SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM T-3
FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES UNDER THE
TRUST INDENTURE ACT OF 1939
WORLD FINANCIAL PROPERTIES, L.P.
(Name of applicant)
One Liberty Plaza
New York, New York 10048
(Address of principal executive offices)
SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
TITLE OF CLASS AMOUNT
Increasing Rate Convertible Up to $[25,000,000]*
Notes due 2004
Approximate date of proposed public offering: On or promptly
after the Effective Date (as defined in the Third Amended Joint
Plan of Reorganization of Olympia & York Realty Corp., et al.,
dated September 12, 1996).
World Financial Properties, L.P.
One Liberty Plaza
New York, New York 10048
(Name and address of agent for service)
with a copy to:
Richard J. Sabella, Esq.
Cahill Gordon & Reindel
Eighty Pine Street
New York, New York 10005
The obligor hereby amends this Application for Qualification on
such date or dates as may be necessary to delay its effective-
ness until (i) the 20th day after the filing of a further
amendment which specifically states that it shall supersede
this amendment, or (ii) such date as the Securities and
Exchange Commission (the "Commission"), acting pursuant to Sec-
tion 307(c) of the Trust Indenture Act of 1939, may determine
upon the written request of the obligor.
Exhibit Index Appears on Page 20
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* This is an approximate amount. The Face Amount of the indenture
securities will be equal to 5.71% of the aggregate Maximum
Allowable Amount of Allowed Claims Unaffiliated Unsecured Claims and
Disputed Unaffiliated Unsecured (as defined in the Plan attached
hereto as Exhibit T3E.2), which amount will be determined under
the Plan as of October 20, 1996.
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GENERAL
1. General Information.
(a) Form of organization.
A limited partnership.
(b) State or other sovereign power under the laws of
which organized.
Delaware.
2. Securities Act exemption applicable. State briefly the
facts relied upon by the applicant as a basis for the
claim that registration of the indenture securities under
the Securities Act of 1933 is not required.
The Notes to be issued pursuant to the Indenture
to be qualified (the "Indenture") will be issued to
existing holders of Consolidated Devco Class 11
Allowed Unaffiliated Unsecured Claims against any of
the Consolidated Devco Entities, as defined in and
pursuant to the Third Amended Joint Plan of Reorgani-
zation of Olympia & York Realty Corp., et al.
(collectively, the "Debtors"), dated as of September
12, 1996 (the "Plan"), filed with the United States
Bankruptcy Court, Southern District of New York (the
"Bankruptcy Court"), in Chapter 11 Case Number 92 B
42698 (JLG) (jointly administered). In connection
with the reorganization of the Debtors, World Finan-
cial Properties, L.P. (the "Company") has been formed
as a Delaware limited partnership. The Debtors dis-
tributed their Disclosure Statement (the "Disclosure
Statement") relating to the Plan to holders of Con-
solidated Devco Class 11 Allowed Unaffiliated Unse-
cured Claims and other creditors of the Debtors. A
copy of the Disclosure Statement is filed with this
application as Exhibit T3E.1 and a copy of the Plan
is filed with this application as Exhibit T3E.2.
The Notes being offered and issued are exempt
from registration under the Securities Act of 1933,
as amended, pursuant to paragraph 62 of an order of
the Bankruptcy Court dated September 20, 1996 con-
firming the Plan (the "Confirmation Order") and
exempting the Notes from registration in accordance
with Section 1145 of Chapter 11 of Title 11 of the
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United States Code (the "Bankruptcy Code"). A copy
of the Confirmation Order is filed with this applica-
tion as Exhibit T3D.1. The Notes will be issued
shortly after the date on which, all conditions to
the effectiveness of the Plan having been satisfied
or waived, the Plan is consummated (the "Effective
Date").
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AFFILIATIONS
3. Affiliates. Furnish a list or diagram of all affiliates
of the applicant and indicate the respective percentages
of voting securities or other bases of control.
World Financial Properties GP Corp. is currently the
general partner of the Company, holding a 1% equity inter-
est in the Company. The Company currently has no other
affiliates.
As of the Effective Date, the affiliates of the Com-
pany will be as set forth below. The affiliates of the
Company which will be controlled directly or indirectly by
the Company will be organized immediately prior to the
Effective Date in connection with the transactions to be
consummated under the Plan.
Partners Limited: owns 66% of the outstanding voting stock
of The Edper Group Limited.
The Edper Group Limited: owns 48% of the outstanding vot-
ing stock of Hees International Bancorp Inc.
Hees International Bancorp Inc.: owns 100% of the out-
standing voting stock of National Bancorp Inc. and 50% of
the outstanding voting stock of Carena Holdings Corpora-
tion Limited.
National Bancorp Inc.: owns 50% of the outstanding voting
stock of Carena Holdings Corporation Limited.
Carena Holdings Corporation Limited: owns 49.85% of the
outstanding voting interests in Carena Holdings Inc.
Carena Holdings Inc.: owns 100% of the outstanding voting
stock of Carena Holdings Ltd.
Carena Holdings Ltd.: owns 100% of the outstanding voting
stock of Placement La Rondelle Ltd.
Placement La Rondelle Ltd: owns 85% of the outstanding
voting stock of Brookfield Properties Corporation.
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Brookfield Properties Corporation: owns 100% of the out-
standing voting stock of Carena Bancorp Equities Limited.
Carena Bancorp Equities Limited: owns 100% of the out-
standing voting stock of CAC [1974] Properties Limited.
CAC [1974] Properties Limited: owns 100% of the outstand-
ing voting stock of Carena Bancorp U.S. Inc.
Carena Bancorp U.S. Inc.: owns 100% of the outstanding
voting stock of Battery Park Holdings Inc.
Battery Park Holdings Inc.: owns __% of the equity inter-
est in World Financial Properties Partnership as a general
partner and __% of the equity interests in the Company as
a limited partner.
World Financial Properties Partnership: owns 75% of the
outstanding voting stock of World Financial Properties,
Inc.
World Financial Properties, Inc.: owns 1% of the equity
interest in the Company as the sole general partner; for-
merly known as World Financial Properties GP Corp.
[Devco GP]: a wholly owned subsidiary of the Company.
[245 Holding LP]: a limited partnership in which [Devco
GP] holds 1% of the equity interests as the sole general
partner.
[SF Holdings]: a wholly owned subsidiary of the Company.
[Florida Equity Corp.]: a wholly owned subsidiary of the
Company.
[MCJV]: a 50% subsidiary of Florida Equity Corp.
[245 Corp.]: a wholly owned subsidiary of [Devco GP].
[New 245 Park LP]: a limited partnership in which [245
Corp.] holds 1% of the equity interests as the sole gen-
eral partner and the Company holds 99% of the equity
interests as the sole limited partner.
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[New Tower A Corp.]: a wholly owned subsidiary of [Devco
GP].
[Tower A Limited Partnership]: a limited partnership in
which [New Tower A Corp.] holds 1% of the equity interests
as a general partner.
[New Tower A LP]: a limited partnership in which [New
Tower A Corp.] holds 3.070707% of the equity interests as
a general partner and the Company holds 70.6666667% of the
equity interests as a limited partner.
[New OLP Corp.]: a wholly owned subsidiary of [Devco GP].
[New Liberty Plaza LP]: a limited partnership in which
[New OLP Corp.] holds 1% of the equity interests as a gen-
eral partner and the Company holds 99% of the equity
interests as a limited partner.
[Pennland GP Corp.]: a wholly owned subsidiary of [Devco
GP].
[Pennland LP]: a limited partnership in which [Pennland GP
Corp.] holds 1% of the equity interests as a general part-
ner and the Company holds 99% of the equity interests as a
limited partner.
[WFC Retailco Holding Corp.]: a wholly owned subsidiary of
[Devco GP].
[WFC Retailco LP]: a limited partnership in which [WFC
Retailco Holding Corp.] holds 1% of the equity interests
as a general partner and the Company holds 99% of the
equity interests as a limited partner.
[53 Holding Company LP]: a limited partnership in which
the Company holds 99% of the equity interests as a general
partner.
[53 State Limited]: a limited partnership in which [53
Holding Company LP] holds 25% of the equity interests as a
general partner.
[Tower D Holding I Corp.]: a wholly owned subsidiary of
[Devco GP].
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[New Tower D Holding I LP]: a limited partnership in which
[Tower D Holding I Corp.] holds 1% of the equity interests
as a general partner and the Company holds 99% of the
equity interests as a limited partner.
[WFC Tower D GP Corp.]: a wholly owned subsidiary of the
Company.
[WFC Tower D Co. LP]: a limited partnership in which [WFC
Tower D GP Corp.] holds 1% of the equity interests as a
general partner and New Tower D Holding I LP holds 48% of
the equity interests as a limited partner.
[Tower D Finance Corp.]: a wholly owned subsidiary of [WFC
Tower D Co. LP].
[New Tower D Holding II LP]: a limited partnership in
which [Devco GP] holds 50.75% of the equity interests as a
general partner and the Company holds 49.25% of the equity
interests as a limited partner.
[WFC Tower B Holding Co. LP]: a limited partnership in
which the Company holds 1% of the equity interets as a
general partner and 98% of the equity interests as a lim-
ited partner and [Devco GP] holds 1% of the equity inter-
ests as a general partner.
[WFC Tower B GP Corp.]: Battery Park Holdings Inc. holds
directly or indirectly 100% of the voting stock.
[WFC Tower B Co. LP]: a limited partnership in which [WFC
Tower B GP Corp.] holds 1% of the equity interests as a
general partner and WFC Tower B Co. LP holds 99% of the
equity interests as a limited partner.
[WFC Tower B Finance Corp.]: a wholly owned subsidiary of
[WFC Tower B Co. LP].
See also Item 4 below -- "Directors and Executive
Officers."
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MANAGEMENT AND CONTROL
4. Directors and executive officers. List the names and com-
plete mailing addresses of all directors and executive
officers of the applicant and all persons chosen to become
directors or executive officers. Indicate all offices
with the applicant held or to be held by each person
named.
The business and affairs of the Company are currently
managed by World Financial Properties GP Corp. ("GP
Corp."), the Company's general partner. The table below
sets forth the names, mailing addresses and offices of the
individuals who currently serve as members of the Board of
Directors and/or executive officers of GP Corp.
Name Address Office
John Zuccotti World Financial Director and
Properties GP Corp. President
One Liberty Plaza
New York, NY 10048
Joseph Killi World Financial Director and
Properties GP Corp. Secretary
One Liberty Plaza
New York, NY 10048
Bruce Flatt c/o Brookfield Director
Properties Corporation
P.O. Box 770, Suite 440
BCE Place, 181 Bay St.
Toronto, Ontario
M5J 2T3
On or about the Effective Date, World Financial Prop-
erties GP Corp. will be renamed World Financial Proper-
ties, Inc. and the business and affairs of the Company
will be managed by World Financial Properties, Inc. under
the terms of the Company's governing limited partnership
agreement (the "Partnership Agreement") (filed as
Exhibit T3A.2 to this application).
The table below sets forth the names, mailing
addresses and offices of individuals who will serve as
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members of the Board of Directors and/or executive offic-
ers of World Financial Properties, Inc. as of the Effec-
tive Date.
Name Address Office
John Zuccotti World Financial Chairman of the
Properties, Inc. Board of Directors
One Liberty Plaza
New York, NY 10048
[List other directors]*
_____________________* President
_____________________* Secretary
* In connection with the transactions to be consummated
on the Effective Date, it is contemplated that there will
be 10 directors and a President and a Secretary. The
names and addresses of these individuals will be provided
by amendment to this Application for Qualification.
5. Principal owners of voting securities. Furnish the fol-
lowing information as to each person owning 10 percent or
more of the voting securities of the applicant.
The following table sets forth each person that cur-
rently owns 10 percent or more of the voting securities of
the Company.
Percentage of
Name and Complete Title of Amount Voting Securities
Mailing Address Class Owned Owned Owned
World Financial General sole general 1% of equity
Properties GP Corp. Partnership partnership interests in the
One Liberty Plaza Interest interest Company
New York, NY 10048
Battery Park Limited sole limited 99% of equity
Holdings Inc. Partnership partnership interests in the
One Liberty Plaza Interest interest Company
New York, NY 10048
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The following table sets forth each person that will
own 10 percent or more of the voting securities of the
Company as of the Effective Date.
Percentage of
Name and Complete Title of Amount Voting Securities
Mailing Address Class Owned Owned Owned
World Financial General sole general 1% of equity
Properties, Inc. Partnership partnership interests in the
One Liberty Plaza Interest interest Company
New York, NY 10048
Battery Park Class A * 43.9224% of equity
Holdings Inc. Units interests in the
One Liberty Plaza Company
New York, NY 10048
[CIBC Sub] Class A * 22.8763% of equity
425 Lexington Avenue Units interests in the
New York, NY 10017 Company
[Citibank Sub] Class A * 22.8763% of equity
53 East 53rd Street Units interests in the
25th Floor Company
New York, NY 10022
The persons listed above also own Class B-1 Units and
Class B-2 Units in the same percentages as the Class
A Units owned by them. The Class B-1 Units and the
Class B-2 Units will not have any voting or other
interest in the assets of the Company until they are
converted by the Company into Class A Units in the
manner and upon the terms and conditions set forth in
the Partnership Agreement following the occurrence of
certain events specified in the Partnership Agree-
ment.
* The number of Class A Units that will be held by
each of these persons will be provided by amendment
to this Application for Qualification.
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UNDERWRITERS
6. Underwriters. Give the name and complete mailing address
of (a) each person who, within three years prior to the
date of filing the application, acted as an underwriter of
any securities of the obligor which were outstanding on
the date of filing the application, and (b) each proposed
principal underwriter of the securities proposed to be
offered. As to each person specified in (a), give the
title of each class of securities underwritten.
(a) None.
(b) None. See Item 2 above.
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CAPITAL SECURITIES
7. Capitalization.
(a) Furnish the following information as to each autho-
rized class of securities of the applicant.
Set forth below is certain information with
respect to the partnership interests of the Company
which are currently outstanding:
Title of Class Amount Authorized Amount Outstanding
General Partnership 1% of equity all
Interest of the Company
Limited Partnership 99% of equity all
Interest of the Company
Set forth below is certain information with
respect to the partnership interests of the Company
which will be outstanding as of the Effective Date:
Title of Class Amount Authorized Amount Outstanding
General Partnership 1% of equity all
Interest of the Company
Class A Units [99,000] Units, *
each representing
a .001% equity
interest in the
Company as a limited
partner**
Class B-1 Units [99,000] Units *
Class B-2 Units [99,000] Units *
* The number of Class A Units, Class B-1 Units and
Class B-2 Units that will be outstanding as of the
Effective Date will be provided by amendment to this
Application for Qualification.
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** A portion of the Class A Units authorized for
issuance are required by the terms of the Indenture
to be reserved for issuance upon conversion of the
indenture securities on the terms and conditions
specified in the Indenture.
(b) Give brief outline of the voting rights of each class
of voting securities referred to in paragraph (a)
above.
The holder of the general partnership interest
of the Company generally has the exclusive right and
power to manage and operate the business of the
Company.
The holders of Class A Units, Class B-1 Units
and Class B-2 Units generally have only the voting
powers and rights set forth under the Partnership
Agreement and as otherwise provided by Delaware law.
The Class B-1 Units and the Class B-2 Units will
not have any voting or other interest in the assets
of the Company until they are converted by the Com-
pany into Class A Units in the manner and upon the
terms and conditions set forth in the Partnership
Agreement following the occurrence of certain events
specified in the Partnership Agreement.
Under Section 11.01 of the Partnership Agree-
ment, the holders of Class A Units, by the vote of
holders of two-thirds of the then outstanding Class A
Units and all of the then existing Founding Limited
Partners (as defined in the Partnership Agreement),
have the power to amend the Partnership Agreement,
provided that, without the consent of each partner
affected thereby, no such amendment may (i) convert a
limited partner's interest into a general partner
interest, (ii) impose any personal liability on any
limited partner, (iii) except as contemplated in the
Partnership Agreement, alter the equity interest of
any limited partner, (iv) impair the rights of lim-
ited partners with respect to profits, losses and
distributions, or (v) alter certain other rights of
the limited partners.
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INDENTURE SECURITIES
8. Analysis of indenture provisions. Insert at this point
the analysis of indenture provisions required under
section 305(a)(2) of the Act.
The terms of the indenture securities include
those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). The
following analysis of certain of the provisions of
the Indenture makes use of certain terms defined in
the Indenture. The following analysis does not pur-
port to be a complete description of the Indenture
provisions discussed and is qualified in its entirety
by express reference to the Indenture. (Section ref-
erences are to the relevant provisions of the
Indenture.)
A. Default Provisions
An "Event of Default" occurs under the Indenture
if: (1) the obligor defaults in the payment of
interest on any indenture securities when the same
becomes due and payable and such default continues
for a period of 10 days, or the obligor defaults in
the payment of the principal of or premium, if any,
on any indenture securities when the same becomes due
and payable at maturity, upon redemption, on the Spe-
cial Offer Payment Date (as defined in the Inden-
ture), by acceleration or otherwise; (2) the obligor
fails to make or consummate any Special Offer (as
defined in the Indenture), as, when and to the extent
required by the provisions of Section 3.7 and Sec-
tions 4.9, 4.10 or 4.17 of the Indenture, as the case
may be; (3) the obligor fails to comply in any
respect with any of the provisions of Section 5.1 of
the Indenture; (4) any representation or warranty
contained in the Indenture shall be untrue in any
material respect; (5) the obligor fails to comply
with any other provision in the Indenture or the
indenture securities for a period of 30 days after
written notice from the indenture trustee or holders
of at least 25% of the indenture securities, other
than indenture securities held by the obligor or an
Affiliate (as defined in the Indenture) of the obli-
gor; (6) the obligor or any of its Significant
<PAGE>
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Subsidiaries (as defined in the Indenture) (other
than an Exempt Subsidiary (as defined in the Inden-
ture)) defaults in the payment of principal or inter-
est on any Indebtedness (as defined in the Indenture)
if the aggregate principal amount of such Indebted-
ness exceeds $5,000,000; (7) the obligor or any of
its Significant Subsidiaries (other than an Exempt
Subsidiary) defaults under any mortgage, indenture or
instrument which results in acceleration of a princi-
pal amount of Indebtedness prior to its stated final
maturity in excess of $5,000,000; (8) there shall be
judgments against the obligor or any Significant Sub-
sidiary (other than an Exempt Subsidiary) rendered by
a court or other tribunal of competent jurisdiction
in excess of $5,000,000, and (a) such judgments are
not stayed or discharged within 45 days after entry
and (b) an enforcement proceeding shall have been
commenced (and not discharged, stayed or settled) by
any creditor upon any such judgments; (9) the obli-
gor, a Controlling Partner (as defined in the Inden-
ture) or any Significant Subsidiary (other than an
Exempt Subsidiary) (a) commences a voluntary case or
proceeding under any Bankruptcy Law (as defined in
the Indenture), (b) consents to the entry of an order
for relief against it in an involuntary case or pro-
ceeding under any Bankruptcy Law, (c) consents to an
appointment of a Custodian (as defined in the Inden-
ture) of it or for all or substantially all of its
property, (d) makes a general assignment for the
benefit of its creditors, (e) admits in writing its
inability to pay its debts generally as they become
due, or (f) dissolves or is deemed dissolved as a
matter of law or contract; (10) a court of competent
jurisdiction enters an order or decree under any
Bankruptcy Law with respect to the obligor, a Con-
trolling Partner or any Significant Subsidiary (other
than an Exempt Subsidiary) that (a) is for relief in
an involuntary case or proceeding, (b) appoints a
Custodian for all or a substantial part of its prop-
erties or (c) orders its liquidation or dissolution,
and in any such case the order or decree remains
unstayed and in effect for 60 days; (11) default by
the obligor in the conversion of any indenture secu-
rity in accordance with the terms of the Indenture
and the indenture securities, which default continues
for three business days; (12) [default on the
$3,000,000 note issued by TIAA, which is guaranteed
<PAGE>
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by the Company]; (13) the obligor defaults under any
mortgage, indenture or instrument which results in
acceleration of Indebtedness that is subordinated in
right of payment to the indenture securities prior to
its stated final maturity; and (14) the opinion or
the CP Certificate (as defined in the Indenture) con-
templated by Section 4.18 of the Indenture are not
delivered to the indenture trustee on the date of the
indenture. (Section 6.1)
If an Event of Default occurs and is continuing,
the indenture trustee or the holders of at least 25%
of the then outstaning principal amount of the inden-
ture securities (excluding any indenture security
then held by the obligor or an Affiliate of the obli-
gor) may, and the indenture trustee at the written
request of such holders shall, declare the unpaid
principal of, premium, if any, on and accrued inter-
est on the indenture securities immediately due and
payable, and may proceed to protect and enforce the
rights of the holders. (Section 6.2)
If a Default occurs and is continuing and if it
is known to the indenture trustee, the indenture
trustee must mail to each holder of the indenture
securities notice of the default within 30 days after
a Trust Officer (as defined in the Indenture)
receives written notice thereof statign tht is is a
notice of "Default" and citing the applicable subsec-
tion of Section 6.1 of the Indenture and indentifying
the Indenture, unless such Default has been cured or
waived. The indenture trustee shall not be deemed to
have notice of any Default until a Trust Officer
shall have received written notice thereof expressly
referring to the Indenture and citing the applicable
subsection of Section 6.1 of the Indenture. The
immediately preceding sentence shall be in lieu of
the proviso to Section 315(b) of the Trust Indenture
Act and said proviso is expressly excluded from the
Indenture, as permitted by the Trust Indenture Act.
(Section 7.5)
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B. Authentication and Delivery of Indenture
Securities
An indenture security will not be valid until
the indenture trustee manually authenticates the
indenture security. The signature will be conclusive
evidence that the indenture security has been authen-
ticated under the Indenture. The indenture trustee
will authenticate securities for original issue in
the aggregate principal amount not to exceed
$_____________, upon receipt of a written order of
the obligor signed by two officers of a Controlling
Partner and an Opinion of Counsel (as defined in the
Indenture) addressed to the indenture trustee and the
holders of the indenture securities in substantially
the form attached to the Indenture as Exhibit B. The
order shall specify the amount of indenture securi-
ties to be authenticated, the date on which the
indenture securities are to be authenticated, the
names, addresses and denominations in which the
indenture securities shall be registered and to whom
the indenture securities shall be delivered. The
aggregate principal amount of indenture securities
outstanding at any time may not exceed $____________
except as provided in Section 2.7 of the Indenture.
(Section 2.2)
The indenture trustee may appoint an authenti-
cating agent acceptable to the obligor to authenti-
cate indenture securities. Unless limited by the
terms of such appointment, an authenticating agent
may authenticate indenture securities whenever the
indenture trustee may do so. An authenticating agent
has the same rights as an Agent (as defined in the
Indenture to deal with the obligor or an Affiliate of
the obligor. (Section 2.2)
The indenture securities will be issuable in
registered form without coupons in denominations of
$1,000 and any integral multiple thereof. (Section
2.1)
The indenture securities will be delivered as
soon as practicable after the execution of the Inden-
ture and the occurrence of the Effective Date. There
will be no proceeds to the obligor from the issuance
of the indenture securities. As described above in
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Item 2, the indenture securities will be issued pur-
suant to the Plan to holders of Consolidated Devco
Class 11 Allowed Unaffiliated Unsecured Claims
against the Consolidated Devco Entities in a princi-
pal amount equal to 5.71% of the aggregate allowed
amount of their claims.
C. Release or Substitution of Collateral
The obligations under the Indenture are not
secured by liens on or security interests in the
property of the obligor or any other person.
D. Satisfaction and Discharge of Indenture
Except for certain specified surviving obliga-
tions, the Indenture shall cease to be of further
effect when all indenture securities previously
authenticated and delivered (other than destroyed,
lost or stolen indenture securities which have been
replaced or paid) have been delivered to the inden-
ture trustee for cancellation or conversion and the
obligor has paid and delivered all sums payable or
deliverable by it under the Indenture. (Section 8.1)
The obligor's obligations under the Indenture
and the indenture securities are subject to rein-
statement in certain circumstances. (Section 8.6)
E. Evidence of Compliance with Conditions
and Covenants
Upon any request or application by the obligor
to the indenture trustee to take any action under the
Indenture, the obligor is required to furnish to the
indenture trustee (1) a CP Certificate stating that,
in the opinion of the signers, all conditions prece-
dent, if any, provided for in the Indenture relating
to the proposed action have been complied with and
(2) an Opinion of Counsel stating that, in the opin-
ion of such counsel, all such conditions precedent
have been complied with. (Section 10.4)
Each CP Certificate and Opinion of Counsel with
respect to compliance with a condition or covenant
provided for in the Indenture must include: (a) a
statement that each Person (as defined in the
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Indenture) or Persons making such CP Certificate or
Opinion of Counsel has read such covenant or condi-
tion; (b) a brief statement as to the nature and
scope of the examination or investigation upon which
the statements or opinions contained in such CP
Certificate or Opinion of Counsel are based; (c) a
statement that, in the opinion of such Person, he has
made such examination or investigation as is neces-
sary to enable such Person to express an informed
opinion as to whether or not such covenant or condi-
tion has been complied with; and (d) a statement as
to whether or not, in the opinion of such Person,
such condition or covenant has been complied with;
provided, however, that with respect to matters of
fact, an Opinion of Counsel may rely on a CP Certifi-
cate or certificates of public officials.
(Section 10.5)
The obligor is required to notify the indenture
trustee and the holders of the indenture securities
as soon as possible after the obligor or a Control-
ling Partner becomes aware of the occurrence of any
event which is, or after notice or passage of time or
both would be, an Event of Default (a "Default"), or
Event of Default which is continuing. (Section 4.3)
The obligor is also required to deliver periodic cer-
tificates, reports and other information to the
indenture trustee and the holders of the indenture
securities, as follows:
(a) within 60 days after the end of each
fiscal quarter and within 120 days after the end
of each fiscal year of the obligor, a CP cer-
tificate stating whether or not the obligor or
any Controlling Partner knows or any Default or
Event of Default which occurred during such pre-
ceding fiscal period or occurred in any other
fiscal period and is continuing. Such certifi-
cate shall contain a certification from each
Controlling Partner as to its knowledge of the
obligor's compliance with all conditions and
covenants under the Indenture during such
preceding fiscal year and shall otherwise comply
with section 314(a)(4) of the Trust Indenture
Act. If a Controlling Partner knows of a
Default or Event of Default, the certificate
<PAGE>
-19-
must describe the Default or Event of Default
and its status; and (Section 4.3)
(b) so long as it is not contrary to the
then current recommendation of the American
Institute of Certified Public Accountants and so
long as the obligor's accountants provide simi-
lar statements to other companies, within 120
days after the end of each fiscal year of the
obligor a written statement by the obligor's
independent certified public accountants stating
(A) that their audit examination has included a
review of the terms of the Indenture and the
indenture securities as they relate to account-
ing matters, and (B) whether, in connection with
their audit examination, any Default has come to
their attention and if such a Default has come
to their attention, specifying the nature and
period of existence thereof; provided, however,
that such independent certified public accoun-
tants will not be liable by reason of any fail-
ure to obtain knowledge of any such Default or
Event of Default that would not be disclosed in
the course of an audit examination conducted in
accordance with GAAP (as defined in the Inden-
ture). (Section 4.3)
9. Other obligors. Give the name and complete
mailing address of any person, other than the
applicant, who is an obligor upon the indenture
securities.
None.
<PAGE>
-20-
Contents of application for qualification.
This application for qualification comprises --
(a) Pages numbered 1 to 22, consecutively.
(b) The statement of eligibility and qualification of
the trustee under the Indenture to be qualified.
(c) The following exhibits in addition to those filed
as a part of the statement of eligibility and
qualification of each trustee.
Exhibit
Exhibit T3A.1 Certificate of Limited Part-
nership of the Company, as
currently in effect.
Exhibit T3A.2 Form of Limited Partnership
Agreement of the Company
anticipated to be in effect on
the Effective Date.
Exhibit T3A.3 Certificate of Incorporation
of GP Corp., as currently in
effect.
Exhibit T3A.4 Form of Amended and Restated
Certificate of Incorporation
of the general partner of the
Company anticipated to be in
effect on the Effective Date.
Exhibit T3B.1 Bylaws of GP Corp., as cur-
rently in effect.
Exhibit T3B.2 Form of Amended and Restated
Bylaws of the general partner
of the Company anticipated to
be in effect on the Effective
Date.
Exhibit T3C Form of Indenture, including
itemized table of contents.
<PAGE>
-21-
Exhibit T3D.1 Confirmation Order of the
Bankruptcy Court entered Sep-
tember 20, 1996.
Exhibit T3D.2 Findings of Fact of the Bank-
ruptcy Court dated September
20, 1996.
Exhibit T3E.1 Disclosure Statement, dated as
of August 9, 1996, distributed
in connection with the Plan.
Exhibit T3E.2 Third Amended Joint Plan of
Reorganization of the Debtors
dated September 12, 1996.
Exhibit T3F Cross-reference sheet showing
the location in the Indenture
of the provisions inserted
therein pursuant to Sections
310 through 318(a), inclusive,
of the Act (included in
Exhibit T3C as the first page
following the cover page of
the Indenture).
<PAGE>
-22-
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939, the applicant, World Financial Properties, L.P., a limited part-
nership organized and existing under the laws of the State of Dela-
ware, has duly caused this application to be signed on its behalf by
the undersigned, thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of New York and State
of New York, on the 9th day of October, 1996.
WORLD FINANCIAL PROPERTIES,
L.P.
By: WORLD FINANCIAL
PROPERTIES GP CORP., its
general partner
By: /s/ John Zuccotti
------------------------
Name: John Zuccotti
Title: President
ATTEST:
[SEAL]
/s/ Joseph Killi
Name: Joseph Killi
Title: Secretary of WORLD FINANCIAL
PROPERTIES GP CORP.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK HERE IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) _____________
_________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)
48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)
_________________
WORLD FINANCIAL PROPERTIES, L.P.
(Exact name of obligor as specified in its charter)
Delaware _____________
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) (Identification No.)
One Liberty Plaza
New York, New York 10048
(Address of principal executive offices) (Zip code)
_________________
World Financial Properties, L.P. Increasing Rate Convertible
Notes due 2004
(Title of the indenture securities)
<PAGE>
Item 1. General Information.*
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervision authority to
which it is subject.
Superintendent of Banks of 2 Rector Street, New York, NY 10006
the State of New York and Albany, NY 12203
Federal Reserve Bank of 33 Liberty Plaza, New York, NY 10045
New York
Federal Deposit Insurance 550 17th Street, N.W., Washington,
Corporation D.C. 20429
New York Clearing House New York, N.Y.
Association
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee,
describe each such affiliation.
None. (See Note on page 4.)
Item 15. List of Exhibits
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of
the Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of
New York (formerly Irving Trust Company) as now in
effect, which contains the authority to commence
business and a grant of powers to exercise corporate
trust powers. (Exhibit 1 to Amendment No. 1 to Form
T-1 filed with Registration Statement No. 33-6215,
Exhibit 1a and 1b to Form T-1 filed with Registration
Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee.
(Exhibit 4 to Form T-1 filed with Registration
Statement No. 33-31019).
- 2 -
<PAGE>
6. The consent of the Trustee required by Section 321(b)
of the Act. (Exhibit 6 to Form T-1 filed with
Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority. (Exhibit 7 to Form
T-1 filed with Registration Statement No. 333-06625)
_____________________
*Pursuant to General Instruction B, the Trustee has responded only to
Items 1, 2 and 16 of this form since to the best of the knowledge of the
Trustee the obligor is not in default under any indenture under which the
Trustee is a trustee.
- 3 -
<PAGE>
NOTE
Inasmuch as this Form T-1 is being filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of
New York, a corporation organized and existing under the laws of the State of
New York, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of
New York, and State of New York, on the th day of October, 1996
THE BANK OF NEW YORK
By:/s/ Lucille Firrincieli
------------------------
Lucille Firrincieli
Assistant Vice President
Exhibit T3A.1
CERTIFICATE OF LIMITED PARTNERSHIP
OF
WORLD FINANCIAL PROPERTIES, L.P.
Pursuant to Section 17-201 of the Delaware Revised
Uniform Limited Partnership Act
This Certificate of Limited Partnership of WORLD
FINANCIAL PROPERTIES, L.P. (the "Partnership") is being exe-
cuted and filed by the undersigned general partner (the "Gen-
eral Partner") to form a limited partnership under the Delaware
Revised Uniform Limited Partnership Act (6 Del. C. { 17-101 et
seq.).
Article One
The name of the limited partnership formed hereby is
WORLD FINANCIAL PROPERTIES, L.P.
Article Two
The address of the registered office of the Partner-
ship in the State of Delaware is 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801, and the name and
address of the registered agent for the service of process on
the Partnership in the State of Delaware is The Corporation
Trust Company, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801.
Article Three
The name and business address of the General Partner
of the Partnership is:
Name Business Address
World Financial Properties 237 Park Avenue
GP Corp. New York, NY 10017
<PAGE>
-2-
IN WITNESS WHEREOF, the undersigned has hereunto set
his hand this 1st day of October, 1996.
WORLD FINANCIAL PROPERTIES
GP CORP., general partner
By: /s/ Roger S. Chari
----------------------------
Name: Roger S. Chari
Title: Sole Incorporator of
World Financial
Properties GP Corp.
LIMITED PARTNERSHIP AGREEMENT
LIMITED PARTNERSHIP AGREEMENT of WORLD FINANCIAL
PROPERTIES, L.P., dated as of , 1996, by and among
WORLD FINANCIAL PROPERTIES GP CORP., a Delaware corporation, as
general partner, and BATTERY PARK HOLDINGS INC. (together with
its successors and assigns, "BPHI"), OLYMPIA & YORK TOWER B
COMPANY (together with its successors and assigns, "OYTBC";
OYTBC, together with BPHI, "BPHI Partner"), [THE CANADIAN IMPE-
RIAL BANK OF COMMERCE OR ITS SUBSIDIARY] (together with its
successors and assigns, "CIBC Partner"), [DRAGON HOLDINGS LIM-
ITED SUBSIDIARY] (together with its successors and assigns,
"Dragon Partner"), [CITIBANK, N.A. SUBSIDIARY] (together with
its successors and assigns, "Citibank Partner"), JMB 245 PARK
AVENUE HOLDING COMPANY, LLC (together with its successors and
assigns, "JMB Partner"), and the other persons and entities
identified on Schedule I, as limited partners.
R E C I T A L :
In furtherance of the consummation of the transac-
tions contemplated in the Plan (as hereinafter defined), the
parties hereto desire to form a limited partnership (the "Part-
nership") pursuant and subject to the provisions of the Dela-
ware Revised Uniform Limited Partnership Act, as amended from
time to time (the "Act").
A G R E E M E N T :
The parties agree as follows:
ARTICLE 1 - DEFINITIONS
As used herein, the following terms have the meanings
assigned to them in this Article (except as otherwise expressly
provided) and include the plural as well as the singular, and
all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles as in effect from time to time:
Act: As defined in the Recital above.
Additional Equity Interests: As defined in
Section 4.02.
<PAGE>
-2-
Additional General Partner: Any additional general
partner admitted to the Partnership (upon conversion of
its Interest as a Limited Partner or otherwise) pursuant
to the provisions of subsection 4.02(c).
Affiliate: With reference to any Person, any other
Person that "Controls," is "Controlled by" or is under
"common Control with" such Person.
Arm's-length Basis: As to any transaction, agreement
or other arrangement, being on terms that would be reached
by unrelated parties not under any compulsion to contract.
Available Funds: As defined in Section 6.03.
Bank of Nova Scotia Settlement: The compromise and
settlement of certain claims of The Bank of Nova Scotia to
be effected in accordance with section 4.9 of the Plan.
Bankruptcy: The "Bankruptcy" of a Partner shall be
deemed to have occurred upon the happening of any of the
following:
(a) The valid appointment of a receiver or
trustee to administer all or a substantial portion of
a Partner's assets or a Partner's Interest in the
Partnership;
(b) The filing by a Partner of a voluntary
petition for relief under the Bankruptcy Code or of a
pleading in any court of record admitting in writing
its inability to pay its debts as they become due;
(c) The making by a Partner of a general
assignment for the benefit of creditors;
(d) The filing by a Partner of an answer admit-
ting the material allegations of, or its consenting
to or defaulting in answering, a petition for relief
filed against it in any proceeding under the Bank-
ruptcy Code; or
(e) The entry of an order, judgment or decree
of any court of competent jurisdiction, granting
relief against a Partner in a proceeding under the
Bankruptcy Code, and such order, judgment or decree
<PAGE>
-3-
continuing unstayed and in effect for a period of
thirty (30) days after such entry.
Bankruptcy Code: The Bankruptcy Reform Act of 1978,
as amended and as codified at title 11, United States
Code.
Bankruptcy Court: The United States District Court
for the Southern District of New York having jurisdiction
over the Reorganization Cases and, to the extent of any
reference under section 157, title 28, United States Code,
the unit of such District Court constituted under section
151, title 28, United States Code.
Business Day: Any day other than a Saturday, a Sun-
day or any other day on which banking institutions in New
York, New York are required or authorized to close by law
or executive order.
Capital Contribution: As defined in Section 4.01.
Certificate: The Partnership's Certificate of Lim-
ited Partnership filed in the office of the Secretary of
State of the State of Delaware, as amended from time to
time.
Change in Control: As to any Partner, a change,
shift or transfer of Control with respect to such Partner
including, without limitation, any change in the Control
of any Person Controlling such Partner; provided, however,
that no Change in Control shall be deemed to have occurred
upon any such change, shift or transfer of Control of
(i) in respect of BPHI Partner, Brookfield Properties,
Inc., (ii) in respect of CIBC Partner, CIBC, (iii) in
respect of Citibank Partner, Citibank, N.A., or (iv) in
respect of any other Limited Partner (including, without
limitation, any Limited Partner that acquires its Interest
from a Founding Limited Partner), any Person that directly
or indirectly Controls such Limited Partner if such Person
(a) has issued and outstanding at least one class of
equity securities that are listed on a national securities
exchange in the United States or (b) has net assets in
excess of $_____________ as of the end of its most
recently concluded fiscal year.
Class A Unit: A fractional interest in all the capi-
tal of the Partnership equal, on the date hereof, to one
<PAGE>
-4-
thousandth of one percent of all such capital as of the
date hereof (exclusive of capital, if any, attributable or
relating to the Disputed Realty Corp. Assets).
Class B Units: Collectively, the Class B-1 Units and
the Class B-2 Units.
Class B-1 Unit: A fractional interest in all the
interest and rights, if any, of the Partnership attribut-
able or related to the capital stock of SF Holdings equal
to one thousandth of one percent of all such interest and
rights.
Class B-2 Unit: A fractional interest in all the
interest and rights of the Partnership attributable or
related to the capital stock of Florida Equity Corp. equal
to one thousandth of one percent of all such interest and
rights.
Code: The Internal Revenue Code of 1986, as amended
from time to time, or any successor statute or statutes to
the Internal Revenue Code of 1986.
Control, Controlling, Controlled: As to any Person,
the possession, directly or indirectly, of the power to
direct or cause the direction of the management and poli-
cies of such Person, whether through ownership of voting
securities or partnership interests, by contract or
otherwise.
Conversion Notice: The notice required to be given
by a holder of one or more Convertible Notes in order to
exercise the Conversion Right.
Conversion Right: The right to convert the indebted-
ness evidenced by the Convertible Notes into Class A Units
(or a fraction of a Class A Unit).
Convertible Note Documents: The Convertible Notes,
together with the Convertible Note Indenture.
Convertible Note Indenture: The indenture (as from
time to time amended) pursuant to which the Convertible
Notes are being issued on the date hereof.
Convertible Notes: The Company's Increasing Rate
Convertible Notes due 2004.
<PAGE>
-5-
Coopers & Lybrand OYDL: Collectively, Coopers &
Lybrand OYDL, Inc. and Coopers & Lybrand OYDL Limited, as
the trustee in the bankruptcy for Olympia & York Develop-
ments Limited, an Ontario corporation.
Core Properties: Those parcels of real property and
interests in Persons owning, directly or indirectly, any
parcels of real property owned by the Partnership or Per-
sons Controlled by the Partnership on the date hereof.
Disputed MCJV Recovery: The recovery that may be
realized by Florida Equity Corp. from the sale of the MCJV
Lands, the amount of which is dependent upon the resolu-
tion of the claims alleged in a suit captioned In re
Holywell Corp., Case No. 84-01590/94-BKC-PGH, before the
United States Bankruptcy Court for the Southern District
of Florida.
Disputed Realty Corp. Assets: The Disputed MCJV
Recovery and the Disputed SF Cash.
Disputed SF Cash: The cash of SF Holdings, subject
to a claim of ownership that has been made by Coopers &
Lybrand OYDL in a case before the Ontario Court of Justice
captioned Coopers & Lybrand OYDL Limited v. Olympia & York
Realty Corp. and Olympia & York SF Holdings Corporation,
Ontario Court Action No. 93-CQ-38609.
Equity Interest: With respect to each Partner at any
time, that portion of all the Class A Units then outstand-
ing that is owned by such Partner, being equal to the quo-
tient of the number of Class A Units owned by such Partner
at such time divided by the total number of all Class A
Units then outstanding.
Fair Market Value: As to any property, the price at
which a willing seller would sell and a willing buyer
would buy such property having full knowledge of the
facts, and assuming each party acts on an Arm's-length
Basis with the expectation of concluding the purchase or
sale within a reasonable time.
Florida Equity Corp.: A Florida corporation that
holds a 50% interest in MCJV.
Founding Limited Partners: BPHI Partner, CIBC Part-
ner, Dragon Partner and Citibank Partner; provided,
<PAGE>
-6-
however, that (i) no assignee or transferee of any of CIBC
Partner, Dragon Partner or Citibank Partner (other than a
Wholly-Owned Affiliate thereof) shall be a Founding
Limited Partner (the rights of each such Partner as a
Founding Limited Partner being personal to such Partner
and not assignable or otherwise transferable except to a
Wholly-Owned Affiliate thereof) and (ii) each of CIBC
Partner, Dragon Partner and Citibank Partner shall cease
to be a Founding Limited Partner upon (A) any Transfer of
its direct or indirect Interest after which such Partner
or its Controlling Affiliates shall own directly or
indirectly less than ___% (in the case of CIBC Partner or
Citibank Partner and their respective Controlling
Affiliates) or ____% (in the case of Dragon Partner and
its Controlling Affiliates) of the beneficial Equity
Interest in the Partnership and (B) the aggregate com-
mencement of any public offering of Class A Units in which
such Partner is permitted to participate as to all its
Class A Units and fails so to participate.
GAAP: As defined in Section 7.09.
General Partner: World Financial Properties GP
Corp., a Delaware corporation, unless and until such cor-
poration shall cease to be a general partner of the Part-
nership pursuant to Section 10.01(c) hereof, and there-
after any successor General Partner of the Partnership
admitted pursuant to Section 9.04 hereof.
Independent Accountants: As defined in Section 7.09.
Initial Unit Value: The deemed Fair Market Value of
a Class A Unit on the date hereof, being $
(viz., the product of .001% and the Partnership Reorgani-
zation Value).
Interest: As to each Partner, such Partner's rights
to participate in the income, gains, losses, deductions
and credits of the Partnership, together with all other
rights and obligations of such Partner under this
agreement.
JMB: JMB/245 Park Avenue Company or any Affiliate
thereof.
JMB Agreement: The agreement between the Partnership
and JMB pursuant to which the Partnership provides to JMB
the rights contemplated in Section 15.8 of the Plan.
<PAGE>
-7-
Limited Partners: BPHI Partner, CIBC Partner, Dragon
Partner, Citibank Partner, JMB Partner, the Persons listed
on Schedule I and any other Person that hereafter becomes
a limited partner of the Partnership in accordance with
the provisions of Article IX hereof.
Majority Interest: An interest, direct or indirect,
in any Person or group of Persons (including, without
limitation, the Partnership but excluding Brookfield Prop-
erties, Inc., CIBC, Citibank, N.A. and all Controlling
Affiliates of each such Person and each Person described
in clause (iv) of the definition of Change in Control)
which represents effective beneficial ownership of more
than 50% of the outstanding Equity Interests in the Part-
nership.
MCJV: Miami Center Joint Venture, a Florida joint
venture.
MCJV Lands: Those certain four parcels of real
estate located east of Southeast 2nd Avenue, west of
Biscayne Bay, north of the Miami River, and south of
Southeast 2nd Street in Miami, Florida.
New 245 Park LP: The Delaware limited partnership
that owns 245 Park Avenue.
Partners: The General Partner, any Additional Gen-
eral Partners and the Limited Partners as a group.
Partnership Reorganization Value: $ .
Person: An individual or a corporation, partnership,
limited liability company, trust, unincorporated associa-
tion or other entity.
Plan: The Third Amended Joint Plan of Reorganization
of Olympia & York Realty Corp., et al., Chapter 11 case
number 92B42698 (JLG) (jointly administered), confirmed by
the Bankruptcy Court on , 1996, as such Plan may
be amended from time to time.
Qualifying Interest: An interest, direct or indi-
rect, in any Person or group of Persons (including, with-
out limitation, the Partnership but excluding Brookfield
Properties, Inc., CIBC, Citibank, N.A. and all Controlling
Affiliates of each such Person and each Person described
in clause (iv) of the definition of Change in Control)
<PAGE>
-8-
which represents effective beneficial ownership of 35% or
more, but not more than 50%, of the outstanding Equity
Interests in the Partnership.
Related Person: As to the General Partner, at any
time, any Person that is then (i) an Affiliate of the Gen-
eral Partner (other than a Person Controlled by the Part-
nership), (ii) the record or beneficial owner of Class A
Units representing 20% or more of all Class A Units then
outstanding, (iii) the record or beneficial owner of 10%
or more of the then outstanding equity securities (of any
class or series) of the General Partner or (iv) any Affil-
iate of a Person described in clause (ii) or clause (iii)
above (other than a Person Controlled by the Partnership).
Required Partners: As defined in subsection 9.06(b).
SF Holdings: Olympia & York SF Holdings Corpora-
tion, a New Brunswick corporation and a Debtor in the
Reorganization Cases.
Transfer: Any direct or indirect transfer, sale,
conveyance, pledge, hypothecation or other disposition,
including, without limitation, any of the foregoing that
occurs by virtue of any Change in Control.
Treasury Regulations: Regulations promulgated under
the Code and from time to time in effect.
245 Park Avenue: That certain parcel of real prop-
erty located at 245 Park Avenue, New York, New York,
together with the office building and other improvements
existing thereon.
245 Park Co.: 245 Park Avenue Company, a New York
general partnership.
Unit Value: As of any date, the Fair Market Value of
a Class A Unit, as determined in good faith by the General
Partner (taking account of all relevant considerations,
including, without limitation, the Fair Market Value of
the assets of the Partnership, the liabilities of the
Partnership and the terms of any Additional Equity Inter-
ests (including, without limitation, any Additional Equity
Interests that are exchangeable for or convertible into
Class A Units or different Additional Equity Interests)),
any such determination to be conclusive and binding for
all purposes of this agreement, except in any case where
Class A Units are to be issued to the General Partner or a
<PAGE>
-9-
Related Person of the General Partner (in which case such
determination shall not be effective unless (i) confirmed
in writing by an independent investment banking institu-
tion of national reputation selected by the General Part-
ner or (ii) in the same transaction and at the same time a
greater number of Class A Units are to be issued to Per-
sons that are neither the General Partner nor Related Per-
sons of the General Partner).
Unrestricted Units: Class A Units issued (i) on the
date hereof to a Limited Partner (including, without limi-
tation, JMB Partner) that is not a Founding Limited Part-
ner, (ii) upon exercise of the Conversion Right or (iii)
upon conversion of Class B Units, all of which Class A
Units shall retain their character as Unrestricted Units
notwithstanding any Transfer thereof.
Wholly-Owned Affiliate: With respect to any Person,
an Affiliate of such Person, the beneficial ownership of
which Affiliate is held by the same Persons and in the
same proportions as the beneficial ownership of such Per-
son is held.
Withholding Advance: As defined in Section 7.12.
ARTICLE 2 - FORMATION
2.01 Formation. The Partners hereby form the Part-
nership as a partnership subject to the provisions of the Act.
2.02 Filing; Publication. The General Partner shall
take all action required by law to create and maintain the
Partnership as a limited partnership under the Act and under
the laws of all jurisdictions in which the Partnership may
elect to conduct business, including, without limitation, the
filing of amendments to the Certificate with the Delaware Sec-
retary of State, and qualification of the Partnership as a for-
eign limited partnership in the jurisdictions in which such
qualification shall be required, as determined by the General
Partner. The General Partner shall also promptly register the
Partnership under applicable assumed or fictitious name stat-
utes or similar laws.
2.03 Name. The name of the Partnership shall be
World Financial Properties, L.P. The General Partner may adopt
such assumed or fictitious names as it deems appropriate in
connection with the qualifications and registrations referred
to in Section 2.02.
<PAGE>
-10-
2.04 Place of Business; Registered Agent. The loca-
tion of the principal office of the Partnership shall initially
be c/o Battery Park Holdings Inc., 237 Park Avenue, New York,
New York 10017 and thereafter at such other location as the
General Partner may designate upon written notice to the other
Partners. The Partnership's registered agent in the State of
Delaware shall be The Corporation Trust Company, having an
address at 1209 Orange Street, Wilmington, Delaware.
2.05 Partners. The name and address of each Partner
shall be as set forth in the books and records of the
Partnership.
ARTICLE 3 - BUSINESS PURPOSE
3.01 Character of Business.
(a) The business of the Partnership shall be to (i)
acquire, own, operate, manage, finance, lease, dispose of and
otherwise deal with interests in real estate and securities
related to or secured by interests in real estate, such inter-
ests to be owned directly or indirectly (as, for example,
through the ownership of equity securities in Persons that own
or otherwise deal with interests in real estate) and
(ii) transact any and all other businesses for which limited
partnerships may be formed under Delaware law.
(b) In furtherance of its business, the Partnership
may participate in other Persons and serve as general or lim-
ited partner, joint venturer, manager, agent or representative
for such other Person.
3.02 Authorized Activities. In carrying out the
purposes of the Partnership, but subject to all other provi-
sions of this agreement, the Partnership is authorized to
engage in any kind of lawful activity, and perform and carry
out contracts of any kind, necessary or advisable in connection
with the accomplishment of the purposes and business of the
Partnership described herein and for the protection and benefit
of the Partnership.
ARTICLE 4 - CAPITAL CONTRIBUTIONS
4.01 Initial Contributions. In accordance with all
applicable provisions of the Plan, each Partner initially shall
make a contribution of capital (a "Capital Contribution") to
<PAGE>
-11-
the Partnership. Each Partner on the date hereof shall own
that number of Class A Units and Class B Units as is set forth
on Schedule I.
4.02 Additional Contributions.
(a) No Partner shall be obligated to make any Capi-
tal Contribution other than as set forth in Section 4.01.
Without limiting any other right or power of the General Part-
ner hereunder or under applicable law, the General Partner may
at any time without notice to any other Partner accept Capital
Contributions of cash or property from and issue new Class A
Units or other equity securities of the Partnership (any such
other securities, "Additional Equity Interests") to any Part-
ners or admit new Partners to the Partnership in connection
with the making by such Partners of Capital Contributions con-
sisting of cash or property (including, without limitation, any
such Capital Contribution made in connection with the creation
of an umbrella partnership real estate investment trust or
similar investment vehicle) and may issue Class A Units or
Additional Equity Interests of the Partnership to such Part-
ners. Each Person that makes any such Capital Contribution
(other than any Persons entitled to Class A Units pursuant to
Article 5 or upon exercise of the Conversion Right) shall be
issued (i) Class A Units in a number equal to the quotient
obtained by dividing the amount or Fair Market Value of such
Capital Contribution (as determined by the General Partner in
its reasonable discretion) by the Unit Value in effect immedi-
ately preceding the making of such Capital Contribution or (ii)
such Additional Equity Interests of the Partnership as the Gen-
eral Partner shall, in good faith, deem to be equal in value to
the amount or Fair Market Value of such Capital Contribution
(taking account of all relevant considerations, including,
without limitation, the Fair Market Value of the assets of the
Partnership, the liabilities of the Partnership and the terms
of any Additional Equity Interests (including, without limita-
tion, any Additional Equity Interests that are exchangeable for
or convertible into Class A Units or different Additional
Equity Interests)), any such determination to be conclusive and
binding for all purposes of this agreement, except in any case
where Class A Units or Additional Equity Interests are to be
issued to the General Partner or a Related Person of the Gen-
eral Partner (in which case such determination shall not be
effective unless (A) confirmed in writing by an independent
investment banking institution of national reputation selected
by the General Partner or (B) in the same transaction and at
the same time a greater number of Class A Units or Additional
Equity Interests are to be issued to Persons that are neither
<PAGE>
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the General Partner nor Related Persons of the General
Partner).
(b) Notwithstanding any contrary provision of this
agreement, the General Partner may not cause the Partnership to
issue any new Class A Units or Additional Equity Interests in
the Partnership unless after giving effect thereto (and any
contemporaneous issuance or Transfers of Class A Units or Addi-
tional Equity Interests to the General Partner) the General
Partner shall own at least a 1% general partner interest in the
capital of, and in all items of income, gain, loss, deduction
and credit of, the Partnership; provided, however, that, upon
the exercise of the Conversion Right by any holder of Convert-
ible Notes, the General Partner and the Founding Limited Part-
ners shall take such actions (including, without limitation,
the Transfer of Class A Units by the Founding Limited Partners
to the General Partner) as shall be necessary to cause the pro-
visions of this subsection to be complied with as of the time
of the issuance of any Class A Units in respect of such
exercise.
(c) The General Partner may, without the approval of
any Partner, admit Additional General Partners to the Partner-
ship in connection with the making of a Capital Contribution in
accordance with the provisions of subsection 4.02(a) or (with
the written approval of the affected Limited Partner) upon a
conversion of the Interest of any Limited Partner into a gen-
eral partner's Interest in the Partnership. All such Addi-
tional General Partners shall have such rights and authority to
act for the Partnership and the Limited Partners as shall be
determined by the General Partner; provided, however, that no
Person shall be admitted to the Partnership as an Additional
General Partner unless the rights and authority of such Person
to act for the Partnership and the Limited Partners do not
exceed the rights and authority of the General Partner so to
act and such Person shall agree to be bound by the provisions
of subsections 7.01(a) and 7.02(c) and Section 7.06 of this
agreement.
(d) The General Partner may, without the approval of
any Partner (other than the affected Additional General Part-
ner), convert the Interest of any Additional General Partner
into a limited partnership Interest in the Partnership.
4.03 Rights of Holders of Class B Units; Cancella-
tion by General Partner.
(a) The holders of Class B Units shall be given
credit (to be applied only to the issuance of Class A Units as
herein provided) for all the income and capital, if any, of the
Partnership with respect to the Disputed Realty Corp. Assets
during the period prior to any conversion of such Class B Units
<PAGE>
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into Class A Units as herein contemplated. The holders of
Class B Units (in their capacities as such holders only) shall
not be entitled to any interest in the income or capital of the
Partnership with respect to any other asset of the Partnership.
Prior to conversion of any Class B Units into Class A Units
pursuant to Article 5 hereof, the holders of such Class B Units
(in their capacities as such) shall not have any right to vote
on any matters subject to the approval of the Partners or to
receive any distribution from the Partnership (other than (in
the event the Partnership shall be liquidated prior to the con-
versions contemplated in Article 5 of this agreement) a distri-
bution of the Disputed Realty Corp. Assets or the proceeds
thereof upon liquidation of the Partnership).
(b) The General Partner may, by written notice given
to the Partners at any time, cancel all or part of the Class B
Units, as appropriate, if (i) the General Partner shall have
determined in its reasonable discretion (based on facts or cir-
cumstances hereafter becoming known to the General Partner
(including, without limitation, the issuance of any rulings or
judgments in any proceedings related to the Disputed Realty
Corp. Assets)) that, notwithstanding commercially reasonable
efforts by the Partnership to enforce or negotiate its claims
with respect to the Disputed Realty Corp. Assets, the net value
to the Partnership of the Disputed SF Cash or the Disputed MCJV
Recovery is insufficient to justify the continued expenditure
of effort or funds by the Partnership to realize on its claims
with respect thereto or (ii) there shall have been issued a
final nonappealable ruling by a court of competent jurisdiction
denying the validity of the Partnership's claims to the Dis-
puted SF Cash or the Disputed MCJV Recovery.
(c) Nothing in this Section 4.03 shall limit the
Partnership's rights against Limited Partners holding Class B
Units under the provisions of Section 7.12 of this agreement
with respect to Withholding Advances or under Section 20 of the
Plan with respect to Tax Advances (as defined in the Plan).
4.04 Partner's Accounts.
(a) Separate capital accounts shall be maintained
for each Partner consisting of all Capital Contributions made
by such Partner increased by the amount of Partnership income
and gain allocated to it pursuant to this agreement and
decreased by (i) the Fair Market Value of property (net of any
liability secured by such property that the Partner is consid-
ered to assume or take subject to) and the amount of cash
<PAGE>
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distributed to such Partner pursuant to this agreement and (ii)
the amount of Partnership losses and deductions allocated to it
pursuant to this agreement.
(b) If any Partner has a deficit balance in its cap-
ital account (after giving effect to all Capital Contributions,
distributions and allocations), such Partner shall have no
obligation to make any contribution to the capital of the Part-
nership by reason of such deficit.
4.05 Transfers or Conversions During Year. To avoid
an interim closing of the Partnership's books, the share of
profits and losses under this Article 4 of a Partner that
assigns or otherwise makes a direct Transfer of part or all of
its Interest during any calendar year or is the assignee or
transferee of such a Partner or is issued any Class A Units
pursuant to the provisions of Section 5.01 or 5.02 or the Con-
vertible Note Documents or is issued any Additional Equity
Interest pursuant to the provisions of subsection 4.02(a) dur-
ing such calendar year shall be determined by (i) in the case
of any such assignment or other direct Transfer, prorating (as
between the transferor Partner and its transferee) the total
amount of the profits and losses of the Partnership attribut-
able to the Interest so transferred for such year and (ii) in
the case of any such conversion, by allocating the total amount
of profits and losses of the Partnership (other than items
attributable to the Disputed Realty Corp. Assets, which shall
be allocated in accordance with the provisions of subsection
6.01(b)) on a per-day basis in accordance with each Partner's
Equity Interest in the Partnership (or otherwise as may be
required to give effect to the provisions of any Additional
Equity Interests) as of the end of such day.
ARTICLE 5 - CONVERSION RIGHTS
5.01 Class B-1 Unit Conversion. If and when SF
Holdings' ownership interest in the Disputed SF Cash ceases to
be disputed by reason of the entry of a final nonappealable
order of the Bankruptcy Court or another court of competent
jurisdiction either (i) confirming SF Holdings' ownership
interest in the Disputed SF Cash or (ii) approving an executed
and delivered settlement agreement with Coopers & Lybrand, or
any successor in interest to Coopers & Lybrand, and SF Holdings
shall have received payment of any funds in satisfaction of its
claim to the Disputed SF Cash, the General Partner shall deter-
mine (which determination shall be confirmed in writing by the
<PAGE>
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Independent Accountants and shall, upon such confirmation, be
conclusive for all purposes hereof, absent manifest error) the
amount or Fair Market Value (using an appropriate discount rate
in the event any payments are deferred for more than 30 days)
of all funds to be received in respect of such claim after
deducting the total liabilities of SF Holdings, including,
without limitation, all applicable litigation costs and settle-
ment amounts (the "Net SF Cash"). Within thirty (30) Business
Days after the last to occur of the date such court order
becomes final and nonappealable and receipt of such funds (the
"SF Deadline"), the General Partner shall send a notice to each
other Partner setting forth such determination and confirming
the conversion that is contemplated in the following sentence.
Effective on and as of the SF Deadline, the then outstanding
Class B-1 Units shall, in the aggregate, automatically be con-
verted into that number of Class A Units (or that fraction of a
Class A Unit) determined by dividing (a) the Net SF Cash (sub-
ject to reduction pursuant to the provisions of subsection
5.03(a)), by (b) the Initial Unit Value, and each Partner that,
immediately preceding such conversion, held any Class B-1 Units
shall be allocated that number of such Class A Units determined
by multiplying the number of such Class A Units by a fraction,
the numerator of which is the number of Class B-1 Units held by
such Partner immediately prior to such conversion and the
denominator of which is the number of Class B-1 Units outstand-
ing immediately prior to such conversion.
5.02 Class B-2 Unit Conversion. If and when the
Disputed MCJV Recovery ceases to be disputed and there is exe-
cuted and delivered a contract of sale of the MCJV Lands and
Florida Equity Corp. shall have received its share of the clos-
ing proceeds in respect thereof, the General Partner shall
determine (which determination shall be confirmed in writing by
the Independent Accountants and shall, upon such confirmation,
be conclusive for all purposes hereof, absent manifest error)
the amount of the net cash closing proceeds of such sale, after
deducting the total liabilities of Florida Equity Corp.,
including, without limitation, (i) the amount required to be
paid by Florida Equity Corp. or the Partnership in accordance
with the Bank of Nova Scotia Settlement and (ii) any amounts
funded by the Partnership in respect of taxes, carrying costs
and other out of pocket expenses relating to the MCJV Lands
(including, without limitation, litigation expenses), together
with interest thereon at the rate of 10% per annum, compounded
annually (the "Net MCJV Proceeds"). Within thirty (30) Busi-
ness Days after the last to occur of the entry of a final and
nonappealable order of the Bankruptcy Court approving such sale
<PAGE>
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and receipt of such closing proceeds (the "MCJV Deadline"), the
General Partner shall send a notice to each other Partner set-
ting forth such determination and confirming the conversion
that is contemplated in the following sentence. Effective on
and as of the MCJV Deadline, the then outstanding Class B-2
Units, in the aggregate, shall automatically be converted into
that number of Class A Units (or that fraction of a Class A
Unit) determined by dividing (a) the Net MCJV Proceeds (subject
to reduction pursuant to the provisions of subsection 5.03(b)),
by (b) the Initial Unit Value, and each Partner that, immedi-
ately preceding such conversion, held any Class B-2 Units shall
be allocated that number of such Class A Units determined by
multiplying the number of such Class A Units by a fraction, the
numerator of which is the number of such Class B-2 Units held
by such Partner immediately prior to such conversion and the
denominator of which is the number of Class B-2 Units outstand-
ing immediately prior to such conversion.
5.03 Additional Conversion Adjustments.
(a) Notwithstanding the foregoing provisions of
Section 5.01, if, on the SF Deadline, a conversion of Class B-2
Units into Class A Units has not already occurred, the General
Partner shall deduct from the amount of Net SF Cash used in the
formula described in Section 5.01 above (i) the litigation
costs and other expenses of the Partnership expended in
attempting to settle or litigate claims relating to the Dis-
puted MCJV Recovery (including, without limitation, amounts
advanced by the Partnership to Florida Equity Corp.) and
(ii) the amount to be deposited in a reserve to fund future
litigation costs and other expenses of Florida Equity Corp. in
attempting to settle or litigate claims relating to the Dis-
puted MCJV Recovery based on the General Partner's reasonable
estimate of such costs and expenses. Any amounts to be
reserved pursuant to clause (ii) of the preceding sentence
shall be subject to the approval of the Bankruptcy Court in
connection with any order of the Bankruptcy Court confirming
the Partnership's ownership interest in the Disputed SF Cash or
approving an executed and delivered settlement agreement with
Coopers & Lybrand OYDL.
(b) Notwithstanding the foregoing provisions of Sec-
tion 5.02, if, on the MCJV Deadline, a conversion of Class B-1
Units into Class A Units has not already occurred, the Partner-
ship shall deduct from the amount of Net MCJV Proceeds used in
the formula described in Section 5.02 above (i) the litigation
costs and other expenses of the Partnership expended in
<PAGE>
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attempting to settle or litigate claims relating to the Dis-
puted SF Cash (including, without limitation, amounts advanced
by the Partnership to SF Holdings) and (ii) the amount to be
deposited in a reserve to fund future litigation costs and
other expenses of SF Holdings in attempting to settle or liti-
gate claims relating to the Disputed SF Cash based on the Gen-
eral Partner's reasonable estimate of such costs and expenses.
Any amounts to be reserved pursuant to clause (ii) of the imme-
diately preceding sentence shall be subject to the approval of
the Bankruptcy Court in connection with any order of the Bank-
ruptcy Court approving the sale of the MCJV Lands.
5.04 Convertible Note Documents. Contemporaneously
with the execution of this agreement, the Partnership is exe-
cuting and delivering the Convertible Note Documents. Upon the
delivery of any Conversion Notice and the satisfaction of any
other conditions to exercise of the Conversion Right by any
holder of one or more Convertible Notes, the General Partner
shall execute such instruments and take such other actions as
shall be necessary to evidence the conversion and issuance of
Class A Units contemplated by the Convertible Note Documents
and such Conversion Notice.
5.05 Transfers Pursuant to the Plan. Each of the
Founding Limited Partners shall make Transfers of Class B Units
to JMB Partner at the times and in the amounts required pursu-
ant to the JMB Agreement and the provisions of Section 15.8.1
of the Plan.
ARTICLE 6 - PROFITS, LOSSES AND DISTRIBUTIONS
6.01 Profits and Losses.
(a) Subject to the provisions of subsection (b) of
this Section 6.01, the Partnership's net profits or net losses
shall be determined on an annual basis and shall be allocated
to the Partners in proportion to their Equity Interests; pro-
vided, however, that (i) to the extent that the terms of any
Additional Equity Interests require a different allocation, the
General Partner shall cause the allocations herein contemplated
to be in accordance with such terms and (ii) except as
expressly provided in subsection 7.02(b), no Limited Partner
(in its capacity as a Limited Partner) shall be personally lia-
ble for losses, costs, expenses, liabilities or obligations of
the Partnership in excess of its Capital Contributions under
Article 4 hereof.
<PAGE>
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(b) Any income, gain, losses or deductions recog-
nized by the Partnership as a result of (i) the Disputed Realty
Corp. Assets ceasing to be disputed or as a result of any dis-
tribution with respect to, or disposition of, the stock of
Florida Equity Corp. shall be allocated to the holders of Class
B-2 Units, and (ii) the Disputed Realty Corp. Assets ceasing to
be disputed or as a result of any distribution with respect to,
or disposition of, the stock of SF Holdings shall be allocated
to the holders of Class B-1 Units.
6.02 Allocations for Tax Purposes. (a) Subject to
the provisions of subsection (b) of this Section 6.02, for
income tax purposes, each item of income, gain, loss, deduction
and credit of the Partnership shall, subject to the provisions
of Section 4.05, be allocated among the Partners in proportion
to their Equity Interests; provided, however, that (i) to the
extent the terms of any Additional Equity Securities require a
different allocation, the General Partner shall cause the allo-
cations herein contemplated to be in accordance with such terms
and (ii) each such item with respect to property contributed to
the Partnership by a Partner or revalued pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(f) shall be allocated
among the Partners in a manner that takes into account the
variation between the adjusted tax basis of such property and
its book value, as required by Section 704(c) of the Internal
Revenue Code and Treasury Regulations Section 1.704-1(b)(4)(i),
using any method permitted by applicable Treasury Regulations.
Notwithstanding the foregoing, (A) if requested by JMB Partner,
the Partnership shall make or cause to be made with respect to
245 Park Avenue the allocations contemplated in subsection
7.11(e) and (B) until such time as JMB Partner shall have
Transferred all its Interest in the Partnership to a Person
other than JMB or shall have otherwise ceased to be a Partner,
the allocations, debt sharing and other income tax treatments
described in Section 15.8.1 of the Plan shall be complied with
by the Partnership.
(b) Any income or gain recognized by the Partnership
as a result of the Disputed Realty Corp. Assets ceasing to be
disputed or as a result of any distribution with respect to, or
disposition of, the stock of SF Holdings or of Florida Equity
Corp. shall be allocated to the holders of Class B-1 and Class
B-2 Units in accordance with the principles of section 704(c)
of the Code (it being understood that, for book purposes, the
initial Capital Contribution made by the holders of Class B-1
and Class B-2 Units shall be fixed at the net value of the
stock of SF Holdings and the stock of Florida Equity Corp.,
<PAGE>
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respectively, as and when the dispute affecting the value of
each such asset is finally resolved and such Class B Units are
converted to Class A Units).
6.03 Distributions. Annually or at more frequent
intervals as determined by the General Partner, in its sole
discretion, the then Available Funds (as hereinafter defined)
shall be distributed to the Partners in proportion to their
Equity Interests; provided, however, that to the extent that
the terms of any Additional Securities require distribution of
Available Funds in a particular order, ranking or amount, the
General Partner shall cause the distribution of Available Funds
to be in accordance with such terms. "Available Funds" means
(i) the Partnership's gross cash receipts, less (ii) the Part-
nership's expenditures, less (iii) the amount that, in the Gen-
eral Partner's reasonable judgment, the Partnership should
retain or otherwise reserve in order to fulfill its business
purposes or to comply with the provisions of any debt or other
obligation of the Partnership, plus (iv) the amount by which,
in the General Partner's reasonable judgment, any such reserve
previously established and then existing shall be reduced after
taking into account the foregoing.
ARTICLE 7 - MANAGEMENT AND FINANCING MATTERS
7.01 Management of Business.
(a) Except as otherwise specifically provided to the
contrary herein, the General Partner shall have full, exclusive
and complete discretion to manage the business and affairs of
the Partnership and to take all such actions as it deems neces-
sary or appropriate to accomplish the purposes of the Partner-
ship as set forth herein; provided, however, that the actions
of the General Partner hereunder shall at all times be in com-
pliance with the provisions of Section 7.06. Nothing contained
in this Section 7.01 shall impose any obligation on any Person
doing business or dealing with the Partnership to inquire as to
whether the General Partner has exceeded its authority in exe-
cuting any contract, lease, mortgage, note, deed or other
instrument on behalf of the Partnership, and any such Person
shall be fully protected in relying upon the plenary authority
of the General Partner. Except as otherwise provided in
Article 8, the General Partner shall serve without compensation
for its services. The General Partner may delegate such of its
respective powers and authority to any Additional General Part-
ner or to managers, employees and agents of the General Partner
<PAGE>
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or of the Partnership as it shall deem necessary or appropriate
for the conduct of the Partnership's business; provided, how-
ever, that the General Partner shall not purport to authorize
any such Additional General Partner, manager, employee or agent
to take any action that the General Partner is itself prohib-
ited from taking under the provisions of this agreement.
(b) In carrying out the purposes of the Partnership,
among other things, the General Partner is authorized to exe-
cute and deliver (i) instruments evidencing the issuance of
Class A Units or Additional Equity Interests of the Partner-
ship, (ii) all contracts, conveyances, assignments, franchise
agreements, licensing agreements and management contracts cov-
ering or affecting the Partnership's assets, (iii) all checks,
drafts and other orders for the payment of the Partnership's
funds, (iv) all promissory notes, mortgages, deeds of trust,
security agreements and other similar documents and (v) all
other instruments of any kind or character relating to the
Partnership's affairs, whether like or unlike the foregoing.
No Partner other than the General Partner or any Additional
General Partner (to the extent the General Partner shall dele-
gate or otherwise authorize or permit such Additional General
Partner to do so) shall have management power over the business
and affairs of the Partnership or actual or apparent authority
to enter into contracts or bind the Partnership.
(c) Meetings of the Partners may be called by the
General Partner by giving ten (10) days prior written notice of
the time, date, location and purpose of the meeting; provided,
however, that in the event of any emergency affecting the Part-
nership or its assets, a meeting of the Partners may be called
by the General Partner on such shorter notice as the General
Partner shall deem appropriate in its reasonable judgment.
(d) Each Limited Partner may authorize any Person or
Persons, including, without limitation, the General Partner, to
act for it by proxy on all matters on which a Limited Partner
may participate. Every proxy (i) must be signed by the Limited
Partner or its attorney-in-fact, (ii) shall expire eleven (11)
months from the date thereof unless the proxy provides other-
wise and (iii) shall be revocable at the discretion of the Lim-
ited Partner granting such proxy.
(e) Any action required or permitted to be taken at
a meeting of the Partners may be taken without a meeting (and
without advance notice thereof) if a written consent setting
forth the action to be taken is signed by the Partners owning
<PAGE>
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the percentage of the total Class A Interests of the Partner-
ship required to take such action, which written consent may be
evidenced in one or more instruments. Consents need not be
solicited from any other Partner if the written consent of
Partners owning such requisite percentage has been obtained to
take the action for which such solicitation was required.
(f) The General Partner shall cause the Partnership
to perform its obligations under the JMB Agreement in accor-
dance with the terms thereof.
7.02 No Management by Limited Partners; Limitation
of Liability.
(a) No Limited Partner, in its capacity as a limited
partner, shall take part in the day-to-day management, opera-
tion or control of the business and affairs of the Partnership
or have any right, power, or authority to act for or on behalf
of or to bind the Partnership or transact any business in the
name of the Partnership. Any approvals rendered or withheld by
any of the Limited Partners pursuant to this agreement shall be
deemed as consultation with or advice to the General Partner in
connection with the business of the Partnership and, in accor-
dance with the Act, shall not be deemed as participation by any
such Limited Partner in the business of the Partnership and are
not intended to create any inference that any such Limited
Partner should be classified as a general partner under the
Act.
(b) No Limited Partner shall have any liability
under this agreement except (i) with respect to withholding
under Section 7.12, (ii) in connection with a breach or viola-
tion of any provision of this agreement by such Limited Partner
or (iii) as provided in the Act.
(c) The General Partner shall not take any action
that would subject any Limited Partner (in its capacity as Lim-
ited Partner) to liability as a general partner.
(d) No Limited Partner (in its capacity as such) may
commence or attempt to commence or join or attempt to join in
any voluntary or involuntary petition for bankruptcy or insol-
vency proceeding with respect to the Partnership pursuant to
the Bankruptcy Code. Neither the Partnership nor the General
Partner shall commence or consent to the commencement of any
such proceeding unless the commencement of such proceeding has
been authorized by due corporate action of the General Partner.
<PAGE>
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7.03 Appointment of Agents, Officers or Representa-
tives. The General Partner may appoint such agents, officers
or representatives as it deems appropriate, and may grant to
them such titles or designations, including that of President,
Vice President, Managing Agent or Managing Director, as it
deems necessary or appropriate.
7.04 Title to Property; Nominee. All property owned
by the Partnership, whether real or personal, tangible or
intangible, shall be deemed to be owned by the Partnership as
an entity, and no Partner, individually, shall have any owner-
ship of such property. Title to the Partnership's assets shall
be held in the Partnership's name or in the name of any nominee
that the General Partner may designate. The General Partner
shall have the power to enter into a nominee agreement with any
such Person, and such agreement may contain provisions indemni-
fying the nominee, except for his or its willful misconduct.
7.05 Time Devoted to Business; Business with Related
Persons.
(a) The General Partner shall devote such time to
the business of the Partnership as it in its discretion deems
necessary for the efficient operation of the Partnership's
business.
(b) The General Partner, in its discretion, may
cause the Partnership or any Person Controlled by the Partner-
ship to transact business with any Related Persons of the Gen-
eral Partner; provided, however, that, notwithstanding any pro-
vision to the contrary in this agreement, the General Partner
shall not cause or permit the Partnership or any Person Con-
trolled by the Partnership to enter into or suffer to exist any
transaction or series of related transactions with the General
Partner or any Related Person of the General Partner if such
transaction or series of related transactions is not on an
Arm's-length Basis.
7.06 Fiduciary Duty; Exculpation. The General Part-
ner shall act as a fiduciary for and in the best interests of
the Limited Partners and the Partnership; provided, however,
that (subject to the provisions of the proviso to subsection
7.05(b)) the General Partner and its Affiliates shall at all
times be free to engage for their own account in all aspects of
any business or investment in which the Partnership is involved
and may compete with the business and investments of the Part-
nership; and provided, further, that, notwithstanding any
<PAGE>
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contrary provision in this agreement, the acquisition of any
assets in addition to the Core Properties or any other expan-
sion of the business of the Partnership shall be within the
sole discretion of the General Partner. The General Partner
shall not be liable, responsible or accountable in damages or
otherwise to the Partnership or any of the other Partners for
any act or omission performed or omitted in good faith on
behalf of the Partnership and in a manner reasonably believed
to be (i) within the scope of the authority granted by this
agreement and (ii) in the best interests of the Partnership.
So long as the General Partner shall not have violated the pro-
visions of the proviso to subsection 7.01(a), the General Part-
ner shall not be responsible for any misconduct or negligence
on the part of any agent (other than direct employees of the
General Partner) if neither the General Partner nor any of its
Related Persons derived any improper personal benefit from such
misconduct or negligence.
7.07 Indemnification.
(a) The Partnership shall indemnify and hold harm-
less any Person acting on behalf of the Partnership (an "Indem-
nified Party") pursuant to the authority herein granted or
otherwise (to the extent such Person is authorized to act), to
the fullest extent as would be permitted by applicable law of
the State of Delaware affording indemnification to persons act-
ing on behalf of corporations organized in such State (includ-
ing, without limitation, any procedures set forth therein
regarding advancement of expenses to such Indemnified Party),
from and against any and all losses, claims, damages, liabili-
ties, joint and several, expenses (including, without limita-
tion, reasonable legal fees and expenses), judgments, fines,
penalties, interests, settlements and other amounts arising
from any and all claims, demands, actions, suits or proceed-
ings, whether civil, criminal, administrative or investigative,
relating to the activities of such Person acting on behalf of
the Partnership.
(b) The Partnership shall have the authority to pur-
chase and maintain such insurance policies on behalf of the
Indemnified Parties as the General Partner shall determine,
which policies may cover those liabilities the General Partner
reasonably believes may be incurred by an Indemnified Party in
connection with the operation of the business of the Partner-
ship. The right to procure such insurance on behalf of the
Indemnified Parties shall in no way mitigate or otherwise
<PAGE>
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affect the right of any such Indemnified Party to indemnifica-
tion pursuant to subsection 7.07(a) hereof.
(c) The provisions of this Section 7.07 are for the
benefit of the Indemnified Parties, their heirs, successors,
assigns and administrators and shall not be deemed to create
any rights in or benefit to any other Person.
7.08 Books and Records at Principal Place of Busi-
ness. The General Partner shall cause the Partnership to main-
tain at its principal place of business full and accurate books
of the Partnership showing all receipts and expenditures,
assets and liabilities, profits and losses, and all other
records necessary for recording the Partnership's business and
affairs, including, without limitation, the following:
(a) a current list in alphabetical order of the full
name and last known business street address of each
Partner;
(b) a copy of the Certificate and all amendments
thereto, together with (i) receipts of filing thereof, and
(ii) executed copies of any powers of attorney pursuant to
which any amendment has been executed;
(c) copies of the Partnership's federal, state and
local income tax returns and reports, if any, for the
three most recent years; and
(d) copies of the Partnership's financial state-
ments, if any, for the three most recent years.
Such books shall be maintained separate from those of any other
Person. Each Partner or its authorized representative shall
have, upon reasonable advance notice in writing, at reasonable
times and at such Partner's expense, the right to review and
make copies of such books and records and to receive true and
complete information regarding Partnership matters to the
extent required (and subject to the limitations) under Delaware
law; provided, however, that the General Partner may impose
reasonable limitations on the access of a Limited Partner to
such books and records to protect against disclosure of propri-
etary or competitively sensitive information or to comply with
the confidentiality restrictions imposed in any agreement to
which the Partnership is a party. The Partnership shall not
impose any service, administrative or other charge upon any
Partner exercising its rights under this Section 7.08 except
<PAGE>
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for payment of the Partnership's reasonable costs of photocopy-
ing and postage.
7.09 Annual Audit and Accounting. The books and
records of the Partnership shall be kept on the accrual basis
of accounting in accordance with generally accepted accounting
principles ("GAAP"). The Partnership's accounting period shall
be the calendar year. The accounts of the Partnership shall be
audited annually by a nationally recognized accounting firm of
independent public accounts selected by the General Partner
(the "Independent Accountants"). JMB Partner and its designees
shall be entitled to confer with the Partnership's Independent
Accountants with respect to any and all tax matters that may
affect JMB Partner, including, without limitation, allocations
of indebtedness as contemplated in Section 6.02 and subsection
7.11(e).
7.10 Reports; Notices.
(a) The books of account shall be closed promptly
after the close of each calendar year, and the General Partner
shall prepare and send to each Partner:
(i) Within one hundred fifty (150) days after the
end of the fiscal year, each Partner shall be provided
with an Internal Revenue Service Schedule K-1 with respect
to its distributive share of income, gains, deductions,
losses and credits for income tax reporting purposes for
each Partnership year, together with any other information
concerning the Partnership reasonably necessary for the
preparation of a Partner's income tax return(s);
(ii) Within ninety (90) days after the end of each of
the first three (3) fiscal quarters, as of the last day of
the fiscal quarter, a report containing unaudited finan-
cial statements of the Partnership and such other informa-
tion as may be legally required or determined to be appro-
priate by the General Partner; and
(iii) Within one hundred twenty (120) days after the
end of the fiscal year, as of the close of the fiscal
year, an annual report containing audited financial state-
ments of the Partnership, presented in accordance with
GAAP and certified by the Independent Accountants.
(b) The General Partner shall give prompt written
notice to each other Partner upon (i) the effectiveness of any
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amendment to this agreement, (ii) the General Partner's obtain-
ing knowledge of any material default by the Partnership or a
Person Controlled by the Partnership in respect of any financ-
ing secured by any material real property of the Partnership or
any Person Controlled by the Partnership, (iii) the General
Partner's obtaining knowledge of any facts or circumstances
that constitute a dissolution of the Partnership, (iv) any
recapitalization, merger or consolidation transaction to which
the Partnership becomes or is contemplated to become a party,
(v) the taking of any action at a meeting of the Partners or by
a written consent signed by less than all the Partners and (vi)
the General Partner's obtaining knowledge of any other event or
circumstance that, in the reasonable judgment of the General
Partner, would be of material importance to the Partners.
7.11 Tax Matters.
(a) The General Partner shall be the Tax Matters
Partner of the Partnership for federal income tax matters pur-
suant to Code Section 6231(a)(7)(A). The Tax Matters Partner
shall cause to be prepared all federal, state and local income
tax returns required of the Partnership at the Partnership's
expense. The Tax Matters Partner shall represent the Partner-
ship (at the expense of the Partnership) in connection with all
examinations of the affairs of the Partnership by any federal,
state or local tax authorities, including, without limitation,
any resulting administrative and judicial proceedings, and may
expend funds of the Partnership for professional services and
costs associated therewith. The Partners shall, to the extent
reasonably requested by the General Partner, cooperate (in all
reasonable respects) with each other in connection with the
conduct of all proceedings pursuant to this Section 7.11(a).
(b) The Tax Matters Partner shall receive no compen-
sation for its services in such capacity. If the Tax Matters
Partner incurs any costs related to any tax audit, declaration
of any tax deficiency or any administrative proceeding or liti-
gation involving any Partnership tax matter, such amount shall
be an expense of the Partnership and the Tax Matters Partner
shall be entitled to full reimbursement therefor.
(c) Except as otherwise set forth in this agreement,
the Tax Matters Partner shall determine whether to make (and,
if necessary, revoke) any tax election available to the Part-
nership under the Code or any state tax law.
<PAGE>
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(d) In the event that Treasury Regulations are
adopted to replace or supplement, with an elective regime, the
existing Treasury Regulations for classifying certain business
organizations, the General Partner shall elect to be treated as
a partnership for federal income tax purposes and take such
other appropriate actions as shall be prescribed thereunder
consistent with such election.
(e) If requested by JMB, the Partnership shall cause
New 245 Park LP and/or its designee(s) to adopt the "remedial
allocation method" under Treasury Regulations section 1.704-3,
with respect to 245 Park Avenue. The Partnership shall not
permit any such remedial allocation to be revoked or withdrawn
so long as the Partnership continues to own the ultimate bene-
ficial ownership in 245 Park Avenue. If such remedial alloca-
tion method is adopted, the Partners intend that:
(i) JMB Partner's share of the Partnership's liabil-
ities secured by 245 Park Avenue will be approximately
$145,000,000 (assuming JMB's section 704(c) book/tax dif-
ference is $155,000,000 upon consummation of the Plan) and
will be subsequently adjusted only for those reductions
required under the remedial allocation method under Trea-
sury Regulations section 1.704-3. To the extent that such
book/tax difference is a different amount, JMB Partner's
share of the Partnership's liabilities will be adjusted as
provided under applicable Treasury Regulations.
(ii) In accordance with the remedial allocation
method under Treasury Regulations section 1.704-3, JMB
Partner's share of the Partnership's section 752 liabili-
ties shall be equal to the product of (A) the total amount
of the Partnership's section 752 liabilities described
under Treasury Regulation section 1.752-3(a)(3) and (B)
JMB Partner's Interest in the Partnership.
(iii) All of the liabilities described in clauses (i)
and (ii) will constitute and be reported as "qualified
nonrecourse financing" within the meaning of
section 465(b)(6) of the Code. Based on existing law and
regulations, in preparing any income tax return of the
Partnership, JMB Partner and New 245 Park LP, the Partner-
ship shall not include, and shall cause JMB Partner and
New 245 Park LP not to include, any attachment or any
statement that indicates that there is more than one
activity for purposes of section 465 of the Code.
<PAGE>
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7.12 Withholding of Certain Amounts.
(a) The General Partner may (in addition to amounts
that may be withheld pursuant to Section 9.11) withhold, in its
discretion, from any distribution of cash or property in kind
to any other Partner or its assignee, upon notice to such Part-
ner pursuant to this agreement, the following amounts:
(i) any amounts due from such Partner or assignee to
the Partnership or the General Partner under this agree-
ment; and
(ii) any amounts required (x) for the payment of any
taxes that the General Partner determines in good faith
must be withheld by the Partnership with respect to such
Partner or assignee or (y) to pay or reimburse the General
Partner for any advances made by the General Partner for
such purpose.
(b) Any amounts withheld pursuant to this
Section 7.12 shall be applied by the General Partner to dis-
charge the obligation in respect of which such amounts were
withheld. All amounts distributable to any Partner or assignee
that are withheld pursuant to this Section 7.12 shall be
treated as amounts distributed to such Partner or assignee. To
the extent that any amount paid over (or required to be paid
over) in satisfaction of any obligation described in clause (i)
or clause (ii) exceeds the amount, if any, actually withheld
from a distribution that otherwise would have been made to a
Partner or assignee, such excess shall be treated as an
interest-free advance to such Partner or assignee, secured by
such Partner's or assignee's Interest in the Partnership
("Withholding Advance"). Amounts treated as advanced to any
Partner or assignee pursuant to this Section 7.12 shall be
repaid by such Partner or assignee to the Partnership within
thirty (30) Business Days after the General Partner gives
notice to such Partner or assignee making demand therefor. If
any Partner or assignee of a Partner fails to pay a Withholding
Advance as provided in this subsection 7.12(b), the Partnership
(without limiting any other remedy that may be available to the
Partnership) shall collect any unpaid amounts from any Partner-
ship distributions to such Partner or assignee that otherwise
would be made to such Partner or assignee and/or permanently
adjust the Interest of such Partner or assignee accordingly.
Notwithstanding anything to the contrary set forth herein, in
the event of any failure by a Partner or assignee to perform
its obligations under this Section 7.12, in addition to all
<PAGE>
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other rights and remedies available hereunder or under appli-
cable law to the Partnership and the General Partner, the Gen-
eral Partner and the Partnership shall have all the rights and
remedies of a secured creditor under the Uniform Commercial
Code as in effect in the State of Delaware.
(c) If the General Partner determines that the Part-
nership would have insufficient funds (taking into account the
cash needs of its Controlled Affiliates) to make a Withholding
Advance, the General Partner shall be entitled to require the
Partner for which the withholding requirement applies to pay
the amount of such withholding requirement sufficiently in
advance of the payment date to permit the Partnership timely to
satisfy its withholding tax liability.
ARTICLE 8 - COMPENSATION
8.01 No Entitlement to Compensation. No Partner
acting on behalf of the Partnership shall be entitled to com-
pensation or remuneration from the Partnership except as may be
specifically provided in this agreement. The provisions of
this Section shall not limit any compensation or remuneration
that any Partner shall receive from any other Person with which
the Partnership may be an Affiliate or in which the Partnership
is a participant or partner.
8.02 Reimbursement. The Partnership shall reimburse
the General Partner for all reasonable and customary out-of-
pocket expenses incurred by it in managing or otherwise acting
on behalf of the Partnership. If the General Partner shall
determine to engage the services of a general manager or agent
or advisor to provide management or advisory or similar ser-
vices to the Partnership, the reasonable and customary fees and
expenses of such manager, agent or advisor shall be paid by the
Partnership.
ARTICLE 9 - TRANSFERS
9.01 Certain Transfers Void. No Partner may Trans-
fer all or any part of its Interest in the Partnership except
in accordance with the provisions of this Article 9. Any pur-
ported Transfer in violation of this Article 9 shall not bind
the remaining Partners, who may continue to treat the original
Partner as the owner of such Interest for all purposes.
<PAGE>
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9.02 Certain Prohibitions on Transfers. Except with
the prior written consent of all the Founding Limited Partners
(which may be withheld for any reason or no reason), no Found-
ing Limited Partner shall make or permit to occur any Transfer
of its Interest (other than (i) a Transfer required pursuant to
Section 5.05 hereof, (ii) a Transfer of any Unrestricted Units
that may be owned by it or (iii) a Transfer constituting, or
made in connection with (or in lieu of) the enforcement of, a
pledge or security interest) or enter into any contract there-
for during the period commencing on the date hereof and ending
on the third anniversary of the date hereof. Commencing after
the third anniversary of the date hereof, without the consent
of any other Partner, each Founding Partner may, at any time,
subject only to the provisions of Section 9.05, Section 9.08
and Section 9.09, Transfer to any Person all or any part of its
Interest; provided, however, that no assignee of a Founding
Partner (other than any assignee of Unrestricted Units acquired
in a transaction that complies with the provisions of Section
9.03) shall be admitted as a Partner of the Partnership except
in compliance with the provisions of Section 9.04. Without the
consent of any other Partner, each Partner that is the holder
of Unrestricted Units may, at any time, subject only to the
provisions of Section 9.05, Section 9.08 and Section 9.09,
Transfer to any Person all or any portion of such Unrestricted
Units.
9.03 Transfers by Certain Partners. Upon any
assignment or other direct Transfer by a Partner of Unre-
stricted Units that does not violate the provisions of
Section 9.05, Section 9.08 or Section 9.09, the transferee
thereof shall be admitted to the Partnership as a Partner upon
receipt of written notice of such Transfer by the General
Partner.
9.04 Approval of Partners.
(a) Other than as set forth in Section 9.03, no
assignee of a Partner's Interest (including, without limita-
tion, an assignee that is a non-United States person) shall be
admitted as a Partner without the consent of non-transferring
Partners owning more than 50% of all the Equity Interests and
more than 50% of any Additional Equity Interests, which consent
may be withheld in the sole and absolute discretion of each
non-transferring Partner. Pending such assignee's admission as
a substitute Partner of the Partnership, and upon receipt of
written notice by the General Partner of the Transfer, such
assignee shall be entitled to share in all allocations and
<PAGE>
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distributions of the Partnership (including, without limita-
tion, liquidating distributions) on the same basis as the Part-
ner from which such assignee obtained its Interest. Unless and
until such assignee is admitted as a substitute Partner, such
assignee shall not be entitled to exercise any other rights of
a Partner, including, without limitation, the right to vote (to
the extent such right was available to such assignee's prede-
cessor) on any matter submitted to the Partners for approval,
and such predecessor shall retain the right, if any, to vote
the Interest so Transferred.
(b) The restriction on substitution with respect to
all permitted assignees contained in this Section 9.04 shall be
of no further force or effect if Treasury Regulations are
adopted to replace or supplement, with an elective regime, the
existing Treasury Regulations for classifying certain business
organizations, any required elections are made thereunder and
the elimination of such restriction does not (in the reasonable
judgment of the General Partner) adversely affect the partner-
ship status of the Partnership from its inception.
9.05 Certain Prohibited Transfers.
(a) No Partner shall assign its Interest to any Per-
son that is not a "United States person" within the meaning of
section 7701(a)(30) of the Code, without the prior written con-
sent of the General Partner, which consent shall be granted if
(i) such Person can demonstrate, to the reasonable satisfaction
of the General Partner, its ability to satisfy its potential
liabilities for any withholding tax that may be imposed on its
pro rata share of the Partnership's income and (ii) the General
Partner determines that the withholding obligations to which
the Partnership reasonably may be expected to be subject as a
result of the ownership of such Interest by such assignee, when
taken together with such withholding obligations with respect
to all other Partnership interests held by non-United States
persons, would not have a material adverse effect on the abil-
ity of the Partnership and its Affiliates to satisfy their debt
service requirements and other contractual obligations and
operational requirements. Notwithstanding the foregoing, the
General Partner shall consent to the distribution by Coopers &
Lybrand OYDL of any Class A Units received by it to the Class
28 creditors of Olympia & York Developments Limited, pursuant
to the provisions of the Plan of Arrangement of Olympia & York
Developments Limited, et al. filed under the Companies' Credi-
tors Arrangement Act.
<PAGE>
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(b) At least ten (10) Business Days prior to the
date scheduled for a Transfer of any Interest in the Partner-
ship (including, without limitation, a Transfer by any assignee
that has not been admitted as a substitute Partner), the trans-
feror shall provide to the General Partner written notice of
the proposed Transfer. No Transfer of any Class A Unit or
Additional Equity Interest shall be made without the approval
of the General Partner if the Class A Unit or Additional Equity
Interest sought to be Transferred, when added to the total of
all other Class A Units and/or Additional Equity Interests
Transferred (or approved for Transfer), would result in a "ter-
mination" of the Partnership under section 708 of the Code.
The General Partner shall be deemed to have granted approval to
the Transfer for purposes of this Section 9.05(b) unless it
notifies the transferor of its objection to such Transfer at
least four (4) Business Days prior to the date scheduled for
such Transfer, as set forth in such written notice. The Gen-
eral Partner shall give notice to all other Partners in the
event that sales or exchanges should be suspended for such rea-
son. Any sales or exchanges deferred by reason of any such
determination by the General Partner shall be made in chrono-
logical order to the extent practicable commencing on such date
as shall be determined by the General Partner. Notwithstanding
anything to the contrary contained in this agreement, each
Founding Limited Partner shall not, prior to the second anni-
versary of the date of this agreement, consent under the provi-
sions of subsection 9.04(a) to any Transfer that would cause
the provisions set forth in this subsection 9.05(b) to delay a
Transfer of any Unrestricted Units.
(c) No Transfer by the General Partner shall be per-
mitted that would cause the General Partner to have less than a
1% interest in the capital of, and in all items of income,
gain, loss, deduction and credit of, the Partnership.
9.06 Successor General Partner; Removal of General
Partner.
(a) Upon the occurrence of an event described in
subsection 10.01(c), the General Partner shall (i) remain lia-
ble for all obligations and liabilities (other than Partnership
liabilities payable solely from Partnership assets) incurred by
it as General Partner before the effective date of such event
and (ii) pay all costs associated with the admission of its
successor General Partner. The General Partner shall be free
of and held harmless by the Partnership against any obligation
<PAGE>
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or liability incurred on account of the activities of the Part-
nership from and after the effective date of such event.
(b) A successor to all of the General Partner's
Interest that is proposed to be admitted to the Partnership as
a successor General Partner shall be admitted as the General
Partner, effective upon the assignment of such Interest to such
proposed successor, upon the approval of Partners (the
"Required Partners") constituting (i) all then existing Found-
ing Limited Partners and (ii) the holders of not less than 75%
of all the Equity Interests and 75% of all Additional Equity
Interests. Any such assignee shall carry on the business of
the Partnership without dissolution. Prior to its admission to
the Partnership, such assignee shall have provided to the Part-
ners such information as to the identity of its Affiliates and
its finances and business and those of its Affiliates as may be
reasonably requested in writing by any Partner. In connection
with the admission of such assignee to the Partnership, such
assignee shall agree in writing to be bound by all the terms
and provisions of this agreement.
(c) The General Partner may be removed and a
replacement General Partner admitted to the Partnership upon
the affirmative vote of the Required Partners; provided, how-
ever, that the rights of the Partners under this subsection (c)
to remove the General Partner and elect a replacement therefor
shall not be effective unless and until (A) the Partnership has
received an opinion of counsel, which counsel is satisfactory
to a majority in interest of the Limited Partners, as to the
legality of such action, and (B) either (x) the Partnership has
received an opinion of counsel, which counsel is satisfactory
to the Required Partners, that such action may be effected
without subjecting the Partners to liability as general
partners under the Act or under the laws of such other
jurisdictions in which the Partnership is formed, re-formed,
re-organized or otherwise qualified, or (y) a Delaware court
having original jurisdiction in the premises has entered a
judgment which has become final to the foregoing effect as to
the Act and an opinion of counsel as provided above has been
obtained as to the laws of such jurisdictions, other than Dela-
ware, in which the Partnership is formed, re-formed,
re-organized or otherwise qualified.
9.07 Successor Partners. In the event of a Bank-
ruptcy of a Limited Partner the bankruptcy trustee or adminis-
trator of such Limited Partner shall succeed to its Interest.
If an individual Limited Limited Partner dies, his executor or
<PAGE>
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administrator shall succeed to his Interest. If an individual
Limited Partner shall be adjudicated insane, incompetent or
incapacitated, his committee, guardian or conservator shall
succeed to his Interest.
9.08 Tag-Along Provisions.
(a) If at any time any Partner alone or together
with any other Partners (such Partner or Partners, "Tag-Along
Sellers") propose to enter into an agreement (or substantially
contemporaneous agreements, whether or not with the same or
affiliated parties) to sell or otherwise dispose of for value
to any Person or Group (as such term is defined in Sections
13(d)(3) and 14(d)(2) of the Securities Exchange Act, as
amended and in effect as of the date hereof) other than a
Wholly-Owned Affiliate of the Tag-Along Sellers (a "Tag-Along
Purchaser") a Majority Interest in one or more related transac-
tions (such sale or other disposition for value being referred
to as a "Majority Tag-Along Sale"), then such Tag-Along Sellers
shall afford each other Partner that owns any Unrestricted
Units (each individually a "Tag-Along Partner" and, collec-
tively, the "Tag-Along Partners") the opportunity to partici-
pate proportionately with respect to its Unrestricted Units in
such Majority Tag-Along Sale in accordance with this Section
9.08. If at any time any Tag-Along Sellers propose to enter
into an agreement (or substantially contemporaneous agreements,
whether or not with the same or affiliated parties) to sell or
otherwise dispose of for value to any Tag-Along Purchaser a
Qualifying Interest in one or more related transactions (such
sale or other disposition for value being referred to as a
"Qualifying Tag-Along Sale", and, collectively with any Major-
ity Tag-Along Sale, each individually, a "Tag-Along Sale"),
then such Tag-Along Sellers shall afford each Tag-Along Partner
holding as of the close of business on the day immediately
prior to the Tag-Along Notice Date (as herein defined) Unre-
stricted Units representing at least 4% of the total Equity
Interests then outstanding the opportunity to participate pro-
portionately in such Qualifying Tag-Along Sale in accordance
with this Section 9.08; provided, however, that if any Partner
shall have at any time exercised its tag-along rights pursuant
to this Section 9.08, such exercise(s) resulting in the sale or
disposition of a portion, but not all, of such Partner's Unre-
stricted Units, such Partner shall thereafter continue to be
entitled to exercise its tag-along rights with respect to its
remaining Unrestricted Units in connection with any subsequent
Qualifying Tag-Along Sale notwithstanding that, as of the close
of business on the day immediately prior to the Tag-Along
<PAGE>
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Notice Date relating to such subsequent Qualifying Tag-Along
Sale, such Partner no longer owns Unrestricted Units represent-
ing at least 4% of the total Equity Interests then outstanding;
and provided, further, that in negotiating a Tag-Along Sale,
the Tag-Along Sellers shall provide that no Tag-Along Partner
shall be required to make any representation, covenant or war-
ranty in connection with the Tag-Along Sale, other than repre-
sentations and warranties as to its valid existence and its
ownership and authority to sell, free of liens, claims or
encumbrances, the Unrestricted Units proposed to be sold by it.
(b) The relevant Tag-Along Sellers shall provide
each Tag-Along Partner entitled to participate in such Tag-
Along Sale pursuant to Section 9.08(a) hereof and the General
Limited Partner with written notice (the "Tag-Along Sale
Notice") not more than sixty (60) days nor less than twenty
(20) days prior to (the date of such Tag-Along Sale Notice
being the "Tag-Along Notice Date") the proposed date of the
Tag-Along Sale (the "Tag-Along Sale Date"). Each Tag-Along
Sale Notice shall be accompanied by a copy of any written
agreement relating to the Tag-Along Sale (redacted to the
extent necessary to comply with any applicable confidentiality
restriction but not so as to eliminate any material information
otherwise required to be provided below) and shall set forth:
(i) the name and address of each proposed Tag-Along Purchaser
of Equity Interests in the Tag-Along Sale, (ii) the total per-
centage of Equity Interests proposed to be Transferred by such
Tag-Along Sellers (the "Original Sale Percentage"), (iii) the
proposed amount of consideration to be paid for such Equity
Interests, which consideration may only be paid in cash, and
the terms and conditions of payment offered by each proposed
Tag-Along Purchaser and (v) the Tag-Along Sale Date.
(c) Any Tag-Along Partner entitled to participate in
the relevant Tag-Along Sale pursuant to Section 9.08(a) hereof
wishing to participate in the Tag-Along Sale shall provide
written notice (the "Tag-Along Notice") to the relevant Tag-
Along Sellers no less than five (5) Business Days prior to the
Tag-Along Sale Date. The Tag-Along Notice shall set forth the
maximum percentage of Equity Interests that such Tag-Along
Partner elects to include in the Tag-Along Sale (such Limited
Partner's "Tag-Along Sale Percentage"). The Tag-Along Notice
given by any Tag-Along Partner shall constitute such Tag-Along
Partner's binding agreement to sell the Unrestricted Units
specified in the Tag-Along Notice on the terms and conditions
applicable to the Tag-Along Sale; provided, however, that in
the event that there is any material change in the terms and
<PAGE>
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conditions of such Tag-Along Sale applicable to the Tag-Along
Partner (including, without limitation, any decrease in the
purchase price that occurs other than pursuant to an adjustment
mechanism set forth in the agreement relating to the Tag-Along
Sale) after such Tag-Along Partner gives its Tag-Along Notice,
then, notwithstanding anything herein to the contrary, the Tag-
Along Partner shall have the right to withdraw from participa-
tion in the Tag-Along Sale with respect to all of its Unre-
stricted Units affected thereby. If the proposed Tag-Along
Purchaser does not agree to consummate the purchase for cash
consideration of all of the Unrestricted Units requested to be
included in the Tag-Along Sale by the Tag-Along Partners on the
same terms and conditions applicable to the proposed purchase
of the Original Sale Percentage of the Tag-Along Sellers, then
such Tag-Along Sellers shall not consummate the Tag-Along Sale
of any of its Equity Interests to such Tag-Along Purchaser,
unless the percentages of Equity Interests to be included in
such Tag-Along Sale by such Tag-Along Sellers and the partici-
pating Tag-Along Partners are reduced or limited pro rata, in
proportion to their respective Original Sale Percentages and
Tag-Along Sale Percentages, to the total percentage of Equity
Interests agreed to be purchased by such Tag-Along Purchaser
(which total percentage shall not in any case be less than the
Original Sale Percentage), and all other terms and conditions
of the Tag-Along Sale are the same for such Tag-Along Sellers
and the Tag-Along Partners (except as otherwise provided in the
proviso to subsection 9.08(a)).
If a Tag-Along Notice from any Tag-Along Partner is
not received by such Tag-Along Sellers prior to the five (5)
Business Day period specified above, such Tag-Along Sellers
shall have the right to consummate the Tag-Along Sale without
the participation of such Tag-Along Partner, but only on terms
and conditions which are no more favorable in any material
respect to such Tag-Along Sellers (and in any event, at no
greater a purchase price, except as the purchase price may be
adjusted pursuant to the agreement relating to the relevant
Tag-Along Sale) than as stated in the Tag-Along Sale Notice and
only if such Tag-Along Sale is consummated on a date within
sixty (60) days of the Tag-Along Sale Date. If such Tag-Along
Sale is not consummated within such sixty (60) day period, the
Equity Interests that were to be subject to such Tag-Along Sale
thereafter shall continue to be subject to all of the restric-
tions contained in this Section 9.08.
(d) On the Tag-Along Sale Date, each Tag-Along Part-
ner shall deliver such documentation, certificates or other
<PAGE>
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instruments with respect to the Unrestricted Units to be sold
by it in connection with the Tag-Along Sale as reasonably
required for the Transfer of such Unrestricted Units to the
relevant Tag-Along Purchaser, against delivery of the purchase
price for such Unrestricted Units.
(e) The percentages of Unrestricted Units to be sold
by each Limited Partner in a Tag-Along Sale under this Section
9.08 shall be subject to reduction on a pro rata basis to the
extent necessary to permit the Partnership to perform its obli-
gations under the Convertible Note Documents and to enable each
holder of a Convertible Note to obtain, on a ratable basis
(based on the number of Class A Units into which such holder's
Convertible Note is convertible) with the Limited Partners
entitled to participate in any sale transaction subject to this
Section 9.08, the same tag-along rights that are available to
such Limited Partners holding Unrestricted Units under this
Section 9.08.
(f) The closing of any Transfer of any Unrestricted
Units pursuant to this Section 9.08 shall take place at the
offices of the Partnership (or at such other location as shall
reasonably be designated by the General Partner) concurrently
with the closing of any sale by the Tag-Along Sellers to the
Tag-Along Purchaser.
9.09 Transfers to Comply with Laws. Notwithstanding
any contrary provision herein, no Limited Partner may Transfer
or offer to Transfer any Interest (or solicit any offers to
Transfer any Interest), and no Transfer, offer to Transfer or
solicitation of offers to Transfer an Interest permitted here-
under shall be permitted, except in compliance with the Securi-
ties Act of 1933, as amended, and rules and regulations promul-
gated thereunder and in compliance with any applicable state
securities laws and rules and regulations promulgated thereun-
der.
9.10 Assumption by Transferee. The Transfer of an
Interest pursuant to this Article 9 to a Person that is not a
Partner and the admission of such Person as a Partner of the
Partnership under Section 9.04 shall be conditioned on such
Person executing documents reasonably required by the General
Partner for such Person to assume the obligations, if any, of
the Selling Partner hereunder.
9.11 Remedies for Impermissible Transfer. Without
limiting any other remedies available to the Partnership or any
<PAGE>
-38-
of the other Partners, upon any breach by a Partner of its
obligations under this Article 9, the General Partner may, and,
upon written demand of Partners owning Equity Interests aggre-
gating at least 20% of all the Equity Interests in the Partner-
ship, shall, so long as any breach by such Limited Partner of
its obligations under such Article shall be continuing, with-
hold distributions of Available Funds to such Partner.
ARTICLE 10 - DISSOLUTION AND TERMINATION
10.01 Events of Dissolution. The Partnership shall
continue until December 31, 2095 unless sooner dissolved by:
(a) the affirmative vote of Partners constituting
(i) all the then existing Founding Limited Partners and
(ii) the holders of not less than two-thirds of all the
Equity Interests and not less than two-thirds of all Addi-
tional Equity Interests;
(b) any event which makes it unlawful for the busi-
ness of the Partnership to be carried on by the Partners;
(c) the death, retirement, resignation, expulsion,
Bankruptcy, liquidation or dissolution of the General
Partner or the occurrence of any other event that termi-
nates the continued membership of the General Partner in
the Partnership; provided, however, that the General Part-
ner shall not withdraw, retire or resign from the Partner-
ship unless a successor general partner shall have been,
or contemporaneously is being, admitted to the Partnership
in accordance with Section 10.02 of this agreement;
(d) the entry of a decree of judicial dissolution of
the Partnership under the Act; or
(e) the sale, exchange or other disposition of all
or substantially all of the Partnership's assets.
10.02 Continuance of the Partnership. Notwithstand-
ing the foregoing provisions of Section 10.01, upon the occur-
rence of an event described in subsection 10.01(c) hereof, the
remaining Partners shall have the right to continue the busi-
ness of the Partnership. Such right may be exercised only by
the affirmative vote of Partners constituting (i) all the then
existing Founding Limited Partners and (ii) the holders of not
less than two-thirds of all the Equity Interests and not less
<PAGE>
-39-
than two-thirds of all Additional Equity Interests, within 90
days after the occurrence of an event described in subsection
10.01(c) hereof, to continue the business of the Partnership
and the selection of a successor General Partner under the
terms of Section 9.06. If not so exercised, the right of the
Partners to continue the business of the Partnership shall
expire and the Partnership's affairs shall be wound up as pro-
vided in Section 10.03.
10.03 Liquidation of Partnership Assets.
(a) Subject to the provisions of subsection
10.03(e), in the event of dissolution pursuant to Section
10.01, the Partnership shall continue solely for purposes of
winding up the affairs of, achieving a final termination of,
and satisfaction of the creditors of, the Partnership. The
General Partner (or, if there is no General Partner remaining,
any Person elected by the affirmative vote of Partners consti-
tuting (i) all the then existing Founding Limited Partners and
(ii) the holders of not less than two-thirds of all the Equity
Interests and not less than two-thirds of all Additional Equity
Interests (the "Liquidator")) shall be responsible for over-
sight of the winding up and dissolution of the Partnership.
The Liquidator shall obtain a full accounting of the assets and
liabilities of the Partnership and such Partnership assets
shall be liquidated as promptly as the Liquidator is able to do
so without any undue loss in value, with the proceeds therefrom
applied and distributed in the following order:
(1) First, to the discharge of Partnership debts and
liabilities to creditors other than Limited
Partners;
(2) Second, to the discharge of Partnership debts
and liabilities to the Partners;
(3) The balance, if any, to the Partners in propor-
tion to their Equity Interests.
(b) In accordance with subsection 10.03(a), the
Liquidator shall proceed without any unnecessary delay to sell
and otherwise liquidate the Partnership assets; provided, how-
ever, that if the Liquidator shall determine that an immediate
sale of part or all of the Partnership assets would cause undue
loss to the Partners, the Liquidator may defer the liquidation
except (i) to the extent provided by the Act or (ii) as may be
<PAGE>
-40-
necessary to satisfy the debts and liabilities of the Partner-
ship to Persons other than the Partners.
(c) If, in the sole and absolute discretion of the
Liquidator, there are Partnership assets that the Liquidator
will not be able to liquidate, or if the liquidation of such
assets would result in undue loss to the Partners, the Liquida-
tor may distribute such Partnership assets to the Partners
in-kind, in lieu of cash, as tenants-in-common (each having an
interest therein proportionate to its Equity Interest (as
adjusted to reflect the terms of any Additional Equity Inter-
ests owned by such Partner)) in accordance with the provisions
of subsection 10.03(a). The foregoing notwithstanding, such
in-kind distributions shall only be made if in the Liquidator's
good faith judgment that is in the best interest of the
Partners.
(d) Upon the complete liquidation and distribution
of the Partnership assets, the Partners shall cease to be Part-
ners of the Partnership, and the Liquidator shall execute,
acknowledge and cause to be filed all certificates and notices
required by law to terminate the Partnership. Upon the disso-
lution of the Partnership pursuant to Section 10.01, the Liqui-
dator shall cause to be prepared, and shall furnish to each of
the Partners, a statement setting forth the assets and liabili-
ties of the Partnership. Promptly following the complete
liquidation and distribution of the Partnership assets, the
Liquidator shall furnish to each Partner a statement showing
the manner in which the Partnership assets were liquidated and
distributed.
10.04 Time for Winding-Up. Anything in this
Article 10 notwithstanding, a reasonable time shall be allowed
for the orderly winding-up of the business and affairs of the
Partnership and the liquidation of the Partnership assets in
order to minimize any potential for losses as a result of such
process. During the period of winding-up, this agreement shall
remain in full force and effect and shall govern the rights and
relationships of the Partners inter se.
ARTICLE 11 - GENERAL PROVISIONS
11.01 Entire Agreement; Amendments and Waivers.
(a) This agreement contains the entire agreement
among the parties and supersedes all prior written or oral
<PAGE>
-41-
agreements among them respecting the subject matter hereof.
Without limiting the generality of the immediately preceding
sentence, in the event of any inconsistency between the Plan
and this agreement, the provisions of this agreement shall
govern.
(b) Except for amendments authorized under subsec-
tion 11.01(c), this agreement may not be amended without the
approval in writing of Partners constituting (i) all then
existing Founding Limited Partners and (ii) the holders of not
less than two-thirds of all the Equity Interests and not less
than two-thirds of all Additional Equity Interests; provided,
however, that, without the written consent of each Partner
affected thereby, no amendment hereto may have the effect of
(i) converting a Limited Partner's Interest into a general
partner interest, (ii) imposing any personal liability on any
Limited Partner, (iii) altering the Equity Interest of any
Partner (other than pursuant to subsection 7.12(c) or in con-
nection with the issuance of Additional Equity Interests pursu-
ant to subsection 4.02(a)), (iv) impairing any Partner's rights
under Section 9.08, (v) amending Article 6 or the definition of
any term used in Article 6, (vi) amending Section 9.03 or
otherwise imposing (except as may hereafter be required by vir-
tue of any change in applicable law) any additional restric-
tions on the Transfer of any Unrestricted Units, (vii) amending
this subsection 11.01(b) or subsection 11.01(c) or the defini-
tion of any term used in this subsection 11.01(b) or subsection
11.01(c) or (viii) amending subsection 11.09(b) or the defini-
tion of any term used in such subsection. In addition, amend-
ments (A) to Article 5, (B) that provide for additional excul-
pations or greater rights of indemnification of the General
Partner, (C) to the definition of Unit Value, (D) to Sections
7.07 through 7.10, (E) to subsection 11.09(b) or the proviso to
Section 7.05(b) or (F) of any terms defined in such articles,
sections or provisions shall require the approval of holders of
not less than a majority of the Equity Interests and a majority
of all Additional Equity Interests, in each case not held,
directly or indirectly, by the General Partner or by any
Related Person of the General Partner.
(c) In addition to any amendments otherwise autho-
rized herein, amendments may be made to this agreement from
time to time by the General Partner, without the consent of any
of the Limited Partners, (i) to add to the representations,
duties or obligations of the General Partner or surrender any
right or power granted to the General Partner herein, for the
benefit of the Limited Partners, (ii) to cure any ambiguity, to
<PAGE>
-42-
correct or supplement any provision herein that may be incon-
sistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under
this agreement that will not be inconsistent with the provi-
sions of this agreement, (iii) to reflect the conversion to
Class A Units of any Class B Units, (iv) to reflect the cancel-
lation of any Class B Units as contemplated in Section 4.03,
(v) to amend Schedule I hereto to reflect the addition or sub-
stitution of Partners, (vi) to adjust the Equity Interest of a
Partner pursuant to subsection 7.12(c), (vii) to admit any
Additional General Partner and provide for rights and obliga-
tions of such Additional General Partner in accordance with the
provisions of subsection 4.02(c) or to convert the Interest of
any Additional General Partner into a limited partnership
Interest pursuant to the provisions of subsection 4.02(d) or
(viii) to document the issuance of Class A Units or Additional
Equity Interests pursuant to Section 4.02 or any exercise of
the Conversion Right or any similar conversion right; provided,
however, that no amendment made pursuant to this subsection
11.01(c) shall (x) have any of the effects referred in the pro-
viso to the first sentence of subsection 11.01(b) or (y) effect
any amendment referred to in the last sentence of subsection
11.01(b).
(d) No Partner may be charged with any waiver of its
rights hereunder unless such waiver shall be in writing signed
by such Partner.
(e) This agreement shall be binding upon and shall
inure to the benefit of the parties and their respective per-
sonal representatives, successors and assigns.
11.02 Appointment of Attorney or Agent. (a) Each
Partner by its execution hereof or any assumption instrument
contemplated in Section 9.10 does irrevocably constitute and
appoint the General Partner (which term shall include the
Liquidator, in the event of a liquidation, for purposes of this
Section 11.02) as attorney-in-fact with full power of substitu-
tion, as its true and lawful attorney, in its name, place and
stead to make, execute, acknowledge, swear to and file in the
appropriate public offices (i) the Certificate, (ii) all amend-
ments to this agreement or to the Certificate required by law
or authorized or required by the provisions of this agreement
or the Certificate, (iii) all certificates and other instru-
ments necessary to qualify or continue the Partnership as a
limited partnership in the states or countries where the Part-
nership is doing or intends to do business, (iv) any other
<PAGE>
-43-
instrument which may be required to be filed by the Partnership
under the laws of any state or governmental agency, or which
the General Partner deems advisable to file, and (v) all con-
veyances and other instruments necessary to effect the continu-
ation of the Partnership or the admission, withdrawal or sub-
stitution of any Partner pursuant to Article 9 or to effect the
Partnership's dissolution and termination pursuant to
Article 10.
(b) The powers of attorney granted herein shall be
deemed to be coupled with an interest and shall be irrevocable
and survive the dissolution, death or incompetency of the Part-
ners. In the event of any conflict between this agreement and
any instruments filed by such attorney pursuant to the power of
attorney granted in this Section 11.02, this agreement shall
control.
11.03 Construction. The singular shall be deemed to
include the plural and vice versa. The section headings and
paragraph titles are for convenience of reference only and
shall have no significance in the interpretation of this
agreement.
11.04 Governing Law. This agreement is governed by
and shall be construed in accordance with the law of the State
of Delaware.
11.05 Further Assurances. The parties agree to exe-
cute and deliver all such documents, provide all such informa-
tion and take or refrain from taking any action as may be nec-
essary or desirable to achieve the purposes of this agreement
and the Partnership.
11.06 Titles and Captions. All articles or section
titles or captions in this agreement are solely for convenience
and shall not be deemed to be part of this agreement or other-
wise define, limit or extend the scope or intent of any provi-
sion hereof.
11.07 Binding Agreement. This agreement shall be
binding upon the parties hereto, their heirs, executors, per-
sonal representatives, successors and assigns.
11.08 Waiver of Partition; Appraisal Rights.
(a) Each of the parties hereto irrevocably waives
during the term of the Partnership any right that it may have
<PAGE>
-44-
to maintain any action for partition with respect to any prop-
erty of the Partnership.
(b) The Limited Partners shall each have, in respect
of the Class A Units only, the appraisal rights contemplated in
Section 17-212 of the Act to the same extent as would be avail-
able to a shareholder of a corporation organized under the laws
of the State of Delaware.
11.09 Counterparts and Effectiveness. This agree-
ment may be executed in several counterparts, which shall be
treated as originals for all purposes, and all so executed
shall constitute one agreement, binding on all of the parties
hereto, notwithstanding that all the parties are not signatory
to the original or the same counterpart. Any such counterpart
shall be admissible into evidence as an original hereof against
each Person who executed it. The execution of this agreement
and delivery thereof by facsimile shall be sufficient for all
purposes, and shall be binding upon any party who so executes.
11.10 Waiver of Trial by Jury. Each Partner, by its
execution and delivery of this agreement, waives any and all
rights it may have to trial by jury of any matter, cause, dis-
pute or other claim arising under this agreement or otherwise
relating to the Partnership.
<PAGE>
-45-
IN WITNESS WHEREOF, each of the undersigned has
signed this agreement as set forth below to be effective as of
the date first above written.
WORLD FINANCIAL PROPERTIES GP CORP.,
as General Partner
By:
---------------------------------
Name:
Title:
BATTERY PARK HOLDINGS INC.,
as a Limited Partner
By:
---------------------------------
Name:
Title:
[THE CANADIAN IMPERIAL BANK
OF COMMERCE OR ITS SUB], as a
Limited Partner
By:
---------------------------------
Name:
Title:
[DRAGON HOLDINGS LIMITED SUB],
as a Limited Partner
By:
---------------------------------
Name:
Title:
<PAGE>
-46-
[CITIBANK, N.A. SUB], as a
Limited Partner
By:
---------------------------------
Name:
Title:
[OLYMPIA & YORK 245 PARK HOLDING
CO. L.P.], as a Limited Partner
By:
---------------------------------
Name:
Title:
WORLD FINANCIAL PROPERTIES GP CORP.,
as authorized signatory for the
Limited Partners identified on
Schedule I annexed hereto
By:
---------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
Partners
Partner
_______ _________ _________
Class A Class B-1 Class B-2
General Partner Units Units Units
World Financial Properties GP Corp.
Limited Partners
BATTERY PARK HOLDINGS
INC.
----- ----- -----
[CANADIAN IMPERIAL BANK
OF COMMERCE SUB]
----- ----- -----
[DRAGON HOLDINGS
LIMITED SUB]
----- ----- -----
[CITIBANK, N.A. SUB]
----- ----- -----
[OLYMPIA & YORK 245 PARK
HOLDING COMPANY L.P.]
----- ----- -----
[UNSECURED CREDITOR]
----- ----- -----
[UNSECURED CREDITOR]
----- ----- -----
[UNSECURED CREDITOR]
----- ----- -----
[UNSECURED CREDITOR]
----- ----- -----
[UNSECURED CREDITOR]
----- ----- -----
[UNSECURED CREDITOR] _____ _____ _____
----- ----- -----
<PAGE>
Exhibit T3A.3
CERTIFICATE OF INCORPORATION
OF
WORLD FINANCIAL PROPERTIES GP CORP.
________
ARTICLE I
NAME
The name of the Corporation is:
WORLD FINANCIAL PROPERTIES GP CORP.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The registered office of the Corporation in the State
of Delaware is located at 1209 Orange Street in the City of
Wilmington, County of New Castle. The name and address of the
Corporation's registered agent at such address is The Corpora-
tion Trust Company.
ARTICLE III
CORPORATE PURPOSES AND POWERS
The purpose of the Corporation is to engage in any
capacity, whether by itself or by or through any other person,
<PAGE>
-2-
organization, association, partnership, corporation or other
entity in which the Corporation may have an interest, in any
lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware, and
the Corporation shall be authorized to exercise and enjoy all
powers, rights and privileges conferred upon corporations by
the laws of the State of Delaware as in force from time to time
including, without limitation, all powers necessary or appro-
priate to carry out all those acts and activities in which it
may lawfully engage.
ARTICLE IV
CAPITAL STOCK
The total number of shares of capital stock which the
Corporation shall have authority to issue, from time to time,
is 100 shares of Common Stock, par value $.01 per share (the
"Common Stock").
Each share of Common Stock shall be entitled to one
vote. So long as any Common Stock is outstanding, and so long
as not otherwise prohibited elsewhere herein, each share of
Common Stock shall entitle the holder thereof to vote on all
matters to be voted upon at all meetings of the stockholders of
the Corporation.
<PAGE>
-3-
ARTICLE V
DIVIDENDS
The Corporation shall pay, when, as and if declared,
so long as permitted under the General Corporation Law of the
State of Delaware and out of funds legally available therefor,
dividends on its Common Stock, at such times as determined by
the Board of Directors, from time to time.
A director shall be fully protected in relying in
good faith upon the books of account or other records of the
Corporation or statements prepared by any of its officers or by
independent public accountants or by an appraiser selected with
reasonable care by the Board or any committee thereof as to the
value and amount of the assets, liabilities, net profits, Com-
mon Stock and surplus of the Corporation, or any other facts
pertinent to the existence and amount of surplus or other funds
from which dividends might properly be declared and paid, or
with which the Corporation's capital stock might properly be
purchased or redeemed.
ARTICLE VI
CORPORATE EXISTENCE
The Corporation is to have perpetual existence.
<PAGE>
-4-
ARTICLE VII
BOARD OF DIRECTORS
(a) Members of the Board; Appointment.
(i) The initial directors shall be as set forth in
the Statement of the Sole Incorporator. Thereafter mem-
bers of the board of directors (the "Board") shall be des-
ignated by the holders of a majority of all outstanding
shares of Common Stock. At any time and from time to
time, subsequent to the initial appointment of directors
by the sole incorporator, the number of directors which
shall constitute the whole Board may be increased to not
more than ten or decreased to not less than one. Any
director may be removed either with or without cause by
the holders of a majority of all outstanding shares of
Common Stock.
(ii) Any change in the number of directorships must
be authorized by a majority of the whole Board, as consti-
tuted immediately prior to such change.
(b) Power and Authorization of the Board.
In furtherance and not in limitation of the powers
conferred by statute, the Board is expressly authorized:
<PAGE>
-5-
(i) To make, alter, amend or repeal the By-laws,
except as otherwise expressly provided in any By-law made
by the holders of the capital stock of the Corporation
entitled to vote thereon. Any By-law may be altered,
amended or repealed by the holders of the capital stock of
the Corporation entitled to vote thereon at any annual
meeting or at any special meeting called for that purpose.
(ii) To determine the use and disposition of any sur-
plus and net profits of the Corporation, including the
determination of the amount of working capital required,
to set apart out of any of the funds of the Corporation,
whether or not available for dividends, a reserve or
reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
(iii) To have the general management and control of
all the property of the Corporation and exercise all the
powers of the Corporation, except such as may be expressly
by statute, by this Certificate of Incorporation or by the
By-laws conferred upon or reserved to the stockholders.
Without limiting the generality of the foregoing powers,
the Board, without consent or other action of the stock-
holders of the Corporation, may authorize the Corporation
<PAGE>
-6-
to purchase, acquire, hold, lease, mortgage, pledge, sell
or convey such property, real and personal, as they may,
from time to time, determine, and in payment for any prop-
erty or for money to issue or cause to be issued, in any
manner permitted by law, stock of the Corporation, or
bonds, debentures, notes or other obligations thereof,
secured or unsecured.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
(a) A director of the Corporation shall not be per-
sonally liable to the Corporation or its stockholders for mone-
tary damages for breach of fiduciary duty as a director, except
for liability
(i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of
law,
(iii) under Section 174 of the Delaware General Corpo-
ration Law, which provision, among other things, makes
<PAGE>
-7-
directors personally liable for unlawful dividends or
unlawful stock repurchases or redemptions and expressly
sets forth a negligence standard with respect to such lia-
bility, or
(iv) for any transaction from which the director
derived an improper personal benefit.
If the Delaware General Corporation Law is amended after
approval by the stockholders of this paragraph (a) of
Article VIII to authorize corporate action further eliminating
or limiting the personal liability of directors, then the lia-
bility of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
(b) Any repeal or modification of paragraph (a) of
this Article VIII by the stockholders of the Corporation shall
not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or
modification.
(c) (1) Each person who was or is made a party or is
threatened to be made a party or is involved in any action,
suit or proceeding, whether civil, criminal, administrative,
<PAGE>
-8-
investigative or otherwise (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director, officer,
employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee
or agent of the Corporation, if the basis of any such action,
suit or proceeding is action in such capacity, shall be indem-
nified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law as
the same exists, or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification
rights than such law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss
(including penalties, fines, judgments, attorneys' fees,
amounts paid or to be paid in settlement and excise taxes or
penalties) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as
to a person who has ceased to be a director, officer or agent
and shall inure to the benefit of his or her heirs, executors
and administrators; provided, however, that the Corporation
shall indemnify any such person seeking indemnification in con-
nection with a proceeding (or part thereof) initiated by such
<PAGE>
-9-
person (other than pursuant to paragraph (c)(2) of this
Article VIII) only if such proceeding (or part thereof) was
authorized by the Board. The right to indemnification con-
ferred in this paragraph (c)(1) of Article VIII shall be a con-
tract right and shall include the right to be paid by the Cor-
poration the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that if
the Delaware General Corporation Law requires the payment of
such expenses incurred by a director or officer in his or her
capacity as a director or officer in advance of the final dis-
position of a proceeding, payment shall be made only upon
delivery to the Corporation of an undertaking by or on behalf
of such director or officer to repay all amounts so advanced if
it shall ultimately be determined that such director or officer
is not entitled to be indemnified under this paragraph (c)(1)
of Article VIII or otherwise. Such expenses incurred by other
agents may be so paid upon such terms and conditions, if any,
as the Board deems appropriate.
(c) (2) If a claim which the Corporation is obli-
gated to pay under paragraph (c)(1) of this Article VIII is not
paid in full by the Corporation within 60 days after a written
claim has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to
<PAGE>
-10-
recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid
also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceed-
ing in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Cor-
poration) that the claimant has not met the standards of con-
duct which make it permissible under the Delaware General Cor-
poration Law for the Corporation to indemnify the claimant for
the amount claimed, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corpo-
ration (including its Board, independent legal counsel or its
stockholders) to have made a determination prior to the com-
mencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware Gen-
eral Corporation Law, nor an actual determination by the Corpo-
ration (including its Board, independent legal counsel or its
stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable
standard of conduct.
<PAGE>
-11-
(c) (3) The provisions of this Section (c) of
Article VIII shall cover claims, actions, suits and proceed-
ings, civil or criminal, whether now pending or hereafter com-
menced and shall be retroactive to cover acts or omissions or
alleged acts or omissions which heretofore have taken place.
If any part of this subsection (c) of Article VIII should be
found to be invalid or ineffective in any proceeding, the
validity and effect of the remaining provisions shall not be
affected.
(c) (4) The right to indemnification and the pay-
ment of expenses incurred in defending a proceeding in advance
of its final disposition conferred in this subsection (c) of
Article VIII shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute,
provision of this Certificate of Incorporation, By-law, agree-
ment, vote of stockholders or disinterested directors or
otherwise.
(c) (5) The Corporation may purchase and maintain
insurance, at its expense, to protect itself and any director,
officer or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against
any such expense, liability or loss, whether or not the
<PAGE>
-12-
Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware Gen-
eral Corporation Law.
ARTICLE IX
RESERVATION OF RIGHT TO AMEND
CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend, alter,
change or repeal any provisions contained in this Certificate
of Incorporation in the manner now or hereafter prescribed by
law, and all the provisions of this Certificate of Incorpora-
tion and all rights and powers conferred in this Certificate of
Incorporation on stockholders, directors and officers are sub-
ject to this reserved power.
ARTICLE X
The name and mailing address of the incorporator is
as follows:
NAME MAILING ADDRESS
Roger S. Chari Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
<PAGE>
-13-
THE UNDERSIGNED being the incorporator hereinbefore
named, for the purposes of forming a corporation pursuant to
the General Corporation Law of the State of Delaware, does make
this Certificate hereby declaring and certifying that the facts
herein stated are true; and accordingly has hereunto set his
hand this 1st day of October, 1996.
/s/ Roger S. Chari
-----------------------------
Roger S. Chari
Sole Incorporator of World
Financial Properties GP Corp.
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
WORLD FINANCIAL PROPERTIES GP CORP.
____________________
The undersigned, for the purposes of amending and
restating the Certificate of Incorporation of World Financial
Properties GP Corp., a Delaware corporation (the "Corpora-
tion"), does hereby certify that:
(1) The name of the Corporation is currently World Financial
Properties GP Corp.
(2) The date of filing of its original Certificate
of Incorporation with the Secretary of State of Delaware was
October 2, 1996.
(3) The Corporation has not received any payment for
any of its stock.
(4) This Amended and Restated Certificate of Incor-
poration was duly adopted by the Board of Directors as of
_______________, 1996, pursuant to Section 241 and Section 245
of the Delaware General Corporation Law.
<PAGE>
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(5) The Certificate of Incorporation of World Finan-
cial Properties GP Corp. is hereby amended and restated in its
entirety as follows:
ARTICLE I
NAME
The name of the Corporation is:
WORLD FINANCIAL PROPERTIES, INC.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The registered office of the Corporation in the State
of Delaware is located at 1209 Orange Street in the City of
Wilmington, County of New Castle. The name and address of the
Corporation's registered agent at such address is The Corpora-
tion Trust Company.
ARTICLE III
CORPORATE PURPOSES AND POWERS
The purpose of the Corporation is to engage in any
capacity, whether by itself or by or through any other person,
organization, association, partnership, corporation or other
entity in which the Corporation may have an interest, in any
<PAGE>
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lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware, and
the Corporation shall be authorized to exercise and enjoy all
powers, rights and privileges conferred upon corporations by
the laws of the State of Delaware as in force from time to time
including, without limitation, all powers necessary or appro-
priate to carry out all those acts and activities in which it
may lawfully engage.
ARTICLE IV
CAPITAL STOCK
The total number of shares of capital stock the Cor-
poration shall have authority to issue, from time to time, is
__________ shares of Common Stock, par value $.01 per share
(the "Common Stock").
Each share of Common Stock shall be entitled to one
vote. So long as any Common Stock is outstanding, and so long
as not otherwise prohibited elsewhere herein, each share of
Common Stock shall entitle the holder thereof to vote on all
matters to be voted upon at all meetings of the stockholders of
the Corporation.
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The affirmative vote of the holders of at least 90%
of the outstanding shares of Common Stock, in person or by
proxy, at a special or annual meeting of stockholders called
for the purpose, shall be necessary to (x) authorize the cre-
ation or issuance of, or an increase in the authorized number
of shares of any existing class of, capital stock ranking pari
passu with the Common Stock (either as to dividends or upon
voluntary or involuntary liquidation, dissolution or winding up
of the Corporation); (y) authorize any increase in the autho-
rized number of shares of, or issue any shares of Common Stock;
or (z) authorize, adopt or approve an amendment to this Cer-
tificate of Incorporation which would decrease the aggregate
number of authorized shares of Common Stock, increase or
decrease the par value of the shares of Common Stock, or alter
or change the powers, preferences or special rights of the
shares of Common Stock.
ARTICLE V
DIVIDENDS
The Corporation shall pay, when, as and if declared,
so long as permitted under the General Corporation Law of the
State of Delaware and out of funds legally available therefor,
<PAGE>
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dividends on its Common Stock, at such times as determined by
the Board of Directors, from time to time.
A director shall be fully protected in relying in
good faith upon the books of account or other records of the
Corporation or statements prepared by any of its officers or by
independent public accountants or by an appraiser selected with
reasonable care by the Board or any committee thereof as to the
value and amount of the assets, liabilities, net profits, Com-
mon Stock and surplus of the Corporation, or any other facts
pertinent to the existence and amount of surplus or other funds
from which dividends might properly be declared and paid, or
with which the Corporation's capital stock might properly be
purchased or redeemed.
ARTICLE VI
CORPORATE EXISTENCE
The Corporation is to have perpetual existence.
<PAGE>
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ARTICLE VII
BOARD OF DIRECTORS
(a) Members of the Board; Appointment.
(i) The initial directors shall be as set forth in
the Statement of the Sole Incorporator. Thereafter mem-
bers of the board of directors (the "Board") shall be des-
ignated (which designation need not be made in the form of
a written ballot) by the holders of a majority of all out-
standing shares of Common Stock present at a meeting where
a quorum is present. At any time and from time to time,
subsequent to the initial appointment of directors by the
sole incorporator, the number of directors that shall con-
stitute the whole Board may (in compliance with the provi-
sions of subparagraph (ii) of this paragraph (a)) be
increased to not more than twelve or decreased to not less
than one. Any director may be removed either with or
without cause by the holders of a majority of all out-
standing shares of Common Stock.
(ii) Any change in the number of directorships must
be authorized by a majority of the whole Board, as consti-
tuted immediately prior to such change.
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(b) Power and Authorization of the Board.
In furtherance and not in limitation of the powers
conferred by statute, the Board is expressly authorized:
(i) To make, alter, amend or repeal the By-laws,
except as otherwise expressly provided in any By-law made
by the holders of the capital stock of the Corporation
entitled to vote thereon. Any By-law may be altered,
amended or repealed by the holders of the capital stock of
the Corporation entitled to vote thereon at any annual
meeting or at any special meeting called for that purpose.
(ii) To determine the use and disposition of any sur-
plus and net profits of the Corporation, including the
determination of the amount of working capital required,
to set apart out of any of the funds of the Corporation,
whether or not available for dividends, a reserve or
reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
(iii) To have the general management and control of
all the property of the Corporation and exercise all the
powers of the Corporation, except such as may be expressly
by statute, by this Certificate of Incorporation or by the
<PAGE>
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By-laws conferred upon or reserved to the stockholders.
Without limiting the generality of the foregoing powers,
the Board, without consent or other action of the stock-
holders of the Corporation, may authorize the Corporation
to purchase, acquire, hold, lease, mortgage, pledge, sell
or convey such property, real and personal, as it may,
from time to time, determine, and in payment for any prop-
erty or for money to issue or cause to be issued, in any
manner permitted by law, stock of the Corporation, or
bonds, debentures, notes or other obligations thereof,
secured or unsecured.
(c) Major Decisions.
Notwithstanding the provisions of subsection (b) of
this Article VII, the Corporation shall not take any action
constituting a Major Decision (as defined below) unless such
Major Decision shall have been approved in writing by each
Founding Shareholder (as defined below). Each of the following
matters (whether proposed to be undertaken by the Corporation
or by any Person Controlled by the Corporation) shall consti-
tute a "Major Decision":
(i) a significant acquisition or business combina-
tion by or involving the Corporation or any Person Con-
trolled by the Corporation, or disposition of the
<PAGE>
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Corporation's or any Person Controlled by the Corpora-
tion's interest in any Core Property (as defined below);
(ii) the incurring or refinancing by the Corporation
or any Person Controlled by the Corporation of any long
term indebtedness in an amount that is material (consid-
ered as a portion of all consolidated indebtedness of the
Corporation and all Persons Controlled by it) if such
indebtedness is convertible into or exchangeable for
equity interests in any Person Controlled by the Corpora-
tion (other than a conversion into equity securities of
World Financial Properties, L.P. or a Person Controlled by
it that is consummated in connection with an actual or
anticipated loan default or acceleration where other rea-
sonable work-out proposals have been rejected by the
applicable lender);
(iii) any transaction between any Person Controlled by
the Corporation and any Related Person (as defined below)
other than recurring ordinary course transactions that are
effected on an Arm's-length Basis (as defined below); pro-
vided, however, that the decision (A) to incur indebted-
ness or to issue equity securities to a Related Person
shall not constitute a Major Decision to the extent that
the proceeds thereof are applied to pay or reimburse the
cost and expenses of abating or averting any Emergency (as
defined below) or (B) to incur indebtedness to a Related
Person (in an amount or of a nature such that, except for
the provision of this clause (iii) would not constitute a
Major Decision) shall not constitute a Major Decision if
the Corporation shall have satisfied with respect to such
incurrence the Related Person Debt Conditions (as defined
below);
(iv) the initial selection, and any removal or
replacement, of the Corporation's president or chief exec-
utive officer during the three-year period following the
Effective Date (as defined in the Third Amended Joint Plan
of Reorganization of Olympia & York Realty Corp. et al.,
Chapter 11 Case Number 92 B 42698 (JLG) (jointly adminis-
tered), dated September 12, 1996);
(v) the issuance, distribution or reacquisition of
any substantial equity interest in World Financial Proper-
ties, L.P. (other than (i) to provide funds to abate or
avert an Emergency or (ii) pursuant to the provisions of
any debt instruments in effect on the Effective Date or
<PAGE>
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pursuant to the partnership agreement of World Financial
Properties, L.P.); or
(vi) any amendment of the organizational documents of
any Person Controlled by the Corporation affecting cumula-
tive voting in any election of directors or affecting any
of the matters referred to in clauses (i) through (v).
As used in this paragraph (c), the following terms
have the following definitions:
"Affiliate" means, as to any Person, any other
Person Controlled by, Controlling or under common Con-
trol with, such Person.
"Arm's-length Basis" means, as to any transaction,
agreement or other arrangement, being on terms that
would be reached by unrelated parties not under any
compulsion to contract.
"Control, Controlling, Controlled" means, as to
any Person, the possession, directly or indirectly, of
the power to direct or cause the direction of the
management and policies of such Person, whether through
ownership of voting securities or partnership inter-
ests, by contract or otherwise.
"Core Property" means each of the parcels of real
property located at (i) 53 State Street, Boston, Massa-
chusetts, (ii) One Liberty Plaza, New York, New York,
(iii) 245 Park Avenue, New York, New York, (iv) One
World Financial Center, New York, New York, (v) Two
World Financial Center, New York, New York, and
(vi) Four World Financial Center, New York, New York,
in each case together with the office building and
other improvements existing thereon.
"Emergency" means in respect of any Core Property
or other material asset of the Corporation or any Per-
son Controlled by the Corporation, any situation or
condition in, under, at or about such Core Property or
other asset that represents a threat to the health
and/or safety of natural Persons at or in such Core
Property or adjoining parcels or the public at large.
<PAGE>
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"Founding Shareholders" means each of World Finan-
cial Properties Partnership and [Citibank Holding Sub-
sidiary] but only so long as each (or any Affiliate
thereof) shall constitute a Founding Limited Partner
(as defined in the Limited Partnership Agreement of
World Financial Properties, L.P.).
"Person" means an individual or a corporation,
partnership, limited liability company, trust,
unincorporated association or other entity.
"Related Person" means each Person that owns,
directly or indirectly, more than 20% of the capital
stock of the Corporation or any Affiliate of such a
Person (other than a Person Controlled by the
Corporation).
"Related Person Debt Conditions" means, in respect
of any incurrence of indebtedness by the Corporation or
Persons Controlled by it, that either (i) the terms of
such indebtedness shall have been determined to be fair
to the Corporation or such Person from a financial
point of view by a nationally recognized investment
bank or financial advisor acceptable to each Founding
Shareholder in its reasonable discretion or (ii) such
indebtedness is on terms determined (in the reasonable
judgment of the Corporation) to be the most advanta-
geous terms then available from among a group of not
less than [three] lenders to which the Corporation or
such Person has made application for the funding of
such indebtedness; provided, however, that no such
indebtedness shall be incurred to a lender other than
Citibank, N.A. unless Citibank, N.A. (x) was among the
lenders in the "group" referred to in clause (ii) above
or (y) Citibank, N.A. has been given a reasonable
opportunity to match the terms of such indebtedness
prior to incurrence thereof.
<PAGE>
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ARTICLE VIII
LIMITATION OF LIABILITY AND INDEMNIFICATION
OF DIRECTORS, OFFICERS AND OTHERS
(a) A director of the Corporation shall not be per-
sonally liable to the Corporation or its stockholders for mone-
tary damages for breach of fiduciary duty as a director, except
for liability
(i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of
law,
(iii) under Section 174 of the Delaware General Corpo-
ration Law, which provision, among other things, makes
directors personally liable for unlawful dividends or
unlawful stock repurchases or redemptions and expressly
sets forth a negligence standard with respect to such lia-
bility, or
(iv) for any transaction from which the director
derived an improper personal benefit.
<PAGE>
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If the Delaware General Corporation Law is amended after
approval by the stockholders of this paragraph (a) of
Article VIII to authorize corporate action further eliminating
or limiting the personal liability of directors, then the lia-
bility of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
(b) Any repeal or modification of paragraph (a) of
this Article VIII by the stockholders of the Corporation shall
not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or
modification.
(c) (1) Each person who was or is made a party or
is threatened to be made a party or is otherwise involved in
any pending, threatened or completed action, suit or proceed-
ing, whether civil, criminal, administrative, investigative or
otherwise (hereinafter a "proceeding"), by reason of the fact
that he or she, or a person of whom he or she is the legal rep-
resentative, is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation, partnership, limited liability company,
<PAGE>
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joint venture trust or other entity (each, an "Other Entity")
if the basis of any such proceeding is action in such capacity,
shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corpora-
tion Law as the same exists, or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnifi-
cation rights than such law permitted the Corporation to pro-
vide prior to such amendment), against all expense, liability
and loss (including penalties, fines, judgments, attorneys'
fees, amounts paid or to be paid in settlement and excise taxes
or penalties) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as
to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that the Cor-
poration shall indemnify any such person seeking indemnifica-
tion in connection with a proceeding (or part thereof) initi-
ated by such person (other than pursuant to paragraph (c)(2) of
this Article VIII) only if such proceeding (or part thereof)
was authorized by the Board. The right to indemnification con-
ferred in this paragraph (c)(1) of Article VIII shall be a con-
tract right and shall include the right to be paid by the
<PAGE>
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Corporation the expenses incurred in defending any such pro-
ceeding in advance of its final disposition; provided, however,
that if the Delaware General Corporation Law requires the pay-
ment of such expenses incurred by a director or officer in his
or her capacity as a director or officer in advance of the
final disposition of a proceeding, payment shall be made only
upon delivery to the Corporation of an undertaking by or on
behalf of such director or officer to repay all amounts so
advanced if it shall ultimately be determined by a final,
unappealable order of a court of competent jurisdiction that
such director or officer is not entitled to be indemnified
under this paragraph (c)(1) of Article VIII or otherwise. Such
expenses incurred by other agents may be so paid upon such
terms and conditions, if any, as the Board deems appropriate.
(c) (2) If a claim for indemnification which the
Corporation is obligated to pay under paragraph (c)(1) of this
Article VIII is not paid in full by the Corporation within 60
days after a written request therefor has been received by the
Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the
claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting
such claim. It shall be a defense to any such action (other
<PAGE>
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than an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final disposition
where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the Dela-
ware General Corporation Law for the Corporation to indemnify
the claimant for the amount claimed, but the burden of proving
such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board, independent legal
counsel or its stockholders) to have made a determination prior
to the commencement of such action that indemnification of the
claimant is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in the Dela-
ware General Corporation Law, nor an actual determination by
the Corporation (including its Board, independent legal counsel
or its stockholders) that the claimant has not met such appli-
cable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the appli-
cable standard of conduct.
(c) (3) The provisions of this Section (c) of
Article VIII shall cover claims, actions, suits and proceed-
ings, civil or criminal, whether now pending or hereafter com-
menced and shall be retroactive to cover acts or omissions or
<PAGE>
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alleged acts or omissions which heretofore have taken place.
If any part of this subsection (c) of Article VIII should be
found to be invalid or ineffective in any proceeding, the
validity and effect of the remaining provisions shall not be
affected.
(c) (4) The right to indemnification and the pay-
ment of expenses incurred in defending a proceeding in advance
of its final disposition conferred in this subsection (c) of
Article VIII shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute,
provision of this Certificate of Incorporation, By-law, agree-
ment, vote of stockholders or disinterested directors or
otherwise.
(c) (5) The Corporation may purchase and maintain
insurance, at its expense, to protect itself and any director,
officer or agent of the Corporation or any Other Entity against
any such expense, liability or loss, whether or not the Corpo-
ration would have the power to indemnify such person against
such expense, liability or loss under the Delaware General Cor-
poration Law.
<PAGE>
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ARTICLE IX
RESERVATION OF RIGHT TO AMEND
CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend, alter,
change or repeal any provisions contained in this Certificate
of Incorporation in the manner now or hereafter prescribed by
law, and all the provisions of this Certificate of Incorpora-
tion and all rights and powers conferred in this Certificate of
Incorporation on stockholders, directors and officers are sub-
ject to this reserved power.
<PAGE>
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IN WITNESS WHEREOF, the undersigned has executed this
Amended and Restated Certificate of Incorporation on behalf of
World Financial Properties GP Corp. and does verify and affirm,
under penalties of perjury, that this Amended and Restated Cer-
tificate of Incorporation is the act and deed of the Corpora-
tion and that the facts stated herein are true as of this _____
day of ___________, 1996.
WORLD FINANCIAL PROPERTIES
GP CORP.
By:
---------------------------
Name:
Title:
Exhibit T3B.1
WORLD FINANCIAL PROPERTIES GP CORP.
* * * * * * * * * * * * * *
BY-LAWS
* * * * * * * * *
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered office
of World Financial Properties GP Corp., a Delaware corporation
(the "Corporation"), shall be in the City of Wilmington, County
of New Castle, State of Delaware.
SECTION 2. Other Offices. The Corporation may also
have offices at such other places both within and without the
State of Delaware as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE II
MEETING OF STOCKHOLDERS
SECTION 1. Place and Date of Annual Meeting; Notice.
The annual meeting of the stockholders of the Corporation shall
be held at such place, within or without the State of Delaware,
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at such time and on such day as may be determined by the Board of Directors
and as such shall be designated in the notice of said meeting, for the
purpose of electing directors and for the transaction of such other
business as may properly be brought before the meeting. If for any reason
the annual meeting shall not be held during the period designated herein,
the Board of Directors shall cause the annual meeting to be held as soon
thereafter as may be convenient. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more
than sixty days before the date of the meeting.
SECTION 2. Special Meetings; Notice. Special meetings of the
stockholders for any purpose or purposes, unless otherwise prescribed by
statute or by the Certificate of Incorporation, may be held at any place,
within or without the State of Delaware, and may be called by resolution of
the Board of Directors, by the president or by the holders of not less than
a majority of the shares entitled to vote at the meeting. Such request
shall state the purpose or purposes of the meeting. Written notice of a
special meeting stating the place, date and hour of the meeting and the
purpose or purposes for which the meeting is called shall be given not less
than ten nor more
<PAGE>
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than thirty days before the date of the meeting to each stockholder
entitled to vote at such meeting. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the
notice.
SECTION 3. Quorum. The holders of a majority of the shares of
stock issued and outstanding and entitled to vote, represented in person or
by proxy, shall constitute a quorum at all meetings of the stockholders for
the transaction of business except as otherwise provided by law, by the
Certificate of Incorporation or by these By-laws. If a quorum is present
or represented, the affirmative vote of a majority of the shares of stock
present or represented at the meeting shall be the act of the stockholders
unless the vote of a greater number of shares of stock is required by law,
by the Certificate of Incorporation or by these By-laws. If, however, such
quorum shall not be present or represented at any meeting of the
stockholders, the stockholders present in person or represented by proxy
shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting, at which a quorum shall be present
or represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
<PAGE>
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SECTION 4. Action Without Meeting. Any action required to be
taken at a meeting of the stockholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who
have not consented in writing.
SECTION 5. Stockholders List. The officer who has charge of
the stock ledger of the Corporation shall prepare and make, at least
fifteen days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholders, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to
the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if
not so
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specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
SECTION 6. Voting. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every meeting of
the stockholders be entitled to vote in person or by proxy for each share
of the capital stock having voting power held by such stockholder, but no
proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period.
ARTICLE III
DIRECTORS
SECTION 1. Number, Election, Term. The Board of Directors
shall consist of that number of directors as set forth in the Certificate
of Incorporation. The number of directors which shall constitute the whole
Board may be increased or decreased to the number of directors and in the
manner set forth in the Certificate of Incorporation. The directors shall
be elected annually, either at the annual meeting of the stockholders or by
written consent of the stockholders entitled to vote in lieu of the annual
meeting as
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provided in Article II, Section 4, except as provided in Section 2 of this
Article, and each director elected shall hold office until the next annual
meeting of stockholders and until his successor is elected and qualified or
until his earlier death or resignation. Directors need not be
stockholders.
SECTION 2. Vacancies. Any vacancies and newly created
directorships may be filled by a majority of the directors then in office,
though less than a quorum, and the directors so chosen shall hold office
until the next annual election and until their successors are duly elected
and shall qualify. A vacancy created by the removal of a director by the
stockholders may be filled by the stockholders.
SECTION 3. Powers. The business of the Corporation shall be
managed by or under the direction of its Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by
these By-laws directed or required to be exercised or done by the stock-
holders or which are not, by the Certificate of Incorporation, prohibited
to be done by the Board of Directors.
SECTION 4. First Meeting. The first meeting of each newly
elected Board of Directors shall be held at such time and
<PAGE>
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place as shall be announced at the annual meeting of stockholders and no
other notice of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided a quorum
shall be present, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time
and place as shall be specified in a notice given as hereinafter provided
for special meetings of the Board of Directors, or as shall be specified in
a written waiver signed by all of the directors.
SECTION 5. Regular Meetings. Regular meetings of the Board of
Directors may be held upon such notice, or without notice, and at such time
and at such place as shall from time to time be determined by the Board.
SECTION 6. Special Meetings. Special meetings of the Board of
Directors may be called by the president on two days' notice to each
director, either personally or by mail or by telegram. Special meetings
shall be called by the president or secretary in like manner and on like
notice on the written request of two directors.
SECTION 7. Waiver. Attendance of a director at any meeting
shall constitute a waiver of notice of such meeting,
<PAGE>
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except where a director attends for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting.
SECTION 8. Quorum. At all meetings of the Board of Directors
a majority of the total number of directors then constituting the whole
Board shall constitute a quorum for the transaction of business, and the
act of a majority of the directors present at any meeting at which there is
a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute, by the Certificate of
Incorporation or by these By-laws. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 9. Action Without Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these By-laws, any action
required or permitted to be taken at any meeting of the Board of Directors
or of any committee thereof
<PAGE>
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may be taken without a meeting, if prior to such action a written consent
thereto is signed by all members of the Board or of such committee, as the
case may be, and such written consent is filed with the minutes of
proceedings of the Board or committee.
SECTION 10. Telephonic Communications. Unless otherwise
restricted by the Certificate of Incorporation or these By-laws, any action
required or permitted to be taken at any meeting of the Board of Directors
or of any committee thereof may be taken in a meeting of the Board or any
committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can
hear each other, and such participation shall constitute presence in person
at the meeting.
SECTION 11. Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of two or more of the directors of
the Corporation which, to the extent provided in the resolution and to the
extent not inconsistent with any provision of these By-Laws, shall have and
may exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation and may
<PAGE>
-10-
authorize the seal of the Corporation to be affixed to all papers which may
require it. Each committee shall have such names, powers and duties as may
be determined from time to time by resolution adopted by the Board of
Directors.
SECTION 12. Removal of Directors. Unless otherwise restricted
by the Certificate of Incorporation or these By-laws, any director or the
entire Board of Directors may be removed, with or without cause, by the
holders of a majority of the shares entitled to vote at an election of
directors.
ARTICLE IV
OFFICERS
SECTION 1. Election and Office. The officers of the
Corporation shall be chosen by the Board of Directors and shall be a
president (who shall function as the chief executive officer of the
Company) and a secretary. The Board of Directors may also elect such
additional officers as may, from time to time, be deemed desirable. Any
number of offices may be held by the same person.
SECTION 2. Term, Powers and Duties. The term of office,
powers and duties of each officer shall be as specified by the Board of
Directors.
<PAGE>
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SECTION 3. Salaries. The salaries of all officers and agents
of the Corporation shall be fixed by the Board of Directors.
SECTION 4. Removal and Vacancies. The officers of the
Corporation shall hold office until their successors are chosen and
qualify. Except as otherwise provided in these By-Laws, any officer
elected or appointed by the Board of Directors may be removed at any time,
with or without cause, by the affirmative vote of a majority of the Board
of Directors. Any vacancy occurring in any office of the Corporation shall
be filled by the Board of Directors.
ARTICLE V
CAPITAL STOCK
SECTION 1. Certificates for Shares. Every owner of stock of
the Corporation shall be entitled to have a certificate or certificates in
such form as the Board of Directors shall prescribe certifying the number
of shares of stock owned by him, except as provided below. The
certificates shall be signed by hand or by facsimile in the name of the
Corporation by such officer or officers as the Board shall appoint. The
Board of Directors may provide by resolution that the stock of the
Corporation shall be uncertificated shares.
<PAGE>
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Notwithstanding the adoption of such a resolution by the Board, every
holder of uncertificated shares shall, upon request, be entitled to receive
a certificate, signed by such officers designated by the Corporation and
complying with the statute, representing the number of shares in registered
certificate form. A record shall be kept of the names of the persons own-
ing any such stock, whether certificated or uncertificated, and the number
of shares owned by each such person.
SECTION 2. Lost, Stolen or Destroyed Certificates. The Board
of Directors may direct a new certificate to be issued in place of any
certificate theretofore issued by the Corporation alleged to have been
lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions
as it deems expedient, and may require such indemnities as it deems
adequate to protect the Corporation from any claim that may be raised
against it with respect to any such certificate alleged to have been lost,
stolen or destroyed.
SECTION 3. Transfer of Shares. Upon surrender to the
secretary of the Corporation, or, if a transfer agent for the Corporation
has been named by the Board of Directors, to
<PAGE>
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the transfer agent, of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto,
and the old certificate cancelled and the transaction recorded upon the
books of the Corporation.
SECTION 4. Fixing Record Date. In order that the Corporation
may determine the stockholders entitled to notice of or to vote at any
meeting of the stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of any stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which
shall not be more than sixty and not less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at
a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date
for the adjourned meeting.
<PAGE>
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SECTION 5. Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a person registered on
its books as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Delaware.
SECTION 6. Signing Authority. Except as provided below, all
contracts, agreements, assignments, transfers, deeds, stock powers or other
instruments of the Corporation may be executed and delivered by the
president or any vice-president or by such other officer or officers, or
agent or agents, of the Corporation as shall be thereunto authorized from
time to time either by the Board of Directors or by power of attorney
executed by any person pursuant to authority granted by the Board of
Directors, and the secretary or the treasurer may affix the seal of the
Corporation thereto and attest same. Certificates issued upon request to
holders of uncertificated stock shall be signed by the president or the
secretary.
<PAGE>
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ARTICLE VI
GENERAL PROVISIONS
SECTION 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation,
if any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or
in shares of the capital stock of the Corporation, subject to the provi-
sions of the Certificate of Incorporation.
SECTION 2. Reserves. Before payment of any dividend, there
may be set aside out of any funds of the Corporation available for
dividends such sum or sums as the directors from time to time, in their
absolute discretion, deem proper as a reserve for such purposes as the
directors shall deem to be in furtherance of the interests of the
Corporation. The directors may from time to time, in their absolute
discretion, modify or terminate any such reserve previously established by
the Corporation.
SECTION 3. Notices. Whenever, under the provisions of
statute, the Certificate of Incorporation or of these By-laws, notice is
required to be given to any director or stockholder, it shall not be
construed to mean personal notice,
<PAGE>
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but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed
to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by telegram.
Whenever any notice is required to be given under the
provisions of statute, the Certificate of Incorporation or of these
By-laws, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
SECTION 4. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
SECTION 5. Checks. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
SECTION 6. Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its
<PAGE>
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organization and the words "Corporate Seal, Delaware". The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in
any manner reproduced.
SECTION 7. Indemnification. The Corporation shall indemnify
its officers, directors, employees and agents to the fullest extent
permitted by the General Corporation Law of Delaware.
SECTION 8. Amendments. Except as may be otherwise
specifically provided by statute, by the Certificate of Incorporation or by
these By-laws, these By-laws may be altered, amended or repealed or new
By-laws may be adopted (a) at any regular or special meeting of
stockholders at which a quorum is present or represented, by the
affirmative vote of a majority of the shares entitled to vote, provided
notice of the proposed alteration, amendment or repeal be contained in the
notice of such meeting; or (b) by the affirmative vote of a majority of the
Board of Directors at any regular or special meeting of the Board. The
stockholders shall have authority to change or repeal any By-laws adopted
by the Board of Directors.
EXHIBIT T3B.2
WORLD FINANCIAL PROPERTIES GP CORP.
* * * * * * * * * * * *
AMENDED AND RESTATED
BY-LAWS
* * * * * * * * *
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered office
of World Financial Properties GP Corp., a Delaware corporation
(the "Corporation"), shall be in the City of Wilmington, County
of New Castle, State of Delaware.
SECTION 2. Other Offices. The Corporation may also
have offices at such other places both within and without the
State of Delaware as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place and Date of Annual Meeting; Notice.
The annual meeting of the stockholders of the Corporation shall
be held at such place, within or without the State of Delaware,
<PAGE>
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at such time and on such day as may be determined by the Board
of Directors and as such shall be designated in the notice of
said meeting, for the purpose of electing directors and for the
transaction of such other business as may properly be brought
before the meeting. Written notice of the annual meeting stat-
ing the place, date and hour of the meeting shall be given to
each stockholder entitled to vote at such meeting not less than
ten nor more than sixty days before the date of the meeting.
SECTION 2. Special Meetings; Notice. Special meet-
ings of the stockholders for any purpose or purposes, unless
otherwise prescribed by statute or by the Certificate of Incor-
poration, may be held at any place, within or without the State
of Delaware, and may be called by resolution of the Board of
Directors, by the chief executive officer or president of the
Corporation or by the holders of not less than a majority of
the shares entitled to vote at the meeting. Such request shall
state the purpose or purposes of the meeting. Written notice
of a special meeting stating the place, date and hour of the
meeting and the purpose or purposes for which the meeting is
called shall be given not less than ten nor more than thirty
days before the date of the meeting to each stockholder enti-
tled to vote at such meeting. Business transacted at any
<PAGE>
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special meeting of stockholders shall be limited to the pur-
poses stated in the notice.
SECTION 3. Quorum. The holders of a majority of the
shares of stock issued and outstanding and entitled to vote,
represented in person or by proxy, shall constitute a quorum at
all meetings of the stockholders for the transaction of busi-
ness, except as otherwise provided by law, by the Certificate
of Incorporation or by these By-laws. If a quorum is present
or represented, the affirmative vote of a majority of the
shares of stock present or represented at the meeting shall be
the act of the stockholders, unless the vote of a greater num-
ber of shares of stock is required by law, by the Certificate
of Incorporation or by these By-laws. If, however, such quorum
shall not be present or represented at any meeting of the
stockholders, the stockholders present in person or represented
by proxy shall have the power to adjourn the meeting from time
to time, without notice other than announcement at the meeting,
until a quorum shall be present or represented. At such
adjourned meeting, at which a quorum shall be present or repre-
sented, any business may be transacted which might have been
transacted at the meeting as originally noticed.
<PAGE>
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SECTION 4. Action Without Meeting. Any action
required to be taken at a meeting of the stockholders may be
taken without notice and without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by
the holders of outstanding stock having not less than the mini-
mum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the tak-
ing of corporate action without a meeting by less than unani-
mous written consent shall be given to those stockholders who
have not consented in writing.
SECTION 5. Stockholders List. The officer who has
charge of the stock ledger of the Corporation shall prepare and
make, at least fifteen days before every meeting of stockhold-
ers, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered
in the name of such stockholder. Such list shall be open to
the examination of any stockholders, for any purpose germane to
the meeting, during ordinary business hours, for a period of at
least ten days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so
<PAGE>
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specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected
by any stockholder who is present.
SECTION 6. Voting. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every
meeting of the stockholders be entitled to vote in person or by
proxy for each share of the capital stock having voting power
held by such stockholder, but no proxy shall be valid after the
third anniversary of its date of issuance, unless such proxy
expressly provides for a longer period of effectiveness.
ARTICLE III
DIRECTORS
SECTION 1. Number, Election, Term. The Board of
Directors shall consist of that number of directors provided in
the Certificate of Incorporation. The number of directors
which shall constitute the whole Board may be increased or
decreased to the number of directors and in the manner set
forth in the Certificate of Incorporation. The directors shall
be elected annually, either at the annual meeting of the stock-
holders or by written consent of the stockholders entitled to
vote in lieu of the annual meeting as provided in Article II,
<PAGE>
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Section 4, except as provided in Section 2 of this Article, and
each director elected, unless removed as provided below, shall
hold office until the next annual meeting of stockholders and
until his successor is elected and qualified or until his ear-
lier death or resignation. Directors need not be stockholders.
SECTION 2. Vacancies. Any vacancies and newly cre-
ated directorships may be filled by a majority of the directors
then in office, though less than a quorum, and the directors so
chosen shall hold office until the next annual election and
until their successors are duly elected and qualified. A
vacancy created by the removal of a director by the stockhold-
ers may be filled by the stockholders.
SECTION 3. Powers. The business of the Corporation
shall be managed by or under the direction of its Board of
Directors, which may exercise all such powers of the Corpora-
tion and do all such lawful acts and things as are not by stat-
ute or by the Certificate of Incorporation or by these By-laws
directed or required to be exercised or done by the stockhold-
ers or which are not, by the Certificate of Incorporation, pro-
hibited to be done by the Board of Directors.
SECTION 4. First Meeting. The first meeting of each
newly elected Board of Directors shall be held at such time and
<PAGE>
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place as shall be announced at the annual meeting of stock-
holders and no other notice of such meeting shall be necessary
to the newly elected directors in order legally to constitute
the meeting, provided a quorum shall be present, or in the
event such meeting is not held at the time and place so fixed
by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors, or as
shall be specified in a written waiver signed by all of the
directors.
SECTION 5. Regular Meetings. Regular meetings of
the Board of Directors may be held upon such notice, or without
notice, and at such time and at such place as shall from time
to time be determined by the Board.
SECTION 6. Special Meetings. Special meetings of
the Board of Directors may be called by the chief executive
officer or president on two days' notice to each director,
either personally or by mail or by telegram. Special meetings
shall be called by the chief executive officer or president or
secretary in like manner and on like notice on the written
request of two directors.
<PAGE>
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SECTION 7. Waiver. Attendance of a director at any
meeting shall constitute a waiver of notice of such meeting,
except where a director attends for the express purpose of
objecting at the beginning of the meeting to the transaction of
any business because the meeting is not lawfully called or con-
vened. Neither the business to be transacted at, nor the pur-
pose of, any regular or special meeting of the Board of Direc-
tors need be specified in the notice or waiver of notice of
such meeting.
SECTION 8. Quorum. At all meetings of the Board of
Directors a majority of the total number of directors then con-
stituting the whole Board shall constitute a quorum for the
transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute, by the Certificate
of Incorporation or by these By-laws. If a quorum shall not be
present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present.
<PAGE>
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SECTION 9. Action Without Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these
By-laws, any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof
may be taken without notice and without a meeting, if prior to
such action a written consent thereto is signed by all members
of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the
Board or committee.
SECTION 10. Telephonic Communications. Unless
otherwise restricted by the Certificate of Incorporation or
these By-laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee
thereof may be taken in a meeting of the Board or any committee
by means of conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall con-
stitute presence in person at the meeting.
SECTION 11. Committees. The Board of Directors may,
by resolution passed by a majority of the whole Board, desig-
nate one or more committees, each committee to consist of two
or more of the directors of the Corporation which, to the
<PAGE>
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extent provided in the resolution and to the extent not incon-
sistent with any provision of these By-Laws, shall have and may
exercise the powers of the Board of Directors in the management
of the business and affairs of the Corporation and may autho-
rize the seal of the Corporation to be affixed to all papers
which may require it. Each committee shall have such names,
powers and duties as may be determined from time to time by
resolution adopted by the Board of Directors. The initial com-
mittees shall be (a) a management committee, (b) an executive
committee, (c) an audit committee relating to financial con-
trols and reporting and (d) a compensation committee, each of
which shall consist of five directors of the Corporation.
SECTION 12. Removal of Directors. Unless otherwise
restricted by the Certificate of Incorporation or these
By-laws, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of
the shares entitled to vote at an election of directors.
SECTION 13. Chairman of the Board. The Chairman of
the Board of Directors shall initially be John Zucotti. At
such time as John Zucotti shall cease to serve as Chairman of
the Board of Directors, the directorship previously held by
John Zucotti shall be filled by the chief executive officer or
<PAGE>
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president of the Corporation. For so long as John Zucotti
shall serve as the Chairman of the Board, the position of
Chairman of the Board shall not be an executive office of the
Corporation.
ARTICLE IV
OFFICERS
SECTION 1. Election and Office. The officers of the
Corporation shall be chosen by the Board of Directors and shall
be a chief executive officer or president and a secretary. The
Board of Directors may also elect such additional officers as
may, from time to time, be deemed desirable. Any number of
offices may be held by the same person.
SECTION 2. Term, Powers and Duties. The term of
office, powers and duties of each officer of the Corporation
shall be as specified by the Board of Directors.
SECTION 3. Salaries. The salaries of all officers
and agents of the Corporation shall be fixed by the Board of
Directors.
SECTION 4. Removal and Vacancies. The officers of
the Corporation shall hold office until their successors are
chosen and qualify. Except as otherwise provided in these
<PAGE>
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By-Laws, any officer elected or appointed by the Board of
Directors may be removed at any time, with or without cause, by
the affirmative vote of a majority of the Board of Directors.
Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors.
ARTICLE V
CAPITAL STOCK
SECTION 1. Certificates for Shares. Every owner of
stock of the Corporation shall be entitled to have a certifi-
cate or certificates in such form as the Board of Directors
shall prescribe certifying the number of shares of stock owned
by such owner, except as provided below. The certificates
shall be signed by hand or by facsimile in the name of the Cor-
poration by such officer or officers as the Board shall
appoint. The Board of Directors may provide by resolution that
the stock of the Corporation shall be uncertificated shares.
Notwithstanding the adoption of such a resolution by the Board,
every holder of uncertificated shares shall, upon request, be
entitled to receive a certificate, signed by such officers des-
ignated by the Corporation and complying with the Delaware Gen-
eral Corporation Law, representing the number of shares in reg-
istered certificate form. A record shall be kept of the names
<PAGE>
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of the persons owning any such stock, whether certificated or
uncertificated, and the number of shares owned by each such
person.
SECTION 2. Lost, Stolen or Destroyed Certificates.
The Board of Directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed.
When authorizing such issue of a new certificate, the Board of
Directors, in its discretion and as a condition precedent to
the issuance thereof, may prescribe such terms and conditions
as it deems expedient, and may require such affidavit of loss
and/or such indemnities as it deems adequate to protect the
Corporation from any claim that may be raised against it with
respect to any such certificate alleged to have been lost, sto-
len or destroyed.
SECTION 3. Transfer of Shares. Upon surrender to
the secretary of the Corporation, or, if a transfer agent for
the Corporation has been named by the Board of Directors, to
the transfer agent, of a certificate representing shares duly
endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer (and of payment of any
applicable stamp, documentary or transfer taxes associated
<PAGE>
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therewith), a new certificate shall be issued to the person
entitled thereto, and the old certificate cancelled and the
transaction recorded upon the books of the Corporation.
SECTION 4. Fixing Record Date. In order that the
Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of the stockholders or any
adjournment thereof, or to express consent to corporate action
in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights,
or entitled to exercise any rights in respect of any change,
conversion or exchange of any stock or for the purpose of any
other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty and
not less than ten days before the date of such meeting, nor
more than sixty days prior to any other action. A determina-
tion of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
SECTION 5. Registered Stockholders. The Corporation
shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive
<PAGE>
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dividends, and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equi-
table or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided
by the laws of Delaware.
SECTION 6. Signing Authority. Except as provided
below, all contracts, agreements, assignments, transfers,
deeds, stock powers or other instruments of the Corporation may
be executed and delivered by the chief executive officer or
president or by such other officer or officers, or agent or
agents, of the Corporation as shall be thereunto authorized
from time to time either by the Board of Directors or by power
of attorney executed by any person pursuant to authority
granted by the Board of Directors, and the secretary may affix
the seal of the Corporation thereto and attest same. Certifi-
cates issued upon request to holders of uncertificated stock
shall be signed by the president and the secretary.
<PAGE>
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ARTICLE VI
GENERAL PROVISIONS
SECTION 1. Dividends. Dividends upon the capital
stock of the Corporation, subject to the provisions of the Cer-
tificate of Incorporation, if any, may be declared by the Board
of Directors at any regular or special meeting, pursuant to
law. Dividends may be paid in cash, in property, or in shares
of the capital stock of the Corporation, subject to the provi-
sions of the Certificate of Incorporation.
SECTION 2. Reserves. Before payment of any divi-
dend, there may be set aside out of any funds of the Corpora-
tion available for dividends such sum or sums as the directors
from time to time, in their absolute discretion, deem proper as
a reserve for such purposes as the directors shall deem to be
in furtherance of the interests of the Corporation. The direc-
tors may from time to time, in their absolute discretion, mod-
ify or terminate any such reserve previously established by the
Corporation.
SECTION 3. Notices. Whenever, under the provisions
of applicable law of the State of Delaware, the Certificate of
Incorporation or of these By-laws, notice is required to be
given to any director or stockholder, it shall not be construed
<PAGE>
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to mean personal notice, but such notice may be given in writ-
ing, by mail, addressed to such director or stockholder, at his
address as it appears on the records of the Corporation, with
postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the
United States mail. Notice to directors may also be given by
telegram.
Whenever any notice is required to be given under the
provisions of applicable law of the State of Delaware, the Cer-
tificate of Incorporation or of these By-laws, a waiver thereof
in writing signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
SECTION 4. Fiscal Year. The fiscal year of the Cor-
poration shall be fixed by resolution of the Board of
Directors.
SECTION 5. Checks. All checks or demands for money
and notes of the Corporation shall be signed by such officer or
officers or such other person or persons as the Board of Direc-
tors may from time to time designate.
<PAGE>
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SECTION 6. Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its
organization and the words "Corporate Seal, Delaware". The
seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
SECTION 7. Indemnification. Subject to the provi-
sions of the Certificate of Incorporation, the Corporation
shall indemnify its officers, directors, employees and agents
to the fullest extent permitted by the General Corporation Law
of Delaware.
SECTION 8. Amendments. Except as may be otherwise
specifically provided under applicable law of the State of Del-
aware, by the Certificate of Incorporation or by these By-laws,
these By-laws may be altered, amended or repealed or new
By-laws may be adopted (a) at any regular or special meeting of
stockholders at which a quorum is present or represented, by
the affirmative vote of a majority of the shares entitled to
vote, provided notice of the proposed alteration, amendment or
repeal be contained in the notice of such meeting; or (b) by
the affirmative vote of a majority of the Board of Directors at
any regular or special meeting of the Board. The stockholders
shall have authority to change or repeal any By-laws adopted by
the Board of Directors.
WORLD FINANCIAL PROPERTIES, L.P.
and
THE BANK OF NEW YORK, as Trustee
-----------------------------
INDENTURE
Dated as of ____________, 1996
-----------------------------
$
Increasing Rate Convertible Notes due 2004
<PAGE>
CROSS REFERENCE TABLE1
TIA Indenture
Section Section
310 (a) (1)........................................... 7.10
(a) (2)........................................... 7.10
(a) (3)........................................... N.A.2
(a) (4)........................................... N.A.
(a) (5)........................................... N.A.
(b)............................................... 7.8; 7.10
(c)............................................... N.A
311 (a)............................................... 7.11
(b)............................................... 7.11
(c)............................................... N.A
312 (a)............................................... 2.5
(b)............................................... 10.3
(c)............................................... 10.3
313 (a)............................................... 6.6
(b) (1)........................................... N.A.
(b) (2)........................................... 6.6
(c)............................................... 6.6
(d)............................................... 6.6
314 (a)............................................... 4.2; 4.3; 10.2
(b)............................................... N.A.
(c) (1)........................................... 10.4
(c) (2)........................................... 10.4
(c) (3)........................................... N.A.
(d)............................................... N.A
(e)............................................... 10.5
(f)............................................... N.A.
315 (a)............................................... 7.1
(b)............................................... 7.5
(c)............................................... 7.1
(d)............................................... 7.1
(e)............................................... 6.11
316 (a) (last sentence)............................... 2.9
(a) (1) (A)....................................... 6.5
(a) (1) (B)....................................... 6.4
(a) (2)........................................... N.A.
(b)............................................... 6.7
(c)............................................... 2.13
317 (a) (1)........................................... 6.8
(a) (2)........................................... 6.9
(b)............................................... 2.4
318 (c)............................................... 10.1
1. Notes: This Cross Reference Table shall not, for any purpose, be
deemed to be part of this Indenture.
2. N.A. means Not Applicable.
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TABLE OF CONTENTS1
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.................... 1
SECTION 1.1. Definitions................................................... 1
SECTION 1.3. Incorporation by Reference of Trust Indenture Act............. 14
SECTION 1.4. Rules of Construction......................................... 14
SECTION 1.5. Acts of Holders............................................... 14
ARTICLE 2 THE NOTES..................................................... 15
SECTION 2.1. Form and Dating.............................................. 15
SECTION 2.2. Execution and Authentication; Aggregate Principal Amount...... 16
SECTION 2.3. Registrar and Paying Agent.................................... 17
SECTION 2.4. Paying Agent To Hold Money in Trust. ......................... 17
SECTION 2.5. Noteholder Lists.............................................. 17
SECTION 2.6. Transfer and Exchange......................................... 18
SECTION 2.7. Replacement Notes............................................. 18
SECTION 2.8. Outstanding Notes............................................. 19
SECTION 2.9. Treasury Notes................................................ 19
SECTION 2.10. Temporary Notes............................................... 20
SECTION 2.11. Cancellation.................................................. 20
SECTION 2.12. Defaulted Interest............................................ 20
ARTICLE 3 REDEMPTION.................................................... 20
SECTION 3.1. Optional Right to Redeem; Notices to Trustee.................. 20
SECTION 3.2. Selection of the Notes or Portions Thereof to be Redeemed. ... 21
SECTION 3.3. Notice of Redemption.......................................... 21
SECTION 3.4. Effect of Notice of Redemption................................ 22
SECTION 3.5. Deposit of Redemption Price................................... 22
SECTION 3.6. Notes Redeemed in Part........................................ 23
SECTION 3.7. Special Procedures for Change in Control Offer,
Excess Proceeds Offer and Capital Infusion Offer............ 23
ARTICLE 4 COVENANTS..................................................... 26
SECTION 4.1. Payment of Principal, Premium and Interest.................... 26
SECTION 4.2. Provision of Reports and Other Information.................... 26
SECTION 4.3. Compliance Certificates....................................... 28
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1 This Table of Contents shall not, for any purpose, be deemed to be
part of this Indenture.
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<PAGE>
SECTION 4.4. Further Instruments and Acts.................................. 29
SECTION 4.5. Maintenance of Office or Agency............................... 29
SECTION 4.6. Limitation on Restricted Payments............................. 29
SECTION 4.7. Limitation on Additional Indebtedness......................... 30
SECTION 4.8. Limitation on Transactions with Affiliates.................... 30
SECTION 4.9. Repurchase Upon Change in Control............................. 31
SECTION 4.10. Limitation on Use of Proceeds from Asset Sales................ 31
SECTION 4.11. Payment of Taxes and Other Claims............................. 32
SECTION 4.12. Corporate or Partnership or Other Existence................... 32
SECTION 4.13. Maintenance of Properties and Insurance....................... 32
SECTION 4.14. Stay, Extension and Usury Laws................................ 33
SECTION 4.15. Payment for Consent........................................... 33
SECTION 4.16. Covenant to Comply with Securities Laws upon Purchase
of the Notes................................................ 33
SECTION 4.17. Capital Infusion Offer........................................ 33
SECTION 4.18. Officers' Certificates........................................ 34
SECTION 4.19. Tag Along Rights.............................................. 34
SECTION 4.20. Certain Amendments to Partnership Agreement................... 34
ARTICLE 5 SUCCESSOR ENTITY.............................................. 34
SECTION 5.1. When the Company May Merge or Transfer Assets................. 34
SECTION 5.2. Surviving Entity Substituted.................................. 35
ARTICLE 6 DEFAULTS AND REMEDIES......................................... 35
SECTION 6.1. Events of Default............................................. 35
SECTION 6.2. Acceleration.................................................. 38
SECTION 6.3. Other Remedies................................................ 38
SECTION 6.4. Waiver of Past Defaults....................................... 38
SECTION 6.5. Control by Holders............................................ 39
SECTION 6.6. Limitation on Suits........................................... 39
SECTION 6.7. Rights of Holders to Receive Payment.......................... 40
SECTION 6.8. Collection Suit by Trustee.................................... 40
SECTION 6.9. Trustee May File Proofs of Claim.............................. 40
SECTION 6.10. Priorities.................................................... 41
ARTICLE 7 TRUSTEE....................................................... 41
SECTION 7.1. Duties of Trustee............................................. 41
SECTION 7.2. Rights of Trustee............................................. 42
SECTION 7.3. Individual Rights of Trustee.................................. 43
SECTION 7.4. Trustee's Disclaimer.......................................... 43
SECTION 7.5. Notice of Defaults............................................ 43
SECTION 7.6. Reports by Trustee to Holders................................. 43
SECTION 7.7. Compensation and Indemnity.................................... 43
SECTION 7.8. Replacement of Trustee........................................ 44
SECTION 7.9. Successor Trustee by Merger................................... 45
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SECTION 7.10. Eligibility; Disqualification................................. 45
SECTION 7.11. Preferential Collection of Claims Against the Company......... 46
ARTICLE 8 DISCHARGE OF INDENTURE; LEGAL DEFEASANCE
AND COVENANT DEFEASANCE..................................... 46
SECTION 8.1. Legal Termination............................................ 46
SECTION 8.2. Company's Option to Effect Legal Defeasance
or Covenant Defeasance..................................... 46
SECTION 8.3. Legal Defeasance and Discharge............................... 46
SECTION 8.4. Covenant Defeasance.......................................... 47
SECTION 8.5. Conditions to Legal Defeasance and Covenant
Defeasance................................................. 47
SECTION 8.6. Reinstatement............................................... 48
SECTION 8.7. Repayment to the Company.................................... 48
SECTION 8.8. Survival of Holders' Conversion Rights and
Company's Obligation to Provide Reports................... 49
ARTICLE 9 AMENDMENTS................................................... 49
SECTION 9.1. Without Consent of Holders................................... 49
SECTION 9.2. With Consent of Holders...................................... 49
SECTION 9.3. Compliance with Trust Indenture Act. ........................ 50
SECTION 9.4. Revocation and Effect of Consents, Waivers and Actions....... 50
SECTION 9.5. Notation on or Exchange of the Notes. ....................... 51
SECTION 9.6. Trustee to Sign Supplemental Indentures...................... 51
SECTION 9.7. Effect of Amendments and Supplemental Indentures............. 51
ARTICLE 10 MISCELLANEOUS................................................ 51
SECTION 10.1. Trust Indenture Act Controls................................. 51
SECTION 10.2. Notices...................................................... 51
SECTION 10.3. Communication by Noteholder with Other Noteholders........... 52
SECTION 10.4. Certificate and Opinion as to Conditions Precedent........... 52
SECTION 10.5. Statements Required in Certificate or Opinion................ 53
SECTION 10.6. Severability Clause.......................................... 53
SECTION 10.7. Rules by Trustee, Paying Agent and Registrar................. 53
SECTION 10.8. Legal Holidays............................................... 53
[SECTION 10.9. Arbitration]................................................. 53
SECTION 10.10. Governing Law; Submission to Jurisdiction.................... 54
SECTION 10.11. Indenture Controls........................................... 54
SECTION 10.12. Successors................................................... 54
SECTION 10.13. Multiple Originals; Counterparts............................. 54
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ARTICLE 11 CONVERSION OF NOTES........................................... 54
SECTION 11.1. Conversion Privilege and Conversion Price..................... 54
SECTION 11.2. Exercise of Conversion Privilege.............................. 55
SECTION 11.3. .............................................................. 56
SECTION 11.4. Adjustment of Conversion Price................................ 56
SECTION 11.5. Notice of Adjustments of Conversion Price..................... 62
SECTION 11.6. Notice of Certain Partnership Action.......................... 62
SECTION 11.7. Issuance of Class A Interests................................. 63
SECTION 11.8. Taxes on Conversions.......................................... 63
SECTION 11.9. Responsibility of Trustee..................................... 63
ARTICLE 12
REPRESENTATIONS AND WARRANTIES................... 63
SECTION 12.1. Corporate/Partnership Status.................................. 63
SECTION 12.2. Corporate/Partnership Power and Authority..................... 64
SECTION 12.3. No Violation.................................................. 64
SECTION 12.4. Class A Interests Issuable upon Conversion of Notes........... 64
SECTION 12.5. Governmental Approvals........................................ 64
SECTION 12.6. Investment Company Act; Public Utility Holding Company Act.... 65
SECTION 12.7. Corporate/Partnership Structure; Capitalization............... 65
SECTION 12.8. No Default.................................................... 65
SECTION 12.9. Licenses, etc................................................. 65
SECTION 12.10.Compliance with Law........................................... 65
SIGNATURES.................................................................. 67
SCHEDULE I OUTSTANDING INDEBTEDNESS.................................... I-1
SCHEDULE II CONSENTS.................................................... II-1
SCHEDULE III CORPORATE/PARTNERSHIP STRUCTURE; CAPITALIZATION.............III-1
EXHIBIT A FORM OF NOTES................................................ A-1
EXHIBIT B CLOSING OPINION REQUIREMENTS................................. B-1
EXHIBIT C CONVERSION NOTICE............................................ C-1
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<PAGE>
Indenture, dated as of ____________, 1996, between WORLD FINANCIAL
PROPERTIES, L.P., a Delaware limited partnership (the "Company") and The Bank of
New York, a New York banking corporation, as trustee (the "Trustee").
The parties agree as follows for the benefit of each other and for the
equal and ratable benefit of the Holders of the Company's Increasing Rate
Convertible Notes due 2004 (the "Notes") issued under this Indenture from time
to time:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Acquisition" means the acquisition by any Acquisition Subsidiary of a
New Property or any New Property Equity Interest.
"Acquisition Subsidiary" means any Subsidiary of the Company that is
created specifically for the purpose of acquiring a New Property or any New
Property Equity Interest or that owns at any time any direct or indirect
interest in such New Property or such New Property Equity Interest.
"Additional Partnership Interests" means any Partnership Interests
issued by the Company after the Effective Date, other than Class A Interests
issued upon conversion of any of the Notes or the Class B Interests outstanding
on the date hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by"
and "under common control with") a specified Person if the controlling Person
possesses (or is a member of a group (as such term is used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act as in effect on the Effective Date) that
possesses), directly or indirectly, the power to direct or cause the direction
of the management or policies of the specified Person, whether through ownership
of Equity Interests, by agreement or otherwise. For purposes of determining
whether any particular Person is an Affiliate, all warrants, options, debt
securities which are exchangeable or convertible into Equity Interests and other
rights to acquire Capital Stock or other Equity Interests that are held by such
Person (and by all other Persons who are members of a group of which such Person
is a member) shall be deemed fully exercised and/or converted.
"Agent" means the Registrar or any Paying Agent or Conversion Agent of
the Company.
"Asset Sale" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by such Person of any of its assets
(including, without limitation, (a) by way of a sale-and-leaseback, merger,
consolidation or otherwise, (b) the sale, assignment or other transfer (by
merger, consolidation or otherwise) of any Equity Interests of any
<PAGE>
Subsidiary of that Person and (c) any amendment, waiver, modification, transfer,
sale or assignment of any Management Agreement) other than (i) the issuance by
the Company or any of its Subsidiaries of its Equity Interests in a transaction
that constitutes a Capital Infusion, (ii) the lease or sublease of any real or
personal property in the ordinary course of business to existing tenants or new
tenants in respect of space to be occupied by such tenant in any building owned
by the Company or any Subsidiary of the Company, (iii) conversion of Cash
Equivalents to cash in the ordinary course of business, (iv) the consolidation
or merger of the Company or the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company, in each case in
accordance with the provisions of Section 5.1 hereof, (v) the sale, lease,
conveyance or other disposition of any assets to the Company or to any
Subsidiary of the Company that is not an Acquisition Subsidiary and that does
not have outstanding any Nonrecourse Debt or (vi) the sale, lease, conveyance or
other disposition, in a single transaction or a series of related transactions,
of any assets, the gross proceeds of which do not exceed $250,000.
"Average Life" means, as of the date of determination, with respect to
any Indebtedness, the quotient obtained by dividing (i) the sum of the products
of the numbers of years from the date of determination to the dates of each
successive scheduled principal payment (assuming the exercise by the obligor of
such debt security of all unconditional (other than as to the giving of notice)
extension options of each such scheduled payment date) of such Indebtedness
multiplied by the amount of such principal payment by (ii) the sum of all such
principal payments.
"Bankruptcy Court" means the United States District Court for the
Southern District of New York having jurisdiction over the Reorganization Cases
and, to the extent of any reference under Section 157, Title 28, United States
Code, the unit of such District Court constituted under Section 151, Title 28,
United States Code.
"Bankruptcy Law" means Title 11 of the United States Code, or any
similar Federal or state law for the relief of debtors.
"Board Resolution" shall mean, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date on such certification, and delivered to the
Trustee.
"Business Day" means any day that is not a Saturday, a Sunday or a day
on which banking institutions in New York, New York are authorized by law or
required by executive order to close.
"Capital Infusion" means (i) any issuance or sale by the Company or
any Subsidiary of the Company of any Equity Interest of the Company or any
Subsidiary of the Company (other than (w) the sale by the Company or any
Subsidiary of the Company of previously issued and then outstanding Equity
Interests of a Person in which the Company or the selling Subsidiary, as the
case may be, has a direct or indirect interest; (x) the capital infusion of $75
million in Cash provided to the Company by the Co-Proponents on the Effective
Date pursuant to Section
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<PAGE>
18.12 of the Plan, (y) the conversion of Class B Interests outstanding on the
date hereof into Class A Interests as required pursuant to the Plan and
Partnership Agreement (as it exists on the date hereof) and (z) capital
contributions made by the Company or any Subsidiary of the Company to the
Company or another Subsidiary of the Company), (ii) any Indebtedness Incurred by
the Company or any Subsidiary of the Company, and (iii) any capital contribution
to the Company or any Subsidiary thereof (other than capital contributions made
by the Company or any Subsidiary of the Company to the Company or another
Subsidiary of the Company); provided, however, that none of the following shall
constitute a Capital Infusion:
(i) any Emergency Capital Infusion made in the form of a contribution
to the capital of the Company, a purchase from the Company of Equity
Interests of the Company or a purchase of Subordinated Debt from the
Company;
(ii) any Refinancing Transaction;
(iii) any transfer of assets (other than Cash) to the Company as a
capital contribution to the Company, or in exchange for Equity Interests of
the Company or Subordinated Debt, in connection with an Acquisition;
(iv) the Incurrence of any Nonrecourse Debt issued in payment of, or
to finance, the purchase price of, and actual out-of-pocket acquisition
expenses incurred by the relevant Acquisition Subsidiary in connection
with, an Acquisition, provided that the amount of the Nonrecourse Debt
issued in connection with such Acquisition does not exceed 80% of the
purchase price of the New Property or the New Property Equity Interest
acquired in such Acquisition;
(v) any Cash capital contribution to the Company, or any amount of
Cash paid to the Company in exchange for Equity Interests of the Company or
Subordinated Debt, to the extent that such Cash is used to pay a portion of
the purchase price of, and actual out-of-pocket acquisition expenses
incurred by the relevant Acquisition Subsidiary in connection with, an
Acquisition that is not paid or financed by the issuance of Nonrecourse
Debt referred to in clause (iv) above;
(vi) the Incurrence by the Company of Permitted Indebtedness;
(vii) the Incurrence of Indebtedness for borrowed money by the Company
or any Subsidiary of the Company so long as such Indebtedness is, at all
times, owed solely to the Company and Subsidiaries of the Company that are
not Acquisition Subsidiaries;
(viii) any Nonrecourse Debt Refinancing Transaction or
(ix) any Subordinated Debt Refinancing Transaction.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
which would at such time be so required to be capitalized on the balance sheet
in accordance with GAAP.
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<PAGE>
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock (including,
without limitation, common and preferred stock), excluding warrants, options or
other rights to acquire Capital Stock.
"Cash" means money or currency or a credit balance each in U.S.
dollars in a demand, savings, passbook, money market or like account with a
commercial bank, savings and loan association or like organization or a
government securities dealer, other than an account evidenced by a negotiable
certificate of deposit.
"Cash Equivalents" means (i) direct obligations of the United States
of America or any agency thereof having maturities of not more than one year
from the date of acquisition, (ii) time deposits and certificates of deposit of
any domestic commercial bank of recognized standing, having capital and surplus
in excess of $500 million, with maturities of not more than one year from the
date of acquisition, (iii) commercial paper rated at least A-1 or the equivalent
thereof by Standard & Poor's Corporation or at least P-1 or the equivalent
thereof by Moody's Investor Services, Inc., in each case maturing within one
year after the date of acquisition and (iv) shares of any money market mutual
fund, or similar fund, which invests exclusively in investments of the types
described in clauses (i) through (iii) above.
"Change in Control" means the occurrence of any of the following: (a)
any sale, lease, transfer, exchange or other disposition in one or more related
transactions of all or substantially all of (i) the assets of the Company, a
Controlling Partner or the Company's Subsidiaries or (ii) the Equity Interests
of the Company, a Controlling Partner or their respective Subsidiaries to any
Person or group (as such term is used in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act as in effect on the Effective Date; for purposes of this definition
the Company and the Controlling Partners shall be deemed to be registrants
within the meaning of the Exchange Act) other than to a Person that is a Wholly
Owned Subsidiary both immediately before and immediately after giving effect to
such transactions; (b) the merger or consolidation of the Company or a
Controlling Partner with or into another Person, or the merger of another Person
into the Company or a Controlling Partner or any other transaction, with the
effect, in any such case, that the holders of Equity Interests of the Company or
a Controlling Partner, as the case may be, immediately prior to such transaction
hold 50% or less of any then outstanding class, type or form of Equity Interests
of the Company, such Controlling Partner or the surviving entity, as relevant
(other than Equity Interests referred to in clause (b) of the definition of
Equity Interests if, on a fully diluted basis, after giving effect to the
exercise, conversion or exchange of all Equity Interests referred to in such
clause (b), the holders of Equity Interests of the Company or a Controlling
Partner, as the case may be, immediately prior to such transaction would own
beneficially and of record 50% or more of each then outstanding class, type and
form of Equity Interests of the Company, such Controlling Partner or the
surviving entity, as relevant); (c) the first date on which the Co-Proponents in
the aggregate own beneficially or of record 50% or less of any then outstanding
class, type or form of Equity Interests of the Company or a Controlling Partner
(other than Equity Interests referred to in clause (b) of the definition of
Equity Interests if, on a fully diluted basis, after giving effect to the
exercise, conversion or exchange of all Equity Interests referred to in such
clause (b), the holders of Equity Interests of the Company or such Controlling
Partner, as the case may be, immediately prior to such transaction would own
beneficially and of record 50% or more of each then
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<PAGE>
outstanding class, type and form of Equity Interests of the Company or such
Controlling Partner, as the case may be); (d) the first date on or after the
Effective Date on which the Co-Proponents in the aggregate do not have the right
to control the management and affairs of the Company and of each Controlling
Partner; or (e) the approval by a Controlling Partner or the required holders of
Equity Interests of the Company of any plan for the liquidation or dissolution
of the Company.
"Class A Interests" means Class A Units (as defined in the Partnership
Agreement (as in effect on the date hereof)) and any Equity Interests into which
such Class A Units may be changed after the Effective Date and shall also
include Equity Interests of any successor or acquiring person referred to in
Section 11.4(c) received by or distributed to the holders of such Equity
Interests in the circumstances contemplated by Section 11.4(c).
"Class B Interests" means the Class B Units (as defined in the
Partnership Agreement (as in effect on the date hereof)) issued on the Effective
Date pursuant to Section 18.1.1 of the Plan.
"Commission" means the Securities and Exchange Commission and any
successor thereto.
"Consolidated Net Worth" of the Company means consolidated interest
holders' equity as determined in accordance with GAAP.
"Controlling Partner" means any general partner of the Company or any
Person exercising similar functions if the Company is not a partnership.
"Conversion Agent" means the Trustee and any other person appointed by
the Company authorized by the Company to perform the duties of a Conversion
Agent specified in this Indenture.
"Conversion Notice" means a notice substantially in the form specified
in Exhibit C hereto.
"Convertible Securities" means evidences of indebtedness or other
securities or Equity Interests which are convertible into or exchangeable, with
or without payment of additional consideration in cash or property, for
Additional Partnership Interests, either immediately or upon the occurrence of a
specified date or a specified event.
"Co-Proponents" means, collectively, Canadian Imperial Bank of
Commerce, Dragon Holdings Limited, Citibank, N.A. and Brookfield Properties,
Inc.
"Core Properties" means, collectively, (i) that certain parcel of real
property located at 53 State Street, Boston, Massachusetts, together with the
office building and other improvements existing thereon, (ii) that certain
parcel of real property located at One Liberty Plaza, New York, New York,
together with the office building and other improvements existing thereon, (iii)
that certain parcel of real property located at 245 Park Avenue, New York, New
- 5 -
<PAGE>
York, together with the office building and other improvements existing thereon,
(iv) the leasehold interest in that certain parcel of real property located at
One World Financial Center, New York, New York, together with the office
building and other improvements existing thereon, (v) the leasehold interest in
that certain parcel of real property located at Two World Financial Center, New
York, New York, together with the office building and other improvements
existing thereon, and (vi) the leasehold interest in that certain parcel of real
property located at Four World Financial Center, New York, New York, together
with the office building and other improvements existing thereon; and "Core
Property" means any of the foregoing.
"CP Certificate" means a written certificate signed in the name of the
Company by two officers of a Controlling Partner and delivered to the Trustee.
"Current Market Price" as of any date with respect to any security
means the average of the Quoted Prices of such security for the twenty-five (25)
consecutive trading days (or, if such security is publicly traded but has been
so traded for less than twenty-five (25) consecutive trading days, such shorter
period in which such security has been publicly traded) immediately preceding
such date; provided, however, that, if an event described in Section 11.4(a)(i)
through 11.4(a)(iii) occurs with respect to such security during the period from
the first of such consecutive trading days through the last of such consecutive
trading days, the computation of Current Market Price shall be appropriately
adjusted to take account of such event. "Quoted Price" of any security for any
date shall be the last reported sales price (or, in case no such sale takes
place on such date, the average of the reported closing bid and ask of prices)
of such security as reported by the principal national securities exchange on
which such security is listed or traded, or as reported by the NASDAQ National
Market System, or if such security is neither so reported nor listed or traded,
the average of the last reported bid and ask prices of such security in the
over-the-counter market on such date. If such security is not listed or traded
on any national securities exchange or quoted in the over-the-counter market,
the Current Market Price of such security shall be deemed to be the fair market
value of such security as determined in good faith by the Board of Directors of
a Controlling Partner and as evidenced by a Board Resolution, which resolution
shall be delivered as soon as practicable thereafter to the Trustee; provided,
however, that if the Current Market Price of such security is being valued in
connection with any Equity Interests owned or purchased by or issued, delivered
or otherwise distributed to any of the Company's Affiliates or Related Persons,
then the Current Market Price of such security shall be determined by the
opinion of a nationally recognized investment banking firm retained by the
Debtor, which opinion shall be delivered by the Company as soon as practicable
after its issuance or delivery to the Trustee.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator, custodian or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Effective Date" means the date of this Indenture.
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"Emergency Capital Infusion" means any Incurrence by the Company of
Subordinated Debt or any capital contribution to the Company, (i) the proceeds
of which are utilized by the Company or any Subsidiary of the Company solely to
cure an existing default on any Indebtedness secured (directly or indirectly) by
any interest in a Core Property or any other Material Asset of the Company or
such Subsidiary and (ii) as to which transaction the Company shall have
certified to the Trustee that, (a) in the absence of such transaction the cash
on hand then available to the Company and its Subsidiaries (including any credit
which may then be available under any line of credit constituting Permitted
Indebtedness) is insufficient to effect such cure or prevent such imminent
default and (b) the proceeds of such transaction do not exceed the amount
reasonably estimated by the Company to be necessary to effect such cure or
prevent such imminent default.
"Equity Interests" means (a) Capital Stock, limited or general
partnership interests or units, interests in limited liability companies, joint
venture interests and other ownership interests in any Person, and (b) warrants,
options or other rights to acquire any of the above (including debt exchangeable
or convertible into any of the above).
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the Commission promulgated
thereunder.
"Excess Proceeds" means the Net Cash Proceeds of any Asset Sale that
is not used by the Company or the relevant Subsidiary of the Company as provided
in subsections (a), (b) or (c) of Section 4.10 of this Indenture within 180 days
after receipt of same by the Company or any Subsidiary of the Company.
"Exempt Subsidiary" means (a) any Significant Subsidiary that would
not be a Subsidiary if (i) it were not the record or beneficial owner, or the
operator or manager, of a Core Property referred to in clause (i) or (iv) of the
definition of Core Property, and (ii) it did not have any direct or indirect
interest in a Person that is the record or beneficial owner, or the operator or
manager, of a Core Property referred to in clause (i) or (iv) of the definition
of Core Property and (b) any Person referred to in subclause (ii)(x) or (ii)(y)
of this clause (b) if (i) by reason of a sale of an interest therein by the
Company or any of its Subsidiaries, the Company's direct and indirect Equity
Interest in any Core Property referred to in clause (ii), (iii), (v) or (vi) of
the definition of Core Property is less than 50% of the Company's direct or
indirect interest in such Core Property as of the date hereof and (ii) all
Persons (on a combined basis assuming that all of such Persons were required to
be included in the consolidated financial statements of the Company) in which
the Company has any direct or indirect interest which (x) are the record or
beneficial owner, or the operator or manager, of such Core Property, or (y) have
any direct or indirect interest in any Person that is the record or beneficial
owner, or the operator or manager, of such Core Property, would not (if
considered to be a single Subsidiary) be a Significant Subsidiary, as that term
is defined in Regulation S-X of the Securities Act of 1933, as in effect on the
date hereof.
"Full Payment Triggering Date" means the date upon which the Company
shall irrevocably deposit with the Paying Agent the purchase price for 100% of
the Notes in a Full Payment Triggering Offer.
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<PAGE>
"Full Payment Triggering Offer" means an offer by the Company to
purchase 100% of the then outstanding Notes pursuant to the terms and provisions
of Section 3.7 of this Indenture.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
as in effect on the Effective Date.
"Holder" or "Noteholder" means a Person in whose name the Notes are
registered on the Register.
"Indebtedness" of any Person means, without duplication, (i) all
obligations of such Person for borrowed money or for the deferred purchase price
of property or services (other than trade payables incurred in the ordinary
course of business that are current liabilities in accordance with GAAP), (ii)
all obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (iii) all reimbursement obligations of such Person in respect of
letters of credit (whether or not such letters of credit have been drawn upon)
or bankers' acceptances, (iv) all Capital Lease Obligations of such Person, (v)
all Indebtedness of others guaranteed by such Person or for which such Person is
otherwise contingently liable, and (vi) all Indebtedness of others secured by a
Lien on any property of such Person, whether or not such Indebtedness is assumed
by such Person.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof, including the provisions of the TIA
that, to the extent provided herein or required by the TIA, are deemed to be a
part hereof.
"Investment" means, when used with respect to any Person, any direct
or indirect advance, loan or other extension of credit (other than the creation
of receivables in the ordinary course of business) or capital contribution by
such Person (by means of transfers of cash or other property to others or
payments for property or services for the account or use of others, or
otherwise) to any other Person, or any direct or indirect purchase or other
acquisition by such Person of a beneficial interest in Capital Stock, bonds,
notes, debentures, Equity Interests or other securities issued by any other
Person.
"Lien" means, with respect to any property, any mortgage, pledge,
security interest, charge, hypothecation, collateral assignment, deposit
agreement, encumbrance, lien (statutory or otherwise), or security agreement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement, other than notice filings not perfecting a security
interest, under the Uniform Commercial Code or comparable law of any
jurisdiction, domestic or foreign, in respect of any of the foregoing).
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"Management Agreement" means any agreement that provides for or
otherwise permits the Company, any Subsidiary of the Company or Affiliate of the
Company that is controlled, directly or indirectly, by the Company to receive
any management or operating fee or leasing commission.
"Material Adverse Effect" means any material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company or any Significant Subsidiary, either
individually or in the aggregate, (b) the rights and remedies of the Noteholders
or the Trustee hereunder or (c) the ability of the Company to perform its
obligations hereunder.
"Material Asset" means any asset of the Company or its Subsidiaries
having a fair market value of at least $20,000,000.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of Cash or Cash Equivalents, including
payments in respect of deferred payment obligations when received in the form of
Cash or Cash Equivalents, casualty loss insurance proceeds, condemnation awards
and proceeds from the conversion of other property received in connection with
any Asset Sale when converted to Cash or Cash Equivalents, net of (i) brokerage
commissions and other direct fees and expenses related to such Asset Sale
actually paid by the seller of such asset(s), (ii) provision for all taxes paid
or payable directly as a result of such Asset Sale and, (iii) amounts to be
applied to the repayment of Indebtedness secured by a Lien on the asset or
assets that are the subject of such Asset Sale.
"New Property" means a Grade A office building containing at least
400,000 square feet of gross floor area.
"New Property Equity Interest" means Capital Stock, limited or general
partnership interests or units, interests in limited liability companies, joint
venture interests and other ownership interests in any Person the principal
assets of which consist of one or more New Properties.
"Nonrecourse Debt" means Indebtedness of an Acquisition Subsidiary
that owns a New Property or New Property Equity Interests acquired in connection
with an Acquisition, provided that (i) such Acquisition Subsidiary shall at all
times have no [material assets] other than the New Property or New Property
Equity Interests acquired in such Acquisition and assets used in connection with
the operation of such New Property, and (ii) neither the Company nor any
Subsidiary of the Company shall at any time as to such Indebtedness (a) provide
credit support of any kind (whether by undertaking, agreement or instrument
constituting Indebtedness or otherwise) or (b) be directly or indirectly liable
(as a guarantor, partner or otherwise).
"Nonrecourse Debt Refinancing Transaction" means any Incurrence of
Nonrecourse Debt by any Acquisition Subsidiary, the net proceeds of which are
used solely to Refinance Nonrecourse Debt of such Acquisition Subsidiary;
provided, however, that the principal amount of Nonrecourse Debt so Incurred
shall not exceed the then outstanding principal amount of the Nonrecourse Debt
so Refinanced.
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<PAGE>
"Notes" means the Increasing Rate Convertible Notes due 2004 of the
Company in the form of Exhibit A hereto issued under this Indenture in
accordance with Section 2.1.
"Noteholder" or "Holder" means a Person in whose name Notes are
registered on the Register.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be reasonably acceptable to the Trustee
and which opinion shall be reasonably satisfactory to the Trustee.
"Partnership Agreement" means the Limited Partnership Agreement of the
Company dated as of even date herewith by and among _______, _______ and
_________.
"Partnership Interests" means the Class A Interests and any Equity
Interest into which such Class A Interests may be changed after the Effective
Date and any other Equity Interest of the Company (regardless of how
denominated) that has the right (subject to any prior rights of any other class,
type or form of Equity Interest) to participate in any distribution of the
assets or earnings of the Company without limit as to per interest amount, and
shall also include Equity Interests of any successor or acquiring Person
referred to in Section 11.4(c) received by or distributed to the holders of
Equity Interests of the Company in the circumstances contemplated by Section
11.4(c).
"Permitted Indebtedness means Indebtedness of the Company that is
outstanding from time to time to provide working capital or other funds
necessary for the day to day operations of the Company and its Subsidiaries;
provided, however, that (i) no such Indebtedness is secured by any Lien, (ii)
the total principal amount of such Indebtedness outstanding at any time shall
not exceed $15 million, and (iii) the documentation evidencing such Indebtedness
shall require (and the Company shall comply with such requirement) that the
Company prepay all such Indebtedness such that, for a period of at least 30
consecutive days at any time during the first fiscal quarter of each fiscal
year, the aggregate outstanding principal amount of Permitted Indebtedness shall
be zero; and provided further, that Permitted Indebtedness does not include any
Indebtedness, the proceeds of which are used (in whole or in part) to Refinance
Nonrecourse Debt or Subordinated Debt.
"Person" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock company,
limited liability company, trust, unincorporated organization or government or
other agency or political subdivision thereof or other entity of any kind.
"Plan" means the ________ Amended Joint Plan of Reorganization, dated
______, 1996.
"Record Date," when used with respect to any Interest Payment Date,
shall mean the [fifteenth day of the month immediately preceding such Interest
Payment Date], whether or not such day is a Business Day.
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"Redemption Date" or "redemption date" means the date specified for
redemption of a Note in accordance with the terms of the Notes and this
Indenture.
"Redemption Price" or "redemption price" shall have the meaning set
forth in Section 3.1.
"Refinancing Transaction" means any Incurrence of Indebtedness by the
Company or any Subsidiary of the Company, the net proceeds of which are used
solely to Refinance Indebtedness (other than Nonrecourse Debt or Subordinated
Debt) of the Company or any Subsidiary of the Company that is not an Acquisition
Subsidiary; provided, however, that (i) the principal amount of Indebtedness so
Incurred by the Company shall not exceed the then outstanding principal amount
of the Indebtedness of the Company that is Refinanced by the Indebtedness so
Incurred by the Company and (ii) the principal amount of Indebtedness so
Incurred by the Company and its Subsidiaries shall not exceed the then
outstanding principal amount of the Indebtedness of the Company and its
Subsidiaries that is Refinanced by the Indebtedness so Incurred by the Company
and its Subsidiaries; and, provided further, that (x) all Indebtedness so
Incurred ranks, relative to the Notes, no more senior than the Indebtedness
being Refinanced thereby and bears interest at or below a market rate; (y) no
Indebtedness so Incurred shall be secured by any Lien on any property of the
Company except to the extent that there is a Lien on such property as security
for the Indebtedness being Refinanced, and (z) all Indebtedness so Incurred
shall have an Average Life greater than, and a stated maturity later than, the
Average Life and stated maturity, respectively, of the Indebtedness being
Refinanced.
"Related Person" of any specified Person means (i) any Affiliate of
such Person (other than a Subsidiary of the Company), (ii) any Person that owns,
directly or indirectly, 20% or more of any then outstanding class, series or
type of Equity Interests of such person, (iii) any Person that owns, directly or
indirectly, 10% of more of any then outstanding class, series or type of Equity
Interests of any Controlling Partner, or (iv) any Affiliate of a Person
described in clause (i), (ii) or (iii) of this definition.
"Reorganization Cases" means the cases commenced under Chapter 11 of
the Bankruptcy Code by certain debtors.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations of the Commission thereunder.
"Significant Subsidiary" means any Subsidiary of the Company that (i)
is the record or beneficial owner, or the operator or manager, of any of the
Core Properties, (ii) has any direct or indirect interest in any Person that is
the record or beneficial owner, or the operator or manager, of any of the Core
Properties, or (iii) is a Significant Subsidiary, as that term is defined under
Regulation S-X of the Securities Act of 1933, as in effect on the date hereof.
"Special Offer Purchase Price" for any Notes means a price equal to
100% of the principal amount of such Notes, plus accrued and unpaid interest to
the Special Offer Purchase Date.
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"Stated Maturity Date," when used with respect to the Notes, means the
date specified in the Notes as the fixed date on which the principal amount of
the Notes is due and payable.
"Subordinated Debt" means Indebtedness of the Company that is not
secured by any Lien, is not guaranteed, directly or indirectly, by any
Subsidiary of the Company and is fully subordinated (pursuant to terms and
conditions reasonably acceptable to the Trustee) in right of payment and
otherwise to all obligations of the Company under the Notes and this Indenture,
and, so long as any Notes are outstanding, as to which no payment shall be
required to be made or shall be made (including in respect of principal,
interest or any other amounts), and no rights or remedies may be exercised by
any holder of such Subordinated Debt.
"Subordinated Debt Refinancing Transaction" means any Incurrence of
Subordinated Debt by the Company, the net proceeds of which are used solely to
Refinance Subordinated Debt; provided, however, that the principal amount of
Subordinated Debt so Incurred shall not exceed the then outstanding principal
amount of the Subordinated Debt so Refinanced.
"Subsidiary" of any Person means any Person of which more than 50% of
the total voting power of shares of Capital Stock or other Equity Interests then
entitled (without regard to the occurrence of any contingency) to vote generally
in the election of directors, managers, trustees or general or managing partner
thereof or the right or power to direct the management or policies thereof
(through control of the relevant general partner, by contract or otherwise) is
at the time owned, controlled or otherwise possessed, directly or indirectly, by
such Person or one or more of the other Subsidiaries of such Person or any
combination thereof. Notwithstanding the foregoing, the Subsidiaries of the
Company shall include each Person in which the Company has any direct or
indirect interest whatsoever, but only if such Person (i) is the record or
beneficial owner, or the operator or manager, of any of the Core Properties, or
(ii) has any direct or indirect interest in any Person that is the record or
beneficial owner, or the operator or manager, of any of the Core Properties;
provided, however, that, for purposes of the provisions of Article 4 hereof, no
Person that is not then an Affiliate that is directly or indirectly controlled
by the Company or any Related Person of the Company shall be deemed to be a
Subsidiary of the Company by reason of the provisions of this sentence.
"Tax Advance" means an advance to be made by the Company to a claims
reserve established in accordance with Section 20 of the Plan in the event that
such reserve does not have sufficient Cash to pay required taxes.2
"TIA" means the Trust Indenture Act of 1939, as amended and as in
effect on the date of this Indenture; provided, however, that in the event the
TIA is amended after such date, TIA means, to the extent required by any such
amendment, the TIA as so amended.
- --------
2 Please note that Section 20.3.4 of the Plan should be modified to make
clear that if not otherwise repaid, Tax Advances should be satisfied
from excess reserves distributed to the Co-Proponents.
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<PAGE>
"Trust Officer," when used with respect to the Trustee, means any vice
president, any assistant vice president, any assistant secretary, any assistant
treasurer, any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above-designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Trustee" means the party named as the "Trustee" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor.
"Wholly Owned Subsidiary" means any Subsidiary of the Company, all of
the outstanding Capital Stock and other Equity Interests of which is owned by
the Company (either directly or indirectly through Wholly Owned Subsidiaries).
"Withholding Advances" means amounts paid by the Company, on behalf of
a partner in the Company or an assignee of an Equity Interest in the Company, in
respect of any amount that the Company determines in its reasonable judgment is
required to be withheld under applicable law in connection with the interest of
such partner in the Company or its assignee, which amounts have not been paid or
otherwise satisfied (including by way of withholding, offset or deduction
against the interest of such partner or assignee) by such partner or assignee.
SECTION 1.2. Other Definitions. [To Be Updated]
Defined in
Term Section
"Acceleration............................ 6.2
"Act".................................... 1.5
"Capital Infusion Offer"................. 4.17
"Change in Control Offer"................ 4.9
"Commission Reports"..................... 4.2
"Conversion Agent".......................
"Conversion Price"....................... 11.1
"Covenant Defeasance".................... 8.4
"Defaulted Interest...................... 2.12
"Event of Default"....................... 6.1
"Excess Proceeds"........................ 4.10
"Excess Proceeds Offer".................. 4.10
"Furnished Information".................. 12.9
"Incur".................................. 4.7
"Interest Payment Date".................. 2.1
"Legal Defeasance"....................... 8.3
"Legal Holiday".......................... 10.8
"Offer to Purchase"...................... 3.8
"Paying Agent"........................... 2.3
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"Redemption Price"....................... 3.1
"Refinancing"............................ 4.7
"Refinancing Indebtedness"............... 4.7
"Register"............................... 2.3
"Registrar".............................. 2.3
"Special Offer".......................... 3.7
"Special Offer Amount"................... 3.7
"Special Offer Payment Date"............. 3.7
"Special Offer Triggering Event"......... 3.7
"Surviving Entity"....................... 5.1
SECTION 1.3. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, such provision is, to
the extent required by the TIA, incorporated by reference in and made a part of
this Indenture. To the extent required by the TIA, all TIA terms used in this
Indenture that are defined by the TIA, defined by TIA reference to another
statute or defined by Commission rule have the meanings assigned to them by such
definitions.
SECTION 1.4. Rules of Construction. Unless the context otherwise
requires:
(1) A term has the meaning assigned to it herein, whether defined
expressly or by reference;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including, without limitation;
(5) words in the singular include the plural, and words in the plural
include the singular; and
(6) "herein," "hereof" and other words of similar nature refer to this
Indenture as a whole and not to any particular or individual article, section or
part of an article or section (unless the context clearly otherwise requires).
SECTION 1.5. Acts of Holders.
(1) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing, in which instruments such Holders shall certify as to
whether they are Affiliates of the Company; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are
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delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Trustee and the Company
if made in the manner provided in this Section.
(2) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Trustee reasonably
deems sufficient.
(3) The ownership of the Notes shall be proved by the Register as of
the record date for such action.
(4) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other act, the Company may,
at its option, by or pursuant to resolutions of its Controlling Partners, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of the Notes have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act; provided
that no such authorization, agreement or consent by the Holders on such record
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture or such authorization, agreement or consent not
later than six months after the record date.
(5) In connection with every Act of Holders and otherwise as
reasonably requested by the Trustee (but in any case no less frequently than
semi-annually), the Company shall be required to deliver a CP Certificate which
identifies each Note (or portion thereof) held of record or beneficially by or
for each Affiliate of the Company or any Subsidiary of the Company (as of the
relevant record date, if any).
ARTICLE 2
THE NOTES
SECTION 2.1. Form and Dating. The Notes and the Trustee's certificate
of authentication thereon shall be substantially in the form of Exhibit A
hereto. The Notes may have notations, legends or endorsements required by law,
stock exchange rules or agreements to which the Company is subject, if any. The
Company shall approve the form of the Notes and any notation, legend or
endorsement thereon, and such approval shall be evidenced by the execution of
such Notes by a Controlling Partner. The Notes shall be dated the date of their
authentication. The Notes shall bear interest from the earlier of the Effective
Date and December 1, 1996 at the rate per annum provided therein, payable
quarterly on __________,
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________, _________ and ____________of each year, commencing with the first such
date after the Effective Date (each such date, an "Interest Payment Date"),
shall mature on __________, 2004, and shall be issuable as registered Notes
without coupons in denominations of $1,000 and any integral multiple thereof.3
The terms and provisions contained in the form of the Notes, annexed
hereto as Exhibit A, shall constitute, and are hereby expressly made, a part of
this Indenture. To the extent applicable, the Company and the Trustee by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
SECTION 2.2. Execution and Authentication; Aggregate Principal Amount.
Two officers of a Controlling Partner shall sign the Notes for the Company by
facsimile or manual signature. The Controlling Partner's corporate seal, if any,
may be reproduced or imprinted on the Notes.
If a Person whose signature is on the Notes no longer holds that
office or position at the relevant Controlling Partner at the time the Trustee
authenticates the Notes, the Notes shall nevertheless be valid. In addition, if
a Person does not hold an office or position at the time the Notes are
authenticated, but holds such office or position on or prior to the delivery of
the Notes, the Notes shall nevertheless be valid. If the Controlling Partner
whose officers signed the Notes for the Company is no longer a Controlling
Partner at the time the Trustee authenticates the Notes, the Notes shall
nevertheless be valid.
The Notes shall not be valid until the Trustee manually signs the
certificate of authentication on the Notes. The Trustee's signature shall be
conclusive evidence that the Notes have been authenticated under this Indenture.
The Trustee shall authenticate for original issuance up to $__________
in aggregate principal amount of Notes upon receipt of (i) a written order of
the Company signed by two officers of a Controlling Partner and (ii) an Opinion
of Counsel addressed to the Trustee and the Noteholders in substantially the
form attached hereto as Exhibit B. The written order shall specify the amount of
the Notes to be authenticated, the date on which the Notes are to be
authenticated, the names, addresses and denominations in which the Notes shall
be registered and to whom the Notes shall be delivered. The aggregate principal
amount of the Notes outstanding at any time under this Indenture may not exceed
$__________ , except as provided in Section 2.7 of this Indenture.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate the Notes, which authenticating agent shall be
compensated by the Company. Unless limited by the terms of such appointment, an
authenticating agent may authenticate -------- 3 This assumes that the
Confirmation Order will provide that in lieu of issuing Notes in denominations
of less than $1,000, the Company will pay to each unsecured creditor an amount
of cash equal to the principal amount of the Note that otherwise would have been
issued to such unsecured creditor.
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<PAGE>
the Notes whenever the Trustee may do so. Except as provided in the preceding
sentence, each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent has the same
rights as any Agent to deal with the Company or any Affiliate of the Company.
SECTION 2.3. Registrar and Paying Agent. The Company shall maintain an
office or agency within the City of New York, Borough of Manhattan, where the
Notes may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where the Notes may be presented for
payment ("Paying Agent"). Unless otherwise designated by the Company, the
Company's office or agency maintained for such purpose in the City of New York,
Borough of Manhattan, will be the office of the Trustee. The Notes will be
payable both as to principal and interest at the office of the Paying Agent. The
Registrar shall keep a register of the Notes, the names and addresses of the
Noteholders and of the transfer and exchange of the Notes (the "Register"). The
Company may have one or more additional Paying Agents. The term "Paying Agent"
includes any additional Paying Agent. Notwithstanding anything to the contrary
contained herein, neither the Company nor any Subsidiary or Affiliate of the
Company may serve as the Paying Agent.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture. Each such agreement shall
implement the provisions of this Indenture that relate to such Agent and shall
incorporate the provisions of the TIA. The Company shall give prompt written
notice to the Trustee and the Holders of the name and address of any such Agent
and any change in the address of such Agent. The Company may change an Agent
without prior notice to the Holders. If the Company fails to maintain a
Registrar or Paying Agent, the Trustee shall act as such and shall be entitled
to receive appropriate compensation therefor in accordance with Section 7.7 of
this Indenture.
The Company initially appoints the Trustee to act as Conversion Agent,
Registrar and Paying Agent.
SECTION 2.4. Paying Agent To Hold Money in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that such
Paying Agent shall hold in trust in immediately available funds for the benefit
of Noteholders all money held by the Paying Agent for the payment of principal,
premium, if any, or interest on the Notes, and such Paying Agent shall notify
the Trustee in writing of any default by the Company in making any such payment.
The Company at any time may require a Paying Agent to pay all money held by it
as Paying Agent to the Trustee and account for any funds disbursed, and the
Trustee may at any time during the continuance of any payment Default, upon
written request to a Paying Agent, require such Paying Agent to pay all money
held by it as Paying Agent to the Trustee and to account for any funds
disbursed. Upon doing so, the Paying Agent shall have no further liability for
the money so paid over to the Trustee.
SECTION 2.5. Noteholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Noteholders and shall otherwise comply with the
provisions of TIA ss. 312(a). If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least
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five Business Days before each Interest Payment Date and at such other times as
the Trustee may request in writing a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the
Noteholders, and the Company shall otherwise comply with the provisions of TIA
ss. 312(a).
The Trustee shall be entitled to rely upon a certificate of the
Registrar, the Company or another Paying Agent, as the case may be, as to the
names and addresses of the Noteholders and the principal amount of the Notes.
SECTION 2.6. Transfer and Exchange.
(a) Transfer and Exchange of the Notes. The transfer and exchange of
the Notes shall be in accordance with this Indenture.
(b) General Provisions Relating to Transfers and Exchanges of the
Notes.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Notes at the
Company's request in accordance with the provisions of Section
2.2 hereof.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may
require from the Holder payment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer tax or
similar governmental charge payable upon exchanges, which shall
be paid by the Company).
(iii) All Notes issued upon any registration of transfer or exchange
of the Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Notes surrendered upon such
registration of transfer or exchange.
(iv) Prior to due presentment for the registration of a transfer of
the Notes, the Trustee, any Agent and the Company may deem and
treat the Person in whose name the Notes are registered as the
absolute owner of the Notes for the purpose of receiving
payment of principal of, interest on, and premium, if any, on
the Notes and neither the Trustee, any Agent nor the Company
shall be affected by notice to the contrary.
SECTION 2.7. Replacement Notes. If a mutilated Note is surrendered to
the Trustee or if the Company and the Trustee receive evidence to their
satisfaction that a Note has been lost, destroyed or wrongfully taken, the
Company shall issue a replacement Note, and the Trustee shall authenticate such
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond shall be provided by the Noteholder
that is sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss which
any
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of them may suffer if the Note is replaced. The Company and the Trustee may
charge such Holder for their expenses in replacing the Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.8. Outstanding Notes. Notes outstanding at any time are all
Notes that have been authenticated by the Trustee, except for those cancelled by
it, those delivered to it for cancellation and those described in this Section
2.8 as not outstanding. Notwithstanding anything to the contrary contained in
this Indenture (except as set forth in Section 2.9 hereof), neither the Company
nor any Affiliate of the Company shall be counted in respect of any Acts of
Holders or for purposes of determining whether Holders of the requisite portion
of Notes have authorized or agreed or consented to a request, direction, notice,
consent or waiver, or denied authorization with respect to any matter requiring
the agreement, consent, authorization or waiver of the Holders and all Notes
held by the Company or any Affiliate of the Company shall be deemed not to be
issued and not to be outstanding for purposes thereof. Except as specifically
provided herein, such Notes do not cease to be outstanding for other purposes
under this Indenture solely because an Affiliate of the Company owns the Notes
of record or beneficially.
If any Note is replaced pursuant to Section 2.7, such Note shall cease
to be outstanding as of the date it is replaced, unless the Trustee receives
proof satisfactory to it that the replaced Note is held by a bona fide
purchaser.
If the principal of, interest on, or Defaulted Interest, if any, or
premium, if any, on any Notes is considered paid under Section 4.1 hereof, such
amount shall cease to be outstanding, and any interest on such amount ceases to
accrue as of the date of such payment.
If any Note is redeemed, repurchased or converted, the principal
amount of such Note so redeemed, repurchased or converted shall cease to be
outstanding and interest thereon shall cease to accrue as of the date of such
payment.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a Redemption Date or Stated Maturity Date, money sufficient,
in immediately available funds, to pay all principal of, interest on and
premium, if any, payable on that date with respect to the Notes (or the portion
thereof to be redeemed or maturing, as the case may be), then on and after that
date such Notes (or portions thereof) shall no longer be deemed to be
outstanding and shall cease to accrue interest.
Upon a "Legal Defeasance" pursuant to Article 8, the Notes shall be
deemed to be outstanding to the extent provided in the applicable Section of
Article 8 hereof.
SECTION 2.9. Treasury Notes. In determining whether the Holders of the
required principal amount of the Notes have concurred in any Act of Holders,
request,
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demand, authorization, direction, notice, waiver, consent or other action,
record and beneficial interests in the Notes owned by the Company or any
Affiliate of the Company and the voting rights related to such beneficial
interests in the Notes shall be disregarded, except that for the purpose of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only interests in the Notes that are listed as so
owned in the CP Certificate required to be delivered pursuant hereto shall be so
disregarded.
SECTION 2.10. Temporary Notes. Until definitive Notes are ready for
delivery, the Company may prepare, and the Trustee shall authenticate, upon
written order of the Company signed by two officers of a Controlling Partner,
temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes but may have variations that the Company reasonably considers
appropriate for temporary Notes. Without unreasonable delay, the Company shall
prepare, and the Trustee shall authenticate, definitive Notes in exchange for
temporary Notes.
Until such exchange, such temporary Notes shall be entitled to the
same rights, benefits and privileges as definitive Notes.
SECTION 2.11. Cancellation. The Company at any time may deliver Notes
to the Trustee for cancellation. The Conversion Agent, Registrar and the Paying
Agent shall forward to the Trustee any Notes surrendered to them for conversion,
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
conversion or cancellation and the Trustee shall dispose of such Notes as
directed in writing by the Company. The Company may not issue new Notes to
replace Notes it has paid for or delivered to the Trustee for cancellation.
SECTION 2.12. Defaulted Interest. If the Company defaults in a payment
of interest on the Notes, it shall pay the defaulted interest in U.S. dollars in
immediately available funds, plus, to the extent permitted by law, any interest
payable on the defaulted interest, to the Persons who are Noteholders on a
subsequent special record date, in each case at the rate provided in the Notes
("Defaulted Interest"). Such special record date shall be the tenth day next
preceding the date fixed by the Company for the payment of Defaulted Interest,
whether or not such special record date is a Business Day. At least 15 days
before the special record date, the Company shall mail or cause to be mailed to
each Noteholder and the Trustee a notice that states the special record date,
the payment date and the amount of Defaulted Interest to be paid.
ARTICLE 3
REDEMPTION
SECTION 3.1. Optional Right to Redeem; Notices to Trustee.
(a) At any time on or after the date hereof to and including the
second anniversary of the Effective Date, the Company, at its option, may redeem
the Notes in
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whole or in part for Cash in accordance with this Section 3.1, at a redemption
price equal to 100% of the principal amount thereof outstanding at the
Redemption Date, plus accrued and unpaid interest to the Redemption Date (the
"Redemption Price"). Immediately following the close of business on the second
anniversary of the Effective Date, this right to redeem Notes shall terminate
and the Company shall have no other optional redemption rights.
(b) If the Company elects to redeem the Notes or a portion thereof
pursuant to this Article 3, it shall notify the Trustee in writing of its
election to redeem the Notes, at least 45 days before the Redemption Date
(unless a shorter notice shall be satisfactory to the Trustee) and shall deliver
to the Trustee a CP Certificate setting forth the Redemption Date, the principal
amount of Notes to be redeemed and the Redemption Price.
SECTION 3.2. Selection of the Notes or Portions Thereof to be
Redeemed. If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the portions of the Note to be redeemed, on a substantially
pro rata basis rounding up or down to the nearest $1,000 in aggregate principal
amount. The Trustee shall make the selection at least 35 but not more than 65
days before the Redemption Date from the Notes not previously called for
redemption. The Notes and portions thereof selected for redemption by the
Trustee shall be in principal amounts of $1,000 or an integral multiple of
$1,000. Provisions of this Indenture that apply to the Notes called for
redemption also apply to portions of the Notes called for redemption. The
Trustee shall notify the Company promptly in writing which Notes or portions of
the Notes are to be redeemed and, in the case of Notes selected for partial
redemption, the principal amount thereof to be redeemed.
SECTION 3.3. Notice of Redemption. At least 30 days but not more than
60 days before a Redemption Date, the Company shall mail or cause to be mailed a
notice of redemption by first-class mail, postage prepaid, to Holders of the
Notes at the Holders' last addresses, as they shall appear on the Register. A
copy of such notice shall be mailed to the Trustee on the same day the notice is
mailed to Holders unless the Trustee mails such notice to the Holders on behalf
of the Company.
The notice shall identify the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent;
(4) if a Note is being redeemed in part, the portion of the principal
amount of the Note to be redeemed and that on and after the Redemption Date,
upon surrender of the Note, the Trustee's records will reflect such decrease in
the principal amount and a new Note or Notes in principal amount equal to the
unredeemed portion will be issued;
(5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price;
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(6) that unless the Company defaults in making the redemption payment,
interest will cease to accrue on the Notes or portions thereof called for
redemption on and after the Redemption Date;
(7) the Conversion Price then in effect, that the Notes may be
converted pursuant to the provisions of Article 11 hereof at any time prior to
the close of business on the Redemption Date and that the conversion right will
expire in respect of the Notes or portions thereof called for redemption upon
the close of business on the Redemption Date unless the Company defaults in
making the redemption payment.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense within 15 days of
such request; provided, however, that (i) in all cases, the text of such notice
of redemption shall be prepared or approved by the Company and the Trustee shall
have no responsibility whatsoever with regard to such notice being accurate or
correct (except for the selection of the portions of the Notes for redemption
pursuant to Section 3.2) and (ii) the Company shall deliver to the Trustee, at
least 45 days prior to the Redemption Date (unless a shorter period shall be
agreed to by the Trustee), a CP Certificate requesting that the Trustee give
such notice and setting forth the information to be stated in such notice.
SECTION 3.4. Effect of Notice of Redemption. Once notice of redemption
is given, Notes or portions thereof called for redemption become due and payable
on the Redemption Date and at the Redemption Price. Upon the later of the
Redemption Date and the date the Notes or portions thereof are surrendered to
the Paying Agent, the Notes or portions thereof called for redemption shall be
paid at the Redemption Price, if money in immediately available funds sufficient
for that purpose has been deposited as provided in Section 3.5 hereof. If a
Redemption Date is on or before an Interest Payment Date and after the related
Record Date for such Interest Payment Date, any interest accrued and unpaid to
the Redemption Date shall be paid on such Interest Payment Date to the Person in
whose name the Notes are registered at the close of business on such Record Date
and the only remaining right of the Holder of the Notes or portions thereof
called for redemption shall be to receive the Redemption Price, excluding all
accrued interest thereon, upon surrender of such Notes to the Paying Agent.
Notice of redemption shall be deemed to be given when mailed by first
class mail to each Holder at its latest registered address, whether or not any
such Holder receives the notice.
SECTION 3.5. Deposit of Redemption Price. On or prior to the
Redemption Date, the Company shall irrevocably deposit with the Paying Agent in
immediately available funds money sufficient to pay the Redemption Price of the
Notes or portions thereof to be redeemed on that date other than portions of the
Notes called for redemption which prior thereto have been delivered by the
Company to the Trustee for cancellation or delivered to the Trustee by the
Holder thereof for conversion pursuant to Article 11 hereof. If any Note called
for redemption is converted pursuant hereto, any money deposited with the
Trustee or any Paying Agent for the Redemption Price of such
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Note shall be paid to the Company upon the Company's written request. The Paying
Agent shall return to the Company any money deposited with the Paying Agent by
the Company in excess of the amounts necessary to pay the Redemption Price of,
and accrued interest on, all Notes or portions thereof to be redeemed.
If the Company complies with the preceding paragraph, interest on the
Notes or portions thereof to be redeemed, whether or not the Notes are presented
for payment, will cease to accrue on the applicable Redemption Date. If any Note
called for redemption is not paid upon surrender thereof for redemption, the
principal (and premium, if any) shall, until paid, bear interest from the
Redemption Date and such Note shall remain convertible until the principal of
such Note and accrued interest shall have been paid or duly provided for.
SECTION 3.6. Notes Redeemed in Part. Upon surrender of the Notes that
are redeemed in part, the Company shall issue, and the Trustee shall
authenticate and make available for delivery to the Holder, new Notes in an
authorized denomination equal in principal amount to the unredeemed portion of
the Notes surrendered.
SECTION 3.7. Special Procedures for Change in Control Offer, Excess
Proceeds Offer and Capital Infusion Offer. The following provisions shall apply
notwithstanding any other provision of this Article 3:
Within 30 days following any Change in Control or the occurrence of an
event which mandates an Excess Proceeds Offer or a Capital Infusion Offer (any
such event or Change in Control hereinafter referred to as a "Special Offer
Triggering Event"), the Company shall mail, by first class mail, to each Holder
at its last registered address, with a copy to the Trustee, a notice, which
shall govern the relevant Change in Control Offer, Excess Proceeds Offer or
Capital Infusion Offer (each one of which is hereinafter referred to as a
"Special Offer"), containing all instructions and materials necessary to enable
the Holders to tender the Notes or portions thereof pursuant to the Special
Offer, and shall state:
(i) that the Special Offer is being made pursuant to Section 4.9,
4.10 or 4.17, as applicable, and, in the case of a Change in
Control Offer, that all issued and outstanding Notes properly
tendered and not subsequently withdrawn will be accepted for
payment and paid for by the Company or, in the case of an
Excess Proceeds Offer or a Capital Infusion Offer, the amount
of the Excess Proceeds or Capital Infusion, as applicable, to
be applied to the purchase of Notes (the "Special Offer
Amount") pursuant to such Excess Proceeds Offer or such Capital
Infusion Offer and the aggregate principal amount of Notes then
outstanding;
(ii) the Special Offer Purchase Price in such Special Offer and the
purchase date (the "Special Offer Payment Date"), which date
shall not be less than 21 Business Days nor more than 31
Business Days following the date such notice is mailed,
provided that the Special Offer Payment Date shall in no event
be later than 60 days (or up to an additional 30
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days to the extent required by applicable law) after the
Special Offer Triggering Event;
(iii) that the Notes or portions thereof not tendered (or which are
tendered but subsequently withdrawn by the Holder prior to
acceptance for payment by the Company or, in the case of an
Excess Proceeds Offer or a Capital Infusion Offer, not accepted
for payment by reason of the proration provisions of such
Offer) will continue to accrue interest and shall continue to
be governed by the terms of this Indenture in all respects;
(iv) that, unless the Company defaults in the payment thereon, the
Notes or portions thereof that are tendered and not timely
withdrawn by Holders and accepted for payment pursuant to the
Special Offer will cease to accrue interest from and after the
Special Offer Payment Date;
(v) that Holders electing to have the Notes (or portions thereof)
purchased pursuant to a Special Offer will be required to
surrender the Notes, accompanied by such customary documents of
surrender and transfer as the Company reasonably may request,
duly completed, to the Trustee at the address of the Trustee
specified in the notice of the Special Offer prior to the close
of business on the Business Day immediately preceding the
Special Offer Payment Date;
(vi) that Holders will be entitled to withdraw or modify their
election if the Trustee receives at the address or facsimile
number, as applicable, of the Trustee specified in the notice
of the Special Offer, not later than the close of business on
the Business Day immediately preceding the Special Offer
Payment Date, a facsimile transmission or letter setting forth
the name of the Holders, the principal amount of the Notes (or
portions thereof) the Holders delivered for purchase, and a
statement that such Holders are withdrawing or modifying their
election to have all or part of such Notes (or portions
thereof) purchased;
(vii) that a Holder whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased
portion of the Notes surrendered, provided that the Notes or
portions thereof purchased and each of such new Notes issued
shall be in a principal amount of $1,000 or an integral
multiple thereof;
(viii) in the case of a Change in Control Offer, the circumstances and
material facts regarding the Change in Control, including but
not limited to information with respect to the historical
consolidated and combined financial information of the Company
and its Subsidiaries and pro forma consolidated and combined
financial information of the Company and its Subsidiaries after
giving effect to the Change in
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Control, information regarding any Person or Persons acquiring
control, to the extent reasonably available, and the business
plans of such Person or Persons with respect to the Company, to
the extent reasonably available;
(ix) in the case of an Excess Proceeds Offer or a Capital Infusion
Offer, that if the Notes (or portions thereof) in an aggregate
principal amount exceeding the Special Offer Amount, as
applicable, are duly surrendered (and not withdrawn), the
Company shall purchase Notes on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that
Notes shall be purchased only in principal amounts of $1,000 or
integral multiples thereof);
(x) the Conversion Price then in effect, the Class A Interests into
which the Notes may then be converted, that the Notes may be
converted pursuant to the provisions of Article 11 hereof at
any time and that such conversion right will expire with
respect to the Notes (or the portion thereof) duly surrendered
(and not withdrawn) and accepted for payment by the Company
unless the Company defaults in the payment of the Special Offer
Purchase Price; and
(xi) in the case of a Special Offer that constitutes a Full Payment
Triggering Offer (whether pursuant to a Change in Control Offer
or otherwise), that from and after the Full Payment Triggering
Date relating thereto, the Company shall no longer be required
to comply with the covenants contained in Section 4.6
(Limitation on Restricted Payments), Section 4.7 (Limitation on
Additional Indebtedness) or Section 4.17 (Capital Infusion
Offer).
On or before the Special Offer Payment Date, the Company shall (i)
deposit with the Trustee or the Paying Agent immediately available funds
sufficient to pay the Special Offer Purchase Price of the Notes or portions
thereof accepted for payment, (ii) deliver or cause to be delivered to the
Trustee a CP Certificate specifying the Notes or portions thereof accepted for
payment, respectively, and (iii) accept for payment the Notes or portions
thereof tendered and not theretofore withdrawn, pursuant to the Special Offer,
except that, in the case of an Excess Proceeds Offer or Capital Infusion Offer,
the principal amount of the Notes accepted for payment need not exceed the
Special Offer Amount. The Trustee shall promptly mail to each Holder of the
Notes so tendered payment in an amount equal to the Special Offer Purchase Price
for such Notes or portions thereof accepted for payment, respectively, and, and
with respect to the Notes accepted for payment in part the Company shall issue
and the Trustee shall promptly authenticate and mail to such Holder one or more
certificates evidencing new Notes equal in principal amount to any unpurchased
portion of the Notes surrendered. The Notes or portions thereof purchased
pursuant to a Special Offer will be cancelled by the Trustee. The Company will
publicly announce the results of any Special Offer on or as soon as practicable
after the Special Offer Payment Date.
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ARTICLE 4
COVENANTS
SECTION 4.1. Payment of Principal, Premium and Interest.
(a) The Company shall pay the principal of, interest on, and premium,
if any, on the Notes on (or prior to) the dates and in the manner provided in
the Notes or pursuant to this Indenture. An installment of principal, premium,
if any, or interest shall be considered paid on the applicable date due, if on
such date the Trustee or the Paying Agent holds, in accordance with this
Indenture, money, in immediately available funds, sufficient to pay all of such
installment then due no later than 12:00 noon on such date. The Company shall
pay interest on overdue principal and premium, if any, and, to the extent
permitted by applicable law, interest on overdue installments of interest (in
each case, including interest accruing on or after the commencement of a
bankruptcy or reorganization proceeding relating to the Company or the filing of
a petition relating to the same, whether or not a claim for such interest is
allowed or allowable in such proceeding), to the extent lawful, at the rate per
annum borne by the Notes plus 2%, which interest on overdue interest and/or
principal shall accrue from the date such amounts became overdue.
[(b) Upon the written request of any Holder that holds at least
$______ in aggregate outstanding principal amount of Notes, and notwithstanding
anything contained in this Indenture or in the Notes to the contrary, the
Company shall pay all amounts becoming due on such Notes for principal, premium,
if any, and interest by the method and at the address specified for such purpose
in such notice, or by such other method or at such other address as such Holder
may from time to time specify to the Company in writing for such purpose.]
SECTION 4.2. Provision of Reports and Other Information.
(a) So long as any Notes remain outstanding, the Company shall cause
copies of all quarterly and annual reports and of the information, documents and
other reports which the Company is required to file with the Commission pursuant
to Section 13(a) or 15(d) of the Exchange Act ("Commission Reports") to be
delivered to the Trustee and mailed to the Holders at their addresses appearing
in the Register, in each case, within 5 days of filing with the Commission. If
for any reason the Company is not subject to the requirements of Section 13(a)
or 15(d) of the Exchange Act or shall cease to be required by the Commission to
file Commission Reports, the Company shall prepare and file with the Trustee and
mail to the Holders at their addresses appearing in the Register:
(i) not later than 45 days after the close of each fiscal quarter of
the Company ending on _______________, ______________, and
________________, a report containing substantially the same information as
is required to be included in a report on Form 10-Q promulgated by the
Commission pursuant to the Exchange Act; and
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(ii) not later than 120 days after the close of each fiscal year of
the Company a report containing substantially the same information as is
required to be included in a report on Form 10-K promulgated by the
Commission pursuant to the Exchange Act;
provided, however, that in respect of the foregoing reports (a) the form of
financial statements included therein need not comply with the provisions of
Regulation S-X (but shall nevertheless be prepared in accordance with GAAP), (b)
the Company need not include any pro forma financial statements for periods
prior to the Effective Date, (c) no reporting of the matters contemplated in
Item 402 of Regulation S-K shall be required, except that [summary information
as to the compensation from the Company and its Subsidiaries of the five highest
paid executive officers of the Company and of all executive officers of the
Company as a group shall be supplied], (d) substantially the same information
that would otherwise have been required to be included in a Form 8-K if the
Company were required to file Commission Reports shall be included in the next
report referred to in clause (i) or (ii) above, (e) such reports shall include
exhibit lists listing the same exhibits as are required to be listed in a report
on Form 8-K, Form 10-Q or Form 10-K, as the case may be, and (f) any Noteholder
shall be entitled to obtain from the Company a copy of any exhibit so listed or
required to be listed. For purposes of providing Commission Reports that comply
with rules and regulations issued by the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act, the Company shall be deemed to be a "registrant"
within the meaning of Rule 12b-2 of the Exchange Act. The Company shall make all
such information available to investors who request it in writing. The Company
shall also comply with the provisions of TIA ss. 314(a).
(b) So long as any Notes remain outstanding, the Company shall cause
copies of all reports, information and notices furnished or made available to
partners of the Company generally to be delivered to the Trustee and mailed to
the Holders at their addresses appearing in the Register, in each case promptly
after they are so furnished or made available.
(c) So long as any Notes remain outstanding, the Company shall cause
notice of each amendment, modification or waiver of or to the Partnership
Agreement (as it may be amended from time to time) to be delivered to the
Trustee and mailed to the Holders at their addresses appearing in the Register.
At the request of any Holder or the Trustee, the Company shall deliver to the
Trustee and to such Holder at its address appearing in the Register a true and
complete copy of the Partnership Agreement, as amended through the date of
delivery thereof.
(d) So long as any Notes remain outstanding, the Company shall cause
notice of any proposed amendment, modification or waiver of or to the
Partnership Agreement referred to in the proviso to the first sentence of
Section 11.01(b), or in the second sentence of Section 11.01(b), of the
Partnership Agreement (as in effect on the date hereof) to be delivered to the
Trustee and mailed to the Holders at their addresses appearing in the Register,
in each case at such a time and in such a manner to enable Holders to consummate
the conversion of their Notes pursuant to Article 11 hereof on a date at least
15 days prior to any vote on such amendment, modification or waiver.
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<PAGE>
(e) So long as any Notes remain outstanding, the Company shall cause
to be delivered to the Trustee and mailed to Holders at their addresses
appearing in the Register, together with reports delivered pursuant to Section
4.2(a), a report identifying each Subsidiary of the Company that became an
Exempt Subsidiary during the relevant reporting period and each Exempt
Subsidiary ceased to be an Exempt Subsidiary during such period. Such notice
shall identify the relevant Subsidiary and the date of such change in status.
(f) If the Company instructs the Trustee to distribute any of the
documents described in clause (a), (b), (c), (d) or (e) above to the
Noteholders, the Company shall provide the Trustee with a sufficient number of
copies of all such documents that the Company may be required to deliver to the
Noteholders under this Section 4.2.
SECTION 4.3. Compliance Certificates.
(a) The Company shall deliver to the Trustee and mail to the Holders
at their addresses appearing in the Register within 60 days after the end of
each fiscal quarter and 120 days after the end of each of the Company's fiscal
years (which as of the date hereof is ___________) a CP Certificate stating
whether or not the Company or any Controlling Partner knows of any Default or
Event of Default which occurred during such preceding fiscal period or occurred
in any other fiscal period and is continuing. Such certificate shall contain a
certification from each Controlling Partner as to its knowledge of the Company's
compliance with all conditions and covenants under this Indenture during such
preceding fiscal year and shall otherwise comply with TIA Section 314(a)(4). If
a Controlling Partner knows of a Default or Event of Default, the certificate
shall describe any such Default or Event of Default, and its status.
(b) So long as it is not contrary to the then current recommendation
of the American Institute of Certified Public Accountants and so long as the
Company's accountants provide similar statements to other companies, the Company
shall deliver to the Trustee and mail to the Holders at their addresses
appearing in the Register within 120 days after the end of each fiscal year a
written statement by the Company's independent certified pubic accountants
stating (A) that their audit examination has included a review of the terms of
this Indenture and the Notes as they relate to accounting matters, and (B)
whether, in connection with their audit examination, any Default has come to
their attention and, if such a Default has come to their attention, specifying
the nature and period of the existence thereof; provided, however, that the
independent certified public accountants delivering such statement shall not be
liable in respect of such statement by reason of any failure to obtain knowledge
of any such Default or Event of Default that would not be disclosed in the
course of an audit examination conducted in accordance with GAAP. In the absence
of actual notice to the contrary, the Trustee shall be entitled to rely upon the
aforementioned statement of the Company's independent public accountants and
shall not be liable to anyone with respect thereto.
(c) The Company shall deliver to the Trustee and mail to the Holders
at their addresses appearing on the Register as soon as possible and in any
event within 10 Business Days after the Company or a Controlling Partner becomes
aware of the occurrence
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of a Default or Event of Default, which is continuing, a CP Certificate setting
forth the details of such Default or Event of Default, and the action which the
Company proposes to take with respect thereto.
(d) The Company shall deliver to the Trustee any information
reasonably requested by the Trustee in connection with the compliance by the
Trustee or the Company with the TIA.
SECTION 4.4. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
SECTION 4.5. Maintenance of Office or Agency. The Company will
maintain or cause to be maintained, within the City of New York, Borough of
Manhattan, an office or agency (which may be an office of the Trustee, Registrar
or Paying Agent) where the Notes may be presented or surrendered for payment,
where the Notes may be surrendered for registration of transfer, exchange,
conversion or redemption and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The corporate trust
office of the Trustee at 101 Barclay Street, New York, New York 10286,
Attention: Corporate Trust Department - Administration, shall initially be such
office or agency for all of the aforesaid purposes. The Company shall give
prompt written notice to the Trustee of any change of location of such office or
agency. If at any time the Company shall fail to maintain or cause to be
maintained any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the address of the Trustee set forth in Section
10.2 hereof.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that any such designation or rescission shall not in any manner relieve
the Company of its obligation to maintain an office or agency within the City of
New York, Borough of Manhattan. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in location
of any such other office or agency.
SECTION 4.6. Limitation on Restricted Payments. Until the Full Payment
Triggering Date, the Company shall not, and shall not permit any Subsidiary to,
directly or indirectly, (i) make any distribution on account of or in respect of
any Equity Interests issued by the Company (other than Tax Advances, Withholding
Advances and distributions by the Company of Equity Interests issued by it
pursuant to an executive compensation plan adopted after the Effective Date by
the Controlling Partners); (ii) purchase, repurchase, redeem or otherwise
acquire or retire for value any Equity Interest issued by the Company (other
than the Notes pursuant hereto); or (iii) purchase, repurchase, redeem, prepay,
defease, or otherwise acquire or retire for value, or make any payment of
principal, interest or other amounts on or with respect to, any Indebtedness of
the Company
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that is subordinated in right of payment to the Notes; provided, however, that
none of the foregoing shall prohibit the conversion of Class B Interests
outstanding on the date hereof into Class A Interests pursuant to the terms of
the Partnership Agreement (as it exists on the date hereof).
SECTION 4.7. Limitation on Additional Indebtedness. Until the Full
Payment Triggering Date, the Company shall not, directly or indirectly, create,
incur, issue, assume, guarantee or otherwise become directly or indirectly
liable for the payment of, contingently or otherwise (collectively, "Incur"),
any Indebtedness.
The foregoing limitation of this Section 4.7 shall not apply to:
(i) Indebtedness of the Company under this Indenture or represented by
the Notes; (ii) Indebtedness of the Company specifically contemplated by
the Plan to be outstanding on the Effective Date as listed on Schedule I
hereto; (iii) Indebtedness that constitutes a Capital Infusion in respect
of which the Company has fully complied with Sections 3.7 and 4.17 hereof;
(iv) Indebtedness Incurred in exchange for, or the proceeds of which are
used to extend, refinance, renew, replace, substitute or refund
(collectively, "Refinance"), Indebtedness permitted by clauses (i), (ii),
(iii) and (iv) of this Section 4.7 (the "Refinancing Indebtedness");
provided, however, that (A) the principal amount of such Refinancing
Indebtedness shall not exceed the then outstanding principal amount of the
Indebtedness so extended, refinanced, renewed, replaced, substituted or
refunded (including the reasonable out-of-pocket costs of issuance), (B)
such Refinancing Indebtedness ranks, relative to the Notes, no more senior
than the Indebtedness being Refinanced thereby, (C) such Refinancing
Indebtedness bears interest at a market rate, (D) such Refinancing
Indebtedness shall not be secured by any Lien on any property of the
Company except to the extent that there is a Lien on such property as
security for the Indebtedness being Refinanced, and (E) such Refinancing
Indebtedness (1) shall have an Average Life greater than and a stated
maturity later than, the Average Life and stated maturity, respectively, of
the Indebtedness being Refinanced or (2) shall not have a scheduled
maturity, principal repayment, sinking fund payment or mandatory redemption
on or prior to the maturity of the Notes; (v) Subordinated Debt referred to
in clause (iii) or (v) of the proviso at the end of the definition of
Capital Infusion; (vi) Indebtedness Incurred by the Company in exchange
for, or the proceeds of which are used to Refinance, Indebtedness permitted
by clause (v) of this Section 4.7 (the "Subordinated Debt Refinancing
Indebtedness"); provided, however, that (A) the principal amount of such
Subordinated Debt Refinancing Indebtedness shall not exceed the then
outstanding principal amount of the Subordinated Debt so Refinanced and (B)
such Subordinated Debt Refinancing Indebtedness shall be Subordinated Debt;
(vii) Indebtedness for borrowed money of the Company owing to Subsidiaries
of the Company that are not Acquisition Subsidiaries, as referred to in
clause (vii) of the proviso at the end of the definition of Capital
Infusion; and (viii) Permitted Indebtedness.
SECTION 4.8. Limitation on Transactions with Affiliates. Neither the
Company nor any of its Subsidiaries shall enter into or suffer to exist any
transaction or
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series of related transactions with any Related Person of the Company
(including, without limitation, the making of any Investment or guarantee in,
to, or for the benefit of, any such Related Person, the sale, lease, transfer or
other disposition of any properties or assets to, or for the benefit of, any
such Related Person or the purchase or lease of any property or assets from, any
such Related Person), unless (i) such transaction or series of transactions is
on terms that are no less favorable to the Company or the relevant Subsidiary,
as the case may be, than those that could have been obtained in a comparable
transaction on an arm's length basis from a Person that is not a Related Person
of the Company and (ii) with respect to any transactions or series of related
transactions that is of a value greater than $10,000,000, the Company delivers
to the Trustee an opinion from a nationally recognized investment banking firm
that such transaction or series of related transactions is fair to the Company
or the relevant Subsidiary, as the case may be, from a financial point of view;
provided, however, that, solely for purposes of compliance with this covenant,
banking and investment banking transactions that are concluded as part of a
public offering, securitization, syndication or similar distribution in which
non-affiliated financial intermediaries participate shall be presumed to be on
arm's length terms, but only to the extent that the relevant Related Persons
participate on the same basis and capacity as the financial intermediaries that
are not Related Persons.
SECTION 4.9. Repurchase Upon Change in Control. Upon the occurrence of
a Change in Control, the Company shall offer in accordance with the procedures
set forth in Section 3.7 of this Indenture (the "Change in Control Offer") to
purchase all issued and outstanding Notes at the Special Offer Purchase Price
and shall purchase as and when required by Section 3.7 of this Indenture, all
Notes tendered in conformity with such section.
SECTION 4.10. Limitation on Use of Proceeds from Asset Sales. Neither
the Company nor any Subsidiary shall, directly or indirectly, consummate any
Asset Sale with or to any Person other than the Company or a Wholly Owned
Subsidiary, unless (i) the Company or the Subsidiary, as the case may be,
receives consideration at the time of any such Asset Sale at least equal to the
fair market value of the asset sold or otherwise disposed of, and (ii) at least
80% of the net proceeds from such Asset Sale is received in Cash or Cash
Equivalents (provided that the amount of any liabilities (as shown on the
Company's most recent consolidated balance sheet) of the Company or any
Subsidiary of the Company that are assumed by the transferee in such Asset Sale
shall be excluded from both the numerator and denominator when calculating the
percent of net proceeds received in Cash or Cash Equivalents for purposes of
this provision). Within 180 days after the receipt by the Company or any
Subsidiary of the Company of Net Cash Proceeds in respect of any Asset Sale, the
Company shall (or shall cause its relevant Subsidiary to) use all such Net Cash
Proceeds (a) to repay Indebtedness of the type describe in subsections (i),
(ii), (iii) or (iv) of Section 4.7 of this Indenture, (b) to repay Indebtedness
of any Subsidiary of the Company to the extent of the fair market value of any
asset of the Company or any Subsidiary of the Company that is pledged to secure
such Indebtedness, (c) to make capital improvements to any of the Core
Properties then owned by the Company or any Subsidiary of the Company or to
acquire a New Property or New Property Equity Interests (except that the amount
of Net Cash Proceeds used to make capital improvements and/or to acquire a New
Property or New
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Property Equity Interests may not exceed 50% of the aggregate of such Net Cash
Proceeds), (d) to make an offer in accordance with the procedures set forth in
Section 3.7 of this Indenture (an "Excess Proceeds Offer") to purchase Notes at
the Special Offer Purchase Price, or (e) for any combination of the above;
provided that, so long as the Excess Proceeds of Asset Sales at any time do not
exceed $2,500,000, the Company need not make an Excess Proceeds Offer if it
deposits all such Excess Proceeds with the Trustee for the benefit of Holders of
Notes; provided, however, that if the aggregate amount of all Excess Proceeds so
deposited with the Trustee at any time exceeds $2,500,000, the Company shall use
such aggregate Excess Proceeds to make an Excess Proceeds Offer as set forth in
this Section 4.10. The Company shall be deemed to have used Net Cash Proceeds
for the purposes set forth in clause (c) of the preceding sentence when it has
made a binding commitment to do so, provided that such Net Cash Proceeds are so
used within twelve months following receipt of such Net Cash Proceeds. If and to
the extent that the principal amount of the Notes (plus accrued interest
thereon) tendered pursuant to any Excess Proceeds Offer is less than the Excess
Proceeds available to fund such offer, the Company may use such remainder, or a
portion thereof, for general purposes, without restriction by this Section 4.10.
SECTION 4.11. Payment of Taxes and Other Claims. The Company shall and
shall cause each of its Subsidiaries to pay or discharge or cause to be paid or
discharged, before any penalty accrues thereon, (i) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Subsidiary upon the income, profits or property of the Company or any Subsidiary
of the Company and (ii) all material lawful claims for labor, materials and
supplies which, if unpaid, would by law become a Lien upon the property of the
Company or any Subsidiary of the Company; provided that neither the Company nor
any Subsidiary of the Company shall be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim the amount,
applicability or validity of which is being contested in good faith by
appropriate proceedings and for which adequate provision has been made or where
the failure to effect such payment or discharge is not adverse in any material
respect to the Holders.
SECTION 4.12. Corporate or Partnership or Other Existence. Subject to
Article 5 hereof, the Company shall and shall cause each of its Subsidiaries to
do or cause to be done all things necessary to preserve and keep in full force
and effect its partnership existence and the corporate, partnership or other
existence of each Subsidiary of the Company in accordance with the respective
organizational documents of such Subsidiary and the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries and the
Controlling Partners; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any Subsidiary, if the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders.
SECTION 4.13. Maintenance of Properties and Insurance. The Company
shall and shall cause each of its Subsidiaries to cause all material properties
owned by, or leased to, the Company or any Subsidiary of the Company and used in
the conduct of its business to be maintained and kept in normal condition,
repair and working order and
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supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly conducted at all times; provided, however,
that nothing in this Section shall prevent the Company or any Subsidiary of the
Company from discontinuing the maintenance of any such properties, if such
discontinuance is desirable in the conduct of its business and is not adverse in
any material respect to the Holders.
The Company shall and shall cause each of its Subsidiaries to provide
or cause to be provided insurance (including self-insurance) against loss or
damage of the kinds customarily insured against by entities similarly situated
and owning like properties, including, but not limited to, liability insurance,
in such amounts, with such deductibles and by such methods as shall be customary
for entities similarly situated in the industry.
SECTION 4.14. Stay, Extension and Usury Laws. The Company covenants
(to the fullest extent it may lawfully do so) that it will not at any time
insist upon, plead or in any manner whatsoever claim or take the benefit or
advantage of, any stay, extension or usury law wherever enacted, now or at any
time hereafter enforced, which may affect the covenants or the performance of
this Indenture; and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law has been enacted.
SECTION 4.15. Payment for Consent. Neither the Company, any
Controlling Partner nor any of their respective Subsidiaries or Affiliates
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder of any Notes for or
as an inducement to obtaining any consent, waiver or amendment of any of the
terms or provisions of this Indenture or the Notes, unless such consideration is
offered in writing to all Holders of Notes on the same terms and conditions and
agreed to be paid, and paid, to all Holders of the Notes which so consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement (which time frame shall not
consist of less than 20 Business Days).
SECTION 4.16. Covenant to Comply with Securities Laws upon Purchase of
the Notes. In connection with any offer to purchase or purchase of the Notes (or
portions thereof) by the Company or any Subsidiary of the Company, the Company
shall (i) comply with Rule 13e-4 (other than, if not otherwise applicable, the
filing requirements of such rule) and Regulation 14E under the Exchange Act, and
(ii) otherwise comply with all Federal and state securities laws and regulations
so as to permit the rights and obligations hereunder (including Sections 3.7,
4.9, 4.10 and 4.17 hereof) to be exercised in the time and in the manner
specified in such Sections.
SECTION 4.17. Capital Infusion Offer. The Company shall cause to be
delivered to it all proceeds of Capital Infusions received by any Subsidiaries
or Affiliates of
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the Company in which the Company has a direct or indirect interest. Upon each
receipt by the Company (from whatever source) or any such Subsidiary or
Affiliate of the Company of the proceeds of a Capital Infusion at any time prior
to the Full Payment Triggering Date, the Company shall offer in accordance with
the procedures set forth in Section 3.7 of this Indenture (a "Capital Infusion
Offer") to purchase at the Special Offer Purchase Price sufficient Notes so that
the aggregate of the principal amount of all Notes (or portions thereof) offered
to be purchased equals the proceeds of the relevant Capital Infusion (after
deducting therefrom all reasonable out-of-pocket expenses incurred in such
Capital Infusion) or, if such Capital Infusion is not cash, then the fair market
value thereof.
SECTION 4.18. Officers' Certificates. Simultaneously with the
execution and delivery of this Indenture, (i) counsel to the Company shall
deliver to the Trustee on behalf of the Holders an Opinion of Counsel in the
form of Exhibit B hereto and (ii) the Company shall deliver to the Trustee on
behalf of the Holders CP Certificates that provide that all of the
representations and warranties set forth in Article 12 hereof are true, complete
and correct in all material respects.
SECTION 4.19. Tag Along Rights. [Holders of Notes to receive notice of
tag along transactions from the Company, may elect to participate in such
transactions based on Units issuable to them on conversion, in which case they
can convey Notes at the closing of the tag along transaction.]
SECTION 4.20. Certain Amendments to Partnership Agreement. The Company
covenants and agrees that no holder of Class A Interests issued upon conversion
of the Notes shall be bound by any amendment to the Partnership Agreement
referred to in the proviso to the first sentence of Section 11.01(b) of the
Partnership Agreement (as in effect on the date hereof), even if such amendment
was made prior to such conversion, unless such holder (in the capacity of a
holder of Class A Interests) has given its written convent to such amendment.
[SECTION 4.21. No Transfer of Equity Interests in Subsidiaries. The
Company shall not transfer any Equity Interest in any Subsidiary of the Company
to any Subsidiary of the Company.]
ARTICLE 5
SUCCESSOR ENTITY
SECTION 5.1. When the Company May Merge or Transfer Assets. The
Company shall not consolidate with, merge with or into, or sell, lease,
transfer, convey or otherwise dispose of all or substantially all of its assets
(in one transaction or a series of related transactions) to, any Person (the
Person formed by or surviving such consolidation or merger, or to which such
sale, lease, conveyance or other disposition shall have been made, whether the
Company or another Person, being herein called the "Surviving Entity") unless:
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(i) the Surviving Entity (if other than the Company) shall be a
corporation, limited liability company or partnership organized and
existing under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all of the obligations of the Company under the Notes and this
Indenture;
(ii) immediately before and immediately after giving effect to such
transaction, no Event of Default and no Default shall have occurred and be
continuing; and
(iii) immediately after giving effect to such transaction on a pro
forma basis, the Consolidated Net Worth of the Surviving Entity (without
giving effect to any write-up of assets as a result of purchase accounting)
is at least equal to the Consolidated Net Worth of the Company immediately
prior to such transaction.
SECTION 5.2. Surviving Entity Substituted. Upon any consolidation or
merger or any transfer of all or substantially all of the assets of the Company
in accordance with this Article 5, the Surviving Entity (if other than the
Company), upon compliance with the provisions of clause (i) of Section 5.1
hereof, shall succeed to, and be substituted for, and may exercise every right
and power of the Company under this Indenture with the same effect as if such
Surviving Entity had been named as the Company herein; and thereafter (provided
that there has been compliance with the provisions of Section 5.1) the
predecessor company shall be discharged and released from all obligations and
covenants under this Indenture and the Notes; provided, however, that nothing in
Article V shall limit or affect in any way the Company's obligations under this
Indenture which arise out of a Change in Control that occurred upon, or prior
to, the consummation of any consolidation, merger or transfer of all or
substantially all of the assets of the Company.
SECTION 5.3. CP Certificate and Opinion of Counsel. Any consolidation,
merger, sale, lease or conveyance permitted under Section 5.01 is also subject
to the condition that the Trustee receive a CP Certificate and an Opinion of
Counsel to the effect that such consolidation, merger, sale, lease or
conveyance, and the assumption by any Surviving Entity, complies with the
provisions of this Article and that all conditions precedent herein provided for
relating to such transactions have been complied with.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default. An "Event of Default" occurs if one of
the following shall occur:
(i) the Company defaults in the payment, when due and payable, of (A)
interest on the Notes and the default continues for a period of 10 days, or (B)
the principal of or premium, if any, on the Notes when the same becomes due and
payable, whether at
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maturity, on the Redemption Date, on the Special Offer Payment Date, by
acceleration or otherwise;
(ii) the Company fails to make or consummate any Special Offer, as,
when and to the extent required by the provisions of Section 3.7 hereof and
Sections 4.9, 4.10 or 4.17 hereof, as the case may be;
(iii) the Company fails to comply in any respect with any of the
provisions of Section 5.1 hereof;
(iv) any representation or warranty contained in this Indenture shall
be untrue in any material respect;
(v) the Company fails to comply in any respect with any other
provision in this Indenture or the Notes and such failure continues for 30 days
after receipt by the Company of a written notice from the Trustee or the Holders
of at least 25% of the then outstanding principal amount of the Notes (excluding
any Note then held by the Company or an Affiliate of the Company);
(vi) the Company or any of its Significant Subsidiaries (other than an
Exempt Subsidiary) defaults in the payment when due (after giving effect to any
applicable grace periods) of any principal of or interest on any Indebtedness of
the Company or any Significant Subsidiary (other than an Exempt Subsidiary) if
the aggregate principal amount of all such Indebtedness as to which defaults
then exists exceeds $5,000,000;
(vii) there shall be a default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness of the Company or any of its Significant Subsidiaries
(other than an Exempt Subsidiary), which default shall have resulted in the
acceleration of such Indebtedness prior to its stated final maturity and the
principal amount of such Indebtedness exceeds $5,000,000;
(viii) there shall be judgments against the Company or any Significant
Subsidiary (other than an Exempt Subsidiary) rendered by a court or other
tribunal of competent jurisdiction aggregating (for the Company and all
Significant Subsidiaries (other than an Exempt Subsidiary) in the aggregate) in
excess of $5,000,000 and (a) such judgments are not stayed or discharged within
45 days after their entry or (b) an enforcement proceeding shall have been
commenced (and not discharged, stayed or settled) by any creditor upon any such
judgments;
(ix) the Company, a Controlling Partner, or any Significant Subsidiary
(other than an Exempt Subsidiary):
(A) commences a voluntary case or proceeding under any Bankruptcy
Law;
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(B) consents to the entry of an order for relief against it in an
involuntary case or proceeding under any Bankruptcy Law;
(C) consents to the appointment of a Custodian of it or for all or
any substantial part of its property;
(D) makes a general assignment for the benefit of its creditors;
(E) admits in writing its inability to pay its debts generally as
they become due; or
(F) dissolves or is deemed dissolved as a matter of law or contract;
(x) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company, a Controlling Partner or any
Significant Subsidiary (other than an Exempt Subsidiary) of the
Company in an involuntary case or proceeding;
(B) appoints a Custodian of the Company, a Controlling Partner or any
Significant Subsidiary (other than an Exempt Subsidiary) for all
or a substantial part of its properties; or
(C) orders the liquidation or dissolution of the Company, a
Controlling Partner, or any Significant Subsidiary (other than an
Exempt Subsidiary);
and in any such case the order or decree remains unstayed and in effect for
60 days;
(xi) default by the Company in the conversion of any Note in
accordance with the terms hereof and thereof, which default continues for three
Business Days;
(xii) [default on $3 million note issued to TIAA, which is guaranteed
by the Company];
(xiii) there shall be a default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness of the Company that is subordinated in right of
payment to the Notes, which default shall have resulted in the acceleration of
such Indebtedness prior to its stated final maturity; or
(xiv) the opinion or the CP certificate contemplated by Section 4.18
hereof are not delivered to the Trustee on the date hereof.
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SECTION 6.2. Acceleration. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% of the then outstanding
principal amount of the Notes (excluding any Note then held by the Company or an
Affiliate of the Company), by written notice to the Company (and to the Trustee
if such notice is given by such Holders) (the "Acceleration Notice"), may, and
the Trustee at the written request of such Holders shall, declare all unpaid
principal of, premium, if any, on and accrued interest on the Notes to be
immediately due and payable, and thereupon the Trustee may in its discretion
proceed to protect and enforce the rights of the Holders of the Notes by
judicial proceedings to the extent that the Trustee has been fully indemnified
in connection therewith and subject to Section 6.5 hereof.
A copy of the Acceleration Notice shall be deemed to have been duly
delivered upon receipt, if personally delivered; when transmitted with
confirmation of receipt, if transmitted by telecopy; the day after being sent,
if sent for next day delivery to a domestic address by a recognized overnight
delivery service; and upon receipt, if sent by registered or certified mail,
return receipt requested. Upon a declaration of acceleration, such principal,
premium, if any, and accrued interest shall be immediately due and payable.
Notwithstanding anything to the contrary contained herein, if an Event of
Default under Section 6.1(ix) or Section 6.1(x) occurs with respect to the
Company, all unpaid principal of, premium, if any, and accrued interest on the
Notes then outstanding shall become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder. Holders
of a majority of the then outstanding principal amount of the Notes (excluding
any Note then held by the Company or an Affiliate of the Company) by notice to
the Trustee may rescind an acceleration and its consequences, except an
acceleration due to (i) default in payment of principal, premium, if any, or
interest on the Notes, (ii) failure to make or consummate any Special Offer or
to pay any amounts in connection therewith or (iii) default in respect of
conversion of a Note pursuant to Article 11.
SECTION 6.3. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of, premium, if any, or interest
on the Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if the Trustee does not
possess the Notes or does not produce the Notes in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default or a Default shall not impair the right or
remedy or constitute a waiver of, or acquiescence in, the Event of Default or
the Default. No remedy is exclusive of any other remedy. To the extent permitted
by law, all available remedies are cumulative.
SECTION 6.4. Waiver of Past Defaults. The holders of at least 66 2/3%
of the then outstanding principal amount of the Notes (excluding any Note then
held by an Affiliate of the Company), by notice to the Trustee (and without
notice to any other Noteholder), may waive an existing Default or Event of
Default and its consequences except (a) an Event of Default or a Default in the
payment of principal of, premium, if any, or interest on the Notes, in respect
of conversion of a Note or in connection with the making or
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consummation of a Special Offer, and (b) a Default in respect of a provision
that under Section 9.2 hereof can be amended only with the consent of each
Noteholder affected. When a Default or Event of Default is waived, it is cured
and ceases to exist, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.
SECTION 6.5. Control by Holders. The holders of a majority of the then
outstanding principal amount of the Notes (excluding any Note then held by the
Company or an Affiliate of the Company) may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or that
the Trustee determines in good faith is unduly prejudicial to the rights of
other Noteholders or would involve the Trustee in personal liability. The
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
SECTION 6.6. Limitation on Suits. Except as provided in Section 6.7
hereof, a Noteholder may not pursue any remedy with respect to this Indenture or
the Notes unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holders of at least 25% of the then outstanding principal
amount of the Notes (excluding any Note then held by the Company or an Affiliate
of the Company) make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity or security
reasonably satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 30 days after
receipt thereof and the offer of indemnity or security; and
(5) during such 30-day period the holders of beneficial interests of a
majority of the then outstanding principal amount of the Notes (excluding any
Note then held by the Company or an Affiliate of the Company) do not give the
Trustee a direction inconsistent with the request.
Notwithstanding anything to the contrary contained in this Section
6.6, any Holder of the Notes shall have the right to institute a proceeding with
respect to this Indenture or the Notes or for any remedy in each of the
following instances:
(w) a Holder of a Note may institute suit for enforcement of payment
of principal of and premium, if any, or interest on such Note on or after the
due dates expressed in such Note (including upon acceleration thereof);
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(x) a Holder of a Note may institute suit for enforcement of payment
of any Special Offer Purchase Price in respect of such Note after the relevant
Special Offer Payment Date;
(y) a Holder of a Note may institute suit for enforcement of its
conversion rights set forth in Article 11 hereof; or
(z) Holders of a majority of the then outstanding principal amount of
the Notes (excluding any Note then held by the Company or an Affiliate of the
Company) may institute any proceeding with respect to this Indenture or the
Notes or any remedy thereunder, including without limitation acceleration;
provided that, upon institution of any proceeding or exercise of any remedy such
holders provide the Trustee with prompt written notice thereof.
A Noteholder may not use this Indenture to prejudice the rights of any
other Noteholder or to obtain a preference or priority over any other
Noteholder.
SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
the principal amount, premium, if any, or interest, in respect of the Notes held
by such Holder, on or after the due dates expressed in the Notes, any Redemption
Date, any Special Offer Payment Date or to bring suit for the enforcement of any
such payment on or after such dates or to convert such Notes, shall not be
impaired or affected adversely without the consent of such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of Default
described in Section 6.1(i) hereof occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount owing with respect to the Notes and the amounts
provided for in Section 7.7 hereof.
SECTION 6.9. Trustee May File Proofs of Claim. In connection with any
judicial proceeding involving the Company, its creditors or its property, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise:
(1) to file and prove a claim for the whole amount of the principal
amount, premium, if any, and interest on the Notes and to file such other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding; and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the
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making of such payments directly to the Holders, to pay the Trustee any amount
due it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant
to this Article 6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.7 hereof; and
SECOND: to Noteholders for amounts due and unpaid on the Notes for the
Redemption Price, Special Offer Purchase Price, principal amount, premium or
interest, if any, as the case may be, ratably, without preference or priority of
any kind, according to such amounts due and payable on the Notes.
The Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 6.10.
ARTICLE 7
TRUSTEE
SECTION 7.1. Duties of Trustee.
(1) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use the
same degree of care in its exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default:
(A) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and
(B) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by
any provision hereof are specifically required to be
furnished to the Trustee, the Trustee
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shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this
Indenture.
(3) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(A) this paragraph (3) does not limit the effect of paragraph
(2) of this Section 7.1;
(B) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved
that the Trustee was negligent in ascertaining the pertinent
facts; and
(C) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(4) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (1), (2), (3) and (5) of this Section 7.1 and
Section 7.2.
(5) The Trustee shall be under no obligation to perform any duty or to
exercise any of the rights or powers vested in it by this Indenture or to expend
or risk its own funds or otherwise incur any financial liability at the request
or direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee security or indemnity reasonably
satisfactory to it against any loss, liability or expense which might be
incurred by it in compliance with such request or direction.
(6) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall not be liable for the payment of any interest on any money deposited with
it except to the extent agreed upon with the Company in writing.
SECTION 7.2. Rights of Trustee.
(1) Subject to Section 7.1(2)(B), the Trustee may rely on any document
reasonably believed by it to be genuine and to have been signed or presented by
the proper Person. The Trustee need not investigate any fact or matter stated in
the document.
(2) Before the Trustee acts or refrains from acting, it may require a
CP Certificate and an Opinion of Counsel. The Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on such CP
Certificate and Opinion of Counsel.
(3) The Trustee may act through agents but shall be responsible for
the willful misconduct or gross negligence of any such agent.
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(4) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized or within
its rights or powers conferred upon it by the Indenture.
(5) The Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon.
SECTION 7.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of the Notes
(or certain portions thereof) and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee. Any Paying
Agent or Registrar may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11 hereof.
SECTION 7.4. Trustee's Disclaimer. The Trustee makes no representation
as to the validity or adequacy of this Indenture or the Notes. It shall not be
accountable for the use or application of any moneys paid over by the Trustee in
accordance with any provision of this Indenture, or for the use or application
of any moneys received by any Paying Agent other than the Trustee. It shall not
be responsible for any statement in any registration statement for the Notes
under the Securities Act (other than statements contained in any Form T-1 filed
with the Commission under the TIA) or in this Indenture or the Notes (other than
its certificate of authentication).
SECTION 7.5. Notice of Defaults. If a Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to the Noteholders, as
their names and addresses appear on the Register, notice of the Event of Default
within 30 days after a Trust Officer receives written notice thereof stating
that it is a notice of "Default" and citing the applicable subsection of Section
6.1 and identifying this Indenture, unless such Default has been cured or
waived. The Trustee shall not be deemed to have notice of any Default until a
Trust Officer shall have received written notice thereof referring expressly to
this Indenture and citing the applicable subsection of Section 6.1 hereof. The
second sentence of this Section 7.5 shall be in lieu of the proviso to Section
315(b) of the TIA and said proviso is hereby expressly excluded from this
Indenture, as permitted by the TIA.
SECTION 7.6. Reports by Trustee to Holders. Within 60 days after each
September 1 beginning with September 1, 1997, the Trustee shall mail to each
Noteholder a brief report dated as of such September 1 in accordance with and to
the extent required under Section 313(a) of the TIA. The Trustee shall also
comply with the reporting requirements of Section 313(b) of the TIA, to the
extent applicable. In addition, the Trustee shall mail to each Noteholder copies
of all materials received from the Company pursuant to the Indenture and not
otherwise provided to the Noteholders. All reports sent by the Trustee pursuant
to this Section 7.6 will be sent in compliance with Section 313(b) of the TIA.
SECTION 7.7. Compensation and Indemnity. The Company agrees:
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(1) to pay to the Trustee from time to time such reasonable
compensation as shall be agreed in writing between the Company and the Trustee
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) to reimburse the Trustee upon its request for all reasonable and
documented expenses, disbursements and advances (if any) incurred or made by the
Trustee in accordance with any provision of this Indenture, including the
reasonable compensation and the expenses, disbursements and advances of its
agents and counsel) and all reasonable expenses, disbursements and advances
incurred or made by the Trustee in connection with any membership on any
creditor's committee, excluding, however, any such expense, disbursement or
advance that may be attributable to the negligence or bad faith of the Trustee
or its agents or counsel;
(3) to reimburse the Trustee's counsel on the Effective Date for its
fees and expenses in connection with review and revision and delivery of this
Indenture and related documentation; and
(4) to indemnify the Trustee in its capacity as such, (which for
purposes of this subsection (4) shall include its officers, directors,
employees, and agents) for, and to hold it harmless against, any and all loss,
liability, costs, claim (including the fees and disbursements of counsel), or
expense, incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of this Indenture or
performance of its duties hereunder, including the reasonable and documented
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
The Trustee shall have a claim and lien prior to the Notes as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 7.7, except with respect to funds
held in trust for the payment of principal of, premium, if any, or interest on
the Notes or portions thereof.
The Company's payment obligations pursuant to this Section 7.7 shall
survive the resignation or removal of the Trustee and the discharge of this
Indenture. When the Trustee renders services or incurs expenses after the
occurrence of a Default specified in Section 6.1(viii) or Section 6.1(ix)
hereof, the compensation for services and expenses are intended to constitute
expenses of administration under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign for any
reason by so notifying the Company in writing at least 45 days prior to the date
of the proposed resignation; provided, however, no such resignation shall be
effective until a successor Trustee has accepted its appointment pursuant to
this Section 7.8. The Holders of at least a majority of the then outstanding
principal amount of the Notes (excluding any Note then held by the Company or an
Affiliate of the Company) may remove the Trustee by so notifying the Trustee and
the Company in writing and may appoint a successor Trustee
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subject to the consent of the Company. The Trustee shall resign and the Company
may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged bankrupt or insolvent or an order of
relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a Custodian, receiver or public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of the Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Noteholders. Subject to payment of all amounts owing to the
Trustee under Section 7.7 hereof and subject further to its lien under Section
7.7, the retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee.
If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of beneficial interests of at least a majority of the then outstanding
principal amount of the Notes (excluding any Note then held by an Affiliate of
the Company) may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets (including this Trusteeship) to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee; provided that such successor is
eligible under Section 7.10 hereof.
SECTION 7.10. Eligibility; Disqualification. There shall at all times
be a Trustee hereunder which shall (i) be a corporation organized and doing
business under the laws of the United States of America or of any state thereof
authorized under such laws to exercise corporate trustee power and (ii) be
subject to supervision or examination by Federal or state authority. The Trustee
shall at all times satisfy the requirements of TIA ss. 310(a)(1). The Trustee
shall have a combined capital and surplus of at least $50,000,000 or such other
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amount as required by the TIA hereafter, as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA ss.
310(b). In determining whether the Trustee has conflicting interests as defined
in TIA ss. 310(b)(1), the provisions contained in the proviso to TIA ss.
310(b)(1) shall be deemed incorporated herein. If the Trustee acquires any such
conflicting interest, it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue as Trustee under this Indenture, or
resign. If at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect specified in Section 7.8.
SECTION 7.11. Preferential Collection of Claims Against the Company.
If the Trustee shall be or become a creditor of the Company (or any other
obligor under the Notes), the Trustee shall be subject to the provisions of the
TIA regarding the collection of claims against the Company (or any such other
obligor). If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect specified in Section 7.8.
ARTICLE 8
DISCHARGE OF INDENTURE; LEGAL DEFEASANCE
AND COVENANT DEFEASANCE
SECTION 8.1. Legal Termination. This Indenture shall cease to be of
further effect (except that the Company's obligations under Section 7.7 and the
Trustee's and Paying Agent's obligations under Section 8.7 shall survive), when
the Notes previously authenticated and delivered (other than destroyed, lost or
stolen Notes which have been replaced or paid) have been delivered to the
Trustee for cancellation or conversion and the Company has paid and delivered
all sums and Class A Interests payable or deliverable by it hereunder.
SECTION 8.2. Company's Option to Effect Legal Defeasance or Covenant
Defeasance. The Company may, at its option at any time, elect to have either
Section 8.3 or Section 8.4 applied to the Notes upon compliance with the
conditions set forth below in this Article 8.
SECTION 8.3. Legal Defeasance and Discharge. Upon the Company's
exercise of the option provided in Section 8.2 applicable to this Section 8.3,
the Company shall be deemed to have been discharged from its obligations with
respect to the Notes (other than those specified below or in Section 8.8), on
the date the conditions set forth in Section 8.5 are satisfied (hereinafter
"Legal Defeasance"). For this purpose, such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of the sections of, and matters under, this Indenture
referred to in clauses (A) and (B) below and to have satisfied all its other
obligations under the Notes and this Indenture insofar as the Notes are
concerned (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
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survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of the Notes to receive, solely from the trust fund described in Section
8.5(i) and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest on the Notes when such payments are
due, (B) the Company's obligations with respect to the Notes under Sections 2.3,
2.6, 2.7 and 2.10, (C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith, and (D)
this Article 8 and Article 11. Subject to compliance with this Article 8, the
Company may exercise its option under this Section 8.3 notwithstanding the prior
exercise of its option under Section 8.4.
SECTION 8.4. Covenant Defeasance. Upon the Company's exercise of the
option provided in Section 8.2 applicable to this Section 8.4 on the date the
conditions set forth in Section 8.5 are satisfied, (i) the Company shall be
released from its obligations under Articles 4 and 5 hereof except Sections 4.1
and 4.2 and (ii) the occurrence of an event specified in Section 6.1 with
respect to any of the provisions of Articles 4 or 5 hereof shall not be deemed
to be an Event of Default on and after the date the conditions set forth below
are satisfied (hereinafter, "Covenant Defeasance").
SECTION 8.5. Conditions to Legal Defeasance and Covenant Defeasance.
The following shall be the conditions to application of Section 8.3 or Section
8.4 to the then outstanding Notes:
(i) the Company must have irrevocably deposited with the Trustee, in
trust, for the benefit of the Holders of the Notes, Cash in immediately
available funds sufficient (excluding interest income), in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on, with respect to the Notes on the
Stated Maturity Date of the Notes or on the Redemption Date, as the case may be,
of such principal of, premium, if any, and interest on the Notes; (ii) in the
case of Legal Defeasance, the Company shall have delivered to the Trustee an
Opinion of Counsel confirming that the Holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such Legal
Defeasance and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such defeasance
had not occurred, which opinion will state that (A) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling to
such effect, or (B) since the Effective Date there has been a change in the
applicable Federal income tax laws or regulations to such effect; (iii) in the
case of Covenant Defeasance, the Company shall have delivered to the Trustee an
Opinion of Counsel confirming that the Holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such
Covenant Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same time as would have been the case if
such Covenant Defeasance had not occurred; (iv) such Legal Defeasance or
Covenant Defeasance shall not result in a breach or violation of or constitute a
default under any material agreement or instrument to which the Company is a
party or by which it is bound; (v) the Company shall have delivered to the
Trustee an Opinion of Counsel to the effect that after the 91st day (or such
other applicable date) following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy,
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insolvency, reorganization or similar laws affecting creditors' rights
generally; (vi) the Company shall have delivered to the Trustee a CP Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders over the other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding creditors of the Company
or others; and (vii) the Company shall have delivered to the Trustee a CP
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to such Legal Defeasance or Covenant Defeasance have been satisfied.
After such irrevocable deposit made pursuant to this Section 8.5 and
satisfaction of the other applicable conditions set forth in this Section 8.5,
the Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified above.
The Trustee shall hold in trust Cash deposited with it pursuant to
this Section 8.5. It shall apply the deposited money through the Paying Agent
and in accordance with this Indenture to the payment of principal of, premium,
if any, and interest on the Notes.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money in accordance with Section 8.3 or Section 8.4 by reason of
any legal proceeding or of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's obligations under this Indenture and the Notes shall be revived
and reinstated as though no deposit had occurred pursuant to this Article 8
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with this Article 8; provided, however, that if the Company
makes any payment of principal, premium, if any, or interest on the Notes
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of the Notes to receive such payment from the money
held by the Trustee or Paying Agent.
SECTION 8.7. Repayment to the Company. Subject to Section 7.7, the
Trustee and the Paying Agent shall promptly pay to the Company upon written
request any excess money held by them at any time. The Trustee and the Paying
Agent shall return to the Company upon written request any money held by them
for the payment of any amount with respect to the Notes that remains unclaimed
for two years after the date upon which such payment shall have become due;
provided, however, that the Trustee or such Paying Agent, before being required
to make such return, may, in the name and at the expense of the Company, cause
to be published once in The Wall Street Journal or a comparable daily newspaper
of national circulation or mail to each such Holder notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such mailing or publication, any unclaimed
money then remaining will be returned to the Company. After the unclaimed money
is returned to the Company, Holders entitled to the money must look to the
Company for payment as general creditors unless an applicable abandoned property
law designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
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SECTION 8.8. Survival of Holders' Conversion Rights and Company's
Obligation to Provide Reports. Notwithstanding anything to the contrary in this
Article 8, the right of Holders to convert any Notes held by them into Class A
Interests of the Company pursuant to Article 11 shall not be impaired or
terminated by reason of any Legal Defeasance or Covenant Defeasance but shall
continue in existence until the Stated Maturity Date of the Notes or the Notes
are redeemed or repurchased pursuant to Article 3. Notwithstanding anything to
the contrary in this Article 8, the Company's obligation to provide all reports
under Section 4.2 shall continue after any Legal Defeasance or Covenant
Defeasance until the Stated Maturity Date of the Notes or the Notes are redeemed
pursuant to Article 3.
ARTICLE 9
AMENDMENTS
SECTION 9.1. Without Consent of Holders. From time to time, the
Company and the Trustee, without notice to or the consent of the Holders of the
Notes, may amend or supplement this Indenture or the Notes as follows:
(1) to comply with Article 5 hereof; or
(2) to cure any ambiguity or to correct or supplement any provision
herein that may be defective or inconsistent with any other provision herein;
provided that no such provision shall adversely affect the interests of the
Noteholders in any respect.
SECTION 9.2. With Consent of Holders. With the written consent
of the Holders of at least at least 66 2/3% of the then outstanding principal
amount of the Notes (excluding any Note then held by the Company or an Affiliate
of the Company), the Company and the Trustee may amend or supplement this
Indenture or the Notes or may waive any existing Default or future compliance by
the Company with any provisions of this Indenture or the Notes (other than a
continuing Default or Event of Default in the payment of principal, premium, if
any, or interest on the Notes). However, without the consent of each Noteholder
affected, a waiver or an amendment to this Indenture or the Notes may not (with
respect to any portion held by a non-consenting Holder of the Notes):
(1) reduce the percentage of principal amount of the Notes whose
Holders must consent to an amendment or waiver or to the rescission of an
acceleration of the Notes or increase the percentage of principal amount of the
Notes whose Holders must consent to any acceleration of the Notes; or
(2) make any change to the Stated Maturity Date or the time, currency
or amount of payment of the principal of, premium, if any, or any interest on,
the Notes or alter any of the redemption provisions or other provisions with
respect thereto; or
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(3) waive a default in the payment of the principal of, premium, if
any, or interest on, the Notes, or in respect of conversion of a Note or in
connection with the making or consummation of a Special Offer; or
(4) make any change to this Section 9.2;
(5) make any change to the provisions of this Indenture which
adversely affects the conversion right set forth in Article 11 hereof; or
(6) make any change to any definition which would have the effect of
making a change in items (1) through (5) above.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment or
supplement, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment or waiver under this Section 9.2 becomes effective,
the Company promptly shall mail or cause to be mailed to each Holder a notice
briefly describing the amendment or waiver. Any failure of the Company to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such amendment or waiver.
SECTION 9.3. Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Notes shall be set forth in a supplemental indenture
executed pursuant to this Article 9 which shall comply with the TIA.
SECTION 9.4. Revocation and Effect of Consents, Waivers and Actions.
Until an amendment, supplement, waiver or other action by Holders becomes
effective a consent to it or any other action by a Holder of the Notes hereunder
is a continuing consent by the Holder and every subsequent Holder of the Notes
or portion of the Notes that evidences the same obligation as the consenting
Holder's Notes or portion thereof, even if notation of the consent, waiver or
action is not made on the Notes. However, any such Holder or subsequent Holder
may revoke the consent, waiver or action as to such Holder's Notes or portion of
the Notes if the Trustee receives notice of revocation before the consent of the
requisite then outstanding principal amount of the Notes has been obtained and
becomes effective. After an amendment, supplement, waiver or action becomes
effective, it shall bind every Noteholder, except as provided in Section 9.2
hereof.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement, or waiver. If a record date is fixed, then, notwithstanding the
first two sentences of the immediately preceding paragraph, those Persons who
were Holders at such record date (or their duly designated proxies), subject to
Section 9.7 and excluding Affiliates of the Company, and only those Persons,
shall be entitled to consent to such amendment, supplement or waiver or to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or
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effective for more than 30 days after such record date, unless consents from
holders of the then outstanding principal amount of the Notes required hereunder
for such amendment, supplement or waiver to be effective shall have also been
given and not revoked within such 30-day period.
SECTION 9.5. Notation on or Exchange of the Notes. Notes authenticated
and made available for delivery after the execution of any supplemental
indenture pursuant to this Article 9 may, and shall, if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Notes so
modified as to conform, in the reasonable judgment of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and made available for delivery by the Trustee in
exchange for the outstanding Notes.
SECTION 9.6. Trustee to Sign Supplemental Indentures. Upon the request
of the Company, the Trustee shall join with the Company in the execution of any
amendment or supplemental indenture authorized or permitted by the terms of this
Indenture but the Trustee shall not be obligated to execute any such amendment
or supplemental indenture which adversely affects its own rights, duties,
liabilities or immunities under this Indenture or otherwise. In signing such
amendment or supplemental indenture the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, a CP Certificate and Opinion of
Counsel stating that such amendment or supplemental indenture is authorized or
permitted by this Indenture.
SECTION 9.7. Effect of Amendments and Supplemental Indentures. Upon
the execution of any amendment or supplemental indenture under this Article 9,
this Indenture shall be modified in accordance therewith, and such amendment or
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of the Notes theretofore or thereafter authenticated and made
available for delivery hereunder shall be bound thereby.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by operation of
subsection (c) of Section 318 of the TIA, the imposed duties shall control. The
provisions of Sections 310 to 317, inclusive, of the TIA that impose duties on
any Person (including provisions automatically deemed included in an indenture
unless the indenture provides that such provisions are excluded) are a part of
and govern this Indenture, except as, and to the extent, expressly excluded from
this Indenture, as permitted by the TIA.
SECTION 10.2. Notices. Any notice, request or communication shall be
in writing and delivered (i) in Person or mailed by first-class mail, postage
prepaid, or (ii) by telecopy (with the original delivered by mail immediately
thereafter) addressed as follows:
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if to the Company:
WORLD FINANCIAL PROPERTIES, L.P.
-------------------------------
Telephone: _______________
Telecopy: ________________
Attention: ______________________
if to the Trustee:
The Bank of New York
101 Barclay Street
New York, New York 10286
Telephone: ______________
Telecopy: _______________
Attention: Corporate Trust Department - Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication given to a Noteholder shall be mailed to
the Noteholder at the Noteholder's address as it appears on the Register and
shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not received by the addressee.
If the Company mails a notice or communication to the Noteholders, it
shall simultaneously mail a copy to the Trustee and each Registrar and Paying
Agent.
SECTION 10.3. Communication by Noteholder with Other Noteholders.
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar, the Paying Agent and anyone else shall have
the protection of TIA Section 312(c).
SECTION 10.4. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(1) a CP Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
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(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 10.5. Statements Required in Certificate or Opinion. Each CP
Certificate and Opinion of Counsel with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that each Person making such CP Certificate or Opinion
of Counsel has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such CP
Certificate or Opinion of Counsel are based;
(3) a statement that, in the opinion of each such Person, he has made
such examination or investigation as is necessary to enable such Person to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement that, in the opinion of such Person, such covenant or
condition has been complied with; provided, however, that with respect to
matters of fact, an Opinion of Counsel may rely on a CP Certificate or
certificates of public officials.
SECTION 10.6. Severability Clause. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 10.7. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or at a meeting of Noteholders.
The Registrar and Paying Agent may make reasonable rules for their functions.
SECTION 10.8. Legal Holidays. A "Legal Holiday" is any day other than
a Business Day. If any specified date (including a date for giving notice but
excluding any record date) is a Legal Holiday, the action shall be taken on the
next succeeding Business Day, and, if the action to be taken on such date is a
payment in respect of the Notes, no principal, premium, if any, or interest
installment shall accrue for the intervening period; provided, however, that if
such payment is in respect of principal then interest shall continue to accrue
thereon until the date such payment is actually made.
SECTION 10.9. Governing Law; Submission to Jurisdiction. THIS
INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO INSTRUMENTS
MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS. The Company hereby irrevocably submits to the
jurisdiction of any New York State or United States Federal court sitting in New
York City over any action or proceeding
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arising out of or relating to this Indenture or the Notes and the Company hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or Federal court. The Company
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. The Company further waives any objection to
venue in such State on the basis of forum non conveniens. The Company agrees
that any action or proceeding brought against the Trustee or any Noteholder
shall be brought only in a New York State or United States Federal court sitting
in New York City.
Nothing in this Section 10.9 shall affect the right of the Trustee or
any Noteholder to serve legal process in any other manner permitted by law or
affect the right of the Trustee or any Noteholder to bring any action or
proceeding against the Company or its property in the courts of any other
jurisdictions.
To the extent that the Company has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Company
hereby irrevocably waives such immunity in respect of its obligations under the
Indenture and the Notes.
SECTION 10.10. Indenture Controls. Notwithstanding anything to the
contrary contained in the Plan or the Order of the Bankruptcy Court confirming
the Plan, if there is any conflict or inconsistency between the terms and
provisions of the Plan or such Order and this Indenture, the terms and
provisions of this Indenture shall control as among the Company, the Noteholders
and the Trustee.
SECTION 10.11. Successors. All agreements of the Company in this
Indenture and the Notes shall bind its successors and assigns. All agreements of
the Trustee in this Indenture shall bind its successor and assigns.
SECTION 10.12. Multiple Originals; Counterparts. The parties may sign
any number of copies of this Indenture in counterparts. Each signed copy shall
be an original, but all of them together represent the same agreement. One
signed copy is enough to prove this Indenture.
ARTICLE 11
CONVERSION OF NOTES
SECTION 11.1. Conversion Privilege and Conversion Price. Subject to
and upon compliance with the provisions of this Article, at the option of the
Holder thereof, any Note or any portion of the principal amount thereof which is
$1,000 or an integral multiple of $1,000 may be converted at the principal
amount thereof, or of such portion thereof, plus accrued and unpaid interest
thereon through the relevant date of conversion into Class A Interests
(calculated to the nearest 1/10,000th of a Class A Interest, with 5/100,000ths
of a Class A Interest being considered as nearer to the next highest 1/10,000th
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of a Class A Interest) at the Conversion Price (as hereinafter defined),
determined as hereinafter provided, in effect at the time of conversion. In case
a Note or portion thereof is called for redemption pursuant to Section 3.1, such
conversion right in respect of the Note or portion so called shall expire at the
close of business on the Redemption Date, unless the Company defaults in making
the payment due upon such redemption.
The price at which Class A Interests shall be delivered upon
conversion (the "Conversion Price") shall initially be $______ per Class A
Interest, and shall be adjusted from time to time as provided herein, including,
without limitation, pursuant to Section 11.4.
SECTION 11.2. Exercise of Conversion Privilege. In order to exercise
the conversion privilege, the Holder of any Notes to be converted shall
surrender such Notes, accompanied by written notice, to the Conversion Agent at
the office of the Conversion Agent or, if less than the entire principal amount
thereof is to be converted, the portion thereof to be converted. Notes
surrendered for conversion during the period from the close of business on any
regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date shall be accompanied by payment in New
York Clearing House funds or other funds acceptable to the Company of an amount
equal to the interest payable on such Interest Payment Date on the principal
amount of Notes being surrendered or delivered for conversion, as the case may
be. Except as provided in the immediately preceding sentence or in Section 11.1,
no other adjustment shall be made for accrued interest on a converted Note.
If the Company reasonably determines in good faith that applicable law
would require the Company to withhold any taxes otherwise payable by a Holder in
connection with the exercise of the conversion privilege and if the Company has
given to such Holder written notice of such determination not less than 15 days
nor more than six months prior to such exercise by such Holder of the conversion
privilege, such Holder shall fund such tax withholding as a condition to the
exercise of the privilege.
Within the Business Day on which any Notes and executed Conversion
Notice are received by the Conversion Agent, the Conversion Agent shall:
(i) notify the Company by facsimile transmission and send by facsimile
transmission a copy of such facsimile (unless the Conversion Agent with
which the Note is deposited is itself the Trustee) to the Trustee, of the
following: (a) the principal amounts of all Notes deposited on the same
occasion by the same Holder which are to be converted, the number of Class
A Interests deliverable upon conversion and the name and address of such
Holder as it appears in the Register and (b) the date such Notes and the
related executed Conversion Notice were received by it (the "Conversion
Date") and the Conversion Price in respect of such conversion;
(ii) cancel all Notes delivered with such Conversion Notice and
(unless the relevant Conversion Agent is also the Trustee) dispatch such
cancelled Notes promptly to or to the order of the Trustee together with a
certificate stating the serial numbers (if applicable) of the Notes so
delivered; and
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(iii) dispatch as soon as practicable and in any event within three
days after satisfaction by the Holder of all conditions precedent to
conversion to the Company, the Conversion Notice and, to the Trustee
(unless the relevant Conversion Agent is also the Trustee), a copy thereof.
Notes shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Notes to the Conversion Agent
for conversion in accordance with the foregoing provisions, and at such time the
rights of the Holders of such Notes as Holders shall cease, and the person or
persons entitled to receive the Class A Interests, issuable upon conversion
shall be treated for all purposes as the record holder or holders of such Class
A Interests at such time. As promptly as practicable on or after the Conversion
Date, but in no event more than three Business Days after the Conversion Date,
the Company shall issue and shall deliver at the office of the Conversion Agent
a certificate or certificates for the number of Class A Interests (including
fractional Interests) issuable upon conversion.
In the case of any Note which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Note or
Notes of authorized denominations in aggregate principal amount equal to the
unconverted portion of the principal amount of such Note in the case of
certificated Notes.
SECTION 11.3. Intentionally Deleted.
SECTION 11.4. Adjustment of Conversion Price. The Conversion Price and
the kind of Equity Interests issuable upon Conversion of Notes shall be subject
to adjustment as set forth below in this Section 11.4. The Company shall give
Holders notice of any event described below which requires an adjustment
pursuant to this Section 11.4 in accordance with the provisions of Section 11.5.
(a) Distributions, Subdivisions and Combinations. If at any time the
Company shall (i) fix a record date for the purpose of determining the
holders of Class A Interests entitled to receive a distribution of
Partnership Interests; (ii) subdivide its outstanding Partnership Interests
into a larger number of Partnership Interests; (iii) combine its
outstanding Partnership Interests into a smaller number of Partnership
Interests; or (iv) issue any other Equity Interests by reclassification of
the Partnership Interests (other than pursuant to paragraph 11.4(c) below);
then the Conversion Price shall be proportionately decreased in the case of
such a distribution of Partnership Interests or such a subdivision, or
proportionately increased in the case of such a combination, or the kind of
Equity Interests of the Company which may be purchased shall be adjusted in
the case of such a reclassification of the Partnership Interests, each on
the record date for such distribution or effective date of such
subdivision, combination or reclassification, as the case may be, such that
each Holder shall be entitled to receive, upon conversion of the Notes held
by such Holder, the aggregate number and kind of Partnership Interests
which, if such Notes had been fully converted immediately prior to such
date, it would have owned upon such
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conversion and been entitled to receive by virtue of such distribution,
subdivision, combination or reclassification.
(b) Certain Other Distributions. If at any time the Company shall fix
a record date for the purpose of determining the holders of Class A
Interests entitled to receive any distribution (including any such
distribution made in connection with a consolidation or merger, but
excluding any distribution referred to in Section 11.4(a)) of:
(i) any evidences of indebtedness, any Equity Interests of the
Company (including Convertible Securities but excluding Partnership
Interests) or any other securities or property of any nature
whatsoever (including cash but excluding normal cash distributions
permitted under applicable law so long as in each case such cash is
payable solely out of earnings or undistributed income of the
Company); or
(ii) any warrants or other rights to subscribe for or purchase
any evidences of its indebtedness, any Equity Interests of the Company
(including Convertible Securities) or any other of its securities or
its property of any nature whatsoever;
then the Conversion Price shall be adjusted to equal the Conversion Price
in effect prior to such distribution multiplied by a fraction, (x) the
numerator of which shall be (A) the Current Market Price of one Class A
Interest on such record date minus (B) the amount allocable to one Class A
Interest of the fair value of any and all such evidences of indebtedness,
Equity Interests, other securities or property or warrants or other
subscription or purchase rights so distributable (as determined in good
faith by the Controlling Partner(s) and supported by an opinion from an
investment banking firm of nationally recognized standing), and (y) the
denominator of which shall be such Current Market Price of one Class A
Interest. Such adjustments shall be made whenever such a record date is
fixed. A reclassification of Class A Interests into Partnership Interests
and other Equity Interests of the Company shall be deemed a distribution by
the Company to the holders of Class A Interests of such other Equity
Interests within the meaning of this Section 11.4(b) and, if the
outstanding Class A Interests shall be changed into a larger or smaller
number of Partnership Interests as a part of such reclassification, such
change shall be deemed a subdivision or combination, as the case may be, of
the outstanding Class A Interests within the meaning of Section 11.4(a).
(c) Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. (i) In case the Company after the date hereof (w)
shall consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger, or (x)
shall permit any other Person to consolidate with or merge into the Company
and the Company shall be the continuing or surviving Person but, in
connection with such consolidation or merger, the Class A Interests shall
be changed into or exchanged for Equity Interests or other securities of
the
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Company or any other Person or cash or any other property, or (y) shall
transfer all or substantially all of its properties or assets to any other
Person, or (z) shall effect a capital reorganization or reclassification of
the Class A Interests (other than a capital reorganization or
reclassification for which adjustment in the Conversion Price is provided
in Section 11.4(a) or Section 11.4(b)), then, and in the case of each such
transaction, proper provision shall be made so that, upon the basis and the
terms and in the manner provided herein, each Holder shall be entitled upon
the conversion of Notes at any time after the consummation of such
transaction, to the extent such Notes are not converted prior to such
transaction, to receive at the Conversion Price in effect at the time
immediately prior to the consummation of such transaction in lieu of the
Class A Interests issuable upon such conversion prior to such transaction
the Equity Interests and other securities, cash and property to which such
Holder would have been entitled upon the consummation of such transaction
if such Holder had converted such Notes immediately prior thereto, subject
to adjustments (subsequent to such action) as nearly equivalent as possible
to the adjustments provided for in this Section 11.4.
(ii) Notwithstanding anything contained herein to the contrary,
the Company will not effect any of the transactions described in
clauses (w) through (z) of Section 11.4(c)(i) unless, prior to the
consummation thereof, the surviving Person (if other than the Company)
in any merger or consolidation described in such clauses, each Person
which acquires the Company's assets in any transaction described in
clause (y) above, and each Person (other than the Company) which may
be required to deliver any Equity Interests, securities, cash or
property upon the conversion of the Notes as provided herein, shall
assume, by written instrument delivered to, and reasonably
satisfactory to, the Trustee, the obligations of the Company hereunder
to deliver to Holders such Equity Interests, securities, cash or
property as such Holders shall be entitled to receive upon conversion
of the Notes (and if the Company shall survive the consummation of
such transaction, such assumption shall be in addition to, and shall
not release the Company from, any continuing obligations of the
Company hereunder), and such Person shall have similarly delivered to
the Trustee, an Opinion of Counsel stating that this Indenture shall
thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this Section
11.4) shall be applicable to the Equity Interests, securities, cash or
property which such Person may be required to deliver upon any
conversion of Notes pursuant hereto.
(d) Issuance of Partnership Interests, Warrants or other Rights. If at
any time the Company shall issue or sell to any Person any Additional
Partnership Interests or warrants or other similar rights to subscribe for
or purchase any Additional Partnership Interests or Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable (but excluding any distributions for which an adjustment is to
be made pursuant to Sections 11.4(a) or 11.4(b) above), and the price per
Additional Partnership Interest or for which such Additional Partnership
Interests are issuable upon the exercise of such warrants or other rights
or upon conversion or exchange of such Convertible Securities shall be
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less than the Current Market Price per Partnership Interest then in
effect, or without consideration, then the Conversion Price upon each
such issuance shall be adjusted to the lesser of (x) the Conversion
Price that would be in effect in the absence of the adjustment
provided for in this Section 11.4(d) and (y) that price, which shall
be determined by multiplying the Conversion Price by a fraction:
(1) the numerator of which shall be the number of
Partnership Interests outstanding immediately prior to the
issuance of such Additional Partnership Interests plus the number
of Partnership Interests which the aggregate consideration for
the total number of such Additional Partnership Interests so
issued would purchase at the Current Market Price therefor then
in effect, and
(2) the denominator of which shall be the number of
Partnership Interests outstanding immediately after the issuance
of such Additional Partnership Interests.
In the case of the issuance or sale of warrants or other rights
or Convertible Securities, any adjustment under this Section 11.4(d)
shall be made on the basis that (i) the maximum number of Additional
Partnership Interests issuable pursuant to all such warrants or other
similar rights or necessary to effect the conversion or exchange of
all such Convertible Securities shall be deemed to have been issued
and outstanding, (ii) the price per Additional Partnership Interest
shall be deemed to be the lowest possible price per Partnership
Interest in any range of prices per Partnership Interest at which such
Additional Partnership Interests are available to such holders, and
(iii) the Company shall be deemed to have received all of the
consideration payable therefor, if any, as of the date of the actual
issuance of such warrants or other similar rights. No further
adjustments of the Conversion Price shall be made upon the actual
issue of such Partnership Interests upon exercise of such warrants or
other similar rights or upon the actual issue of such Partnership
Interests upon such conversion or exchange of such Convertible
Securities. For the purposes of this Section 11.4(d), the date as of
which the Current Market Price of Partnership Interests shall be
computed shall be the earliest of (x) the date on which the Company
shall enter into a firm contract for the issuance of such warrants or
other similar rights or (y) the date of actual issuance of such
warrants or other similar rights. Such adjustments shall be made upon
the date of the issuance or sale of such warrants or other similar
rights.
(e) Issuance of Convertible Securities. If at any time the
Company shall issue or sell to any Person any Convertible Securities
(other than securities distributed in a transaction described in
Sections 11.4(b) or 11.4(d) above), whether or not the rights to
exchange or convert thereunder are immediately exercisable, the price
per Partnership Interest for which Partnership Interests are issuable
upon such conversion or exchange shall be less than the Current Market
Price per Partnership Interest then in effect on the date of such
issuance or sale or if, after any such issuance or sale, the price per
Partnership Interest for which Additional Partnership Interests may be
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issuable thereafter is amended, and such price as so amended shall be
less than the Current Market Price in effect at the time of such
amendment, then the Conversion Price upon each such issuance or
amendment shall be adjusted (if such adjustment would result in a lower
Conversion Price than would be in effect in the absence of the
adjustment provided for in this Section 11.4(e)) as provided in Section
11.4(d) above on the basis that (i) the maximum number of Additional
Partnership Interests necessary to effect the conversion or exchange of
all such Convertible Securities shall be deemed to have been issued and
outstanding, (ii) the price per Additional Partnership Interest shall
be deemed to be the lowest possible price in any range of prices at
which such Additional Partnership Interests are available to such
holders, and (iii) the Company shall be deemed to have received all of
the consideration payable therefor, if any, as of the date of actual
issuance of such Convertible Securities. No adjustment of the
Conversion Price shall be made under this Section 11.4(e) upon the
issuance of any Convertible Securities which are issued pursuant to the
exercise of any warrants or other subscription or purchase rights
therefor, if any such adjustment shall previously have been made upon
the issuance of such warrants or other rights pursuant to Section
11.4(d). No further adjustments of the Conversion Price shall be made
upon the actual issue of such Partnership Interests upon conversion or
exchange of such Convertible Securities and, if any issue or sale of
such Convertible Securities is made upon exercise of any warrant or
other right to subscribe for or to purchase any such Convertible
Securities for which adjustments of the Conversion Price have been or
are to be made pursuant to other provisions of this Section 11.4, no
further adjustments of the Conversion Price shall be made by reason of
such issue or sale. For the purposes of this Section 11.4(e), the date
as of which the Current Market Price of Partnership Interests shall be
computed shall be the earlier of (x) the date on which the Company
shall enter into a firm contract for the issuance of such Convertible
Securities or (y) the date of actual issuance of such Convertible
Securities. Such adjustments shall be made upon each issuance or
amendment of Convertible Securities and shall become effective
immediately after such issuance or amendment.
(f) Superseding Adjustment. If, at any time after any adjustment
to the Conversion Price shall have been made pursuant to Section
11.4(d) or 11.4(e) above as the result of any issuance of warrants,
rights or Convertible Securities, and either
(i) such warrants or rights, or the right of conversion or
exchange of any other Convertible Securities, shall expire, and
all or a portion of such warrants or rights, or the right of
conversion or exchange with respect to all or a portion of such
other Convertible Securities, as the case may be, shall not have
been exercised; or
(ii) the consideration per Partnership Interest for which
Partnership Interests are issuable pursuant to such warrants or
rights, or the terms of such other Convertible Securities, shall
be increased solely by virtue of provisions therein contained for
an automatic increase in such consideration per Partnership
Interest upon the occurrence of a specified date or event;
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then such previous adjustment shall be rescinded and annulled and
the Additional Partnership Interests which were deemed to have
been issued by virtue of the computation made in connection with
the adjustment so rescinded and annulled shall no longer be
deemed to have been issued by virtue of such computation.
Thereupon, a re-computation shall be made of the effect of such
rights or options or other Convertible Securities on the
Conversion Price on the basis of
(iii) treating the number of Additional Partnership
Interests or other property, if any, theretofore actually issued
or issuable pursuant to the previous exercise of any such
warrants or rights or any such right of conversion or exchange,
as having been issued on the date or dates of any such exercise
and for the consideration actually received and receivable
therefor (including all amounts received in respect of the
issuance or continuance of the validity of such warrants or
rights or any such right of conversion or exchange); and
(iv) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having
been granted or issued immediately after the time of such
increase of the consideration per Partnership Interest for which
Partnership Interests are issuable under such warrants or rights
or other Convertible Securities.
(g) When Adjustments To Be Made. No adjustment in the Conversion
Price shall be required by this Section 11.4 if such adjustment either
by itself or with other adjustments not previously made would require
an increase or decrease of less than 1% in such price. Any adjustment
representing a change of less than such minimum amount which is
postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section
11.4 and not previously made, would result in a minimum adjustment.
Notwithstanding the foregoing, any adjustment carried forward shall be
made no later than ten Business Days prior to the earlier of the
Stated Maturity Date and any Redemption Date. All calculations under
this Section 11.4(g) shall be made to the nearest cent. For the
purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence.
(h) When Adjustments Not Required. If the Company shall fix a
record date for the purpose of determining the holders of Class A
Interests entitled to receive a distribution and shall, thereafter and
before the distribution to such holders thereof, legally abandon its
plan to pay or deliver such distribution, then thereafter no
adjustment shall be required by reason of the taking of such record
and any such adjustment previously made in respect thereof shall be
rescinded and annulled.
(i) Other Action Affecting Class A Interests. In case after the
date hereof the Company shall take any action affecting Class A
Interests other than an action described in this Section 11.4, and the
failure to make any adjustment would not
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fairly protect the conversion rights contemplated hereby in accordance
with the essential intent and principle of this Section 11.4, then the
Conversion Price shall be adjusted in such manner and at such time as
shall be equitable in the circumstances.
SECTION 11.5. Notice of Adjustments of Conversion Price. Whenever the
Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price in
accordance with Section 11.4 and shall prepare a CP Certificate
setting forth the adjusted conversion price and showing in reasonable
detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at each office or agency
maintained for the purpose of conversion of Notes; and
(b) such CP Certificate and a notice stating that the Conversion
Price has been adjusted and setting forth the adjusted Conversion
Price shall, as soon as practicable, be mailed by the Company to all
Holders at their last addresses as they appear in the Register.
SECTION 11.6. Notice of Certain Partnership Action. In case:
(a) the Company shall declare any distribution on its Class A
Interests; or
(b) the Company shall authorize the granting to holders of its Class A
Interests of rights to subscribe for or to purchase any Equity Interests;
or
(c) of any reclassification of the Class A Interests of the Company,
or of any consolidation or merger to which the Company is a party, or the
sale or transfer of all or substantially all of the assets of the Company;
or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the Trustee and at each office or
agency maintained for the purpose of conversion of Notes, and shall cause to be
mailed to all Holders at their last addresses as they shall appear in the
Register, at least 20 days (or 10 days in any case specified in clause (a) or
(b) above) prior to the applicable record date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
distribution or rights or, if a record is not to be taken, the date as of which
the holders of Partnership Interests of record to be entitled to such
distribution or rights are to be determined, or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Class A Interests of record shall be
entitled to exchange their Class A Interests for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. Failure to give the notice
requested by this Section or any defect therein shall not affect the
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legality or validity of any distribution, right, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up,
or the vote upon any such action.
SECTION 11.7. Issuance of Class A Interests. The Company covenants
that all Class A Interests which may be issued upon conversion of Notes will
upon issue be duly and validly issued and fully paid and nonassessable and,
except as provided in Section 11.8, the Company will pay all taxes, liens and
charges with respect to the issue thereof.
SECTION 11.8. Taxes on Conversions. The Company will pay any and all
taxes that may be payable in respect of the issue or delivery of Class A
Interests on conversion of Notes pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of Class A Interests in a name other
than that of the Holder of the Note or Notes to be converted, and no such issue
or delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of any such tax, or has established to the
satisfaction of the Company that such tax has been paid.
SECTION 11.9. Responsibility of Trustee. Neither the Trustee, subject
to the provisions of Section 7.1, nor any Conversion Agent shall at any time be
under any duty or responsibility to any Holder to determine whether any facts
exist which may require any adjustment of the Conversion Price, or with respect
to the nature or extent of any such adjustment when made, or with respect to the
method employed, or herein or in any supplemental indenture provided to be
employed, in making the same. Neither the Trustee nor any Conversion Agent makes
any representation or shall be accountable with respect to the validity or value
(or the kind or amount) of any Class A Interests, or of any other securities or
property, which may at any time be issued or delivered upon the conversion of
any Note. Neither the Trustee nor any Conversion Agent shall be responsible for
any failure of the Company to make any cash payment or to issue, transfer or
deliver any Class A Interests or stock certificates or other securities or
property upon the surrender of any Note for the purpose of conversion; and
neither the Trustee, subject to the provisions of Section 7.1, nor any
Conversion Agent shall be responsible for any failure of the Company to comply
with any of the covenants of the Company contained in this Article.
ARTICLE 12
REPRESENTATIONS AND WARRANTIES
The Company hereby makes the following representations and warranties
for the benefit of the Trustee and the Holders in connection with the issuance
of the Notes hereunder. The following representations and warranties shall be
true as of the Effective Date.
SECTION 12.1. Corporate/Partnership Status. Each of the Company, each
Significant Subsidiary of the Company and each Controlling Partner (a) is a duly
organized and validly existing corporation (in the case of the Controlling
Partners and Significant Subsidiaries of the Company that are corporations) or
partnership (in the case of
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<PAGE>
the Company and Significant Subsidiaries of the Company that are partnerships)
in good standing under the laws of the jurisdiction of its incorporation or
formation, (b) has all requisite corporate or partnership power and authority,
as the case may be, to own its property and assets and to transact the business
in which it is engaged or presently proposes to engage and (c) is duly qualified
and authorized to do business and is good standing as a foreign corporation or
foreign partnership, as the case may be, in every jurisdiction where the failure
to be so qualified has no reasonable possibility of having a Material Adverse
Effect.
SECTION 12.2. Corporate/Partnership Power and Authority. Each of the
Company and each Controlling Partner has all requisite corporate or partnership
power and authority, as the case may be, to execute, deliver and carry out the
terms and provisions of the Indenture and the Notes issued thereunder to which
it is a party and has taken all necessary corporate or partnership action, as
the case may be, to authorize the execution, delivery and performance by it of
the Indenture and the execution and the authentication by the Trustee of the
Notes. A Controlling Partner has duly executed and delivered the Indenture and
the Notes on behalf of the Company, and each of the Indenture and the Notes
constitutes the Company's legal, valid and binding obligation, enforceable in
accordance with its terms, except as enforceability may be limited by applicable
insolvency, bankruptcy or similar laws affecting creditors' rights generally, or
general principles of equity, whether such enforceability is considered in a
proceeding in equity or at law.
SECTION 12.3. No Violation. Neither the execution, delivery or
performance by the Company or any Controlling Partner of the Indenture and the
Notes, nor the compliance by any such Person with the terms and provisions
hereof and thereof, (a) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality, other than any of the foregoing which has no
reasonable possibility of having a Material Adverse Effect, or (b) will conflict
with or result in any breach of, or constitute a default under or result in
breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
the Company (or of any Controlling Partner or any Subsidiary of the Company),
other than any of the foregoing which has no reasonable possibility of having a
Material Adverse Effect, or (c) will, with respect to the Company or any
Controlling Partner or any Subsidiary of the Company that is a partnership,
violate any provisions of the partnership agreement of such Person (or the
partnership agreement of any partnership of which such Person is a partner), or
(d) will, with respect to any Controlling Partner or any Significant Subsidiary
of the Company that is a corporation, violate any provision of its Certificate
of Incorporation or By-Laws.
SECTION 12.4. Class A Interests Issuable upon Conversion of Notes. The
Company has authorized the creation, and no payments are required in connection
with the issuance, of Class A Interests upon conversion of Notes.
SECTION 12.5. Governmental Approvals. No order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption
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<PAGE>
by, any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with (i) the execution,
delivery and performance of the Indenture or the issuance of the Notes or (ii)
the legality, validity, binding effect or enforceability of the Indenture or the
Notes, except for those listed on Schedule II, each of which has been duly
obtained or completed.
SECTION 12.6. Investment Company Act; Public Utility Holding Company
Act. None of the Company, any Controlling Partner or any Subsidiary of the
Company is (x) an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended, (y) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of either a "holding company" or a "subsidiary
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or (z) subject to any other federal or state law or regulation which
purports to restrict or regulate its ability to borrow money.
SECTION 12.7. Corporate/Partnership Structure; Capitalization.
Schedule III hereto sets forth, as of immediately following the effectiveness of
the transactions to be consummated on the Effective Date pursuant to the Plan, a
complete list of (a) all Affiliates of the Company or any Subsidiary of the
Company that have any record or beneficial interest in any of the Notes, (b) all
Subsidiaries of the Company, (c) each holder of an Equity Interest in the
Company or in any Subsidiary of the Company and the interest so held, (d) all
Core Properties and all Indebtedness thereon and all agreements, instruments and
other documents related thereto, including, without limitation, pursuant to
which such Indebtedness is evidenced, secured or guaranteed and (e) all assets
(including, without limitation, all Equity Interests of any Subsidiary of the
Company) and liabilities of each of the Company and each of its Subsidiaries.
SECTION 12.8. No Default. None of the Company, any Controlling Partner
or any Subsidiary of the Company is in default in any material respect beyond
any applicable grace period under or with respect to any material agreement,
instrument or undertaking to which it is a party or by which it or any of its
property is bound in any respect, the existence of which default could result in
a Material Adverse Effect.
SECTION 12.9. Licenses, etc. The Company, the Controlling Partners and
the Subsidiaries of the Company have obtained and hold in full force and effect,
all material franchises, licenses, permits, certificates, authorizations,
qualifications, accreditation, easements, rights of way and other rights,
consents and approvals which are necessary for the operation of the Core
Properties and their respective businesses as presently conducted.
SECTION 12.10. Compliance with Law. The Company, the Controlling
Partners and the Subsidiaries of the Company are in compliance with all laws,
rules, regulations, orders, judgments, writs and decrees, noncompliance with
which could result in a Material Adverse Effect.
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<PAGE>
SECTION 12.11. Capital Infusion. The Company has received from the
Co-Proponents on the Effective Date an aggregate capital contribution of $75
million in Cash.
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<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized, have
executed this Indenture on behalf of the respective parties hereto as of the
date first above written.
WORLD FINANCIAL CENTER
PROPERTIES, L.P.
By_______________________________,
its General Partner
By
--------------------------
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By
------------------------------
Name:
------------------------
Title:
-----------------------
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Exhibit T3D.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- --------------------------------------x
In re : Chapter 11 Case Nos.
92 B 42698
OLYMPIA & YORK REALTY CORP., et al., :
(Jointly Administered)
Debtors. :
- --------------------------------------x
ORDER CONFIRMING THE THIRD AMENDED JOINT
PLAN OF REORGANIZATION FOR THE DEBTORS DATED
SEPTEMBER 12, 1996 UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
September 20, 1996
New York, New York
<PAGE>
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O&Y (U.S.) Development Company, L.P., O&Y (U.S.) Development General
Partner Corp., O&Y Equity Company, L.P., O&Y Equity General Partner Corp.,
Olympia & York Real Estate (U.S.A.) Inc., Baden Real Estate Corp., O&Y (U.S.)
Financial Company, O&Y WFC Tower Corp., WFC Tower A Company, O&Y 245 Corp.,
Olympia & York 245 Park Avenue Holding Company L.P., Olympia & York Realty
Corp., Olympia & York SF Holdings Corporation, O&Y (U.S.) Development Canada
Ltd., O&Y Equity (Canada) Ltd., Olympia & York Tower B Lease Company, O&Y
Financial Company, 245 Park Avenue Company, O&Y Liberty Plaza Company, Olympia &
York OLP Company and Trinity Place Company (collectively, the "Debtors")1,
having proposed that certain Third Amended Joint Plan of Reorganization for the
Debtors dated September 12, 1996 (the "Plan"); and based upon the Findings of
Fact and Conclusions of Law entered by the Bankruptcy Court on September 20,
1996 in connection with the Plan; and the appearance of all interested parties
having been noted on the record; and objections to confirmation of the Plan
having been withdrawn or overruled; and upon the record of, and the evidence
procured or offered at, the Confirmation Hearing;
Now upon the motion of the Debtors and after due deliberation, this
Court hereby ORDERS, ADJUDGES AND DECREES THAT:
- --------
1 All capitalized terms used herein but not defined herein shall have the
meanings ascribed to such terms in either the Plan, the 970 Plan, or the
Findings of Fact and Conclusions of Law, as applicable.
<PAGE>
-3-
1. The Plan be, and it hereby is, confirmed.
2. The record of this Confirmation Hearing be, and it hereby is,
closed.
3. Any objections to confirmation of the Plan that have not been
withdrawn prior to entry of this Confirmation Order or are not cured by the
relief granted herein be, and they hereby are, overruled in their entirety and
all withdrawn objections be, and they hereby are, deemed withdrawn with
prejudice.
4. The DIP Loan be, and it hereby is, continued through the earlier of
the Effective Date or December 31, 1996. The obligations of each Debtor that is
a Borrower (as defined in the DIP Loan) under the DIP Loan and the DIP Order,
be, and they hereby are, deemed to remain in full force and effect through and
including the earlier of the Effective Date or December 31, 1996. Each Debtor
that is a Borrower (as defined in the DIP Loan) be, and hereby is, directed to
fully comply with all of the terms and provisions of the DIP Loan and the DIP
Order through and including the earlier of the Effective Date or December 31,
1996. Allof the Claims, Liens, rights and priorities held by the Agent (as
defined in the DIP Loan) or Lenders (as defined in the DIP Loan) pursuant to
THE DIP Loan or the DIP Order be, and they hereby are, deemed to remain in full
force and effect through and including the earlier of the Effective Date or
December 31, 1996. All obligations of each Debtor that is a Borrower (as defined
in the DIP Loan) under the DIP Loan and the DIP Order shall be
<PAGE>
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satisfied or fulfilled in Accordance with the provisions of the DIP Loan.
5. The provisions in sections 19 and 20 of the Plan governing
distributions, reserves, and the procedures for resolving and treating Disputed
Claims under the Plan be, and they hereby are, approved and found to be fair and
reasonable. The amount of Cash reserved on the Effective Date on account of
Administrative Expense Claims shall include an amount estimated by the Debtors
to be or to become payable on account of professional fees and expenses that (i)
are subject to the approval of the Court after the Effective Date, or (ii) were
Allowed by order of the Court prior to the Effective Date but remain unpaid as
of the Effective Date for any reason.
6. The record date for purposes of distribution to holders of Allowed
Unaffiliated Unsecured Claims be, and hereby is, fixed as October 21, 1996.
7. The Undisputed Realty Corp. Assets be, and they hereby are, deemed
to have a value of $10,550,000, and in accordance with section 8.6 of the Plan,
the Disbursing Agent be, and it hereby is, authorized and directed to distribute
to each holder of an Allowed General Unsecured Claim against Consolidated Realty
Corp. Class A Interests having a value equal to such holder's Ratable Proportion
of $10,550,000.
8. The Convertible Notes will be issued in $1,000 denominations and
each holder of an Allowed Unaffiliated Unsecured Claim will receive a Cash
payment on account of the amount by which 5.71% of their Allowed Unaffiliated
<PAGE>
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Unsecured Claim exceeds the closest $1,000 denomination. Upon the Allowance of
any Disputed Claim for which a reserve in the Subclass 7.11.1 Disputed Claims
Debt/Equity Escrow has been established, the holder of the then Allowed
Unaffiliated Unsecured Claim will receive a Cash payment from Newco LP equal to
the amount by which 5.71% of the then Allowed Unaffiliated Unsecured Claim
exceeds the closest $1,000 denomination.
9. At least ten days prior to the Effective Date, the Debtors, the
Creditors' Committee and the Co-Proponents shall agree upon the denominations in
which units of Class A and Class B Interests are to be distributed pursuant to
the Plan and the fractions of such units that may be issued pursuant to the
Plan. Each party in interest shall receive from Newco LP a Cash payment equal to
the amount by which any fractional units of Class A and Class B Interests which
it would otherwise receive under the Plan (based on the amount of its Allowed
Claims) exceeds the nearest fractional unit permitted to be issued under the
Plan multiplied by the per unit Newco Reorganization Value as established
pursuant to paragraph 27 of this Confirmation Order.
10. In accordance with section 2.1 of the Plan, on the Effective Date,
all assets and Liabilities of each of the Consolidated Devco Entities be, and
they hereby are, substantively consolidated; each Intercompany Claim held by a
<PAGE>
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Consolidated Devco Entity against a Consolidated Devco Entity be, and it hereby
is, eliminated in accordance with the Restructuring Transactions or otherwise
cancelled; all assets and Liabilities of each of the Consolidated Devco Entities
(other than Devco) be, and they hereby are, treated as though they were merged
with the assets and Liabilities of Devco; each guarantee by a Consolidated Devco
Entity of an obligation of a Consolidated Devco Entity be, and it hereby is,
eliminated so that any Claim against a Consolidated Devco Entity and any
guarantee thereof by a Consolidated Devco Entity and any joint or several
liability of two or more of the Consolidated Devco Entities, be, and it hereby
is, deemed to be one obligation of Devco; and each Claim filed or to be filed in
the Reorganization Cases of the Consolidated Devco Entities be, and it hereby
is, deemed filed against Devco and deemed one Claim against and obligation of
Devco.
11. In accordance with section 2.2 of the Plan, on the Effective Date,
all assets and Liabilities of Realty Corp., OYREUSA and Baden be, and they
hereby are, substantively consolidated; each Intercompany Claim held by Realty
Corp., OYREUSA or Baden against Realty Corp., OYREUSA or Baden be, and it hereby
is, eliminated in accordance with the Restructuring Transactions or otherwise
cancelled; all assets and Liabilities of OYREUSA and Baden be, and they hereby
are, treated as though they were merged with the assets and Liabilities of
Realty Corp.; each guarantee by Realty Corp., OYREUSA, or Baden of an
<PAGE>
-7-
obligation of Realty Corp., OYREUSA or Baden be, and it hereby is, eliminated so
that any Claim against Realty Corp., OYREUSA or Baden and any guarantee thereof
by Realty Corp., OYREUSA or Baden and any joint or several liability of two or
more of Realty Corp., OYREUSA or Baden be, and it hereby is, deemed to be one
obligation of Realty Corp; and each Claim filed or to be filed in the
Reorganization Cases of Realty Corp., OYREUSA or Baden be, and it hereby is,
deemed filed against Realty Corp. and deemed one Claim against and obligation of
Realty Corp.
12. In accordance with section 2.3 of the Plan, on the Effective Date,
all assets and Liabilities of Liberty Plaza Co., OLP Co. and Trinity Place Co.
be, and they hereby are, substantively consolidated; each Intercompany Claim
by Liberty Plaza Co., OLP Co. or Trinity Place Co. against Liberty Plaza Co.,
OLP Co. or Trinity Place Co. be, and it hereby is, eliminated in accordance with
the Restructuring Transactions or otherwise cancelled; all assets and
Liabilities of OLP Co. and Trinity Place Co. be, and they hereby are, treated as
though they were merged with the assets and Liabilities of Liberty Plaza Co.;
each guarantee by Liberty Plaza Co., OLP Co. and Trinity Place Co. of an
obligation of Liberty Plaza Co., OLP Co. or Trinity Place Co. be, and it hereby
is, eliminated so that any Claim against any of Liberty Plaza Co., OLP Co. or
Trinity Place Co. and any guarantee thereof by Liberty Plaza Co., OLP Co. and
Trinity Place Co. and any joint or several liability of two or
<PAGE>
-8-
more of Liberty Plaza Co., OLP Co. or Trinity Place Co. be, and it hereby is,
deemed to be one obligation of Liberty Plaza Co.; and each Claim filed or to be
filed in the Reorganization Cases of Liberty Plaza Co., OLP Co. and Trinity
Place Co. be, and it hereby is, deemed filed against Liberty Plaza Co. and
deemed one Claim against and obligation of Liberty Plaza Co.
13. In accordance with section 2.4 of the Plan, on the Effective Date,
all assets and Liabilities of 245 Park Co., 245 Holding LP and 245 Corp. be, and
they hereby are, substantively consolidated; each Intercompany Claim held by 245
Park Co., 245 Holding LP or 245 Corp. against 245 Park Co., 245 Holding LP or
245 Corp. be, and it hereby is, eliminated in accordance with the Restructuring
Transactions or otherwise cancelled; all assets and Liabilities of 245 Holding
LP and 245 Corp. be, and it hereby is, treated as though they were merged with
the assets and Liabilities of 245 Park Co.; each guarantee by 245 Park Co., 245
Holding LP or 245 Corp. of an obligation of 245 Park Co., 245 Holding LP or 245
Corp. be, and it hereby is, eliminated so that any Claim against 245 Park Co.,
245 Holding LP or 245 Corp. and any guarantee thereof by 245 Park Co., 245
Holding LP or 245 Corp. and any joint or several liability of two or more of 245
Park Co., 245 Holding LP or 245 Corp. be, and it hereby is, deemed to be one
obligation of 245 Park Co.; and each and every Claim filed or to be filed in the
Reorganization Cases of 245 Park Co., 245 Holding LP or 245 Corp. be, and it
hereby is,
<PAGE>
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deemed filed against 245 Park Co. and deemed one Claim against and obligation of
245 Park Co.
14. In accordance with section 1141 of the Bankruptcy Code, the
provisions of the Plan be, and they hereby are, binding upon the Debtors, the
Debtors in Possession, the O&Y Affiliates, the Co-Proponents, any other Entity
giving, acquiring or receiving property under the Plan, any lessor or lessee of
property to or from the Debtors and any holder of a Claim against or Equity
Interest in the Debtors, whether or not the Claim or Equity Interest of such
creditor or Equity Interest holder is impaired under the Plan and whether or not
such creditor or Equity Interest holder has filed, or is deemed to have filed, a
proof of Claim or proof of Equity Interest or has accepted the Plan.
15. Subject to the terms of paragraphs 45, 69 and 70 hereof, nothing
in this Confirmation Order shall in any way affect the provisions of section
22.1.2(x) of the Plan which provide that, if the Plan is not consummated, this
Confirmation Order and all Findings of Fact and Conclusions of Law relating
thereto shall be null and void and the Debtors, the Co-Proponents, the
Creditors' Committee and other holders of Claims and Equity Interests, in
relation to one another, shall stand in the same position as if the Plan had
never been filed and this Confirmation Order had never been entered, except
that paragraphs 46, 47, 48 and 49 hereof, shall specifically remain in full
force
<PAGE>
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and effect and be binding upon all Entities affected thereby even if the
Plan is not consummated for whatever reason.
16. On the Effective Date, in accordance with section 1141 of the
Bankruptcy Code and section 23.2 of the Plan, Newco LP or its designee be, and
it hereby is, revested with the assets, if any, of the Debtors not distributed
or otherwise transferred under the Plan free and clear of all Liens, Claims and
encumbrances, except to the extent provided herein, in the Plan, the Tower B Co.
Plan or the 970 Plan.
17. In exchange for the consideration provided for under the Plan, and
in accordance with section 1141 of the Bankruptcy Code, the Debtors be, and they
hereby are, discharged and released of and from any and all Claims against the
Debtors or any of their respective estates that arose before the Effective Date,
including, without limitation, any interest accrued or expenses incurred thereon
from and after each Debtor's respective Petition Date or any Claim of a kind
specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether
or not (a) a proof of Claim based upon such Clam is filed or deemed filed under
section 501 of the Bankruptcy Code, (b) such Claim is allowed under section 502
of the Bankruptcy Code, or (c) the holder of such Claim has accepted the Plan;
provided, however, that with respect to any debt to the United States Government
arising under the IRC, the environmental laws or any
<PAGE>
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criminal laws of the United States, the reference in section 23.3 of
the Plan to Effective Date shall mean the Confirmation Date.
18. Subject to the last sentence of this paragraph, the Release
Provisions described in sections 24.1, 24.2 and 24.3 of the Plan be, and they
hereby are, approved in all respects. Subject to the last sentence of this
paragraph, the Monitoring Committee, the current and former members of the
Monitoring Committee as such, and the Bankruptcy Inspectors in the OYDL Canadian
insolvency and bankruptcy proceedings as such, and any Affiliates, agents,
attorneys, accountants, financial advisors, investment bankers, appraisers,
advisors and engineers of or for the Monitoring Committee, the current or former
members thereof or such Bankruptcy Inspectors, in each case in their capacities
as such, shall on the Effective Date have the benefit of releases identical to
those provided to Plan Releasees under the Plan, but limited to Liabilities
arising before the date of this Confirmation Order. Nothing in this Confirmation
Order or the Plan shall effect a release in favor of any Plan Releasee or O&Y
Releasee with respect to any debt owed to the United States Government for any
liability arising under the IRC, the environmental laws or any criminal laws of
the United States; provided, however, that this sentence shall in no way affect
or limit the discharge granted to the O&Y Releasees who are debtors under
chapter 11 of the Bankruptcy Code.
<PAGE>
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19. This Confirmation Order be, and it hereby is, deemed to be the
Injunction provided in section 24.4 of the Plan; provided, however, that nothing
in this Confirmation Order or the Plan shall enjoin or restrain the United
States Government from any act to enforce the IRC, the environmental laws or any
criminal laws of the United States; provided, further, however, that this
paragraph shall in no way affect or limit the discharge granted to the O&Y
Releasees who are debtors under chapter 11 of the Bankruptcy Code.
20. The waiver of claims described in section 24.5 of the Plan be, and
it hereby is, approved in all respects.
21. On the Effective Date, Newco LP and Managing GP each be, and
hereby are, authorized and directed (i) to assume all the several
indemnification agreements entered into pursuant to Section 3.b of the Protocol
between, on the one hand, the Canadian Debtors, Devco GP, Equity GP and OYREUSA
and, on the other hand, the officers listed on Schedule 2 to the Protocol and
the original nine members of the Independent Board, and to provide the indemnity
required by and otherwise perform such indemnification agreements, and (ii) to
assume such other indemnification agreements between any of the Debtors and any
of the current or former officers of Devco GP as the Debtors and the
Co-Proponents shall designate in writing before the Effective Date and to
provide the indemnity required by and otherwise perform such indemnification
agreements.
<PAGE>
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22. Nothing contained in this Confirmation Order shall supersede,
invalidate or limit in any respect the authorization, approval or requirements
of the Order Pursuant to Sections 105(a), 363(b), 503(b) and 1107(a) of the
Bankruptcy Code Approving and Directing Implementation of the Corporate
Governance Protocol Proposed By the Examiner dated July 15, 1993 entered by this
Court in the Reorganization Cases of the Canadian Debtors or of the related
provisions of Sections 3.b through 3.h of the Protocol, and the immunities,
covenants not to sue and indemnifications provided pursuant thereto be, and
hereby are, deemed to remain in full force and effect in accordance with their
terms.
23. Except with respect to the provisions of Sections 3.b through 3.h
of the Protocol and the immunities, covenants not to sue and indemnifications
provided pursuant thereto, which shall remain in full force and effect in
accordance with their terms, the Protocol be, and hereby is, deemed terminated
and shall have no effect with respect to the corporate governance of the
Canadian Debtors, Devco GP, Equity GP and OYREUSA (or their successors) upon the
Effective Date.
24. Devco GP be, and it hereby is, appointed as Disbursing Agent under
the Plan for the period commencing on the Confirmation Date and ending
immediately prior to the Effective Date, and Newco LP be, and it hereby is,
appointed as Disbursing Agent under the Plan for the period from and after the
Effective
<PAGE>
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Date, and the Disbursing Agent be, and it hereby is, authorized and directed to
take any and all actions contemplated to be taken by it under the Plan,
including the prosecution and settlement of all Disputed Claims under the Plan.
The Disbursing Agent be, and hereby is, authorized to require as a condition to
the delivery of Class A or Class B Interests to any party otherwise entitled to
receive such interests in accordance with the Plan, an instrument, in form and
substance, reasonably satisfactory to the Disbursing Agent that such party has
executed the Newco LP Partnership Agreement or otherwise authorized in writing
the execution of same on its behalf. The Disbursing Agent (i) shall hold all
such Class A and Class B Interests in escrow on behalf of the parties otherwise
entitled to distribution of such Interests; (ii) shall similarly hold any
distributions in respect of such Interests; and (iii) shall abstain from
exercising any other rights in connection therewith.
25. In accordance with section 1142 of the Bankruptcy Code, the
Debtors, the Debtors in Possession, the O&Y Affiliates, the Co-Proponents and
any other Entity designated pursuant to the Plan be, and they hereby are,
authorized, empowered and directed to execute, deliver, file and record any
document, and to take any action necessary or appropriate to implement,
consummate and otherwise effect the Plan in accordance with its terms in all
material respects, and all such Entities shall be bound by the terms and
provisions of all documents executed and delivered by
<PAGE>
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them necessary or appropriate to effectuate the transactions contemplated by the
Plan.
26. All Entities holding Claims against or Equity Interests in the
Debtors that are treated under the Plan be, and they hereby are, directed to
execute, deliver, file or record any document, and to take any action necessary
to implement, consummate and otherwise effect the Plan in accordance with its
terms, and all such Entities shall be bound by the terms and provisions of all
documents executed and delivered by them in connection with the Plan.
27. For all purposes with respect to distributions to creditors in
Class 7.11, the Newco Reorganization Value be, and hereby is, $545,000,000,
subject only to change as necessary to account for variances in the amount of
the Convertible Note on the Effective Date from that amount assumed in the Ahern
Affidavit ($27,701,043) and any material amendments to the Plan made after the
Confirmation Date. At least five days prior to the Effective Date, notification
will be provided to the Creditors' Committee as to the amount of the Convertible
Note to be issued in accordance with section 7.11 of the Plan and any amendments
to the Plan that will result in a change in the Newco Reorganization Value. The
Bankruptcy Court will have exclusive jurisdiction to resolve any disputes
regarding the Newco Reorganization Value.
<PAGE>
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28. Upon the Effective Date, in accordance with section 7.3 of the
Plan, the CIBC/OLP Claims be, and they hereby are, allowed in the amount of
$75,658,000 plus interest accruing from and after June 30, 1996 through the
Effective Date and any unpaid attorneys' fees and expenses incurred through the
Effective Date that are payable under the agreements evidencing the CIBC/OLP
Claims.
29. The Intercompany Settlement be, and it hereby is, approved
pursuant to Bankruptcy Rule 9019 as a fair, prudent and reasonable compromise of
the controversies and Claims resolved by such settlement that is binding upon
all Entities affected thereby.
30. The BPHI Settlement be, and it hereby is, approved pursuant to
Bankruptcy Rule 9019 as a fair, prudent and reasonable compromise of the
controversies and Claims resolved by such settlement that is binding upon all
Entities affected thereby.
31. Upon the Effective Date, in accordance with the BPHI Settlement,
BPHI be, and it hereby is, deemed to have an Allowed General Unsecured Claim
against Devco in the amount of $22,250,000.
32. The Merrill Lynch Settlement be, and it hereby is, approved
pursuant to Bankruptcy Rule 9019 as a fair, prudent and reasonable compromise of
the controversies and Claims resolved by
<PAGE>
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such settlement that is binding upon all Entities affected thereby.
33. Upon the Effective Date, in accordance with the Merrill Lynch
Settlement, the Merrill Lynch/Tower B Leaseco Secured Claim be, and it hereby
is, deemed to be an Allowed Claim in the amount of $502,000 and Merrill Lynch
be, and it hereby is, deemed to have an Allowed General Unsecured Claim against
Tower B Leaseco of $93,000,000 and, to the extent such Allowed General Unsecured
Claim against Tower B Leaseco shall not receive payment in full in accordance
with section 16.4 of the Plan, Merrill Lynch be, and it hereby is, deemed to
have an Allowed Unaffiliated Unsecured Claim against Devco.
34. The TIAA Settlement be, and it hereby is, approved pursuant to
Bankruptcy Rule 9019 as a fair, prudent and reasonable compromise of the
controversies and Claims resolved by such settlement that is binding upon all
Entities affected thereby.
35. Upon the Effective Date, in accordance with the TIAA Settlement,
TIAA be, and it hereby is, deemed to have an Allowed Unaffiliated Unsecured
Claim against Devco of $75,000,000.
36. The Toronto Dominion Settlement be, and it hereby is, approved
pursuant to Bankruptcy Rule 9019 as a fair, prudent and reasonable compromise of
the controversies and Claims
<PAGE>
-18-
resolved by such settlement that is binding upon all Entities affected thereby.
37. The Reichmann Settlement be, and it hereby is, approved pursuant
to Bankruptcy Rule 9019 as a fair, prudent and reasonable compromise of the
controversies and Claims resolved by such settlement that is binding upon all
Entities affected thereby.
38. The Amex Settlement be, and it hereby is, approved pursuant to
Bankruptcy Rule 9019 as a fair, prudent and reasonable compromise of the
controversies and Claims resolved by such settlement that is binding upon all
Entities affected thereby.
39. Upon the Effective Date, in accordance with the Amex Settlement,
Amex be, and it hereby is, deemed to have an Allowed Unaffiliated Unsecured
Claim against Devco in the amount of $320,000 in complete settlement of all
Claims relating to the World Financial Center and Amex be, and it hereby is,
deemed to have an Allowed Unaffiliated Unsecured Claim against Devco in the
amount of $4,000,000, representing the maximum damages that Amex would be
allowed under the Bankruptcy Code for unpaid rent and for damages if the
Amex/Retailco Lease had been rejected.
40. The Bank of Nova Scotia Settlement be, and it hereby is, approved
pursuant to Bankruptcy Rule 9019 as a fair, prudent and reasonable compromise of
the controversies and Claims
<PAGE>
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resolved by such settlement that is binding upon all Entities affected thereby.
41. The Dragon Settlement be, and it hereby is, approved pursuant to
Bankruptcy Rule 9019 as a fair, prudent and reasonable compromise of the
controversies and Claims resolved by such settlement that is binding upon all
Entities affected thereby.
42. Upon the Effective Date, in accordance with the Dragon Settlement,
Dragon be, and it hereby is, deemed to have an Allowed Co-Proponent Unsecured
Claim in the amount of $60,000,000.
43. The Oppenheimer Agreement be, and it hereby is, approved pursuant
to Bankruptcy Rule 9019 as a fair, prudent and reasonable compromise of the
controversies and Claims resolved bysuch settlement that is binding upon all
Entities affected thereby.
44. Upon the Effective Date, in accordance with the Oppenheimer
Agreement, Oppenheimer be, and it hereby is, deemed to have an Allowed
Unaffiliated Unsecured Claim against Devco arising out of the partnership
agreement for Tower A Co. in an agreed amount equal to $60,000,000.
45. The order dated September 12, 1996 approving the OYDL Settlement
be, and hereby is, incorporated herein by reference as if set forth in full and
at length. The automatic stay of section 362(a) of the Bankruptcy Code be, and
hereby is,
<PAGE>
-20-
modified to permit the litigation commenced by or on behalf of OYDL
against SF Holdings and Realty Corp. as Court File No. 93-CQ-38609 (the "SF
Litigation") to proceed in the Ontario Court of Justice to determine liability,
if any, of SF Holdings and/or Realty Corp. to OYDL. The Debtors and Citibank
hereby withdraw their contention that the SF Holdings Litigation was void ab
initio. The terms and provisions of this Confirmation Order shall be construed
consistent with the orders dated September 12, 1996 entered by this Court and
the Ontario Court of Justice approving the OYDL Settlement. Notwithstanding
section 22.1.2(x) of the Plan, the terms of this paragraph 45 shall specifically
remain in full force and effect and be binding upon all Entities affected
thereby even if the Plan is not consummated for whatever reason.
46. All objections to the January 12th Settlement that have not been
previously withdrawn be, and hereby are, overruled in their entirety, and all
withdrawn objections be, and they hereby are, deemed withdrawn with prejudice.
47. The January 12th Settlement Agreement be, and it hereby is,
approved pursuant to Bankruptcy Rule 9019 as a fair, prudent and reasonable
compromise of the controversies and Claims resolved by such settlement that is
binding upon the parties thereto in accordance with the terms thereof and all
Entities affected thereby.
<PAGE>
-21-
48. On and after the Closing Date of the January 12th Settlement
Agreement (as defined therein):
a. The Debtors, the Debtors in Possession, and the O&Y Affiliates be,
and they hereby are, authorized and directed to transfer their assets,
properties and interests in property in accordance with the January 12th
Settlement Agreement and to enter into documents and instruments necessary to
effectuate the transactions contemplated by the January 12th
Settlement Agreement.
b. In accordance with the terms and conditions of the January 12th
Settlement Agreement, the Claims under and Collateral and other rights in
respect of the Club Loan to be transferred to Carena, CIBC, Citibank and Dragon
(collectively, the "Club Loan Transferees"), including but not limited to the
Claims in respect of the Club Loan in the aggregate amount of $166,508,335.43
(as of October 11, 1995, plus any allowable interest, fees, costs and charges
from and after October 11, 1995), and all Liens and security interests securing
such Claims and all documents evidencing such Claims, Liens and security
interests, be, and they hereby are, valid, non-avoidable, enforceable and have
such priority in accordance with their terms against (a) those Debtors which are
obligated in respect of the Club Loan and (b) all assets of the Debtors which
are pledged as Collateral for the Club Loan.
<PAGE>
-22-
c. In accordance with the terms and conditions of the January 12th
Settlement Agreement, any and all Claims, Causes of Action or defenses arising
from conduct through the date of entry of this Confirmation Order held by the
Debtors and their respective estates and all persons or Entities claiming by,
through or under them against any of the Club Loan Transferees or otherwise in
respect of the Club Loan Claims and Collateral or the Transferred Unsecured
Claims (as hereinafter defined), whether such Claims and Causes of Action arise
pursuant to any provision of the Bankruptcy Code or applicable non-bankruptcy
law (whether arising at law or in equity) be, and they hereby are, released.
d. In accordance with the terms and conditions of the January 12th
Settlement Agreement, any and all Claims, Causes of Action or defenses arising
from conduct between August 24, 1993 through the date of entry of this
Confirmation Order held by the Debtors and their respective estates and all
Entities claiming by, through or under them against Apollo, NYPROP, L.L.C.,
Tishman Speyer Crown Equities, Tishman Speyer Associates, L.P., Tishman Speyer
Properties, L.P., Tishman Speyer Properties, Inc., TSE Limited Partnership,
NYPROP Associates Limited Partnership, Tishman Speyer Holdings, Inc. and each of
the nine above-referenced Entities' respective general partners or managing
members (as the case may be), directors and officers and managers, based upon or
arising out of their acts or status as
<PAGE>
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parties in interest in the Reorganization Cases of the Debtors or as
participants in the restructuring of the O&Y Affiliates (other than Claims or
Causes of Action for fulfillment of obligations under the January 12th
Settlement Agreement), whether such Claims and Causes of Action arise pursuant
to any provision of the Bankruptcy Code or applicable non-bankruptcy law
(whether arising at law or in equity) be, and they hereby are, released.
e. In accordance with the terms and conditions of the January 12th
Settlement Agreement, no act or omission prior to the date of entry of this
Confirmation Order by any party to the January 12th Settlement Agreement or by
any holder of an interest or participation in the Club Loan or the performance
of any party under the January 12th Settlement Agreement shall, directly or
indirectly, preclude or otherwise affect the right of any of the Club Loan
Transferees to receive and retain distributions on account of the Club Loan (as
transferred pursuant to the January 12th Settlement Agreement) under the Plan or
any other plan of reorganization for all or certain of the Debtors confirmed by
the Bankruptcy Court.
f. In accordance with the terms and conditions of the January 12th
Settlement Agreement, immediately upon the transfer of the Club Loan from the
Club Loan Transferors to the Club Loan Transferees, the Club Loan Claims be, and
they hereby are, allowed pursuant to section 502 of the Bankruptcy Code and
Bankruptcy Rule 3002 in the amount of $166,508,335.43, plus any
<PAGE>
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allowable interest, fees, costs and charges from and after October 11, 1995
through the Effective Date to the extent payable and allowable under the
agreements evidencing the Club Loan and under applicable law; the Club Loan
Transferees be, and they hereby are, entitled to receive and retain the
distributions on account of the Club Loan Claims set forth in the Plan.
g. In accordance with the terms and conditions of the January 12th
Settlement Agreement, immediately upon the transfer by Apollo to the Club Loan
Transferees of Apollo's Unsecured Claims against certain of the Debtors and
certain Affiliates of the Debtors as described and listed on Schedule A to the
January 12th Settlement Agreement (collectively, including the General Unsecured
Claim described in the next decretal paragraph, the "Transferred Unsecured
Claims"), the Transferred Unsecured Claims be, and they hereby are, allowed as
Co-Proponent Unsecured Claims pursuant to section 502 of the Bankruptcy Code and
Bankruptcy Rule 3002 as follows, with such allowance in each case being as of
October 11, 1995:
Salomon Brothers Swap Claim: $41,634,840 against
Consolidated Devco;
FNBC Group Claim: $18,120,919 against
Consolidated Devco;
Bank of Montreal Swap Claim: $12,289,650 against
Consolidated Devco.
h. In accordance with the terms and conditions of the January 12th
Settlement Agreement and the Restructuring
<PAGE>
-25-
Transactions, Apollo's Deficiency Claims against West 31st Street Associates and
Devco shall be, and hereby are, fixed at $18,275,583 as of October 11, 1995
(provided that such amount is subject to adjustment in accordance with the terms
of the January 12th Settlement Agreement), with such Deficiency Claims to be
transferred by Apollo to the Club Loan Transferees effective as of the date of
transfer of the Club Loan, and pursuant to section 502 of the Bankruptcy Code
and Bankruptcy Rule 3002, the Club Loan Transferees, be, and they hereby are,
deemed to hold Allowed Unsecured Claims against West 31st Street Associates and
Allowed Co-Proponent Unsecured Claims against Consolidated Devco in the amount
of $18,275,583 as of October 11, 1995 (provided that such amount is subject to
adjustment in accordance with the terms of the January 12th Settlement
Agreement).
i. In accordance with the terms and conditions of the January 12th
Settlement Agreement, the Club Loan Transferees and the Club Loan Transferors
be, and they hereby are, deemed to be in compliance with the provisions of
Bankruptcy Rule 3001(e) with respect to the transfer of the Club Loan Claims and
the Transferred Unsecured Claims.
j. In accordance with the terms and conditions of the January 12th
Settlement Agreement (including sections 3(i)(e) and 3(ii) thereof) and the
Restructuring Transactions, the Debtors be, and they hereby are, authorized and
directed as general partners of West 31st Street Associates to cause West
<PAGE>
-26-
31st Street Associates to transfer and convey to Apollo (or its designee which
shall be an Affiliate of Apollo), promptly upon request by Apollo, all of their
respective rights, titles and interests in the property and related assets known
as West 31st Street and, if requested by Apollo, to effect such conveyance and
transfer, including as set forth in sections 3(i)(e) and 3(ii) of the January
12th Settlement Agreement, and to minimize Claims arising from ownership and
operation of West 31st Street.
k. In accordance with the terms and conditions of the January 12th
Settlement Agreement, no act or omission prior to the date of entry of this
Order by any party to the January 12th Settlement Agreement or by any holder of
an interest or participation in the Club Loan or the performance of any party
under the January 12th Settlement Agreement shall, directly or indirectly,
preclude or otherwise affect the right of Apollo or any holder of an interest or
participation in the Club Loan to receive and retain distributions on account of
the Co-Sponsor 970 Notes (as defined in the January 12th Settlement Agreement)
under the 970 Plan or any other plan of reorganization for all or certain of the
Debtors confirmed by the Bankruptcy Court.
l. In accordance with the terms and conditions of the January 12th
Settlement Agreement, the Co-Sponsor 970 Notes be, and they hereby are,
enforceable in their full face amounts against the 970 Issuers (as defined in
the January 12th Settlement Agreement) and their properties.
<PAGE>
-27-
m. In accordance with the terms and conditions of the January 12th
Settlement Agreement, Equityco, as a member of each of the 970 Debtors, is
authorized and directed to cause, and to cause O&Y NY Building Corp., the
managing member of each of the 970 Issuers, to cause each of the 970 Issuers to
consent to the allowance of the Co-Sponsor 970 Notes in the full face amount of
such notes.
n. In accordance with the terms and conditions of the January 12th
Settlement Agreement, the Debtors and their respective estates be, and they
hereby are, authorized to release, and are directed to cause the 970 Issuers to
release, any and all Claims and Causes of Action against the Club Loan
Transferors and their participants in respect of the Co-Sponsor 970 Notes,
whether such Claims and Causes of Action arise pursuant to any provision of the
Bankruptcy Code or applicable non-bankruptcy law (whether arising at law or in
equity).
49. Upon the earlier to occur of the Effective Date of the 970 Plan or
the Closing Date of the January 12th Settlement Agreement (as defined therein):
a. The Debtors and the O&Y Affiliates be, and they hereby are,
authorized and directed to transfer the Tenant Notes including, as set forth in
the January 12th Settlement Agreement, interest collected thereon after January
1, 1996;
b. Equityco be, and it hereby is, authorized and directed to assign to
the 970 REIT or its designee all of its
<PAGE>
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right, title and interest in and to the 2 Broadway Utility Tax Reserve;
c. Equityco and Devco be, and they hereby are, authorized and directed
to forgive all Waived Payments;
d. 2 Broadway Associates and 2 Broadway Land Company be, and they
hereby are, authorized and directed to assign all of their interests, if any, in
the Remaining 2 Broadway Assets to the 970 REIT or its designee;
e. The O&Y Lease Agreement be, and it hereby is, approved in all
respects;
f. O&Y MFC be, and it hereby is, authorized and directed to assign the
JMB Notes to the 970 REIT or its designee; and the terms of this Decretal
Paragraph 49 shall remain in full force and effect even if the Plan or the 970
Plan is not consummated for any reason.
50. Pursuant to section 1123(b)(2) of the Bankruptcy Code and section
21.1 of the Plan, as of the Effective Date, all executory contracts and
unexpired leases to which the Debtors are party be, and they hereby are,
rejected, except for those executory contracts or unexpired leases that (a) have
been assumed pursuant to Final Order of this Court prior to the Confirmation
Date, (b) are listed on Schedule 21.1 to the Plan, as such schedule has been
amended from time to time, (c) are the subject of a separate motion filed under
section 365 of the Bankruptcy Code by any of the Debtors and pending on the
<PAGE>
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Confirmation Date, or (d) have Merrill Lynch as a party and appear on the
Surviving Documents Agreement, which agreement will be executed on the Effective
Date and a form of which is annexed hereto as Exhibit "A".
51. On the Effective Date, pursuant to sections 365(a) and 365(f)(1)
of the Bankruptcy Code, all executory contracts and unexpired leases of the
Debtors identified to be assumed and assigned in accordance with section 21 of
the Plan be, and they hereby are, deemed assumed by the Debtors, notwithstanding
any provision in such contracts or leases prohibiting assignment or transfer.
52. Pursuant to the Stipulation and Order Withdrawing the Claims of
the Pension Benefit Guaranty Corporation dated September 12, 1996, the O&Y
(U.S.) Development Company, L.P. Retirement Plan for Salaried Employees (the
"Pension Plan") be, and hereby is, assumed by Newco LP. Upon confirmation of the
Plan, Newco LP be, and it hereby is, deemed the contributing sponsor of the
Pension Plan, is responsible for all minimum funding obligations due the Pension
Plan pursuant to section 302 of ERISA, 29 U.S.C. ss. 1082, and section 412 of
IRC, 26 U.S.C. ss. 412, will be responsible, upon termination of the Pension
Plan, for all unfunded benefit liabilities of the Pension Plan pursuant to
section 4062(b) of ERISA, 29 U.S.C. ss. 1362(b), and will administer the Pension
Plan in accordance with ERISA, 29 U.S.C. ss.ss. 1001 et seq.
<PAGE>
-30-
53. If the rejection of an executory contract or unexpired lease by
the Debtors results in damages to the other party or parties to such contract or
lease, a Claim for such damages, if not heretofore evidenced by a filed proof of
Claim, be, and it hereby is, forever barred and shall not be enforceable against
the Debtors, or their properties or their interests in property or agents,
successors or assigns, unless a proof of Claim is filed with the Bankruptcy
Court and served upon counsel for the Debtors on or before thirty (30) days
after the earlier to occur of (a) the Confirmation Date and (b) the entry of an
order by the Bankruptcy Court authorizing rejection of a particular executory
contract or lease (the "Executory Contract Rejection Deadline").
54. The Debtors be, and they hereby are, directed to serve by
first-class mail within five (5) days of the Confirmation Date a notice of
rejection of executory contracts or unexpired leases (the "Rejection Notice"), a
copy of which is annexed hereto as Exhibit "B", to all parties to executory
contracts or unexpired leases being rejected pursuant to the Plan.
55. The Rejection Notice be, and it hereby is, approved in all
respects and shall be deemed good, sufficient and adequate notice to all parties
to executory contracts or unexpired leases being rejected pursuant to the Plan
of the Executory Contract Rejection Deadline if such notice is mailed in
<PAGE>
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accordance with the terms of the immediately preceding decretal paragraph.
56. In accordance with section 506(d) of the Bankruptcy Code, the
Equity Interest of Devco GP in Tower B Co. be, and hereby is, deemed to be
exhausted by the distributions required to be made on account of the Allowed
Club Loan Claims with the effect that (i) no distributions shall be made to
Svenska Handelsbanken or any other holder of a pledge of the Equity Interest of
Devco GP in Tower B Co. that is subordinate to the pledge of Equity Interests in
Tower B Co. in favor of the holders of the Club Loan, and (ii) each of the Liens
relating to such pledges be, and hereby are, deemed extinguished. Pursuant to
the consent of Sanwa to the Plan Modifications, the pledge of O&Y 25 Realty
Company's interest in 53 State Limited to Sanwa to secure the Sanwa/OLP Mortgage
Loan be, and it hereby is, released and any Lien relating to such pledge be, and
hereby is, deemed extinguished.
57. The Plan Modifications be, and hereby are, deemed to be either
technical changes or clarifications that do not adversely change the treatment
of the Claim of any creditor or any Equity Interest holder of the Debtors or
have been consented to by the Entities affected thereby, and the Debtors and the
Co-Proponents be, and hereby are, authorized to execute and file with the Court
an amended Plan which shall reflect the Plan Modifications.
<PAGE>
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58. The Debtors and the Co-Proponents be, and they hereby are, subject
to further order of this Court, authorized to amend or modify the Plan at any
time prior to the Effective Date, but only in accordance with section 25.2 of
the Plan and section 1127 of the Bankruptcy Code.
59. In the event of any inconsistency between the Plan and any
agreement, instrument or document intended to implement the Plan and this
Confirmation Order, the provisions of this Confirmation Order shall govern and
shall supersede any orders of this Court issued prior to the Effective Date that
may be inconsistent herewith.
60. The Debtors and the Co-Proponents and any counterparty (a
"Counterparty") to any agreement or other document annexed to the Plan as an
exhibit (the "Plan Exhibits") be, and hereby are, authorized to modify such Plan
Exhibits consistent with the terms of the Plan without further order of this
Court or further notice to any Entities. For purposes of Exhibit B to the Plan,
a Counterparty shall refer to the Creditors' Committee and TIAA. For purposes of
Exhibit H to the Plan, a Counterparty shall refer to the Creditors' Committee
and JMB.
61. Until the Effective Date, this Court shall retain exclusive
jurisdiction over the Debtors, their properties and operations. On and after the
Effective Date, this Court retains exclusive jurisdiction for all purposes
relating to the releases
<PAGE>
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and injunctions issued under the Plan with the effect that any party challenging
any of the releases or injunctions issued under the Plan shall be required to
raise such challenge in this Court.
In addition, on and after the Effective Date, in accordance with section 25.1 of
the Plan and sections 105(a) and 1142 of the Bankruptcy Code, the Debtors, their
properties and their operations shall be released from the custody and
jurisdiction of the Bankruptcy Court, except that this Court retains
jurisdiction over, and if this Court exercises its retained jurisdiction, shall
have exclusive jurisdiction over, all matters arising out of or related to the
Reorganization Cases and the Plan or otherwise enumerated in section 25.1 of the
Plan.
62. In accordance with section 1145 of the Bankruptcy Code, the offer
or issuance, sale, exchange or other transfer of any security in accordance with
the Plan or this Confirmation Order ("Plan Securities"), including, without
limitation, the Class A Interests (including Class A Interests issued under the
Plan in connection with a conversion of Convertible Note Interests into Class A
Interests or a conversion of Class B Interests into Class A Interests), the
Class B Interests, Convertible Note Interests and the Liquidating Corp. Shares,
be, and they hereby are, exempt from the provisions of section 5 of the
Securities Act of 1933, as amended (15 U.S.C. ss. 77(e), as amended), and any
state or local law requiring registration for the offer or sale of a security or
registration or licensing of
<PAGE>
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the issuer, or an Affiliate thereof as an underwriter, broker or dealer in
securities. The solicitation of acceptances or rejections of the Plan and any
other communication in connection with the offer, issuance, sale, exchange or
other transfer of any Plan Securities does not, and shall not be deemed to
constitute an offer or solicitation with respect to any securities to be offered
or issued pursuant to the ML Lease Securitization (as defined in the Tower B Co.
Plan) or the refinancing of Tower D as contemplated by section 18.9 of the Plan.
63. In accordance with section 1146(c) of the Bankruptcy Code, the
offer or issuance, sale, exchange or other transfer of any security in
accordance with the Plan or this Confirmation Order (including, without
limitation, the Class A Interests (including Class A Interests issued under the
Plan in connection with a conversion of Convertible Note Interests into Class A
Interests or a conversion of Class B Interests into Class A Interests), the
Class B Interests, Convertible Note Interests and the Liquidating Corp. Shares
or any existing Equity Interest in an Entity dealt with under the Plan) shall
not be taxed under any federal, state or local law imposing a recording tax,
stamp tax, transfer tax or any similar tax.
64. In accordance with section 1146(c) of the Bankruptcy Code, the
making, delivery, filing or recording of various instruments and documents as
specified in the Plan and the exhibits thereto either (i) by or to a Chapter 11
Debtor,
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(ii) in the case of mortgages to be granted as of the Effective Date with
respect to the Core Properties, by a Chapter 11 Debtor or New Tower A LP, New
245 Park LP and New Liberty Plaza under the Plan, or (iii) in connection with
the Tower D Financing be, and they hereby are, exempt from taxation under any
law imposing a recording tax, stamp tax, transfer tax or any similar tax,
including the New York State Real Estate Transfer Tax and the New York City Real
Property Transfer Tax applicable to deeds, assignments of leases and interests
in real property and the New York City and New York State Mortgage Recording
Taxes applicable to mortgages. The appropriate state or local governmental
officials or agents be, and hereby are, directed to forego the collection of any
such tax or governmental assessment with respect to, and to accept for filing
and recordation without the payment of any such tax or government assessment,
any such valid instrument or other document. The Debtors, the Debtors in
Possession, and the O&Y Affiliates, any successor-in-interest thereto, the
Co-Proponents or any agent or representative of any of the foregoing Entities
be, and they hereby are, authorized to serve upon all filing and recording
officers and all taxing jurisdictions, a notice, substantially in the form
annexed hereto as Exhibit "C", in connection with the making, delivery, filing
or recording of any instruments or documents in accordance with the Plan, or the
filing of any tax returns relating thereto, to evidence and implement this
paragraph of the Confirmation Order. All filing
<PAGE>
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and recording officers are hereby directed to accept for filing or recording (i)
all instruments made or delivered by or to a Chapter 11 Debtor, and (ii) all
mortgages and related financing documents given in connection with the Tower D
Financing, which are in each case to be filed and recorded in accordance with
the Plan and the exhibits thereto without the payment of any such taxes, and
without the presentation of any affidavits (including, without limitation, any
affidavit under section 255 of the Tax Law of the State of New York),
instruments or returns otherwise required for recording, other than this
Confirmation Order. The exemption provided by section 1146(c) of the Bankruptcy
Code with respect to the Chapter 11 Debtors shall not extend to transfers from
Liquidating Corp. that would otherwise be taxable. This Court retains
jurisdiction to enforce the foregoing directions, by contempt or otherwise.
65. Any cash collateral stipulation approved by this Court due to
expire prior to the earlier of the Effective Date or December 31, 1996 be, and
it hereby is, deemed extended to the earlier of the Effective Date and December
31, 1996, and any rights of the Creditors' Committee reserved under such cash
collateral stipulation that has not expired as of the date hereof be, and it
hereby is, extended to the earlier of the Effective Date and December 31, 1996.
66. The cash collateral stipulations with Sanwa relating to Tower A of
the World Financial Center and One Liberty
<PAGE>
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Plaza, be, and they hereby are, deemed extended (in accordance with updated
budgets to be agreed upon by the Debtors and Sanwa) to the Effective Date.
67. Each of the pending motions of the Debtors under section 6(b) of
the Protocol be, and hereby are, approved.
68. All pending objections to the Claims and/or Equity Interests of
the Co-Proponents be, and hereby are, deemed withdrawn with prejudice or
overruled in their entirety.
69. Upon entry of this Confirmation Order, Sanwa Financial Products
(an Affiliate of Sanwa) is hereby authorized to enter into one or more swap
agreements with one or more swap counterparties (collectively, the "OLP Swap
Agreement") in order to fix Sanwa's cost of funds as contemplated by section
12.2 of the Plan with respect to certain portions of the Sanwa/OLP Restructured
Mortgage Loan in such amounts and for such periods as Sanwa and Consolidated OLP
shall agree. The OLP Swap Agreement, as so entered into, shall be deemed to have
been entered into in good faith. If the Effective Date shall fail to occur in
accordance with the Plan, any breakage damages incurred by Sanwa in connection
with the OLP Swap Agreement, including, without limitation, all costs, fees,
attorneys' fees and the like (the "OLP Swap Breakage Claim") shall be, and
hereby are, secured by all of the Prepetition Collateral and Postpetition
Collateral (as those terms are defined in the court-approved cash collateral
stipulations with respect to the Consolidated OLP Entities).
<PAGE>
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Sanwa is hereby granted security interests in all the Prepetition Collateral and
the Postpetition Collateral as security for the OLP Swap Breakage Claim, and
such security interests shall be valid, enforceable and perfected first priority
security interests immediately upon execution of the OLP Swap Agreement without
the need for filing financing statements of any kind under the Uniform
Commercial Code or otherwise. Prior to the Effective Date of the Plan, and for
so long as the chapter 11 cases of the Consolidated OLP Entities are pending,
copies of this Confirmation Order shall serve as evidence of perfection of
Sanwa's security interests whenever required in any jurisdiction. To the extent
that the Prepetition Collateral and the Postpetition Collateral are insufficient
to compensate Sanwa in full for the OLP Swap Breakage Claim, Sanwa is hereby
granted, as against the Consolidated OLP Entities, a superpriority Claim payable
before all Claims, including Claims arising under sections 503(b) and 507(b) of
the Bankruptcy Code to the extent of any such deficiency. If the Effective Date
shall fail to occur in accordance with the Plan, any direct payments received by
Sanwa arising from or relating to any premature termination of the OLP Swap
Agreement, less all direct costs, fees, attorneys' fees and the like actually
incurred by Sanwa as the result of such premature termination of the OLP Swap
Agreement (the "OLP Swap Unwinding Premium"), shall be applied to the principal
amount of the indebtedness owed to Sanwa by the Consolidated OLP Entities.
<PAGE>
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Notwithstanding section 22.1.2(x) of the Plan, the terms of this paragraph 69
shall specifically remain in full force and effect and be binding upon all
Entities affected thereby even if the Plan is not consummated for whatever
reason.
70. Upon entry of this Order, Sanwa Financial Products (as Affiliate
of Sanwa) is hereby authorized to enter into one or more swap agreements with
one or more swap counterparties (collectively, the "Tower A Swap Agreement") in
order to fix Sanwa's cost of funds as contemplated by section 13.2 of the Plan
with respect to certain portions of the Sanwa/Tower A Restructured Mortgage Loan
in such amounts and for such periods as Sanwa and Tower A Co. shall agree. The
Tower A Swap Agreement, as so entered into, shall be deemed to have been entered
into in good faith. If the Effective Date shall fail to occur in accordance with
the Plan, any breakage damages incurred by Sanwa in connection with the Tower A
Swap Agreement, including, without limitation, all costs, fees, attorneys' fees
and the like (the "Tower A Swap Breakage Claim") shall be and hereby are secured
by all of the Prepetition Collateral andPostpetition Collateral (as those terms
are defined in the court-approved cash collateral stipulations with respect to
Tower A Co.). Sanwa is hereby granted security interests in all the Prepetition
Collateral and the Postpetition Collateral as security for the Tower A Swap
Breakage Claim, and such security interests shall be valid, enforceable and
perfected first
<PAGE>
-40-
priority security interests immediately upon execution of the Tower A Swap
Agreement without the need for filing financing statements of any kind under the
Uniform Commercial Code or otherwise. Prior to the Effective Date and for so
long as the chapter 11 case of Tower A Co. is pending, copies of this Order
shall serve as evidence of perfection of Sanwa's security interests whenever
required in any jurisdiction. To the extent that the Prepetition Collateral and
the Postpetition Collateral are insufficient to compensate Sanwa in full for the
Tower A Swap Breakage Claim, Sanwa is hereby granted, as against Tower A Co., a
superpriority Claim payable before all Claims, including Claims arising under
section 503(b) and 507(b) of the Bankruptcy Code to the extent of any such
deficiency. If the Effective Date shall fail to occur in accordance with the
Plan, any direct payments received by Sanwa arising from or relating to any
premature termination of the Tower A Swap Agreement, less all direct costs,
fees, attorneys' fees and the like actually incurred by Sanwa as the result of
such premature termination of the Tower A Swap Agreement (the "Tower A Swap
Unwinding Premium") shall be applied to the principal amount of the indebtedness
owed to Sanwa by Tower A Co. after payment of any breakage costs actually
incurred by Sanwa under the existing swap agreement with respect to Tower A.
Notwithstanding section 22.1.2(x) of the Plan, the terms of this paragraph 70
shall specifically remain in full force and
<PAGE>
-41-
effect and be binding upon all Entities affected thereby even if the Plan is not
consummated for whatever reason.
71. The terms and conditions of the Stipulation and Order dated
September 12, 1996 by and among the Debtors and other related parties on the one
hand and the New York City Department of Finance on the other (the "City Tax
Stipulation"), which stipulation is annexed hereto as Exhibit "D", be, and
hereby are incorporated into the Confirmation Order and the parties to the City
Tax Stipulation are directed to perform all their respective obligations under
such stipulation.
72. The terms and conditions of the Stipulation and Order dated
September 12, 1996 by and among the Debtors and other related parties on the one
hand and the New York State Department of Taxation and Finance on the other (the
"State Tax Stipulation"), which stipulation is annexed hereto as Exhibit "E",
be, and hereby are incorporated into the Confirmation Order and the parties to
the State Tax Stipulation are directed to perform all their respective
obligations under such stipulation.
73. To the extent that any reserve established under the Tower B Co.
Plan on the Effective Date thereof is insufficient to satisfy in full the
liability, if any, that may be established in favor of Laub by a Final Order of
the Court against Devco, Devco GP, Tower B Leaseco, Tower B Co. or Tower B
Holding I on account of brokerage commissions allegedly due Laub in connection
with the tenancy of Mitsubishi Bank at Tower B,
<PAGE>
-42-
Newco LP shall be responsible for the deficiency between the amount of such
liability, if any, and the amount of such reserve. Any and all indemnifications
in favor of the Debtors are hereby preserved for the benefit of Newco LP and
shall be unaffected by this Confirmation Order except that such indemnifications
shall be enforceable by Newco LP against any and all such indemnitors.
74. Within ten (10) days after the entry date of this Confirmation
Order, or within such further time as this Court may allow, the Debtors be, and
they hereby are, directed to mail to all known creditors and other parties in
interest notice of the entry of this Confirmation Order.
75. The provisions of this Confirmation Order are integrated with each
other and are nonseverable and mutually dependent.
Dated: New York, New York
September 20, 1996
/s/ James L. Garrity, Jr.
------------------------------
United States Bankruptcy Judge
<PAGE>
Exhibit A
Surviving Documents Agreement
<PAGE>
Exhibit B
Rejection Notice
<PAGE>
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- -------------------------------x
In re : Chapter 11 Case Nos.
92 B 42698 (JLG)
OLYMPIA & YORK :
REALTY CORP., et al., (Jointly Administered)
Debtors. :
- -------------------------------x
NOTICE OF: (a) REJECTION OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES UNDER THE DEBTORS' THIRD
AMENDED JOINT PLAN OF REORGANIZATION, AND
(b) DEADLINE FOR FILING CLAIMS FOR DAMAGES ARISING
FROM REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
TO: PARTIES ON THE ATTACHED SERVICE LIST
PLEASE TAKE NOTICE, that the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court") has entered an order
dated September [20], 1996 (the "Confirmation Order"), confirming the Debtors'
Third Amended Joint Plan of Reorganization, dated September 12, 1996 (the
"Plan").
PLEASE TAKE FURTHER NOTICE, that pursuant to section 21.1 of the Plan,
the Plan constitutes a motion by the Debtors to reject, as of the Confirmation
Date, all executory contracts and unexpired leases to which any of the Debtors
is a party, except for an executory contract or unexpired lease that (a) has
been assumed pursuant to a Final Order prior to the Confirmation Date, (b) is
specifically listed on Schedule 21.1 to the Plan, (c) is the subject of a
separate motion filed under section 365 of the Bankruptcy Code by any of the
Debtors and pending on the
<PAGE>
-2-
Confirmation Date or (d) has Merrill Lynch as a party
and appears in the Surviving Documents Agreement, which Agreement is to be
executed on the Effective Date of the Plan and a form of which is annexed to the
Confirmation Order as Exhibit "A".
PLEASE TAKE FURTHER NOTICE, that attached hereto is a list of those
executory contracts and unexpired leases which have been deemed rejected by the
Debtors as of the Confirmation Date in accordance with section 21 of the Plan
(each a "Rejected Contract or Lease," and collectively the "Rejected Contracts
and Leases"). By receipt of this notice, you are hereby notified that the
Debtors rejected the executory contract(s) and/or unexpired lease(s) to which
you are party as of the Confirmation Date.
BY RECEIPT OF THIS NOTICE YOU ARE FURTHER NOTIFIED, that, in order to
assert a claim against the Debtors for damages arising from the rejection of a
Rejected Contract or Lease, if you have not already done so, you must file a
written proof of claim with the United States Bankruptcy Court for the Southern
District of New York which substantially conforms to the Proof of Claim approved
by the Clerk of the Bankruptcy Court (the "Clerk") or Official Form No. 10,
either (i) by mailing the original proof of claim to the United States
Bankruptcy Court for the Southern District of New York, c/o Olympia & York
Claims Processing, Bowling Green Station, Post Office Box 865, New York, New
York 10274-0865 or (ii) by sending the original proof of claim via
<PAGE>
-3-
hand delivery or courier service (but not by United States mail) to the Clerk of
the United States Bankruptcy Court for the Southern District of New York, One
Bowling Green, Fifth Floor, New York, New York 10004-1408, so that it is
actually received at the appropriate destination not later than 5:00 p.m.
(Eastern Daylight Time) on or before October 14, 1996 (the "Executory
Contract/Lease Bar Date"). Such proofs of claim will be deemed timely filed only
when they are actually received by the Clerk or at the Post Office Box noted
above, as applicable, on or before the Executory Contract/Lease Bar Date.
As used herein, the term "claim" means (A) right to payment, whether
or not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured; or (B) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured.
PLEASE TAKE FURTHER NOTICE THAT IF YOU ARE REQUIRED TO FILE A PROOF OF
CLAIM AND FAIL TO DO SO ON OR BEFORE 5:00 PM OCTOBER 14, 1996 IN THE MANNER
PRESCRIBED ABOVE, YOU WILL BE FOREVER BARRED FROM ASSERTING ANY SUCH CLAIM
AGAINST THE DEBTORS OR THEIR SUCCESSORS OR ASSIGNS.
<PAGE>
-4-
THIS NOTICE MAY HAVE BEEN INADVERTENTLY SENT TO PERSONS OR ENTITIES
THAT MAY NOT ACTUALLY HAVE A CLAIM. THE FACT THAT YOU HAVE RECEIVED THIS NOTICE
DOES NOT MEAN THAT YOU HAVE A CLAIM OR THAT THE DEBTORS OR THE BANKRUPTCY COURT
CONCEDE THAT YOU HAVE A CLAIM.
DATED: New York, New York
September __, 1996
BY ORDER OF THE COURT
JAMES L. GARRITY, JR.
UNITED STATES BANKRUPTCY JUDGE
UNITED STATES BANKRUPTCY COURT
<PAGE>
Exhibit C
Notice to Tax Authorities
<PAGE>
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- -------------------------------x
In re : Chapter 11 Case Nos.
92 B 42698 (JLG)
OLYMPIA & YORK :
REALTY CORP., et al., (Jointly Administered)
Debtors. :
- -------------------------------x
NOTICE TO FILING AND RECORDING OFFICERS
OF ENTRY AND TERMS OF CONFIRMATION ORDER
TO ALL FILING AND RECORDING OFFICERS:
PLEASE TAKE NOTICE that on September [20], 1996, the United States
Bankruptcy Court for the Southern District of New York entered the Findings of
Fact, Conclusions of Law, and Order Confirming The Third Amended Joint Plan of
Reorganization for the Debtors Dated September 12, 1996 (the "Plan") Under
Chapter 11 of the Bankruptcy Code (the "Confirmation Order"), under section
1129, title 11, United States Code.
PLEASE TAKE FURTHER NOTICE that paragraph 64 of the Decretal
Provisions of the Confirmation Order provides as follows:
In accordance with section 1146(c) of the Bankruptcy Code, the making,
delivery, filing or recording of various instruments and documents as
specified in the Plan and the exhibits thereto either (i) by or to a
Chapter 11 Debtor, (ii) in the case of mortgages to be granted as of
the Effective Date with respect to the Core Properties, by a Chapter
11 Debtor or a transferee of the Core Properties under the Plan, or
(iii) in connection with the Tower D Financing be, and they hereby
are, exempt from taxation under any law imposing a recording tax,
stamp tax, transfer tax or any similar
<PAGE>
-2-
tax, including the New York State Real Estate Transfer Tax and the New
York City Real Property Transfer Tax applicable to deeds, assignments
of leases and interests in real property and the New York City and New
York State Mortgage Recording Taxes applicable to mortgages. The
appropriate state or local governmental officials or agents be, and
hereby are, directed to forego the collection of any such tax or
governmental assessment with respect to, and to accept for filing and
recordation without the payment of any such tax or government
assessment, any such valid instrument or other document. The Debtors,
the Debtors in Possession, and the O&Y Affiliates, any
successor-in-interest thereto, the Co-Proponents or any agent or
representative of any of the foregoing Entities be, and they hereby
are, authorized to serve upon all filing and recording officers and
all taxing jurisdictions, a notice, substantially in the form annexed
hereto as Exhibit "C", in connection with the making, delivery, filing
or recording of any instruments or documents in accordance with the
Plan, or the filing of any tax returns relating thereto, to evidence
and implement this paragraph of the Confirmation Order. All filing and
recording officers are hereby directed to accept for filing or
recording (i) all instruments made or delivered by or to a Chapter 11
Debtor, and (ii) all mortgages and related financing documents given
in connection with the Tower D Financing, which are in each case to be
filed and recorded in accordance with the Plan and the exhibits
thereto without the payment of any such taxes, and without the
presentation of any affidavits (including, without limitation, any
affidavit under section 255 of the Tax Law of the State of New York),
instruments or returns otherwise required for recording, other than
this Confirmation Order. The exemption provided by section 1146(c) of
the Bankruptcy Code with respect to the Chapter 11 Debtors shall not
extend to transfers from Liquidating Corp. that would otherwise be
taxable. This Court retains jurisdiction to enforce the foregoing
directions, by contempt or otherwise.
<PAGE>
-3-
PLEASE TAKE FURTHER NOTICE that presentation of this Notice by (a) any
of the Debtors2, as reorganized, (b) the O&Y Affiliates, (c) any
successors-in-interest thereto, (d) any of the Co-Proponents, or (e) any agent
or representative of any of the foregoing, of any of the above-described
documents, constitutes a certificate by such person that such document is
entitled to be filed or recorded in accordance with decretal paragraph 64 of the
Confirmation Order without payment of any
- --------
2 All capitalized terms used herein but not defined herein shall have the
meanings ascribed to such terms in the Plan or Findings of Fact and
Conclusions of Law, as applicable.
<PAGE>
-4-
recording tax, stamp tax, transfer tax, or any other similar tax imposed by
federal, state or local law.
Dated: New York, New York
September __, 1996
------------------------------
United States Bankruptcy Judge
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors and
Debtors in Possession (Other than Olympia & York Tower B
Lease Company)
767 Fifth Avenue
New York, New York 10153-0119
(212) 310-8000
KAYE, SCHOLER, FIERMAN, HAYS
& HANDLER
425 Park Avenue
New York, New York 10022
(212) 836-8000
Attorneys for Olympia & York Tower B Lease Company,
as Debtor and Debtor in Possession
<PAGE>
Exhibit D
New York City Tax Stipulation
<PAGE>
Exhibit E
New York State Tax Stipulation
Exhibit T3D.2
NOT FOR PUBLICATION
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - - - x
In re : Chapter 11 Case Nos.
92 B 42698
OLYMPIA & YORK REALTY CORP., et al., :
(Jointly Administered)
Debtors. :
- - - - - - - - - - - - - - - - - - - - x
FINDINGS OF FACT AND CONCLUSIONS OF LAW
FOR THE THIRD AMENDED JOINT PLAN OF REORGANIZATION
FOR THE DEBTORS DATED SEPTEMBER 12, 1996
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
September 20, 1996
New York, New York
<PAGE>
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - - - x
In re : Chapter 11 Case Nos.
92 B 42698
OLYMPIA & YORK REALTY CORP., et al., :
(Jointly Administered)
Debtors. :
- - - - - - - - - - - - - - - - - - - - x
FINDINGS OF FACT AND CONCLUSIONS OF LAW
FOR THE THIRD AMENDED JOINT PLAN OF REORGANIZATION
FOR THE DEBTORS DATED SEPTEMBER 12, 1996
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
INTRODUCTION
On September 11 and 12, 1996, the Bankruptcy Court
for the Southern District of New York held a hearing (the "Con-
firmation Hearing") to consider confirmation of the Third
Amended Joint Plan of Reorganization for the Debtors1 under
chapter 11 of the United States Bankruptcy Code dated September
12, 1996, (the "Plan"), proposed by the Debtors, CIBC,
Citibank, BPHI, Carena and Dragon (each a "Plan Proponent" and,
collectively, the "Plan Proponents").
The Court has reviewed and considered the Plan, the
Affidavit of Joel M. Simon, dated September 10, 1996 (the
_________________________
1 All capitalized terms used herein but not defined herein shall have
the meanings ascribed to such terms in either the Plan or the 970
Plan, as applicable.
<PAGE>
-2-
"Simon Affidavit"), the Affidavit of John E. Zuccotti, dated
September 9, 1996 (the "Zuccotti Affidavit"), the Affidavit of
Patrick Ahern, dated September 9, 1996 (the "Ahern Affidavit"),
the Affidavit of John Moore, dated September 11, 1996 (the
"Moore Affidavit"), the Affidavit of John Stevenson, an officer
of Georgeson & Company Inc. ("Georgeson"), dated September 10,
1996 (the "Stevenson Affidavit), the Affidavit of Edward
Beisner, dated September 9, 1996 (the "Beisner Affidavit"), the
Affidavits of Edwin Nordholm, dated September 11, 1996 (the
"Nordholm Affidavits"), the Affidavit of Corinne Ball, dated
September 9, 1996 (the "Ball Affidavit"), the Affidavit of
Richard Beltram, dated September 9, 1996 (the "Beltram Affida-
vit"), as well as the testimony proffered and adduced and the
exhibits admitted into evidence at the Confirmation Hearing,
and the arguments of counsel presented at the Confirmation
Hearing. The Court has also considered all of the objections
to confirmation of the Plan filed by creditors and other par-
ties in interest.
This Court is familiar with the Plan and other rele-
vant factors affecting the Debtors' Reorganization Cases and at
the Plan Proponents' unopposed request, it has taken judicial
notice of the entire record of these Reorganization Cases since
each respective Petition Date, including, but not limited to,
<PAGE>
-3-
all pleadings filed by the Debtors and other parties in inter-
est and all documentary evidence and testimony presented by the
Debtors in these Reorganization Cases before this Court. In
particular, this Court has taken judicial notice of (i) the
orders entered by this Court on February 28, March 26, April 23
and May 9, 1996 establishing various bar dates for filing
Claims against and Equity Interests in the Debtors' estates,
(ii) the orders dated April 23 and May 20, 1996 establishing
various dates in connection with approval of the Debtors' Dis-
closure Statement and confirmation of the Plan, (iii) the order
dated August 9, 1996 approving the Debtors' Disclosure State-
ment, (iv) the orders regarding allowance for voting and dis-
tributions purposes of various Claims against and Equity Inter-
ests in the Debtors, and (v) the orders entered by this Court
pursuant to the O&Y Voting Stipulations (as hereinafter
defined). Based upon the entire record, the Court now finds
and determines that the Plan should be confirmed.
At the close of the Confirmation Hearing, the Court
requested interested parties to submit proposed Findings of
Fact and Conclusions of Law respecting the Plan. Only the Plan
Proponents did so. By Notice of Presentment dated September
17, 1996 and returnable September 20, 1996, which was served on
all interested parties entitled to notice thereof, they
<PAGE>
-4-
submitted their Proposed Findings of Fact and Conclusions of
Law in support of the Confirmation Order. In accordance with
the Notice of Presentment, objections, if any, to their pro-
posed findings of fact and conclusions of law were to be filed
on or before September 19, 1996 at 5:00 p.m. No objections,
timely or othrwise, have been filed. We do not blindly accept
the proferred findings of fact and conclusions of law. Rather,
we have independently reviewed all matters raised during the
Confirmation Hearing in light of the evidence of record and
applicable law. See St. Clare's Hospital and Health Center v.
Insurance Company of North America (In re St. Clare's Hospital
and Health Center), 934 F.2d 15, 17 (2d Cir. 1991) (citing
United States v. El Paso Natural Gas Co., 376 U.S. 651, 656
(1964)).
FINDINGS OF FACT
In accordance with Bankruptcy Rules 7052 and 9014,
the Court makes the following findings of fact and conclusions
of law in support of confirmation of the Plan (collectively,
the "Findings of Fact").
<PAGE>
-5-
I.
BACKGROUND
1. On May 14, 1992, OYDL and four of its Canadian
subsidiaries, Realty Corp., Equity Canada, Devco Canada and SF
Holdings (collectively, the "Canadian Debtors"), each filed
with this Court a voluntary petition for relief under chapter
11 of the Bankruptcy Code (the "Original Cases"). On March 12,
1993, this Court entered an order dismissing the chapter 11
case of OYDL. (Canadian Debtors' Chapter 11 Petitions; Realty
Corp. Docket No. 273).2
2. On July 18, 1995, Olympia & York World Financial
Center Finance Corp. ("WFC Finco") filed with this Court a vol-
untary petition for relief under chapter 11 of the Bankruptcy
Code. (WFC Finco Chapter 11 Petition; WFC Finco Docket No. 1).
3. On October 11, 1995, Devco GP, Devco, Equity GP,
Equityco, OYREUSA, Baden, U.S. Finco, Tower A Co., 245 Holding
LP, 245 Corp. and Tower Corp. (collectively, the "U.S.
_________________________
2 All citations to the Realty Corp. Docket shall refer to
the docket in the jointly administered chapter 11 cases
captioned In re Olympia & York Realty Corp., et al., Chap-
ter 11 Case No. 92 B 42698 (JLG).
<PAGE>
-6-
Debtors") each filed with this Court a voluntary petition for
relief under chapter 11 of the Bankruptcy Code. (U.S. Debtors'
Chapter 11 Petitions).
4. On November , 1995, Chicago-Superior Associ-
ates ("Chicago-Superior") filed with this Court a voluntary
petition for relief under chapter 11 of the Bankruptcy Code.3
(Chicago-Superior Chapter 11 Petition; Realty Corp. Docket
No. 1).
5. On November 9, 1995, Devco-11601-A, L.P. and
Devco 11601-B, L.P., and on June 12, 1996, 11601 Holding Corp.
(collectively, the "Wilshire Debtors"), each filed with this
Court a voluntary petition for relief under chapter 11 of the
Bankruptcy Code.4 (Wilshire Debtors' Chapter 11 Petitions).
6. On January 10, 1996, Tower B Leaseco filed a
voluntary petition for relief under chapter 11 of the Bank-
ruptcy Code. (Tower B Leaseco Chapter 11 Petition; Realty
Corp. Docket No. 1).
7. On April 23, 1996, O&Y Finco, 245 Park Co., OLP
Co., Liberty Plaza Co. and Trinity Place Co. (collectively, the
_________________________
3 Chicago-Superior is not a Plan Proponent.
4 The Wilshire Debtors are not Plan Proponents.
<PAGE>
-7-
"Additional Debtors"), each filed with this Court a voluntary
petition for relief under chapter 11 of the Bankruptcy Code.
(Additional Debtors' Chapter 11 Petitions; Realty Corp. Docket
No. 1).
8. On April 23, 1996, O&Y NY Building Corp. and
Equityco filed involuntary petitions for relief against each of
237 Park Avenue Associates, L.L.C. and 1290 Associates, L.L.C.
(the "970 Debtors") under chapter 11 of the Bankruptcy Code.
On April 25, 1996, each of the 970 Debtors consented to the
commencement of the respective chapter 11 cases and orders for
relief were entered in connection therewith. (970 Debtors'
Chapter 11 Petitions; 970 Debtors' Docket Nos. 2).
9. On April 24, 1996, Olympia & York Tower B Com-
pany ("Tower B Co.") filed a voluntary petition for relief
under chapter 11 of the Bankruptcy Code.5 (Tower B Co. Chapter
11 Petition; Tower B Co. Docket No. 1).
10. Each of the Debtors and the other chapter 11
debtors referenced above continues to operate its business and
_________________________
5 A separate chapter 11 Plan for WFC Finco and Tower B Co.
(the "Tower B Co. Plan") was filed on June 28, 1996. A
hearing to consider confirmation of the Tower B Co. Plan
took place on September 11 and 12, 1996.
<PAGE>
-8-
manage its properties as a debtor in possession pursuant to
sections 1107 and 1108 of the Bankruptcy Code.
11. By orders dated May 15, 1992, October 11, 1995
and April 23, 1996, the Debtors' chapter 11 cases have been
consolidated for procedural purposes only pursuant to Bank-
ruptcy Rule 1015(b). (Orders dated May 15, 1992, October 11,
1995 and April 23, 1996; Realty Corp. Docket Nos. 3, 665, and
1133).6
12. The business of the Debtors principally consists
of (i) owning, operating and managing large first-class commer-
cial office buildings located in major cities of the United
States through Devco, Equityco, Devco GP and Equity GP and sub-
sidiaries thereof and (ii) owning and operating other commer-
cial real estate located throughout the United States through
OYREUSA and Baden and their wholly-owned subsidiaries. (U.S.
Debtors' Chapter 11 Petitions).
13. On October 24, 1995, the United States Trustee
for the Southern District of New York (the "United States Trus-
tee") appointed an official committee of unsecured creditors in
_________________________
6 The chapter 11 cases of the Wilshire Debtors, Tower B Co.,
WFC Finco, and the 970 Debtors have not been procedurally
consolidated with the chapter 11 cases of the Debtors.
<PAGE>
-9-
the chapter 11 cases of the U.S. Debtors (the "Creditors' Com-
mittee") pursuant to section 1102(a) of the Bankruptcy Code,
which order of appointment has been amended from time to time.
(Realty Corp. Docket Nos. 703 and 709).
14. No trustee has been appointed in any of the
Debtors' Reorganization Cases.
15. Examiner and Protocol. By order dated May 28,
1993, this Court approved the appointment of Cyrus R. Vance,
Esq. as an examiner (the "Examiner") in the chapter 11 cases of
the Canadian Debtors to develop and implement a protocol to
"harmonize the Canadian and U.S. proceedings" and comply with
"the corporate governance provisions of the CCAA Plan while
striking a balance necessary to achieve a Board of Directors
that will be able to function independently" in the governance
of the Canadian Debtors and their subsidiaries, including O&Y
(U.S.). (Disclosure Statement, Article IV).
16. By order dated July 15, 1993, this Court
approved and directed the implementation of the corporate gov-
ernance protocol (the "Protocol") proposed by the Examiner. On
July 26, 1993, the Canadian Court entered an order approving
the Protocol. (Id.; Realty Corp. Docket No. 366). The Proto-
col provides for the reconstitution of the boards of directors
<PAGE>
-10-
of each of the four Canadian Debtors, Devco GP, Equity GP and
OYREUSA (collectively, the "Protocol Corporations") as a
nine-person board which was to include the Chief Executive
Officer of O&Y (U.S.) (at the time, and currently, John E.
Zuccotti) and Coopers & Lybrand OYDL, Inc. (at the time, and
through May 28, 1996, Robert E. Lowe), as well as seven inde-
pendent directors of prominence with substantial experience in
the real estate business (the "Independent Board").
17. By various orders of this Court, the tenure of
the Examiner has been extended several times through September
30, 1996. (Realty Corp. Docket No. 1612). In addition, the
Examiner was appointed to serve in the chapter 11 cases of the
U.S. Debtors, Chicago-Superior, the Wilshire Debtors, Tower B
Leaseco, the Additional Debtors, the 970 Debtors, WFC Finco,
and Tower B Co. [Realty Corp. Docket No.; Wilshire Debtors
Docket No. 127; 970 Debtors Docket No. 63; WFC Finco Docket No.
101; Tower B Co. Docket No. 34).
18. The Examiner has played an active and contruc-
tive role in the Debtors' Reorganization Cases. (Zuccotti
Affidavit, | 14).
19. The Independent Board was impaneled to direct
the business activities of the Protocol Corporations. The
<PAGE>
-11-
Protocol continues to be the governing document for all actions
taken by the Independent Board. (Disclosures Statement at
Article IV).
20. The original nine members of the Independent
Board were: John E. Zuccotti, Robert Lowe (the Chief Executive
Officer of Coopers & Lybrand OYDL, Inc.), Richard Shinn, John
Whitehead, Willard Butcher, Frederick Rose, William Davis,
William Hassett and Richard Ravitch (collectively, the "Direc-
tors"), each distinguished, experienced and found by this Court
to be disinterested under law applicable to directors of com-
panies. (Zuccotti Affidavit, | _)
21. Among other things, the Protocol established
important indemnity protections and immunity provisions for the
Directors and certain senior officers of O&Y (U.S.). In addi-
tion to John E. Zuccotti, the officers protected by the indem-
nification and immunity provisions are Joel M. Simon, Myron S.
Frucher, John A. Moore, David G. King, Jr., Thomas Falus,
Gerald Lieberman, and former officers Gerald D. Kelfer and
Camille Douglas (the "Protocol Officers"). (Zuccotti Affida-
vit, | 18). In particular, Section 3 of the Protocol provided
for agreements (the "Indemnification Agreements") indemnifying
the Directors and Protocol Officers from, among other things
<PAGE>
-12-
and subject to immaterial exceptions, all costs and other lia-
bilities incurred in connection with any proceedings or threat-
ened proceedings involving the Directors and Protocol Officers
in their capacities as such form the effective date of the Pro-
tocol until the Protocol Corporations are reorganized under
chapter 11 or their chapter 11 cases and converted to cases
under chapter 7. (Zuccotti Affidavit, | 19).
22. Pursuant to the Protocol and Indemnification
Agreements executed in a form substantially similar to that
which is annexed to the Protocol, a pledge account (the "Pledge
Account") was established with $16 million of funds of SF Hold-
ings to secure the obligations of the entities of the U.S.
Operations that were signatories to the Indemnification Agree-
ments (Realty Corp., SF Holdings, Devco Canada, Devco GP,
Equity Canada, Equity GP, and OYREUSA). (Zuccotti Affidavit,
| 20).
23. A pledge agreement substantially similar to that
which is annexed to the Protocol and referenced in Section 3(g)
of the Protocol (the "Pledge Agreement") established, among
other things, the terms and conditions of the Pledge Account,
including the terms for the application of funds from that
account. In particular, Section 5 of the Pledge Agreement
<PAGE>
-13-
provides that the funds held in the Pledge Account shall remain
there until released to satisfy obligations to indemnify the
Directors and Protocol Officers or until they are released to
SF Holdings upon satisfaction of certain conditions. (Zuccotti
Affidavit, | 21).
24. Under the Pledge Agreement, the funds held in
the Pledge Account may be released to SF Holdings (or its suc-
cessor) only upon receipt by the pledge agent of a written
notice signed by SF Holdings and all the Directors and Protocol
Officers averring, and accompanied by evidence reasonably sat-
isfactory to the pledge agent to the effect, that either (i)
plans of reorganization for all of the Protocol Corporations
have been substantially consummated under chapter 11, which
plans provide, on terms reasonably satisfactory to all the
Directors and Protocol Officers, for (A) the settlement or
other reasonably satisfactory resolution of all pending pro-
ceedings against any of the Directors or Protocol Officers that
are covered by the Indemnification Agreements, (B) a release of
any and all Claims against any of the Directors or Protocol
Officers that are covered by the Indemnification Agreements and
(C) an injunction against the commencement by any
non-governmental agency of any action, suit or proceeding
against any of the Directors and Protocol Officers that are
<PAGE>
-14-
covered by the Indemnification Agreements or (ii) all of the
following shall have occurred: (A) as to each of the Protocol
Corporations, a plan of reorganization under chapter 11 has
been substantially consummated or its chapter 11 case has been
converted to a case under chapter 7, (B) no proceeding that is
covered by the Indemnification Agreements is pending against
any Director or Protocol Officer or any such proceeding has
been settled or otherwise resolved in a satisfactory manner,
and (C) the applicable statute of limitations in respect of the
commencement against any Director or Protocol Officer of any
proceeding that is covered by the Indemnification Agreements
shall have been expired. Under current circumstances, the con-
ditions described in clause (ii) of the immediately preceding
sentence could not occur until, at the earliest, late in the
year 2002. (Zuccotti Affidavit, | 22).
25. In addition to providing for the indemnification
of the Directors and Protocol Officers, Section 3 of the Proto-
col provided the Directors and Protocol Officers with certain
immunities from liabilities that might otherwise attach to them
in their official capacities, and provided for the Protocol
Corporations, Coopers & Lybrand OYDL, Inc. and certain credi-
tors to execute covenants not to sue the Directors, the Proto-
col Officers, and 13 additional, identified officers of O&Y
<PAGE>
-15-
(U.S.). In approving the Protocol, the Bankruptcy Court also
issued an injunction barring any party in interest from com-
mencing any proceeding in any court other than the Bankruptcy
Court or the Ontario Court of Justice against any director or
Protocol Officer "in connection with [the] performance of their
roles in the management of the U.S. Operations." (Zuccotti
Affidavit, | 23).
26. The protections incorporated in the Protocol
were an essential element in inducing the Directors and Proto-
col Officers to provide their experience and expertise for the
benefit of the U.S. Operations. (Zuccotti Affidavit, | 24).
Such protections were and continue to be critical conditions to
the service of the Directors and Protocol Officers. (Id.).
Indeed, when this Court approved the Protocol in its entirety,
it specifically ordered that, as set forth in the Protocol, the
Indemnification Agreements and covenants not to sue be executed
and that the Directors and Protocol Officers have the specified
protections from liability. (Order Approving Protocol; Realty
Corp. Docket No. 1158). In addition, the Court specifically
approved the pledge of $16 millions of funds held by SF Hold-
ings to secure the obligations under the Indemnification Agree-
ments in the manner and to the extent set forth in the Protocol
and exhibits annexed thereto. (Zuccotti Affidavit, | 24).
<PAGE>
-16-
27. From the time that the Protocol was approved,
the Debtors, Directors, Protocol Officers, creditors, partners
and other parties in interest in the Reorganization Cases --
including virtually all of the major parties in interest --
have relied upon the Protocol as the framework for pursuing the
restructuring of the U.S. Operations. The Protocol has been
critical in ensuring that the restructuring of the U.S. Opera-
tions would be in the overall best interest of all the credi-
tors and other constituents of the U.S. Operations and has
allowed the Directors and senior officers who have in good
faith based upon the exercise of their independent business
judgment, without risk or incurring personal liability at every
turn. (Zuccotti Affidavit, | 25).
28. Critical Events in these Cases Relating to the
Plan. Together with their petitions, the U.S. Debtors filed a
detailed plan proposal which would effect a reorganization of
the Debtors around seven "core properties" located in Manhat-
tan, one in Boston, any possibly two other properties premised
upon: (i) total settlements with partners in the various "core
properties"; (ii) a substantial cash infusion (in the form of
equity or debt); and (iii) a conversion of debt to equity by
secured and unsecured creditors. This plan proposal was
endorsed by BPHI, a partner in the Towers A, B and D of the
<PAGE>
-17-
World Financial Center, Citibank, CIBC and Dragon, all signifi-
cant creditors. It was not endorsed by a significant secured
creditor group led by Apollo, which group included Coopers &
Lybrand OYDL, Inc. (the "Apollo Group"). Following several
months on intense and bitter litigation between the Apollo
Group on the one hand, and the group led by BPHI and the Debt-
ors on the other, regarding the Debtors' exclusivity and the
authority of the Independent Board under the Protocol to take
certain actions, the Examiner was director to explore whether a
negotiated resolution was achievable. The situation advance in
parallel paths of intensive negotiating sessions and continuing
litigation. A resolution emerged in the form of the January
12th Settlement Agreement, which, among other things, led to
the surrender of two "core properties" located in Manhattan
(the "970 Buildings") to the control of the Apollo Group. As a
result, a separate plan of reorganization for the Debtors'
affiliates that own the 970 Buildings (the "970 Plan") is the
subject of a concurrent confirmation hearing.
29. Based upon the value of the U.S. Operations and
the value of the Debtors' unencumbered assets, management and
the Independent Board did not believe that a liquidation would
provide a recovery to anyone other than certain senior secured
creditors.
<PAGE>
-18-
30. Scheduling Orders. The Plan and Disclosure
Statement were originally filed on April 23, 1996. On April
23, 1996, this Court entered a scheduling order (the "April 23
Scheduling Order") which (1) fixed the hearing to consider
approval of the Debtors' Disclosure Statement for May 20, 1996,
(2) fixed May 13, 1996 as the last day to file objections to
the Disclosure Statement, (3) fixed May 10, 1996 as the last
day by which any party in interest may file objections to
Claims or Equity Interests for purposes of accepting or reject-
ing the Plan, (4) fixed May 23, 1996 as the last day for credi-
tors or Equity Interest holders to file motions for temporary
allowance of such Claims or interests for purposes of accepting
or rejecting the plan ("Temporary Allowance Motions"),
(5) fixed June 4, 1996 and June 5, 1996 as the dates on which
hearing would be held to consider Temporary Allowance Motions,
(6) fixed June 19, 1996 as the date by which votes to accept or
reject the Plan must be submitted (the "Voting Deadline"),
(7) fixed the Confirmation Hearing for June 24, 1996, (8) fixed
June 5, 1996 as the last day to file objections to confirmation
of the Plan, (9) fixed May 13, 1996 as the last day for all
Entities to file requests for discovery in connection with
approval of the Disclosure Statement or confirmation of the
Plan ("Discovery Requests"), (10) fixed May 13 and 20, 1996 as
<PAGE>
-19-
the dates on which status conferences would be held to consider
all Discovery Requests, and (11) approved of the form and man-
ner of notice of the foregoing, including providing notice of
the foregoing by publishing a notice of such dates in each of
the international edition of The Wall Street Journal, the
national edition of The New York Times, The Los Angeles Times,
and The Toronto Globe and Mail twice during the week of May 5,
1996. (Realty Corp. Docket No. 1853).
31. The Debtors complied in all respects with the
April 23 Scheduling Order. (Affidavits of Publication; Affida-
vits of Service; Realty Corp. Docket No. 1192).
32. On May 23, 1996, this Court entered a supplemen-
tal scheduling order (the "May 23 Scheduling Order"), which
amended and supplemented the April 23 Scheduling Order and (1)
fixed the hearing to consider approval of the Debtors' Disclo-
sure Statement for June 6, 1996, (2) fixed May 30, 1996 as the
last day for all parties in interest to file any objections to
Claims or Equity Interests filed against any of the Additional
Debtors, (3) fixed June 10, 1996 as the date by which parties
must file motions for temporary allowance of Claims or Equity
Interests filed against the Additional Debtors (the "Additional
Debtors' Temporary Allowance Motions"), (4) fixed June 17 as
<PAGE>
-20-
the date to consider the Temporary Allowance Motions and the
Additional Debtors' Temporary Allowance Motions, (5) fixed May
13, 1996 as the last day to file objections to the Disclosure
Statement, (6) fixed July 1, 1996 as the last to file objec-
tions to the Plan, (7) fixed July 16, 1996 as the last day to
file responses to objections to the Plan, (8) fixed July 15,
1996 as the Voting Deadline, (9) fixed the Confirmation Hearing
for July 22, 1996, and (10) approved of the form and manner of
notice of the foregoing. (Realty Corp. Docket No. 1430).
33. The Debtors complied in all respects with the
May 23 Scheduling Order. (Affidavits of Service; Realty Corp.
Docket No.)
34. Discovery regarding the Plan and Disclosure
Statement commenced in May 1996, encompassing substantial docu-
ment production and numerous depositions. (Simon Affidavit,
| 13)
35. The First Amended Plan and the amended Disclo-
sure Statement relating thereto were filed with the Bankruptcy
Court on August 2, 1996. The Second Amended Plan (the "Second
Amended Plan") and the amended Disclosure Statement relating
thereto were filed with the Bankruptcy Court on August 9, 1996.
A motion to approve certain Plan modifications (the "Plan
<PAGE>
-21-
Modification Motion") was filed with the Bankruptcy Court on
August 30, 1996. (Plan; Realty Corp. Docket No. 1817). Addi-
tional, limited modifications to the Plan were proposed at the
Confirmation Hearing. A hearing to consider the Plan Modifica-
tion Motion was held on September 12, 1996, and the Plan
Modification Motion was granted on such date.
36. On August 9, 1996, after a hearing held on
August 9, 1996, at which time unresolved objections were con-
sidered, the Court overruled such objections and found, among
other things, that (a) sufficient and timely notice of such
hearings was given in accordance with the Bankruptcy Rules and
orders of this Court, and (b) based upon the information con-
tained in the Disclosure Statement, the Disclosure Statement,
including a cover letter to the Disclosure Statement from the
Committee (the "Committee Letter"), contained "adequate infor-
mation" pursuant to section 1125 of the Bankruptcy Code. On
the same date, the Court entered an order which, among things,
approved the Disclosure Statement (the "Disclosure Statement
Order"). (Disclosure Statement Order; Realty Corp Docket No.
1714).
37. The Disclosure Statement Order authorized and
directed the Debtors to serve or cause to be served by hand
<PAGE>
-22-
delivery (to those persons located in New York City) and over-
night delivery (to all other persons referenced below) no later
than August 16, 1996 a copy of the notice of the confirmation
hearing and other related dates (the "Confirmation Notice"),
the Disclosure Statement and all exhibits and attachments
thereto, and the Plan without exhibits (collectively, the "Dis-
closure Package"), to the persons or Entities listed on the
service lists annexed to the Disclosure Statement Order as (A)
Exhibit "D", unless such person or Entity was otherwise to
receive a Solicitation Package (as hereinafter defined) pursu-
ant to the Disclosure Statement Order, which list was compiled
from and comprised of (i) all persons or Entities that have
filed proofs of Claim or Equity Interests with the Court on or
before the Record Date, (ii) all person or Entities listed in
the Schedules and lists of Equity Interest holders and all
amendments thereto through the Record Date, which Claims or
Equity Interests are not scheduled as disputed, contingent or
unliquidated, (iii) all other known holders of record of Claims
against or Equity Interests in the Debtors, if any, as of the
Record Date, (iv) all parties in interest that have filed a
notice pursuant to Bankruptcy Rule 2002 in the Debtors' chapter
11 cases on or before the Record Date, and (v) the Abbreviated
Service List (as defined in the Disclosure Statement Order);
<PAGE>
-23-
and (B) Exhibit "E", which list was compiled from and comprised
of those Entities listed on the Bankruptcy Rule 2019 Statement
of Millbank, Tweed, Hadley & McCloy as counsel for the Tower B
Noteholders dated April 25, 1996, and contained a list of all
Tower B Noteholders and was provided to the Debtors by counsel
for the Tower B Noteholders. (Disclosure Statement Order;
Id.).
38. In accordance with the Disclosure Statement
Order, the Debtors served copies of the Disclosure Packages on
each of the Entities entitled to receive such packages, includ-
ing, without limitation, the Tower B Noteholders, pursuant to
the Disclosure Statement Order. (Affidavits of Service dated
September 11, 1996; Realty Corp. Docket No. 1874-1890).
39. The Disclosure Statement Order authorized and
directed the Debtors to serve or cause to be served by hand
delivery (to those person located in New York City) and over-
night delivery (to all other persons) no later than August 16,
1996 to the persons or Entities on the service list annexed to
the Disclosure Statement Order as Exhibit "F", which list was
compiled from and comprised of the holders of all Claims and
Equity Interests that are entitled to vote on the Plan as spec-
ified in the Disclosure Statement Order in accordance with
<PAGE>
-24-
Bankruptcy Rule 3018(a), (i) the Confirmation Notice, (ii) the
Disclosure Statement and all exhibits and attachments thereto,
(iii) the Plan (without exhibits), (iv) an appropriate form of
Ballot and pre-addressed return envelope, and (v) the Committee
Letter (collectively, a "Solicitation Package"); provided, how-
ever, that Solicitation Packages for holders of Claims against
or Equity Interests in any Debtor placed within a class under
the Plan that is deemed to accept or reject the Plan under sec-
tion 1126(f) or 1126(g) of the Bankruptcy Code did not have to
include a Ballot and a Ballot return envelope.
40. In accordance with the Disclosure Statement
Order, the Debtors served copies of the Solicitation Packages
on each of the Entities entitled to receive such packages pur-
suant to the Disclosure Statement Order. (Affidavits of Ser-
vice dated September 11, 1996; Realty Corp. Docket No.
1874-1890).
41. The Disclosure Statement Order established
August 9, 1996 as the record date for determining the Equity
Interest holders and holders of Claims who may vote to accept
or reject the Plan. (Disclosure Statement Order; Realty Corp.
Docket No. 1714).
<PAGE>
-25-
42. The Disclosure Statement Order required the
Debtors to publish the Confirmation Notice once during the
weeks of August 12 and August 19, 1996 in each of the following
publications: The Wall Street Journal (international edition),
The New York Times (national edition), The Los Angeles Times,
and The Toronto Globe and Mail. (Id.)
43. The Debtors complied with the publication
requirements of the Disclosure Statement Order. (Affidavits of
Publication dated September 9, 1996; Realty Corp. Docket No.
1853).
44. The Disclosure Statement Order fixed September
4, 1996 at 5:00 p.m. Eastern Daylight Time, unless otherwise
agreed to by the Debtors, as the time and date by which all
Ballots must be completed, executed, marked and received by the
Debtors' vote tabulation agent, Georgeson, in order to be
counted as acceptances or rejections of the Plan. (Disclosure
Statement Order; Realty Corp. Docket No. 1714).
45. The Debtors extended the Voting Deadline for the
following Entities (collectively, the "Extended Voting Deadline
Creditors"): (i) Sanwa, (ii) OYDL, (iii) Aetna, (iv) DKB,
(v) Toronto Dominion Bank, (vi) The Bank of Nova Scotia, (vii)
<PAGE>
-26-
JMB, (viii) holders of Claims in Tower A Co. Class 4, Tower B
Leaseco Class 3, Consolidated 245 Class 6 and Consolidated
Devco Class 10, (ix) Bank Leumi, (x) Svenska Handelsbanken and
(xi) the City and State of New York. (Ball Affidavit, | 7).
The Extended Voting Deadline Creditors that timely cast their
Ballots prior to the expiration of such agreed-upon extensions
each voted such Ballots to accept the Plan. (Stevenson Affida-
vit, | 30).
46. The Disclosure Statement Order fixed September
11, 1996 at 2:00 p.m. and continuing on September 12, 1996 at
10:00 a.m. as the time and date for the Confirmation Hearing.
(Disclosure Statement Order; Realty Corp. Docket No. 1714).
47. The Disclosure Statement Order fixed August 28,
1996 as the last day for creditors and other parties in inter-
est to file objections to confirmation of the Plan. (Id.).
The Debtors also granted Sanwa, Aetna, DKB, OYDL and certain
Affiliates, the City of New York and the State of New York
extensions of the deadline for filing objections to confirma-
tion of the Plan. (Ball Affidavit, | 8). None of such parties
filed objections to confirmation of the Plan prior to the
agreed-upon extensions.
<PAGE>
-27-
48. The Debtors received copies of five (5) objec-
tions to confirmation of the Plan from the following Entities
on or before August 29, 1996: (i) Kenneth D. Laub & Company,
Inc. ("Laub"), (ii) Svenska Handelsbanken, (iii) Henry
Rodstein, H.R. Mortgage & Realty, American Network Realty
Estate and Edward Renzulli, (collectively, "Rodstein") (iv)
Samuel and Elization Bays, Martin A. Berezin, Lucille G. Cline,
Jack and Charlotte Dunkless, Richard and Cecilia Newman,
Malcolm and Ruth Rosenblatt, Betty Saunders, William and Edna
Sbordon, John D. and Margaret A. Short, Carol L. Stolberg and
Susan S. Howe, and Susan Needleman, as Trustee of the R/M
Perkins Nominee Trust (the "Bays Plaintiffs"), and (v) The
United States of America (the "United States Government"). In
addition, on or about August 31, 1996, the Debtors received an
objections to confirmation of the Plan from the United States
Trustee.
49. At the Confirmation Hearing, the Court overruled
the objections of each of Rodstein and the Bays Plaintiffs.
The objection filed by Svenska Handelsbanken was withdrawn
prior to the conclusion of the Confirmation Hearing based upon
the agreement reached with Svenska Handelsbanken as reflected
in the Plan Modifications (as hereinafter defined). The objec-
tion filed by the United States Government was resolved at the
<PAGE>
-28-
Confirmation Hearing based upon an agreement reached between
the Debtors, the 970 Debtors, Tower B Co. and WFC Finco and the
United States Government regarding certain of the release pro-
visions. The terms of the agreement reached between such par-
ties are reflected in these Findings of Fact and the Confirma-
tion Order. The Objection filed by the United States Trustee
was withdrawn prior to or at the Confirmation Hearing based on
the fact that no holders of Claims or Equity Interests rejected
the Plan. Laub's objection to the feasibility of the Plan was
withdrawn at the Confirmation Hearing based upon an agreement
reached between Debtor, Tower B Co. and Laub. The balance of
Laub's objection was overruled.
50. The Disclosure Statement Order fixed September
6, 1996 as the last day for the Debtors and other parties in
interest to file responses to objections to confirmation of the
Plan. (Id.). Due to extensions given to certain parties of
the time to object to confirmation of the Plan, the Debtors
sought and received from each of the objecting parties an
extension of the time to file a response until Monday, Septem-
ber 9, 1996. In accordance with that understanding, the Debt-
ors filed a memorandum of law in support of confirmation of the
Plan which incorporates responses to the various objections to
confirmation of the Plan. (Realty Corp. Docket No. 1872).
<PAGE>
-29-
51. Newco/970 Plan. The Plan is premised upon the
reorganization of the Debtors' estates around six (6) Core
Properties. The Core Properties consist of five (5) commercial
office buildings located in New York City -- Towers A, B and D
of the World Financial Center, One Liberty Plaza, and 245 Park
Avenue -- and 53 State Street located in Boston, Massachusetts.
(Plan). In the aggregate, the Core Properties have over 9.7
million rentable square feet, generate in excess of $400 mil-
lion annual revenues, and serve as the headquarters of certain
of the world's leading financial institutions, such as Merrill
Lynch, Bear Stearns & Company, Inc., Oppenheimer & Co., Inc.,
and Nomura Securities. (Simon Affidavit, | 7).
52. The 970 Plan is premised upon the reorganization
of two commercial office buildings -- 237 Park Avenue and 1290
Avenue of the Americas -- each located in New York City (the
"970 Buildings"). The 970 Buildings contain in the aggregate
over 3 million rentable square feet. (Disclosure Statement,
Section 4(a) and 4(b)).
53. The successful reorganization of Newco LP as a
solvent, economically viable entity is dependent upon (a) the
contribution by BPHI and JMB of their minority partnership
interests in four of the six Core Properties, (b) the
<PAGE>
-30-
Co-Proponents' Capital Infusion of $75,000,000, and (c) the
Debtors' refinancing of their interests in two of the towers in
the World Financial Center, using the proceeds to pay creditors
under the Newco Plan and the Tower B Co. Plan. (Simon Affida-
vit, | 8). The Debtors have worked hard and have expended sub-
stantial resources in pursuing the foregoing financial accommo-
dations as conditions to a successful reorganization. The
direct beneficiaries of such financial accommodations and the
resultant reorganization are the creditors of the Debtors.
(Simon Affidavit, | 9).
54. Financings. Pursuant to the Tower D Financing
(as defined herein), the Debtors will raise approximately
$440,000,000. Pursuant to the refinancing of the obligations
relating to Tower B of the World Financial Center (the "Tower B
Financing" and together with the Tower D Financing, the "Plan
Financings"), the Debtors will raise approximately
$835,000,000. The Plan Financings are critical to confirmation
of the Plan and provide needed Cash to help fund payments under
the Plan. (Simon Affidavit, | 10).
55. The Co-Proponents' Capital Infusion will be used
to, among other things, repay any outstanding obligations under
<PAGE>
-31-
the DIP Loan, which loan was approved by this Court by the DIP
Order. (Original DIP Order; Realty Corp. Docket No. 1539).
56. Administrative Bar Date. On September 5, 1996,
the Debtors, Tower B Co. and WFC Finco fled a motion pursuant
ot Bankruptcy Rule 3003(c) setting a final date for filing
proofs of Claim against the Debtors, Tower B Co. and WFC Finco
for Administrative Expense Claims (the "Administrative Claims
Bar Date Motion"). Pursuant to the Administrative Claims Bar
Date Motion, the Debtors, Tower B Co. and WFC Finco requested
that the Court fix October 15, 1996 (the "Administrative Claims
Bar Date") as the date by which all proofs of Claims for Admin-
istrative Expense Claims must be filed against the Debtors,
Tower B Co. or WFC Finco or be forever bared from asserting
such claims. An order granting the relief requested in the
Administrative Claims Bar Date Motion was entered by the Court
on September 16, 1996 (the "Administrative Claims Bar Date
Order").
57. In accordance with section 20.1 of the Plan, on
September 6, 1996, the Debtors notified each holder of a Claim
filed with the Bankruptcy Court with respect to which any of
the Debtors disputes liability in whole or in part on such
<PAGE>
-32-
Claims, that the Debtors dispute liability, in whole or in
part, with respect to such Claims.
58. Solicitation of acceptances or rejections of the
Plan or the Tower B Co. Plan and other actions or communica-
tions by or on behalf of the Debtors, Tower B Co., WFC Finco,
Merrill Lynch, BPHI or their respective Affiliates or represen-
tatives in connection with the negotiation, confirmation or
consummation of the Plan or the Tower B Co. Plan does not con-
stitute a "general solicitation" (within the meaning of Regula-
tion D under the Securities Act of 1933) with respect to any
securities to be offered or issued pursuant to the ML Lease
Securitization (as defined in the Tower B Co. Plan) or other-
wise. The offering and issuance of securities pursuant to the
Plan or the Tower B Co. Plan (including, without limitation,
the equity of the Debtors and the Zero Coupon Notes (as defined
in the Tower B Co. Plan)) to holders of Claims or Equity Inter-
ests is independent of, and not integrated with, the offering
or issuance of any securities pursuant to the ML Lease
Securitization (as defined in the Tower B Co. Plan).
<PAGE>
-33-
II.
VOTING AND VOTING PROCEDURES
Voting Procedures
1. The Disclosure Statement Order authorized the
Debtors' appointment of Georgeson to act as ballot solicitation
agent ("Solicitation Agent") and vote tabulation agent ("Tabu-
lation Agent"). (Disclosure Statement Order; Realty Corp.
Docket No. 1714).
2. The Debtors received approximately forty (40)
returned Disclosure and/or Solicitation Packages. The Debtors
attempted to locate correct addresses for each of the returned
packages and, when possible, sent such packages to the new
address.
3. In accordance with Local Bankruptcy Rule
3018-1(b), on September 16, 1996, Georgeson provided notice in
writing to each holder of a Claim whose election on the Ballot
was ineffective that such election was ineffective. (Stevenson
Affidavit, | 42).
4. Following dissemination of the Disclosure State-
ment as provided in the Disclosure Statement Order, Georgeson
<PAGE>
-34-
properly assisted the Plan Proponents in soliciting votes for
the Plan from the impaired classes of Claims and Equity Inter-
ests by answering various questions from holders of Claims and
Equity Interests regarding the Plan, with the guidance and
advice of the Debtors' counsel, and, together with the Plan
Proponents, appropriately solicited the votes of the impaired
classes of Claims and Equity Interests in good faith in a man-
ner consistent with the Bankruptcy Code. (Stevenson Affidavit,
|| 7-12, 25 and 26-31).
5. The Debtors entered into five (5) different vot-
ing stipulations which each have been so ordered by the Court
(collectively, the "O&Y Voting Stipulations"):
a. Order dated September 4, 1996 with Respect to
Voting on Debtors' Plans of Reorganization (the
"Intercompany Voting Order");
b. Stipulation and Order dated September 11, 1996
Allowing Teachers and Insurance Annuity Associa-
tion of America to Vote Claims Relating to
Tower A Judgment, and (b) Voting Claims Relating
to Tower A Judgment as an Acceptance to the Plan
(the "TIAA Voting Stipulation");
c. Stipulation and Order (a) Allowing Coopers &
Lybrand OYDL Inc., Coopers & Lybrand Limited,
Olympia & York Developments Limited, 656624,
Ontario Inc., Olympia & York Contractors Limited
and O&Y 25 Realty Company, L.P., to Vote Claims
Relating to the Debtors, (b) Voting Such Claims
as Acceptances of the Debtors' Plan and
(c) Approving the Settlement Among the Debtors,
Co-Proponents and O&Y Canada (the "OYDL
Settlement");
<PAGE>
-35-
d. Stipulation and Order dated September 11, 1996
by and Among the Debtors and Cassandra Mosley
Relating to Voting on the Debtors' Plan of Reor-
ganization (the "Mosley Voting Stipulation");
and
e. Stipulation and Order dated September 11, 1996
by and among the Debtors and Minerva Ortiz
Relating to Voting on the Debtors' Plan of Reor-
ganization (the "Ortiz Voting Stipulation").
The Mosley Voting Stipulation and the Ortiz Voting Stipulation
are hereinafter referred to as the "Change Vote Stipulations."
(Realty Corp. Docket No. 1841).
6. Pursuant to the Intercompany Voting Order,
(i) all of the Ballots representing Claims by an O&Y Affiliate
against one or more of the Debtors ("Intercompany Claims")
shall be deemed to have been voted to accept the Plan and the
970 Plan, as the case may be, and (ii) any and all Equity
Interests in the Debtors held by an O&Y Affiliate that is enti-
tled to vote on the Plan or the 970 Plan, as the case may be
("O&Y Equity Interests"), whether such O&Y Equity Interests are
held through a partnership, a corporation or a limited lia-
bility company, shall be deemed to have been voted to accept
the Plan and the 970 Plan, as the case may be. Furthermore,
the Intercompany Voting Order directs that Georgeson count all
Ballots on account of all Intercompany Claims and O&Y Equity
<PAGE>
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Interests as votes to accept the Plan. (Intercompany Voting
Order; Realty Corp. Docket No. 1857).
7. Pursuant to the TIAA Voting Stipulation, TIAA is
permitted to vote the Tower A Judgment Claims on the Debtors'
Plan in the amount of $79,698,692.38, and the Ballot on account
of the TIAA Judgment Claims shall be deemed to have been voted
to accept the Plan, and such Ballot shall be deemed to have
been received by Georgeson on or prior to September 4, 1996 at
5:00 p.m. (the "Voting Deadline"). (TIAA Voting Stipulation;
Realty Corp. Docket No. 1841).
8. Pursuant to the OYDL Settlement, (i) O&Y Canada
(as defined in the OYDL Settlement) is permitted to vote those
O&Y Canada Claims (as defined in the OYDL Settlement) set forth
on Exhibit A to the OYDL Settlement on the Plan in the amounts
set forth thereon, and (ii) the Ballots on account of the O&Y
Canada Claims (as defined in the OYDL Settlement) set forth on
Exhibit A to the OYDL Settlement shall be deemed to have been
voted to accept the Plan, and such Ballots shall be deemed to
have been received by Georgeson, on or prior to the Voting
Deadline, as extended by agreement of the Debtors. (OYDL
Settlement; Realty Corp. Docket No. 1865).
<PAGE>
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9. On September 9, 1996, pursuant to Bankruptcy
Rule 3018(a), the Debtors filed a motion to give effect to the
Change Vote Stipulations. A hearing to consider Bankruptcy
Court approval of the Change Vote Stipulations was held on
September 11, 1996, and the motion was granted by the Court on
that same date. (Mosley Stipulation; Ortiz Stipulation).
10. Pursuant to the Mosley Stipulation, the Ballots
originally cast by Cassandra Mosley in Equity Canada Class 2
and Consolidated Devco Class 10 to reject the Plan are deemed
votes to accept the Plan. (Mosley Stipulation; Realty Corp.
Docket No. 1876).
11. Pursuant to the Ortiz Stipulation, the Ballot
originally cast by Minerva Ortiz in Tower B Leaseco Class 3 to
reject the Plan is deemed a vote to accept the Plan. (Ortiz
Stipulation; Realty Corp;. Docket No. 1898).
12. The Court takes judicial notice of the
Intercompany Voting Order, the TIAA Voting Stipulation, the
OYDL Settlement, the Mosley Voting Stipulation, and the Ortiz
Voting Stipulation.
13. There are no holders of Claims in the following
classes: (i) Tower Corp. Classes 3 and 4, (ii) Devco Canada
<PAGE>
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Class 2, and (iii) Consolidated OLP Class 4 (collectively, the
"Eliminated Classes"). Pursuant to section 17.3 of the Plan,
the Eliminated Classes are deleted from the Plan for all pur-
poses, including for purposes of voting on the Plan and deter-
mining acceptance or rejection of the Plan by such classes
under section 1129(a)(8) of the Bankruptcy Code. (Stevenson
Affidavit, | 22).
14. Pursuant to section 1126(g) of the Bankruptcy
Code and sections 14.5 and 16.5 of the Plan, Tower Corp. Class
5 and Tower B Leaseco Class 5 are conclusively deemed to have
rejected the Plan. (Plan, Sections 14.5 and 16.5).
15. Section 17.2 of the Plan identifies each of Con-
solidated Devco Class 1, Consolidated Realty Corp. Class 1, SF
Holdings Class 1, Devco Canada Class 1, Equity Canada Class 1,
Consolidated OLP Class 1, Tower A Co. Class 1, Tower Corp.
Class 1, Consolidated 245 Class 1 and Tower B Leaseco Class 1
as unimpaired, and such classes are conclusively presumed to
accept the Plan pursuant to section 1126(f) of the Bankruptcy
Code. (Plan, | 17.2).
16. In accordance with the Disclosure Statement
Order and Local Bankruptcy Rule 3018-1, the Tabulation Agent
has made a final determination of the validity of, and
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tabulation respecting, all acceptances and rejections of the
Plan by the impaired classes of Claims and Equity Interests and
has submitted to the Court at lease one day prior to the
Confirmation Hearing its written report of the results (the
"O&Y Voting Tabulation Report"), which report includes the
amount and number of Allowed Claims or Allowed Equity Interests
of each class accepting or rejecting the Plan, and which report
concludes that, after giving effect to the O&Y Voting Stipula-
tions, as set forth above, and assuming the conditions to the
Conditional Ballots7 (as defined in the Stevenson Affidavit)
have been satisfied on or prior to the Confirmation Hearing:
a. With respect to the impaired classes of Claims,
each of the following classes has accepted the
Plan by at least two-thirds in amount and a
majority in number of the Claims in each such
class actually voting, exclusive of the votes
cast by holders of Claims subject to objection
that have not obtained temporary allowances of
such Claims for voting purposes:
(1) Consolidated Devco Classes 2, 3, 4, 5, 6,
88, 9, 10 and 11.
_________________________
7 Prior to the conclusion of the Confirmation Hearing, the
Debtors notified the Court that the Debtors, Aetna and DKB
had entered into a stipulation regarding the Conditional
Ballots (as defined in the Stevenson Affidavit), and that
based on such stipulation the Ballots on account of
Aetna's and DKB's Claims were voted to accept the Plan.
8 On September 11, 1996, the sole holder of Claims in Con-
solidated Devco Class 8, JMB, conditionally voted all of
Footnote continued on next page.
<PAGE>
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(2) Consolidated Realty Classes 2, 3, 4, 5 and
6.
(3) SF Holdings Class 2.
(4) Devco Canada Class 3.
(5) Equity Canada Classes 2 and 3.
(6) Consolidated OLP Classes 2, 3 and 5.
(7) Tower A Co. Classes 2, 3, 4 and 5.
(8) Tower Corp. Class 2.
(9) Consolidated 245 Classes 2, 3, 4, 5, 6 and
7.
(10) Tower B Leaseco Classes 2, 3 and 4.
b. With respect to the impaired classes of Claims,
only Consolidated Devco Class 7 has failed to
accept the Plan.
c. With respect to the impaired classes of Equity
Interests, each of the following classes has
accepted the Plan by at least two-thirds in
amount of the Equity Interests in each such
class actually voting, exclusive of any votes
cast by the holders of Equity Interests subject
to obligation that have not obtained temporary
allowances of such Equity Interests for voting
purposes:
(1) Consolidated Devco Class 12.
_________________________
Footnote continued from previous page.
its Claims in such class to accept the Plan (the "JMB Bal-
lots"), subject to certain conditions. On September 12,
1996, on the record at the Confirmation Hearing, counsel
for JMB advised the Court that such conditions had been
satisfied and authorized the Debtors to release the JMB
Ballots to Georgeson and count the JMB Ballots as accep-
tances to the Plan. Thus, Consolidated Class 8 has voted
to accept the Plan.
<PAGE>
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(2) Consolidated Realty Class 7.
(3) SF Holdings Class 3.
(4) Devco Canada Class 4.
(5) Equity Canada Class 4.
(6) Consolidated OLP Class 6.
(7) Tower A Co. and Class 6.
(8) Consolidated 245 Class 8.
d. With respect to the impaired classes of Equity
Interests, no class of Equity Interests entitled
to vote on the Plan has failed to accept the
Plan.
17. In accordance with Local Bankruptcy Rule
3018-1(a), the Stevenson Affidavit, which includes the O&Y Vot-
ing Tabulation Report, was served upon the Debtors, the Credi-
tors' Committee and the United States Trustee. (Stevenson
Affidavit, | 43).
18. The determination of Georgeson is valid and cor-
rectly sets forth the tabulation of votes required under the
Bankruptcy Code. (Id.).
19. Each of the Co-Proponents has voted its respec-
tive Claims and Equity Interests in favor of the Plan. (Id.)
20. All holders of Claims and Equity Interests who
are impaired under the Plan were mailed Ballots and allowed to
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vote on the Plan in the amount (i) scheduled by the Debtors in
the respective Debtor's Schedules filed with the Bankruptcy
Court, (ii) the amount claimed in a properly filed proof of
Claim, (iii) set forth in an order entered by the Bankruptcy
Court relating to such Claim or Equity Interest, or (iv) set
forth in a stipulation between such holder of a Claim or Equity
Interest and the Debtors.
III.
IDENTIFICATION OF THE SETTLEMENTS AFFECTING
CLASSIFICATION AND TREATMENT OF CLAIMS UNDER THE PLAN
A. The Plan Settlements. The Plan is dependent upon and
incorporates the terms of eleven critical settlements (collec-
tively, the "Plan Settlements")9:
1. the BPHI Settlement;
2. the January 12th Settlement Agreement;
3. the Merrill Lynch Settlement;
4. the TIAA Settlement;
5. the Toronto Dominion Settlement;
6. the Reichmann Settlement;
_________________________
9 All summaries of the terms of any of the Plan Settlements
contained in these Findings of Fact are qualified in their
entirety by the terms of such settlement contained the the
Plan.
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7. the Amex Settlement;
8. the Bank of Nova Scotia Settlement;
9. the Dragon Settlement;
10. the Oppenheimer Indirect Capital Contribution
and Treatment of Oppenheimer Claims; and
11. the Intercompany Claims Settlement.
B. General Findings of Fact in Connection with
the Plan Settlements.
1. Each of the Plan Settlements (other than the
Intercompany Claims Settlement) is the result of extensive and
lengthy arm's-length negotiations. (Simon Affidavit, | 41).
2. Absent the Plan Settlements, the complexity,
cost and delay of litigation to address the issues resolved by
each such settlement would be enormous. (Simon Affidavit,
| 42).
3. The Court takes notice of the competence and
experience of each of the respective counsel, including Debt-
ors' counsel, who support each of the respective Plan
Settlements.
4. The Debtors and the other Plan Proponents, and
their respective counsel and financial advisors, have carefully
evaluated all aspects of the Plan Settlements (including
<PAGE>
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exploration of alternatives to such settlements) and determined
that such settlements are fair. (Simon Affidavit, | 43).
5. The Plan enjoys the support of each of the par-
ties to the Plan Settlements. Without such settlements, it is
likely that the non-Debtor settling parties with respect to
each Plan Settlement would not support the Plan. Such a result
would (i) increase the Administrative Expense Claims associated
with the Reorganization Cases, (ii) unduly delay confirmation
of the Debtors' Plan or cause liquidation of the Debtors, and
(iii) reduce recoveries to creditors. (Simon Affidavit, | 44).
6. Certain of the Plan Settlements, notably the
BPHI Settlement, the January 12th Settlement Agreement and the
settlement with the Creditors' Committee, require broad
releases as a condition to each such settlement. The United
States Government objected to those releases, but such objec-
tion was subsequently resolved at the Confirmation Hearing.
There are no objections by any other party in interest to the
Plan Settlements, except those objections filed on or before
March 6, 1996 in respect of the January 12th Settlement Agree-
ment, none of which is being prosecuted. (Simon, | 46).
Except for the objection filed by Laub and the United States
<PAGE>
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Government, no objections relating to the release provisions
contained or referred to in the Plan were filed.
C. Common Elements to the Plan Settlements.
The Plan Settlements, which in many respects, are the
heart of the Plan, have at least four common elements:
- Multiple Claims/Interests and Multiple Debtors.
First, the Claims and/or Equity Interests of the
creditors and/or partners being settled are gen-
erally related to more than one Debtor and/or
O&Y Affiliate, and in many cases relate to cer-
tain non-debtor Entities as well (e.g., January
12th Settlement Agreement, BPHI Settlement,
Merrill Lynch Settlement, TIAA Settlement). See
Disclosure Statement at 71-111.
- Complexity of the Claims/Interests. Second, the
Claims and/or Equity Interests being settled are
exceedingly complex. They include certain part-
ner disputes (e.g., BPHI and Merrill Lynch)
which, if not resolved, would require litigation
over complex issues regarding the assumption of
a partnership agreement, dissolution of a part-
nership as the result of a chapter 11 filing by
one of the general partners and assignment of a
partner interest, which involves law that is
unsettled. Id. at 77-87. In addition, complex
issues of fraudulent conveyance law would have
to be litigated (e.g., Club Loan, TIAA and The
Bank of Nova Scotia). Id. at 62, 64 and 95-97.
- Prolonged Litigation. Third, if the litigations
described above were commenced or continued,
such proceedings would be expensive and time
consuming, and would more than likely lead to a
liquidation of the Debtors' estates. (Simon
Affidavit, | 47). It is likely that, if any one
of the major settlements set forth in the Plan
were not effectuated (e.g., January 12th Settle-
ment Agreement, BPHI Settlement, Merrill Lynch
<PAGE>
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Settlement), the Plan would fail and the Debt-
ors' estates would be liquidated. (Simon Affi-
davit, | 47).
- Uncertain Outcome. Fourth, the outcome of the
various litigations which are being settled
through the various Plan Settlements are uncer-
tain at best, and adverse rulings with respect
to any litigation would impair the ability of
the Debtors to confirm the Plan. The outcome of
the litigations is also uncertain as to whether
the Debtors would have sufficient resources to
continue to litigate the complex and time con-
suming factual and legal issues involved.
(Simon Affidavit, | 47).
D. The BPHI Settlement.
1. BPHI holds substantial minority partner inter-
ests in Towers A, B and D of the World Financial Center with
the practical and economic effect of being the Debtors'
thirty-five percent (35%) general partner in each such build-
ings. BPHI also asserts substantial Unsecured Claims against
various debtors in Consolidated Devco Class 11. Thus, BPHI
was, and is, a significant and strategically placed constituent
whose support for the Debtors' reorganization was critical.
2. From an operational point of view, despite
numerous defaults on over $5 billion in debt, including most of
its mortgage debt, and a moratorium on the payment of all unse-
cured debt since the summer of 1992, the Debtors were success-
ful in implementing their operating principles which enabled
<PAGE>
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them to implement the reorganization plan of preserving "core
properties' and exiting "non-core properties". The operating
principles were premised upon (i) maintaining O&Y (U.S.) con-
trol over, among other things, the "core properties", and (ii)
a self-imposed restriction against sending any monies or value
to OYDL and/or the Reichmann Entities. This success, however,
let to litigation with BPHI, which erupted in November 1992,
due in part to management's inability to assure creditors of
the U.S. Operations that the Reichmann family did not then have
an interest in BPHI.
3. In the face of that uncertainty and its commit-
ment to the operating principles, management refused to remit
distributions to BPHI from any of the three Core Properties in
the World Financial Center. BPHI, on the other hand, was con-
cerned about the debt and partnership defaults caused by the
Debtors at Tower B. The Debtors had used or borrowed all the
Cash generated by Tower B during 1991 and early 1992 and were
not able to repay the borrowed Tower B funds. As a result,
Tower B was not able to meet its annual debt service payments
to the Tower B Noteholders, giving rise to a serious and poten-
tially incurable default on both that property's
yen-denominated mortgage and the partnership agreement between
the Debtors and BPHI.
<PAGE>
-48-
4. At that time, BPHI brought suit alleging the
Debtors converted and misapplied partnership property, and BPHI
sought the appointment of a receiver for each of Towers A, B
and D of the World Financial Center. To best preserve the
going concern value of the Debtors and the World Financial Cen-
ter, the litigation effort was suspended in favor of an interim
operating agreement which, among other things, (i) required the
Debtors to fully inform and consult with BPHI on the Debtors'
operation of the World Financial Center mortgage debt and any
debt that was secured by a pledge of the Debtors' Equity Inter-
ests in the World Financial Center, such as the Club Loan, as
well as any discussions to restructure, amend or modify any of
the Debtors' agreements with the ground lessors of the World
Financial Center, other partners and/or significant tenants at
the World Financial Center, and (ii) permitted settlement dis-
cussions to continue. Those settlement discussions ultimately
resulted in the BPHI Settlement set forth in the Newco Plan.
(Plan, Section 4.3; Disclosure Statement, 77-79).
5. Consistent with the interim operating agreement
with BPHI, the Debtors worked with BPHI in their efforts to
restructure the indebtedness encumbering the World Financial
Center and the Debtors' Equity Interests in the World Financial
Center, as well as to rationalize and improve the operation of
<PAGE>
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the World Financial Center, particularly as it relates to the
relationship with Merrill Lynch and the retail space at the
World Financial Center. (Simon Affidavit, | 55).
6. Throughout the Debtors' efforts at restructuring
their indebtedness, various creditors and other parties in
interest have raised litigation threats against BPHI relating
to the ownership, operation and control of the World Financial
Center, and the partnership accounts and the original purchase
by BPHI of its interest in the World Financial Center in 1989.
The original purchase by BPHI of its interest in the World
Financial Center involved Cash payments and the assumption of
what was then intercompany indebtedness which was structured to
realize certain tax efficiencies in Canada for the benefit of
OYDL. (Simon Affidavit, | 56).
7. The creditors and other parties in interest who
raised such litigation threats included, among others, the
Tower B Noteholders, the former and current holders of the Club
Loan, the Creditors' Committee and Coopers & Lybrand OYDL
Inc./Ltd. BPHI consistently denied and defended against those
allegations and looked to the Debtors, Tower B Co. and Tower D
Co. for any damages it may sustain in connection with its posi-
tion in the World Financial Center, including by reason of its
<PAGE>
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assumption of any indebtedness relating to the World Financial
Center.
8. Prior to the commencement of the Reorganization
Cases, BPHI also took steps towards the dissolution of the var-
ious partnerships with the Debtors that controlled and operated
the World Financial Center, asserting that incurable defaults
had occurred. In connection therewith, BPHI filed in excess of
$300,000,000 in Claims against the Debtors.
9. The BPHI Settlement provides for the mutual
release of all Claims, Causes of Action, and equitable remedies
that were alleged or asserted or could have been alleged or
asserted by BPHI, or any one or more of the Debtors, the Debt-
ors' estates or the Debtors' creditors, including, without
limitation, Claims relating to the Debtors' indebtedness and
BPHI's assumption of indebtedness to the World Financial Center
partnerships, cross-claims and claims for contribution as among
partners. In addition, the BPHI Settlement (i) cements a joint
and effective approach to all of the constituents in the World
Financial Center, notably, Merrill Lynch, the Tower B
Noteholders, American Express, and Sanwa, (ii) provides for a
favorable resolution of the difficult and complex issue of
whether a general partnership can survive the commencement of a
<PAGE>
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chapter 11 case by the managing general partner through pre-
serving the going concern enterprise value of the World Finan-
cial Center, (iii) provides for the contribution to Newco LP of
BPHI's Equity Interests in the World Financial Center, includ-
ing, without limitation, its interest in the net Tower B
Financing proceeds and the net Tower D Financing proceeds, and
(iv) serves as the cornerstone of the Plan, the January 12th
Settlement Agreement, the Merrill Lynch Settlement, the Amex
Settlement, the TIAA Settlement and the Oppenheimer Agreement.
10. The BPHI Settlement was reached through
arm's-length negotiations among the Debtors and BPHI, and
resolves a contentious and potentially long and expensive
litigation.
11. The BPHI Settlement resolves all claims by and
between the Debtors and BPHI, a strategically placed constit-
uent, and preserves and enhances the going concern value of the
World Financial Center.
12. In accordance with applicable legal standards,
the Debtors have analyzed the overall consideration to be given
to BPHI by O&Y (U.S.) and by BPHI to O&Y (U.S.) under the BPHI
Settlement. Given the overall value of such consideration to
<PAGE>
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be given and received, and considering the likelihood of suc-
cess on the merits of complex and protracted litigation over
the claims described in the BPHI Settlement, including liti-
gation relating to the effect of a bankruptcy filing on a part-
nership, the BPHI Settlement is fair and reasonable and in the
best interests of the Debtors' estates and creditors.
13. Given that the BPHI Settlement ends all liti-
gation with BPHI, provides the framework for the Plan, and
enhances and preserves the going concern value of the World
Financial Center, the releases granted pursuant to the BPHI
Settlement (including the release of Claims arising in connec-
tion with the Tower B Co. Credit Agreement) are fair, prudent,
reasonable and an integral and necessary part of such settle-
ment and are essential to its implementation.
14. Any litigation with BPHI concerning the myriad
Claims asserted by BPHI would be extremely complex and costly,
and would not only delay but could entirely preclude the reor-
ganization of the Debtors.
E. The January 12th Settlement Agreement.
1. The January 12th Settlement Agreement is exceed-
ingly important to the reorganization of the Debtors because it
<PAGE>
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ends all litigation between the Debtors and the Co-Proponents
on the one hand, and Apollo on the other. Apollo is a strate-
gically placed creditor due to its position as the holder of:
(i) 81.25% of the Club Loan, which loan is secured by pledges
of the Debtors' interests in Towers A and B of the World Finan-
cial Center and 245 Park Avenue, each a Core Property; (ii)
substantial Unsecured Claims against the Debtors; and (iii)
substantial holdings of the mortgage notes that are secured by
the 970 Buildings. (Simon Affidavit, | 85).
2. The January 12th Settlement Agreement reflects
the reality that, based upon the historical relationship
between Apollo and the Co-Proponents, the difficult negotia-
tions, the intense litigation concerning the extensions of the
Debtors' exclusive periods, and the parties' respective (and
seemingly irreconcilable) business objectives, Apollo and the
Co-Proponents were unwilling to share control of a single ongo-
ing enterprise. The January 12th Settlement Agreement, as sup-
plemented by a stipulation among the parties thereto dated
August 15, 1996 and subsequently amended on September 11, 1996,
accomplishes a separation between Apollo and the Co-Proponents
and provides for a global settlement of numerous outstanding
claims and issues.
<PAGE>
-54-
3. The litigation between the Debtors and the
Co-Proponents on the one hand, and the Apollo Group on the
other, continued throughout the negotiation of the January 12th
Settlement Agreement. Such litigation was expensive, time con-
suming, and in all likelihood would have resulted in the liqui-
dation of the Debtors. Thus, the January 12th Settlement
Agreement paved the way for the Debtors' successful
reorganization.
4. The January 12th Settlement Agreement was
reached through arm's-length negotiations between the parties
thereto and was negotiated with the active mediation of Cyrus
Vance, the Court-appointed Examiner. The Examiner supports the
January 12th Settlement Agreement as an appropriate resolution
of numerous outstanding issues in this restructuring.
5. Initially, the January 12th Settlement Agreement
was submitted for approval independent from the Plan. At that
time, certain parties in interest filed objections to the Janu-
ary 12th Settlement Agreement, which resulted in substantial
discovery regarding (i) the Club Loan and all Claims and Causes
of Action proposed to be released and forever barred pursuant
thereto, (ii) the various benefits and costs to the Debtors'
estates associated with the January 12th Settlement Agreement,
<PAGE>
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and (iii) approval of the January 12th Settlement Agreement
outside the context of a plan of reorganization.
6. In accordance with applicable legal standards,
the Debtors have analyzed the overall consideration to be given
to and provided by O&Y (U.S.) under the January 12th Settlement
Agreement. (Disclosure Statement, pp. 9, 18, 23, 24, 161).
Given the overall value of such consideration to be given and
received, and considering the likelihood of success on the mer-
its of complex and protracted litigation over the Claims
described in the January 12th Settlement Agreement, the January
12th Settlement Agreement is fair and reasonable and in the
best interests of the Debtors' estates and creditors.
7. Any and all Claims Causes of Action being
released pursuant to the January 12th Settlement Agreement,
including any claims arising under Chapter 5 of the Bankruptcy
Code and any similar state law governing creditors' rights in
insolvency, have been previously raised, considered and evalu-
ated in the Debtors' Reorganization Cases.
8. This Court finds that the Claims under and Col-
lateral and other rights in respect of the Club Loan to be
transferred to Carena, CIBC, Citibank and Dragon (collectively,
the "Club Loan Transferees"), including but not limited to the
<PAGE>
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Claims in respect of the Club Loan in the aggregate amount of
$166,508,335.43 (as of October 11, 1995, plus any allowable
interest, fees, costs and charges from and after October 11,
1995), and all Liens and security interests securing such
Claims and all documents evidencing such Claims, Liens and
security interests, are valid, non-avoidable, enforceable and
have such priority in accordance with their terms against (a)
those Debtors which are obligated in respected of the Club Loan
and (b) all assets of the Debtors which are pledged as collat-
eral for the Club Loan.
9. Conduct of the Settling Parties.
a. The Court finds that each party to the January
12th Settlement Agreement acted in good faith in negotiating,
executing and delivering such agreement.
b. The Court finds that no act or omission prior to
the date of entry of this Confirmation Order by any party to
the January 12th Settlement Agreement or by any holder of an
interest or participation in the Club Loan or holder of an
interest in the Co-Sponser 970 Notes (including the performance
of any party under the January 12th Settlement Agreement) will,
directly or indirectly, preclude or otherwise affect (i) the
right of any of the Club Loan Transferees to receive and retain
<PAGE>
-57-
distributions on account of the Club Loan (as transferred pur-
suant to the January 12th Settlement Agreement) under the Plan
after confirmation of the Plan by this Court, (ii) the right of
Apollo or any holder of an interest or participation in the
Club Loan to receive and retain distributions on account of the
Co-Sponsor 970 Notes under the 970 Plan after confirmation of
the 970 Plan by this Court, or (iii) the right of the Club Loan
Transferrers to vote the Club Loan and the right of the Club
Loan Transferees to vote the Co-Sponsor 970 Notes.
10. The Debtors receive significant consideration
under the January 12th Settlement Agreement. Such considera-
tion includes: (i) receiving a release from the 970
Noteholders of claims under the Master Cash Flow Agreement,
which could amount to over $200,000,000 (ii) receiving recipro-
cal releases from Apollo, Tishman Speyer and the other holders
of the Club Loan for any Claims against the Debtors arising out
of the restructuring process, (iii) significantly reducing the
risks of a liquidation, and (iv) enabling the Debtors to pro-
pose and file the Plan (collectively, the "January 12th Settle-
ment Agreement Consideration").
11. In order to receive and obtain the benefit of
the January 12th Settlement Agreement Consideration, the
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Debtors and the Co-Proponents are required to execute and
deliver certain releases pursuant to the January 12th Settle-
ment Agreement. Such releases are fair, prudent, reasonable
and an integral and necessary part of such settlement and are
essential to its implementation.
F. The Merrill Lynch Settlement.
1. Certain Affiliates of Merrill Lynch, namely
Merrill Lynch WFC/L, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated (collectively, "Merrill Lynch"), are O&Y
(U.S.)'s largest tenants, leasing approximately 4.3 million
square feet in the aggregate in Towers B and D of the World
Financial Center. In addition, Merrill Lynch holds a
forty-nine percent (49%) nominal partnership interest in Tower
D of the World Financial Center -- one of the six Core Proper-
ties. Merrill lynch was the sublessor of floors 29-44 of Tower
B of the World Financial Center to Tower B Leaseco, as well as
a party to numerous agreements relating to the construction,
operation, capital, improvement and maintenance of the World
Financial Center. In addition, at various points in time,
Merrill Lynch had disputes that were in arbitration or liti-
gation that related to one or more of the foregoing. (Simon
Affidavit, | 66).
<PAGE>
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2. Merrill Lynch filed in excess of $350 million in
Unsecured Claims against the Debtors. Merrill Lynch also had a
number of motions pending against the Debtors to permit Merrill
Lynch to pursue remedies against the Debtors in connection with
the Debtors' operation of the World Financial Center and the
Debtors' sublease at Tower B of the World Financial Center.
Merrill Lynch also had reserved its rights to assert Claims and
defaults as a partner in Tower D of the World Financial Center
and to enforce limitations on the Debtors in borrowing addi-
tional funds secured by this property. In addition, given the
adversarial relationship, Merrill Lynch and the Debtors (and
Amex) had become unable to proceed with capital projects which
were critically necessary for the efficient operation of the
World Financial Center. Merrill Lynch also had potential
Claims against the Debtors and Tower B by reason of the poor
financial performance of the retail space at the World Finan-
cial Center. (Simon Affidavit, | 67).
3. The Merrill Lynch Settlement provides for the
reduction in Claims asserted by Merrill Lynch to: (i) an
Allowed Unaffiliated Unsecured Claim against Tower B Leaseco in
the amount of $93,000,000, (ii) a Secured Claim of $502,000
against Tower B Leaseco, (iii) an Allowed Unaffiliated Unse-
cured Claim against Consolidated Devco of$93 million less
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payments paid by Tower B Leaseco under the Plan, (iv) a rent
reduction on the lease with Merrill Lynch at Tower D of the
World Financial Center (with a present value of approximately
$26 million), (v) the transfer to Merrill Lynch of certain
escrow monies in the aggregate amount of $2,500,000 relating to
an arbitration against Tower A Co., (vi) a transfer to Merrill
Lynch of sublease rents collected by Tower B Leaseco, and (vii)
Claims relating to management fee reductions.
4. In addition, Merrill Lynch also agreed to a res-
olution of the retail space issues at the World Financial Cen-
ter which enabled the Debtors to settle their issues with Amer-
ican Express, the owner of Tower C of the World Financial Cen-
ter. These resolutions are embodied in the Merrill Lynch
Settlement. Of critical importance, and solely for the benefit
of the Debtors and their creditors, Merrill Lynch also agreed
to permit the Debtors to refinance Tower D of the World Finan-
cial Center at the Debtors' expense, which refinancing (the
"Tower D Financing") permits the Debtors to utilize all of the
refinancing proceeds to pay certain creditors of the Debtors.
See Plan Section 4.4 at 21; see also Disclosure Statement at
82-87.
<PAGE>
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5. The Project Operating Agreement is a highly com-
plex and significant agreement to which certain of the Debtors
are parties. As the sole tenant of Towers B and D of the World
Financial Center, on a triple-net basis, Merrill Lynch has sig-
nificant rights under the Project Operating Agreement. The
Merrill Lynch Settlement resolves all of the Debtors' and
Merrill Lynch's filed Claims relating to the Project Operating
Agreement and provides for the assumption of such agreement
pursuant to the terms set forth in section 4.4 of the Plan.
(Simon Affidavit, |70).
6. The Merrill Lynch Settlement resolves all of the
Debtors' and Merrill Lynch's Claims relating to the River Water
By-Pass Agreement. (Simon Affidavit, | 71).
7. The Merrill Lynch Settlement resolves all of the
Debtors' and Merrill Lynch's Claims relating to the Tower B
Sublease. Termination of the tower B Sublease by Tower B
Leaseco gave rise to an alleged Unsecured Claim in favor of the
ML Tenant against Tower B Leaseco and, absent substantive con-
solidation, Devco, in their respective chapter 11 cases (in the
case of Devco, pursuant to a guarantee of the Tower B Sublease)
as to which Merrill Lynch has filed proofs of claim in excess
of $93,000,000. (Beisner Affidavit, | 30).
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8. The Merrill Lynch Settlement was reached through
arm's-length negotiations among the Plan Proponents and Merrill
Lynch.
9. The Merrill Lynch Settlement resolves all filed
Claims by Merrill Lynch, a strategically placed creditor, part-
ner and the Debtors' single-largest tenant, relating to the
World Financial Center as against the Debtors, O&Y Affiliates
and BPHI as a partner in certain O&Y Entities that control Tow-
ers A, B and D of the World Financial Center. In addition,
Merrill Lynch is committed to cooperate in the Tower B Financ-
ing and Tower D Financing.10
10. In accordance with applicable legal standards,
the Debtors have analyzed the overall consideration to be given
to Merrill Lynch by O&Y (U.S.) and received by O&Y (U.S.) under
the Merrill Lynch Settlement. Given the overall value of such
consideration to be given and received, and considering the
likelihood of success on the merits of complex and protracted
litigation over the Claims described in the Merrill Lynch
_________________________
10 The Court takes judicial notice that Merrill Lynch is also
serving as the placement agent for these financings under
fee arrangements that have been disclosed to and approved
by this Court, in each case after notice and a hearing.
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Settlement, the Merrill Lynch Settlement is fair and reasonable
and in best interests of the Debtors' estates and creditors.
11. Any litigation with Merrill Lynch concerning the
myriad Claims asserted by and between Merrill Lynch and O&Y
(U.S.) would be extremely complex and costly, would inevitably
involve third parties, and would delay, if not derail com-
pletely, the reorganization of the Debtors.
12. The Merrill Lynch Settlement (i) obviates the
need for any litigation between the parties thereto, (ii) pre-
serves the going concern enterprise value of Towers B and D of
the World Financial Center, (iii) enables the Tower B and D
Tower Financings which will fund payments under the Plan and
the Tower B Co. Plan, and (iv) enhances and preserves the Debt-
or's assets.
G. The Amex Settlement.
1. Amex is the ground lessee of Tower C of the
World Financial Center pursuant to a certain ground severance
lease between the Battery Park City Authority, as lessor, and
Amex, as lessee. In addition to leasing the retail space of
Tower C to Retailco, as assignee of Tower A Co., under the
Amex/Retailco Lease, Amex is a party to the Project Operating
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Agreement, which sets forth the relative rights and duties of
the parcel tenants at the World Financial Center with respect
to the common areas thereof, and Amex is also a party to the
River Water By-Pass Agreement. In connection therewith, Amex
alleged substantial Claims against Tower A Co. and Devco under
the Amex/Retailco Lease and the Project Operating Agreement.
2. As more fully set forth in the Plan, the Amex
Settlement resolves these Claims by providing Amex with an
Allowed Claim of $4,320,000 in aggregate. In addition, the
Amex Settlement successfully restructures the Amex/Retailco
Lease as part of the reorganization of the Entities that own
the properties that constitute the World Financial Center, and
pursuant thereto Amex consents to Newco LP as Operator under
the Project Operating Agreement.
H. The TIAA Settlement and the Oppenheimer Indirect
Capital Contribution and Treatment of Oppenheimer
Claims.
1. The Debtors and various O&Y Affiliates have been
involved in several litigations commenced by TIAA arising pri-
marily out of allegedly breached loan commitments between cer-
tain of the Debtors and TIAA relating to Tower A of the World
Financial Center and the commercial office building located at
53 State Street, Boston, Massachusetts (the "Loan Commitment
<PAGE>
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Litigations"), in which TIAA asserted in excess of $120,000,000
in damages, which with prejudgment interest for ten (10) years
would exceed $240,000,000 against the Debtors and certain other
O&Y Affiliates. (Simon Affidavit, | 80).
2. In addition, the Debtors and TIAA have been
engaged in substantial litigations in the Bankruptcy Court
regarding, among other things, (i) the allowance of the
$79,698,692.38 Judgment obtained by TIAA in the Tower A Action,
(ii) enjoining continuation of the 53 State Street Action and
related litigations in Federal District Court involving TIAA's
attempt to amend its complaint relating to the 53 State Street
Action and add additional defendants, (iii) TIAA's motion for
authorization to commence an adversary proceeding to recover
certain alleged fraudulent conveyances from, among others,
BPHI, (iv) TIAA's motion to prevent Tower A Co. from paying
property management fees due to Devco, and (v) the Debtor's
objections to TIAA's proofs of Claim. The TIAA Settlement
resolves all Claims of TIAA against the Debtors and the O&Y
Affiliates and ends all litigation between TIAA and the Debtors
and the O&Y Affiliates (Simon Affidavit, | 80).
3. The TIAA Settlement fully satisfies (i) the TIAA
Judgement Claims, (ii) all Claims of TIAA against Tower A Co.,
<PAGE>
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53 State Limited, Devco, and all of the O&Y Affiliates, includ-
ing, without limitation, any Claims asserted in or otherwise
arising out of Tower A Action or the State Street Action, and
(iii) all Claims of TIAA against BPHI and Carena which have
been or could have been asserted in or otherwise arise of the
Tower A Action or the State Street Action or arise in connec-
tion with or relating to BPHI's investment in the World Finan-
cial Center, in exchange for (i) aggregate Cash consideration
of $9,000,000 (ii) an Allowed Unaffiliated Unsecured Claim
against Devco in the amount of $75,000,000, and (iii) retention
of the two escrow funds on deposit with TIAA aggregating
approximately $28,000,000.
4. The Cash consideration is funded by (i)
Oppenheimer, an Affiliate of which is a third-party partner in
Tower A Co., and (ii) the cash collateral held in Tower A. The
Cash payment to TIAA does not come from unencumbered Cash of
the Debtors or other assets of the Debtors currently available
to pay Debtor's creditors.
5. The litigation with TIAA critically affected
Oppenheimer's partner interest in Tower A Co., which gave rise
to Oppenheimer asserting Unsecured Claims in excess of
$60,000,000 against Devco and Tower A Co., arising out of
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various indemnities relating to O&Y (U.S.)'s relationship with
Oppenheimer. In connection with the TIAA Settlement, the Debt-
ors and Oppenheimer have reached an agreement concerning any
and all Claims between them (the "Oppenheimer Agreement").
Under the Oppenheimer Agreement, Oppenheimer will provide the
Cash to fund the TIAA Settlement and will receive an Allowed
Unaffiliated Unsecured Claim of $60,000,000 against Consoli-
dated Devco. In addition, Oppenheimer and the Debtors have
agreed to modify the Tower A Co. Partnership Agreement as set
forth in the Plan.
6. Oppenheimer's contribution of $6,000,000 to fund
Cash payment to TIAA under the TIAA Settlement is an integral
and necessary component of the TIAA Settlement. (Simon Affida-
vit, | 94).
I. The Toronto Dominion Settlement And The Bank of Nova
Scotia Settlement.
1. Toronto Dominion Bank ("TD") has asserted Claims
against Baden arising out of a guarantee by Baden of a certain
loan made and letter of credit issued by TD to another O&Y
Affiliate that granted a mortgage on certain Florida real
estate.
<PAGE>
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2. TD obtained a judgment against Baden based on
its guaranty of a loan. The Debtors entered into an agreement
to settle the TD judgment and TD agreed to stand still on
enforcing its judgment. Until October 11, 1995, the Debtors
performed under that agreement. Concurrent with the filing of
certain of the Debtors' chapter 11 petitions on October 11,
1995, the Debtors took steps involving the note issued by David
P. Chase in the current amount of $1,500,000, which TD alleged
breached the agreement. TD threatened to sue all the Debtors,
certain O&Y Affiliates and others.
3. The Bank of Nova Scotia was a party to an inter-
est rate adjustment agreement with OYDL (the "BNS Swap").
Within weeks prior to OYDL's filing of its chapter 11 petition,
OYDL entered into agreements which purported to pledge certain
of its property, and caused Baden to enter into agreements
which purported to pledge certain notes Baden owned (the "Baden
Pledge") that were issued by the Miami Center Joint Venture
("MCJV"). O&Y (U.S.) has reached a compromise with The Bank of
Nova Scotia of all of its claims arising out of this relation-
ship (the "Bank of Nova Scotia Settlement"). Under The Bank of
Nova Scotia Settlement, the Bank of Nova Scotia is receiving an
instrument entitling it to participate in the proceeds of a
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sale of the MCJV Lands in accordance with the terms set forth
in the Plan.
4. TD has threatened litigation against the Debtors
based on allegations of fraud, and the Debtors have threatened
litigation against The Bank of Nova Scotia based on allegations
of fraud. (Simon Affidavit, | 98).
J. The Reichmann Settlement.
1. Terms of the Reichmann Settlement. A settlement
has been reached to compromise both the Claims of the U.S.
Operations against the Reichmann Family and the Reichmann
Family Corps. and the Claims of the Reichmann Family and the
Reichmann Family Corps. against the U.S. Operations, (the
"Reichmann Settlement"). The Reichmann Settlement is premised
upon (i) mutual releases of Claims between the U.S. Operations,
the Reichmann Family and the Reichmann Family Corps. (exclusive
of the Claims held by O&Y (U.S.) against O&Y 25 Realty Co. and
O&Y 25 Realty Co., L.P., although the Reichmann Family Corps.
are to be exculpated from any affirmative liability for the O&Y
(U.S.) Claims), and (ii) a contribution to the Debtors of
either the Svenska Handelsbanken Claims and the Bank Leumi
Claims, as described in the Plan (collectively, the "Reichmann
Bank Claims"), or the Old Bridge Lands, as supplemented by a
<PAGE>
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personal indemnity of Paul Reichmann. In addition, the
Reichmann Settlement provides for (i) continuing cooperation
from the Reichmann Family on a number of disputes between O&Y
(U.S.) and others by providing information and testimony to
assist O&Y (U.S.) is successfully resolving such disputes, and
(ii) a consent by the Reichmann Entities to the settlement with
Coopers & Lybrand OYDL, Inc./Limited and Entities related
thereto, including the transfer by the partners of O&Y 25
Realty Company, L.P. to Newco LP of all of its interest in 53
State Street.
2. The Reichmann Settlement provides for releases
and contribution of Claims, resolves issues involving multiple,
complex relationships occurring over long periods of time span-
ning the CCAA proceedings and avoids time consuming and costly
litigation which has small prospects for any recovery.
3. The benefits to be derived from the Reichmann
Settlement, in the Debtors' informed business judgment, out-
weigh the cost of releasing potential Claims against the
Reichmann Family, especially given the Reichmann Family's
asserted challenge to such Claims.
<PAGE>
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K. The Dragon Settlement.
1. Dragon filed four (4) proofs of Claim, each in
the amount of $126,367,792.54, against Equityco, Equity GP,
Equity Canada and Realty Corp. (collectively, the "Dragon
Claims"). The Dragon Claims relate to the real property and
the commercial office building located at 60 Broad Street, New
York, New York (the "60 Broad Property"). Dragon has funded
the operation of this building since 1993.
2. Under the Dragon Settlement, in full settlement
of the Dragon Claims, the Debtors have agreed to return the 60
Broad Property to Dragon unencumbered and provide Dragon with
an Allowed Co-Proponent Unsecured Claims in the amount of
$60,000,000.
3. In addition, under the Dragon Settlement, Dragon
releases and waives all other Claims that it has or may have
against the Debtors, the Debtors in Possession and the O&Y
Affiliates (other than 60 Broad Co.) with the effect that
Dragon shall only have recourse to the assets of 60 Broad Co.
(and not those of the general partners of such Entity). Such
releases are significant.
<PAGE>
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L. Intercompany Settlement.
As discussed herein, the operation of the Consoli-
dated Devco Entities, the Consolidated Realty Entities and the
contribution of assets in exchange for the equity of Newco LP
support the resolution of Claims set forth in the Intercompany
Settlement as fair to the creditors of the Debtors and reason-
ably necessary to the effective implementation of the Plan.
M. Additional General Findings Regarding Certain Plan
Settlements.
1. Each of the Amex, TIAA, Oppenheimer, The Toronto
Dominion Bank, The Bank of Nova Scotia, Reichmann, Dragon and
Intercompany Settlements (collectively, the "Remaining Plan
Settlements") was reached through arm's-length negotiations
among the parties to such settlements and resolve long, conten-
tious and potentially expensive litigations both inside and
outside the Bankruptcy Court. (Simon Affidavit. | 147).
2. In accordance with applicable legal standards,
the Debtors have analyzed the overall consideration to be given
to each of the parties to the Remaining Plan Settlements by O&Y
(U.S.) under such settlements. Given the overall value of such
consideration to be given and received, and considering the
likelihood of success on the merits of complex and protracted
<PAGE>
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litigation over the Claims described in such settlements, such
settlements are fair and reasonable and in the best interests
of the Debtors' estates and creditors. (Simon Affidavit,
| 143).
3. The releases granted pursuant to the Remaining
Plan Settlements (where such releases are granted) are fair,
prudent, reasonable and an integral and necessary part of each
such settlement and are essential to its implementation and its
release of all but the Allowed Claims and consideration granted
by the Debtors under each settlement. (Simon Affidavit,
| 144).
4. Any litigation with the parties to each of the
Remaining Plan Settlements concerning the myriad Claims
asserted by the parties thereto would be extremely complex and
costly, and would delay (and could potentially derail) the
reorganization of the Debtors. (Simon Affidavit, | 145).
5. The Remaining Plan Settlements obviate the need
for any litigation between the parties thereto and provide for
significant consideration to the Debtors, thereby enhancing and
preserving the Debtors' assets and minimizing Administrative
Expense Claims. (Simon Affidavit, | 146).
<PAGE>
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IV.
RELEASES, INJUNCTION, WAIVER OF CLAIMS
A. Release of the Debtors and Debtors in Possession.
1. Sections 22.1 and 23.2 of the Plan require the
transfers contemplated thereunder, including the transfers to
occur as of the Effective Date, to be free and clear of all
Claims, Liens and encumbrances, except to the extent expressly
provided in the Plan. (Plan, Sections 22.1.2(i) and 23.2).
Such "free and clear" protection is expressly provided for in
section 1123(a)(5)(D) of the Bankruptcy Code, which provides
that a plan shall provide adequate means of implementation,
including the "sale of all or any part of the property of the
estate . . . free of any lien." See 11 U.S.C.
Section 1123(a)(5)(D). As a result of section 23.2 of the Plan
and in accordance with section 1123(a)(5(D), after the Effec-
tive Date, the Debtors will have transferred all of their
assets and will have no monies with which to satisfy any
Claims.
2. The Administrative Claims Bar Date Order fixes
October 15, 1996 as the Administrative Claims Bar Date. The
Administrative Claims Bar Date Order provides that any holder
<PAGE>
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of an Administrative Expense Claim against one or more of the
Debtors arising in the ordinary course of the Debtors' busi-
nesses need not file a proof of Claim by the Administrative
Claims Bar Date. Rather, any such Claims may be asserted
against such Debtor in the ordinary course. Furthermore, all
ordinary course Administrative Expense Claims will be assumed
by either Newco LP, New Liberty Plaza LP, New 245 Park LP or
New Tower A LP, as the case may be. (Administrative Claims Bar
Date Order; Letter Dated September 9 ,1996 from John Rapisardi
to the Honorable James L. Garrity, Jr., Realty Corp. Docket
No. 1856).
3. Section 5.1 of the Plan provides for the payment
in full of all Administrative Expense Claims. (Plan,
Section 5.1).
4. Based on the foregoing, the universe of Claims
being released by section 24.1 of the Plan from the Confirma-
tion Date through the Effective Date is de minimis.
B. Limited Release of the O&Y Releasees.
1. The release of the O&Y Releasees pursuant to
section 24.2 of the Plan is limited in scope because it only
relates to the following Claims:
<PAGE>
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a. Claims arising from the negotiation, formu-
lation, documentation, approval and implementation of the Plan
or the Tower B Co. Plan.
b. Claims relating to the ownership, manage-
ment or operation of the properties or other assets of the
Debtors or Debtors in Possession.
c. Claims relating to the preparation by any
of the O&Y Releasees of financial statements in respect of the
Debtors, Debtors in Possession and the O&Y Affiliates.
d. Without limiting the foregoing, in the case
of any O&Y Releasees who are current or former directors,
officers or employees of any of the O&Y Affiliates, the
releases in the Plan do not release any Liability arising pri-
marily from the Willful Misconduct of any such director, offi-
cer or employee of any of the O&Y Affiliates or any Liability
for repayment of any loan made to such director, officer or
employee made by an O&Y Affiliate prior to the Effective Date
and recorded in the ordinary course of business on the books
and records of such O&Y Affiliate and that remains outstanding
on the Effective Date.
<PAGE>
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e. The limited releases granted to the O&Y
Releasees does not apply to any debt to the United States
Government arising under the IRC, the environmental laws or any
criminal laws of the United States; provided, however, that
this limitation shall in no way affect or limit the discharge
granted to the O&Y Releasees who are debtors under chapter 11
of the Bankruptcy Code.
C. Limited Release of the Plan Releasees.
1. Under the Plan, Plan Releasees are confined to
(i) the Co-Proponents, the Creditors' Committee and the current
and former members of the Creditors' Committee in their capac-
ity as such, determined as of the Ballot Date, and Coopers &
Lybrand OYDL, Inc./Limited, (ii) the respective successors,
predecessors, Affiliates, assignors or assignees of any of
same, in their capacity as such, (iii) all current or former
stockholders, members, partners or owners of any of the fore-
going (including current or former owners of any direct or
indirect interest in any of the foregoing), in their capacity
as such, and (iv) all current and former officers, directors,
trustees, employees, agents, attorneys, accountants, financial
advisors, investment bankers, appraisers, advisors and engi-
neers of any of the foregoing, in their capacity as such. The
<PAGE>
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limited releases granted to the Plan Releasees does not apply
to any debt to the United States Government arising under the
IRC, the environmental laws or any criminal laws of the United
States; provided, however, that this limitation shall in no way
affect or limit the discharge granted to the O&Y Releasees who
are debtors under chapter 11 of the Bankruptcy Code.
2. Under the Plan, the Plan Releasees are only
released from Liabilities relating to (i) their relationships
with the Debtors, Debtors in Possession and the O&Y Affiliates,
and (ii) their negotiation, formulation, documentation,
approval and implementation of the Plan or the Tower B Co.
Plan.
D. The Need for the Release And Injunction Provisions.
1. The release provisions in the Plan (collec-
tively, the "Release Provisions") (including, but not limited
to, the provision providing that the releases operate to
release conduct through the Effective Date of the Plan) and the
injunction provisions of the Plan (collectively, the "Injunc-
tion Provisions") form an integral part of the Debtors' reor-
ganization. (Simon Affidavit, | 111).
<PAGE>
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2. The Release Provisions provide finality to all
(i) potential litigation by and against the Debtors, (ii)
Causes of Actions against the Plan Releases that may be consid-
ered property of the Debtors' estates or for which any recovery
would be for the benefit of the Debtors, their estates or their
creditors, and (iii) the resolution of and satisfaction of all
investments in, Claims against, and Equity Interests in the
Debtors.
3. The Release Provisions are supported by suffi-
cient consideration from each releasee. Such consideration
includes, among other things: (i) reciprocal releases; (ii)
cooperation in the formulation and successful prosecution of
the Plan and throughout the Debtors' Reorganization Cases;
(iii) the Co-Proponents' Capital Infusion of $75,000,000; (iv)
contribution of BPHI's partnership interest in the World Finan-
cial Center; (v) the consent to using all net proceeds of the
Tower D Financing for the benefit of the Debtors' creditors;
(vi) in the case of the Reichmann Entities, new indemnities and
the contribution of the Svenska Bank Claims and Leumi Bank
Claims (or the Old Bridge Lands); (vii) the Co-Proponents' con-
tribution of various hedge positions to provide certainty for
and assurances for the Tower B and Tower D Financings (the
"Hedge Positions"); and (vii) the conversion of secured debt to
<PAGE>
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equity by certain of the Co-Proponents. If the Release Provi-
sions are reasonably satisfactory to the Directors and Protocol
Officers, the Debtors and their creditors will receive the
$16,000,000 currently held in the indemnity fund held by SF
Holdings pursuant to the Pledge Agreement under the Protocol.
4. The ability of the Debtors to reorganize depends
upon the Release Provisions and Injunction Provisions. In the
absence of the Release Provisions and Injunction Provisions,
the following concrete, adverse effects may occur:
a. there will be no Plan and conversion to
chapter 7 of the Bankruptcy Code will likely ensue;
b. piecemeal dismemberment of estate assets,
resulting in substantial diminution in the value of assets
available to be distributed to creditors; and
c. loss of a substantial and important source
of capital due to the withdrawal of the Co-Proponents' Capital
Infusion.
5. The Release Provisions as they relate to offic-
ers and directors of the Debtors are consistent with the Proto-
col and prior orders of this Court relating to the Protocol,
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and simply reaffirm the terms of the Indemnification Agreements
established under the Protocol.
6. The Release Provisions and Injunction Provisions
are essential to implementation and consummation of the Plan
and the recoveries to creditors.
7. Without the Release Provisions and Injunction
Provisions, (i) the roll-up of BPHI's partnership interests,
(ii) the consent to using one hundred percent (100%) of the net
proceeds of the Tower D Financing, and (iii) the Co-Proponents'
Capital Infusion will not be made, thereby eliminating substan-
tial and needed working capital for the Debtors to enable them
to fund payments under the Plan and to provide meaningful and
adequate working capital for the Reorganized Debtors to conduct
their businesses.
<PAGE>
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V.
FACTS THAT WARRANT THE SUBSTANTIVE
CONSOLIDATIONS AS SET FORTH UNDER THE PLAN
A. The Plan is dependent upon the following four criti-
cal substantive consolidations:
1. the assets and Liabilities of Devco, Devco GP,
Equityco, Equity GP, U.S. Finco and O&Y Finco are substantively
consolidated;
2. the assets and Liabilities of Realty Corp.,
Baden and OYREUSA are substantively consolidated;
3. the assets and Liabilities of Liberty Plaza Co.,
OLP Co. and Trinity Place Co. are substantively consolidated;
and
4. the assets and Liabilities of 245 Park Co., 245
Holding LP and 245 Corp. are substantively consolidated.
B. Substantive Consolidation of Consolidated Devco
Entities.
1. The Court finds that a strong interrelationship
exists among the Consolidated Devco Entities and that substan-
tive consolidation of such Entities is appropriate and proper.
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a. Common Management. Historically, the corporate
general partners of Devco, Equityco, U.S. Finco and O&Y Finco
have shared a common board of directors and executive officers.
Moreover, the day-to-day decision-making responsibilities of
these Entities have been centralized in one management team.
(Simon Affidavit, | 23).
b. Common Employees. In addition to common manage-
ment, all the employees retained by the Consolidated Devco
Entities, with the exception of certain building-level employ-
ees, are employees of Devco or Devco GP. Moreover, each of the
Consolidated Devco Entities uses common professionals. There
is a single in-house counsel for these Entities. Each of the
Consolidated Devco Entities has used the same accounting firm,
the same law firms, the same appraiser for current value finan-
cial statements, the same budgeting system, and the same
marketing force. (Id.).
c. Common Business. Both Devco and Equityco share
a common business: owning, operating and leasing large,
first-class, commercial office buildings that are substantially
leveraged and generally have outside partners. Originally,
only Devco was in the development business. Equityco, however,
became a critical component of that development business.
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Additionally, Devco and Equityco have historically followed
common strategies in terms of leasing space and financing
projects. Both Devco and Equityco have common directors of
leasing, property management and financial reporting. (Id.)
d. Cash Management System. Except for property
owning partnerships that had unaffiliated partners, Cash was
historically centralized and consolidated within Devco,
Equityco, U.S. Finco and O&Y Finco. The primary device for
moving Cash among the various Entities was U.S. Finco (and for
certain Equityco Entities, O&Y Finco). Cash distributed out of
the property-owning partnerships to Equityco or Devco, or com-
ing from other borrowers to Equityco or Devco or to the part-
ners of Equityco or Devco, generally was moved into and through
U.S. Finco (and O&Y Finco) to meet the Cash requirements of the
O&Y (U.S.) enterprise as a whole. (Id.)
e. Intercompany Indebtedness. As a result of the
consolidated Cash management system described above, loans were
made from the property-owning partnerships to U.S. Finco or O&Y
Finco in the ordinary course of business. Once funds were in
U.S. Finco or O&Y Finco, monies were moved where necessary --
including repaying a loan incurred by a different O&Y (U.S.)
Entity. (Id.)
<PAGE>
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f. Books and Records. Given the multiple relation-
ships of all O&Y Affiliates and U.S. Finco and O&Y Finco, cer-
tain of the intercompany balances were periodically set off to
keep them down to a manageable level. This setoff was driven
by many considerations and, prior to 1992, generally occurred
every fiscal year. As a result of such transactions, a cumula-
tive record which would identify each and every intercompany
transaction would be onerous and burdensome for the Debtors to
recreate. (Id.)
g. Common Ownership and Enterprise Control. In
many instances, decisions regarding which O&Y (U.S.) Entities
pledged collateral to secure the obligations of the Entities
owning properties were driven by the financing demands of the
overall enterprise. Frequently, the credit support of Devco,
Equityco and Finco were used interchangeably. For example,
with respect to 1999 Bryan Street, a property in Texas, Devco
owned the partner interest in such property but Equityco was
obligated on a master lease for the entire building. Simi-
larly, with respect to the Club Loan, Devco, Equityco and U.S.
Finco all pledged collateral to support the loan. Addition-
ally, JMB had both Devco and Equityco as guarantors on its
partnership interest at 125 Broad, and 320 Park Avenue, an
Equityco-owned property, had its debt obligations guaranteed by
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Devco and supported by Devco. With respect to the California
and Portland properties, Equityco guaranteed certain obliga-
tions of Devco. Also, the partners of U.S. Finco are Equityco,
Devco and Devco GP. Thus, the Consolidated Devco Entities
operated as a single economic Entity in many instances without
regard to which legal Entity owned a particular interest in
property. (Id.)
2. No party in interest has objected to the sub-
stantive consolidation of the Consolidated Devco Entities.
3. The Court finds that unsecured creditors dealt
with the Consolidated Devco Entities as a single economic unit
and did not necessarily rely on their separate identity in
extending credit.
4. The Court finds that the affairs of the Consoli-
dated Devco Entities are so entangled that consolidation will
benefit the credit or constituents of the Consolidated Devco
Entities as a whole.
5. The Court finds that there was a substantial
commingling of assets and business functions among the Consoli-
dated Devco Entities.
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6. The Court finds that there is a unity of inter-
est and ownership among the Consolidated Devco Entities.
C. Substantive Consolidation of Consolidated
Realty Corp. Entities.
1. The Court finds that, based on the history of
the Consolidated Realty Corp. Entities set forth below, which
includes a common management, a common business, the
intercompany indebtedness existing among these Entities, and
the common ownership and enterprise control among these Enti-
ties, a strong interrelationship exists among the Consolidated
Realty Corp. Entities and that substantive consolidation of
such Entities is appropriate and proper.
a. History of Realty, OYREUSA and Baden. Each
of Baden and OYREUSA was created in June 1984 as a subsidiary
of Realty Corp. (which at that time was known as OYDL) in con-
nection with a major internal reorganization of O&Y (U.S.).
OYREUSA and Baden were created to hold and liquidate, or other-
wise dispose of, various ventures, assets, properties and
interests that were not part of, or related to, the large com-
mercial office building business ("Other O&Y (U.S.) Assets") of
the U.S. Operations and to return the recoverable investment
capital to Realty Corp. There was a substantial overlap of the
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officers as among Realty Corp., OYREUSA and Baden, including
Paul and Albert Reichmann, Michael Dennis, Keith Roberts,
Gordon Hendry and, on a special venture basis, Gary Goodman and
others. Each of these individuals operated primarily from the
Realty Corp. offices in Toronto. OYREUSA was capitalized by a
$69,000,000 Cash contribution from Realty Corp. and bank loans
of $200,000,000 that were provided by CIBC ($80,000,000), Bank
of Nova Scotia ($60,000,000) and Bank of Montreal
($60,000,000), in arrangements made by the Canadian-based
officers of Realty Corp. through their contacts with these
Canadian lenders. In addition, Realty Corp. provided letters
of comfort or "keep-wells" to such banks regarding the repay-
ment of these loans by OYREUSA. In turn, OYREUSA capitalized
Baden with $270,000,000 in Cash which was used to purchase the
Other O&Y (U.S.) Assets for their book value of approximately
$300,000,000, leaving Equityco with a contribution of
$30,000,000 in connection with the sale of the Other O&Y (U.S.)
Assets, which it deemed made by its parent, the
predecessor-in-interest to U.S. Holdings. (Simon Affidavit,
Section 28).
b. Baden performed substantially below its
initial expectations and was unable to return any Cash to
OYREUSA or Realty Corp., and instead was a consumer of Cash and
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revenues to sustain its own operations. These developments
required Realty Corp. to repay the Canadian bank loans and con-
tinue to support the cost of maintaining the Baden capital
recovery program through continuing support to OYREUSA for
Baden's expenses. (Id.)
c. Other OYREUSA/Realty Connections. Baden
has been a net consumer of capital from the U.S. Operations
throughout its history, dedicated to the resolution of the
investment in the Other O&Y (U.S.) Assets. Baden was the pri-
mary focus of OYREUSA, although from time to time OYREUSA per-
formed other functions for Realty Corp. (Id.) The overwhelm-
ing majority of Claims filed against OYREUSA and Baden were
filed as undetermined and appear to arise from contingencies or
litigation having little or no connection to the creditworthi-
ness of either or both of OYREUSA or Baden. (Id.)
2. No party in interest has objected to the sub-
stantive consolidation of the Consolidated Realty Corp.
Entities.
3. The Court finds that creditors dealt with the
Consolidated Realty Corp. Entities as a single economic unit
and did not necessarily rely on their separate identity in
extending credit.
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4. The Court finds that the affairs of the Consoli-
dated Realty Corp. Entities are so entangled that consolidation
will benefit the creditor constituents of the Consolidated
Realty Corp. Entities as a whole.
5. The Court finds that there was a substantial
commingling of assets and business functions among the Consoli-
dated Realty Corp. Entities.
6. The Court finds that there is a unity of inter-
est and ownership among the Consolidated Realty Corp. Entities.
D. Substantive Consolidation of Consolidated OLP
Entities and the Consolidated 245 Entities.
1. The Court finds that a strong interrelationship
exists among the Consolidated OLP Entities. Similarly, the
Court finds that substantial interrelationship exists among the
Consolidated 245 Entities and that substantive consolidation is
appropriate and proper for such entities.
a. Common Ownership of One Liberty
Plaza/245 Park Avenue.
The parcel of real property located at One Lib-
erty Plaza is wholly-owned by the three Consolidated OLP Enti-
ties. Similarly, the parcel of real property located at 245
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Park Avenue is owned directly and indirectly by, among others,
the Consolidated 245 Entities. (Simon Affidavit, | 32).
b. Common Mortgage Indebtedness. The inter-
ests of each of the Consolidated OLP Entities and Consolidated
245 Entities in OLP and 245 Park Avenue, respectively, are sub-
ject to the applicable mortgage debt that encumbers such Core
Properties. (Id.).
c. Creditor Reliance. The Consolidated 245
Entities were created by Equityco in connection with an inter-
nal restructuring and were virtually unknown or invisible to
any creditor other than the secured lenders holding the mort-
gage on 245 Park Avenue and certain holders of the Club Loan.
Similarly, the Consolidated OLP Entities have been invisible to
all creditors dealing with One Liberty Plaza except for Sanwa,
as mortgagee. The Debtors do not believe that creditors relied
on the separate credit of any of the Consolidated OLP Entities
or the Consolidated 245 Entities. (Id.).
d. Common Management and Employees. Each of
the Consolidated OLP Entities and Consolidated 245 Entities
share common officers. (Id.).
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e. Financial Statements. Historically, the
Debtors have consistently issued consolidated financial state-
ments with respect to the Consolidated OLP Entities and the
Consolidated 245 Entities. In addition, on an annual basis,
the Consolidated OLP Entities and the Consolidated 245 Enti-
ties, respectively, submit consolidated income and expense
reports to the City of New York for tax certiorari purposes.
2. No party in interest has objected to the sub-
stantive consolidation of the Consolidated OLP Entities or the
Consolidated 245 Entities.
3. The Court finds that the creditors of the Con-
solidated OLP Entities and the Consolidated 245 Entities,
respectively, dealt with such consolidated entities as a single
economic unit, and did not necessarily rely on their separate
identity in extending credit.
4. The Court finds that the affairs of the Consoli-
dated OLP Entities and the Consolidated 245 Entities, respec-
tively, are so entangled that consolidation will benefit the
creditor constituents of the Consolidated OLP Entities and the
Consolidated 245 Entities as a whole.
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5. The Court finds that there was a substantial
commingling of assets and business functions among the Consoli-
dated OLP Entities and the Consolidated 245 Entities,
respectively.
6. The Court finds that there is a unity of inter-
est and ownership among the Consolidated OLP Entities and the
Consolidated 245 Entities, respectively.
E. The Intercompany Claims Settlement.
1. As more fully set forth in the Plan, the Plan
provides for a settlement of all Claims held by the Debtors
and/or any Wholly-Owned Affiliate and/or Controlled Affiliate
against any other Debtor and/or Wholly-Owned Affiliate and/or
Controlled Affiliate (the "Intercompany Claims Settlement").
The Intercompany Claims Settlement is a natural and logical
conclusion from the four substantive consolidations to be
effectuated under the Plan, and is supported by the same facts
that support each of the substantive consolidations under the
Plan. (Plan, Section 4.1; Simon Affidavit, | 48).
2. The Intercompany Claims Settlement is an impor-
tant component of the Plan. Without it, the Debtors would have
to expend significant time and expense to sort through the
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myriad intercompany Claims between the Debtors and the O&Y
Affiliates to determined the priority and allowability of each
such Claim. (Simon Affidavit, | 49).
3. Based on the facts that warrant each of the pro-
posed substantive consolidations, the Intercompany Claims
Settlement is fair and reasonable and in the best interests of
the Debtors' estates and creditors. (Simon Affidavit, | 50).
VI.
COMPLIANCE WITH THE REQUIREMENTS OF
SECTION 1129 OF THE BANKRUPTCY CODE
A. Section 1129(a)(1) -- Compliance of the Plan
with Applicable Provisions of the Bankruptcy
Code.
1. The Court finds that the Plan satisfies all the
applicable provisions of the Bankruptcy Code.
2. Section 1123(a)(1) -- Designation of Claims
and Interests
Section 6 of the Plan designates classes of Claims
against and Equity Interests in the various Debtors other than
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Administrative Expense Claims and Priority Tax Claims.11
(Plan, Section 6).
3. Section 1122(a) -- Classification
Section 6 of the Plan separately classifies Claims
against and Equity Interests in the various Debtors together
with Claims or Equity Interests that are substantially similar
to the other Claims or Equity Interests of such class. (Plan,
Section 6; Beisner Affidavit, | 7).
4. Section 1122(b) -- Administrative Convenience
Class
a. Section 5.3 of the Plan provides each
holder of a Claim in Consolidated Devco Class 11 with the
option of electing to have its Claim treated as a Consolidated
Devco Convenience Claim. (Plan, Section 5.3).
b. Section 8.6 of the Plan provides each
holder of a Claim in Consolidated Realty Class 6 with the
option of electing, provided that such holder qualifies to so
elect, to have its Claim treated as a Realty Corp. Cash-Out
Claim. (Plan, Section 8.6).
_________________________
11 Classes of Administrative Expense Claims and Priority Tax
Claims are not required to be designated pursuant to sec-
tion 1123(a)(1) of the Bankruptcy Code.
<PAGE>
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5. Section 1123(a)(2) -- Specification of
Impaired Classes
The Plan identifies impaired classes of Claims and
Equity Interests and provides for their treatment. Section
17.2 of the Plan identifies each of Consolidated Devco Class 1,
Consolidated Realty Corp. Class 1, SF Holdings Class 1, Devco
Canada Class 1, Equity Canada Class 1, Consolidated OLP Class
1, Tower A Co. Class 1, Tower Corp. Class 1, Consolidated 245
Class 1 and Tower B Leaseco Class 1 as unimpaired, and such
classes are conclusively presumed to accept the Plan pursuant
to section 1126(f) of the Bankruptcy Code. Section 17.1 of the
Plan provides that each of Tower Corp. Class 5 and Tower B
Leaseco Class 5 will receive no distribution under the Plan
and, accordingly, each such class of Claims and/or Equity
Interests is deemed to have not accepted the Plan pursuant to
section 1126(g) of the Bankruptcy Code. Each of the remaining
classes is identified under section 17.1 of the Plan as
impaired. (Plan, Sections 17.1 and 17.2).
6. Section 1123(a)(2) -- Specification of
Treatment of Impaired Claims and Interests
Sections 7, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of
the Plan specify the treatment of each impaired class of Claims
and Equity Interests. (Plan, Sections 7-16).
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7. Section 1123(a)(4) -- Same Treatment Within
Each Class Unless Agreement to Different
Treatment
With respect to each class of Claims and Equity
Interests under the Plan other than Consolidated Devco Class 11
and Consolidated 245 Class 8, the Plan provides the same treat-
ment for each Claim or Equity Interest in each such class.
Consolidated Devco Class 11 has two subclasses: Subclass
7.11.1 provides the treatment for the holders of Allowed
Unaffiliated Unsecured Claims, and Subclass 7.11.2 provides the
treatment for Allowed Co-Proponent Unsecured Claims. In
respect of Consolidated Devco Class 11, the Co-Proponents have
agreed to accept less favorable treatment in order to provide
the distributions to holders of Allowed Unaffiliated Unsecured
Claims. (Beisner Affidavit, | 14). Consolidated 245 has two
subclasses: Subclass 15.8.1 provides the treatment for JMB's
Equity Interest in 245 Park Co., and Subclass 15.8.2 provides
the treatment for the Equity Interests of 245 Holding LP, 245
Corp. and Equityco in 245 Park Co. (Simon Affidavit, | 15).
Each of JMB and 245 Holding LP, 245 Corp. and Equityco have
agreed to their respective treatments in Consolidated 245
Class 8. (Simon Affidavit, | 15).
<PAGE>
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8. Section 1123(a)(5) -- Means of Implementation
a. Section 18 of the Plan and the Restructur-
ing Transactions described in Schedule 18 to the Plan provide
adequate means for implementing the Plan. These provisions
relate to, among other things: (i) the Restructuring Transac-
tions; (ii) the distribution of property of the Debtors'
estates to those having an interest in such property; and
(iii) the amendment to any one or more of the Debtors' certifi-
cates or articles of incorporation, by-laws or codes of regula-
tions or other similar constituent documents and the formula-
tion of any such documents for Entities to be created under the
Plan, (iv) the Tower D Financing, and (v) the Tower B Financ-
ing. (Plan; Schedule 18 to Plan).
b. Section 23.2 of the Plan provides adequate
means for implementing the Plan relating to the revesting of
assets in Newco LP free and clear of all Liens, Claims and
encumbrances. (Id.) Each of the settlements in section 4 of
the Plan and each of the provisions in sections 7 through 16 of
the Plan, relating to the treatment of Secured Claims, together
with sections 23.2 and 24 of the Plan, provide adequate means
for implementing the Plan relating to (i) the satisfaction
and/or modification of any existing liens, and (ii) the
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refinancing or curing of defaults and extension of the Debtors'
mortgage indebtedness. (Id.).
9. Section 1123(a)(6) -- Prohibition Against the
Issuance of Nonvoting Equity Securities
a. Each of the Class A Interests in Newco LP,
the Class B Interests in Newco LP, and the Liquidating Corp.
Shares issued under the Plan entitle the holders thereof to the
same voting rights, respectively. Certain Entities to be orga-
nized under the Plan will be organized and exist for the pur-
pose of implementing a bankruptcy-remote structure for certain
mortgage lenders relating to the Core Properties. (Plan, p.
157). The Plan distributes the Equity Interest in such Enti-
ties directly or indirectly to (a) Newco LP and (b) the mort-
gage lender for the particular Core Property. (Plan, Section
3). The Equity Interests issued to Newco LP and each mortgage
lender possess an appropriate allocation of voting power.
b. Newco LP and each of the following Debtors
are partnerships: Devco, Equityco, U.S. Finco, Tower A Co.,
245 Holding LP, O&Y Finco, 245 Park Co., OLP Co., Liberty Plaza
Co., Trinity Place Co., and Tower B Leaseco. (Debtors' Chapter
11 Petitions; Plan).
<PAGE>
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10. Section 1123(a)(7) -- Selection of Officers
and Directors
Section 18.1 of the Plan provides that Newco LP will
be governed by Managing GP, which will hold a 1% general part-
ner interest in Newco LP. The business and affairs of Managing
GP will be managed by and under the direction of its board of
directors, which will have ten (10) members. (Plan, Section
18.4.2). The Chief Executive Officer of Managing GP will be a
member of this board. (Plan, Section 18.1.4). The certificate
of incorporation of Managing GP will provide for cumulative
voting in any election of directors. (Plan, Section 18.1.4).
In addition, the Co-Proponents (or Affiliates designated by
them) will become stockholders of Managing GP on the Effective
Date and will enter into a stockholders' agreement setting
forth, among other things, the rights of such parties with
respect to the nomination and election of directors of Managing
GP. (Plan, Section 18.1.4).
11. Section 1123(b)(1) -- Impairment
Section 17 of the Plan impairs or leaves unimpaired,
as the case may be, each class of Claims or Equity Interests.
(Plan, Section 17.1).
<PAGE>
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12. Section 1123(b)(2) -- Executory Contracts and
Unexpired Leases
a. Section 21 of the Plan provides for the
assumption or rejection of the executory contracts and unex-
pired leases of the Debtors. (Plan, Section 21).
b. The Debtors and the Co-Proponents have
engaged in a thorough review of the executory contracts and
unexpired leases to which any of the Debtors is a party.
(Simon Affidavit, | 160).
c. After a thorough review of the executory
contracts and unexpired leases by the Debtors and the
Co-Proponents, in accordance with section 21 of the Plan, on
September 4, 1996, and as amended on September 11, 1996, the
Debtors filed with the Bankruptcy Court Schedule 21.1 to the
Plan, which schedule provides a list of executory contracts and
unexpired leases to be assumed under the Plan. (Plan, Section
21; Realty Corp. Docket No. 1892).
d. In addition, Merrill Lynch on the one hand,
and the Debtors and certain O&Y Affiliates on the other, have
reviewed the executory contracts and unexpired leases to which
Merrill Lynch is a party, and will upon the Effective Date exe-
cute an agreement which identifies those executory contracts
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and unexpired leases to be assumed by the Debtors and certain
O&Y Affiliates (the "Surviving Documents Agreement"). The
agreements listed in the Surviving Documents Agreement will
continue in full force and effect and survive consummation of
the Plan. All other executory contracts or unexpired leases
between Merrill Lynch and the Debtors and certain O&Y Affili-
ates which are not referenced in the Surviving Documents Agree-
ment, or appear on schedule 21.1 to the Plan, as such schedule
has been amended from time to time or on schedule 10.1 to the
Tower B Co. Plan are rejected and Merrill Lynch has consented
to such rejections.
e. The Debtors' Pension Plan was amended prior
to confirmation of the Plan. (Simon Affidavit, | 166). Newco
LP is assuming the Pension Plan as amended. (Stipulation and
Order dated September 23, 1996 Withdrawing the Claims of the
Pension Benefit Guaranty Corporation).
f. All executory contracts and unexpired
leases not being assumed by the Debtors under the Plan are
rejected under the Plan because the Debtors have made a deter-
mination that they would impose an onerous burden on the Debt-
ors' estates. (Simon Affidavit, | 167).
<PAGE>
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13. There are no defaults under any of the executory
contracts and unexpired leases being assumed under the Plan, or
any defaults have been or will be cured. (Beisner Affidavit,
| 44).
14. Section 1123(b)(3) -- Retention, Enforcement
and Settlement of Claims Held by the Debtors
a. Section 4 of the Plan sets forth provisions
for the settlement of various Claims. A detailed discussion of
each of the Plan Settlements is set forth in these Findings of
Fact, the Plan and the Disclosure Statement. (Plan, Section 4;
Disclosure Statement, Sections II(D) and V).
b. Section 24.5 of the Plan provides that, as
of the Effective Date, the Debtors waive the right to prosecute
and release, on behalf of themselves and their respective
estates, any avoidance or recovery actions under sections 542,
544, 545, 547, 548, 549, 550, 551 and 553 of the Bankruptcy
Code or any other Causes of Action, or rights to payment of
Claims that belong to or could have been raised by or on behalf
of the Debtors or Debtors in Possession or their respective
estates, other than or in connection with any such actions that
were commenced on or before the Effective Date (collectively,
"Plan Causes of Action"). Newco LP, as a successor to the
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Debtors, shall retain and may prosecute any such Plan Causes of
Action that may be pending on the Effective Date. However,
nothing in section 24.5 of the Plan shall be deemed to waive
any right of any Debtor or Debtor in Possession, Newco LP or
Liquidating Corp. to assert avoidance or recovery actions under
sections 542, 544, 545, 547, 548, 549, 550, 551 and 553 of the
Bankruptcy Code or any other Causes of Action defensively,
including by way of setoff, recoupment or counterclaim. (Plan,
Section 24.5).
c. As of the Confirmation Hearing, there are
no pending Plan Causes of Action. (Simon Affidavit, | 14).
15. Section 1123(b)(6) -- Other Provisions not
Inconsistent with Applicable Provisions of
the Bankruptcy Code
The Plan includes additional appropriate provisions
that are not inconsistent with applicable provisions of the
Bankruptcy Code. (Plan).
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B. Section 1129(a)(2) -- Compliance with Applicable
Provisions of the Bankruptcy Code.
1. The Debtors have complied with the operating
guidelines and financial reporting requirements enacted by the
Office of the United States Trustee on January 15,1992 by
(i) timely filing all operating reports and consolidated finan-
cial statements, (ii) opening up new bank accounts following
each of the Debtors' respective Petition Date, and
(iii) maintaining and providing proof of insurance. (Beisner
Affidavit, | 45).
2. The Debtors have paid all statutory fees
required to be paid during the Reorganization Cases and on a
cumulative basis filed all fee statements required to be filed.
(Beisner Affidavit, | 46; Realty Corp. Docket No. 1861).
3. The Debtors have timely filed with the Bank-
ruptcy Court all Schedules, lists of executory contracts and
statements of financial affairs. (Beisner Affidavit, | 45).
C. Section 1129(a)(3) -- Proposal of the Plan
in Good Faith.
1. The Debtors, the Co-Proponents and the Examiner
have been closely involved in all negotiations regarding the
Plan.
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2. The Independent Board has been extensively
briefed about the terms of the Plan, including the various ver-
sions thereof, and has authorized and approved the Plan in
accordance with the procedures prescribed by the Protocol.
Indeed, the Independent Board has been closely involved in the
development of the Plan. (Zuccotti Affidavit, || 14, 77 and
78).
3. The Debtors have complied with all provisions of
the Protocol.
4. The Court has examined the totality of the cir-
cumstances surrounding the formulation of the Plan. The Plan
is based on extensive arm's-length negotiations among the Plan
Proponents, Apollo, the Creditors' Committee and many other
parties in interest and was formulated with the assistance of
the Examiner. (Zuccotti Affidavit, | 102; Simon Affidavit,
| 11).
5. The Plan has been accepted by holders of Claims
in the following classes:
a. Consolidated Devco Classes 2, 3, 4, 5, 6,
8, 9, 10 and 11.
b. Consolidated Realty Classes 2, 3, 4, 5 and
6.
c. SF Holdings Class 2.
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d. Devco Canada Class 3.
e. Equity Canada Classes 2 and 3.
f. Consolidated OLP Classes 2, 3 and 5.
g. Tower A Co. Classes 2, 3, 4, and 5.
h. Tower Corp. Class 2.
i. Consolidated 245 Classes 2, 3, 4, 5, 6 and
7.
j. Tower B Leaseco Classes 2, 3 and 4.
6. The Plan has been accepted by holders of Equity
Interests in the following classes:
a. Consolidated Devco Class 12.
b. Consolidated Realty Class 7.
c. SF Holdings Class 3.
d. Devco Canada Class 4.
e. Equity Canada Class 4.
f. Consolidated OLP Class 6.
g. Tower A Co. Class 6.
h. Consolidated 245 Class 8.
7. The votes to accept the Plan described above
demonstrate the informed decision of holders of Claims against
and Equity Interests in the Debtors that the Plan is in their
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best interests and maximizes distributions available to them.
(Stevenson Affidavit; O&Y Voting Tabulation Reports).
8. On the basis of the evidence presented at the
Confirmation Hearing, this Court finds that the Plan has been
proposed with the legitimate and honest purpose of reorganizing
the Debtors' businesses and affairs and to maximize the value
available to creditors and Equity Interest holders. (Zuccotti
Affidavit, | 5; Simon Affidavit, | 12).
D. Section 1129(a)(4) -- Bankruptcy Court Approval
of Certain Payments as Reasonable
1. Pursuant to Section 5 of the Plan, all payments
to professionals will be (i) subject to review and approval by
this Court upon final application pursuant to sections 327,
328, 330, 331, 503(b) or 1103 of the Bankruptcy Code, or
(ii) paid in accordance with prior orders of this Court approv-
ing the retention of certain professionals. (Plan, |
Section 5; Orders approving retention of Lazard Freres and
Ahern & Partners; Realty Corp. Docket Nos. 998 and 955).
2. The employment contracts of the officers of the
Debtors (the "Employment Contracts") have been thoroughly liti-
gated and carefully examined by the Court, the Examiner and the
Creditors' Committee, and are a matter of public record.
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(Simon Affidavit, | 165). The Employments Contracts and the
compensation provided therein have been approved by this Court.
(Id.).
E. Section 1129(a)(5) -- Disclosure of Identity and
Affiliations of Proposed Management, Compensation
of Insiders and Consistency of Management Proposals
with the Interests of Creditors and Public Policy
1. The Debtors and the Co-Proponents have disclosed
in the Disclosure Statement, and in evidence presented at the
Confirmation Hearing, the identity of the individuals that have
been selected to hold positions with the Debtors or their suc-
cessors after confirmation of the Plan, and have shown that the
service of such individuals is consistent with the interests of
creditors and Equity Interest holders and with public policy.
(Zuccotti Affidavit, || 46, 50; Nordholm Affidavit, | 4).
2. The Debtors have disclosed in the Disclosure
Statement, and in evidence presented at the Confirmation Hear-
ing, the identity of any insider who has been identified to be
employed or retained by Newco LP and the nature of any compen-
sation for such insider. (Id.)
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F. Section 1129(a)(6) -- Approval of Rate Changes.
The Plan does not provide for any changes in rates
that require regulatory approval of any governmental agency.
(Plan).
G. Section 1129(a)(7) -- Best Interests of Creditors.
1. Based on the evidence presented at the Confirma-
tion Hearing and the Financial Appendix to the Disclosure
Statement, with respect to each impaired class of Claims or
Equity Interests for each Debtor, each holder of a Claim or
Equity Interest will receive or retain under the Plan on
account of such Claim or Equity Interest property of a value,
as of the Effective Date, that is not less than the amount that
such holder would receive or retain if the debtor were liqui-
dated on the Effective Date under chapter 7 of the Bankruptcy
Code. (Simon Affidavit, | 146; Ahern Affidavit, | 7-21).
H. Section 1129(a)(8) -- Acceptance of the Plan
by Each Impaired Class.
1. All impaired classes of Claims and Equity Inter-
ests, other than Consolidated Devco Class 7, and those classes
that are deemed to reject the Plan pursuant to section 1126(g)
of the Bankruptcy Code, have either voted to accept the Plan or
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are not impaired under the Plan. (Stevenson Affidavit, | 39;
O&Y Voting Tabulation Reports).
2. Sterling National Bank & Trust Company of New
York ("Sterling National"), the only holder of a Claim in Con-
solidated Devco Class 7, did not vote on the Plan and, thus,
such class has not accepted the Plan.
3. Each of Tower Corp. Class 5 and Tower B Leaseco
Class 5 is conclusively deemed to have rejected the Plan pursu-
ant to section 1126(g) of the Bankruptcy Code. (Plan,
Section 17.2).
4. Each of the unimpaired classes of Claims and
Equity Interests under the Plan and each holder of a Claim or
Equity Interest in each such class is conclusively presumed to
have accepted the Plan, and solicitation of acceptance with
respect to each such class is not required. (See 11 U.S.C.
Section 1126(f)).
I. Section 1129(a)(9) -- Treatment of Claims Entitled
to Priority Pursuant to Section 507(a) of the
Bankruptcy Code
1. Section 1129(a)(9) of the Bankruptcy Code pro-
vides for certain mandatory treatment of claims entitled to
priority under the Bankruptcy Code. Section 5.1 of the Plan
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provides that each holder of an Administrative Expense Claim
will be paid in Cash (a) in full upon the later of (i) the
Effective Date and (ii) the date that is ten (10) Business Days
after an order of the Bankruptcy Court with respect to such
Administrative Expense Claims becomes a Final Order or (b) upon
such other terms as may be mutually agreed upon between such
holder of an Administrative Expense Claim and any of the Debt-
ors. As required by section 1129(a)(9)(B) of the Bankruptcy
Code, sections 7.1, 8.1, 9.1, 10.1, 11.1, 12.1, 13.1, 14.1,
15.1 and 16.1 of the Plan provide that each holder of a Pri-
ority Non-Tax Claim that is an Allowed Claim will be paid in
Cash in full on the Effective Date. Consistent with section
1129(a)(9)(C) of the Bankruptcy Code, section 5.2 of the Plan
provides that, on the Effective Date: (a) with respect to each
Debtor or substantively consolidated group of Debtors (other
than Tower B Leaseco), each holder of an Allowed Priority Tax
Claim shall be distributed on account of such Allowed Priority
Tax Claim a Tax Note from such Debtor or substantively consoli-
dated group of Debtors, or the successor(s) in interest
thereto, that complies with the requirements of section
1129(a)(9)(C) of the Bankruptcy Code or such other, more favor-
able treatment as the Debtors in their sole discretion shall
elect; and (b) each holder of an Allowed Priority Tax Claim
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against Tower B Leaseco shall receive a payment in Cash equal
to the amount of such Allowed Priority Tax Claim. (Plan,
Section 5.2).
2. The Debtors have sufficient Cash to fund such
payments. (Beisner Affidavit, | 50).
J. Section 1129(a)(10) -- Acceptance by at Least
One Impaired Class
1. Each of Consolidated Devco Classes 2, 3, 4, 5,
6, 8, 9, 10, 11 and 12, are impaired under the Plan and have
voted to accept the Plan. (Stevenson Affidavit; | 33, O&Y Vot-
ing Tabulation Report).
2. Each of Consolidated Realty Corp. Classes 2, 3,
4, 5, 6 and 7 are impaired under the Plan and has voted to
accept the Plan. (Id.).
3. Each of SF Holdings Classes 2 and 3 is impaired
under the Plan and has voted to accept the Plan. (Id.).
4. Each of Devco Canada Classes 3 and 4 is impaired
under the Plan and has voted to accept the Plan. (Id.).
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5. Each of Equity Canada Classes 2, 3 and 4 is
impaired under the Plan and has voted to accept the Plan.
(Id.).
6. Each of Consolidated OLP Classes 2, 3, 5 and 6
is impaired under the Plan and has voted to accept the Plan.
(Id.).
7. Each of Tower Co. Classes 2, 3, 4, 5 and 6 is
impaired under the Plan and has voted to accept the Plan.
(Id.).
8. Tower Corp. Class 2 is impaired under the Plan
and has voted to accept the Plan. (Id.).
9. Each of Consolidated 245 Classes 2, 3, 4, 5, 6,
7 and 8 are impaired under the Plan and have voted to accept
the Plan. (Id.).
10. Each of Tower B Leaseco Classes 2, 3 and 4 is
impaired under the Plan and has voted to accept the Plan.
(Id.).
11. In each of the 10 plans incorporated in the
Plan, there exists at least one impaired class of Claims that
has voted to accept the plan without taking into account the
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votes of any insider. (Stevenson Affidavit, | 40; O&Y Voting
Tabulation Reports).
K. Section 1129(a)(11) -- Feasibility of the Plan
1. On the basis of information presented in the
Plan, at the Confirmation Hearing, in the various affidavits in
support of confirmation of the Plan, and as detailed in the
Disclosure Statement, this Court finds that confirmation of the
Plan is not likely to be followed by the liquidation of, or the
need for further financial reorganization of, any of the Debt-
ors, except to the extent that such liquidation is required by
or contemplated under the Plan. (Ahern Affidavit, | 21).
2. Patrick Ahern has reviewed the cash flow reports
of the Reorganized Debtors and determined that the Reorganized
Debtors can adequately meet their projected Cash requirements
and their obligations under the Plan. (Id.)
3. Assuming the Tower D Financing and the
Co-Proponents' Capital Infusion, the Debtors have sufficient
Cash on hand to fund the Cash requirements on and after the
Effective Date, including the payment of Administrative Expense
Claims and all other required payments and the funding of
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reserves to be established under the Plan. (Beisner Affidavit,
| 50).
4. Assuming (i) the effectiveness of the Plan, and
(ii) the amount of the Convertible Note on the Effective Date
is $27,701,043, the reorganization value of the Debtors is
$545,000,000 (the "Newco Reorganization Value"). (Ahern Affi-
davit, | 15).
L. Section 1129(a)(12) -- Payment of Bankruptcy Fees
Section 26.1 of the Plan provides that all fees pay-
able pursuant to section 1930, title 28, United States Code,
shall be paid by Newco LP on the Effective Date. (Beisner
Affidavit, | 49).
M. Section 1129(a)(13) -- Retiree Benefits
Section 26.2 of the Plan provides that on and after
the Effective Date, pursuant to section 1129(a)(13) of the
Bankruptcy Code, Newco LP or its designee shall continue to pay
all retiree benefits (within the meaning of section 1114 of the
Bankruptcy Code), at the level established in accordance with
subsection (e)(1)(B) or (g) of section 1114 of the Bankruptcy
Code, at any time prior to the Confirmation Date for the dura-
tion of the period that any of the Debtors has obligated itself
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to provide such benefits to any Retiree under any Retiree Bene-
fit Plan. (Plan, Section 26.2).
N. Section 1129(b) -- Confirmation of the Plan Over
the Nonacceptance of Certain Impaired Classes
1. The holders of Claims and Equity Interests in
each of Tower Corp. Class 4 and Tower B Leaseco Class 5 are
conclusively deemed to have rejected the Plan pursuant to sec-
tion 1126(g) of the Bankruptcy Code. (Plan, Section 17.2).
2. In addition, the holder of Claims in Consoli-
dated Devco Class 7 has failed to vote on the Plan. No other
classes or Claims or Equity Interests have voted to reject the
Plan or failed to vote to accept the Plan. (Stevenson Affida-
vit, | 34).
3. No holder of a Claim or Equity Interest junior
to the Claims or Equity Interests in each of Tower Corp.
Class 5 and Tower B Leaseco Class 5 will receive or retain any
property under the Plan on account of such junior Claims or
Equity Interests, and no class of Claims senior to such classes
is receiving more than full payment on account of the Claims or
Equity Interests in such classes. (Plan, Sections 14 and 16).
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4. The obligations owed to Sterling National are
fully secured with Cash and Cash equivalents and any and all of
such obligations currently owed to Sterling National by the
Debtors are being assumed by Newco LP under the Plan. (Plan,
Section 7.7).
5. All holders of Claims or Equity Interests in the
same class under each of the plans incorporated in the Plan are
receiving the same treatment under the Plan, unless such holder
has (i) made an election under the Plan to be treated as a Con-
solidated Devco Convenience Claim or a Realty Corp. Cash-Out
Claim, or (ii) agreed to accept less favorable treatment as in
the case of the Co-Proponents and Entities holding Equity
Interests in 245 Park Co. No holders of Claims have elected to
be treated as a Realty Corp. Cash-Out Claim.
O. Section 1129(d) -- Tax Avoidance
1. No objection has been filed by any governmental
unit or any party in interest alleging that the principal pur-
pose of the Plan is avoidance of taxes or avoidance of the
requirements of section 5 of the Securities Act of 1933, as
amended.
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VII.
DISTRIBUTIONS
A. Distributions Under the Plan. Section 19 of the
Plan provides for the provisions governing distributions under
the Plan, and such provisions are fair and reasonable.
VIII.
PLAN MODIFICATIONS
A. On August 30, 1996, the Plan Proponents filed a
motion seeking approval of modifications to the Plan which
effect certain amendments to certain Plan Settlements and
agreed treatments and resolve certain anticipated objections to
confirmation of the Plan. (Simon Affidavit, | 146). The modi-
fications relate to (a) the Intercompany Settlement, (b) the
Reichmann Settlement, (c) the Equity Interests in the Consoli-
dated Devco Entities, Consolidated Realty Corp., SF Holdings,
Devco Canada and Equity Canada, (d) the treatment of the
Sanwa/OLP Mortgage Loan, the Sanwa/Tower A Mortgage Loan, the
Aetna Mortgage Loan and the DKB Mortgage Loan, (e) the identi-
fication of classes of impaired Claims and Equity Interests,
(f) the means of implementation of the Plan, (g) the executory
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contracts and unexpired leases to be assumed under the Plan,
(h) the conditions precedent to the Confirmation Date and the
Effective Date, (i) the vesting of assets in the Debtors, as
reorganized, (j) the release provisions of the Plan, (k) the
provisions relating to modification of the Plan, (l) the
Restructuring Transactions and (m) the exhibits to the Plan
(the "Original Plan Modifications"). (Simon Affidavit, | 148).
B. The Original Plan Modifications relating to the
Reichmann Settlement only affect the Reichmann Entities and
such Entities have agreed to such modifications. Similarly,
the Original Plan Modifications relating to the treatment of
the Sanwa/OLP Mortgage Loan, the Sanwa/Tower A Mortgage Loan,
the Aetna Mortgage Loan, and the DKB Mortgage Loan only affect
Sanwa, Aetna and DKB, respectively, and have been agreed to by
Sanwa, Aetna and DKB, respectively. The remaining Original
Plan Modifications are either clarifications of language in the
Plan or are required to implement a settlement among the Debt-
ors and Coopers & Lybrand OYDL, Inc./Limited (the "OYDL Settle-
ment"), which settlement was the subject of a separate motion
filed by the Debtors and approved by order of the Court on
September 12, 1996.
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C. Following the filing of the motion relating to
the Original Plan Modifications on August 30, 1996, the Plan
Proponents were required to make certain additional changes to
the Plan relating solely to (a) the treatment of the Aetna
Mortgage Loan, (b) the DKB Mortgage Loan and (c) the Reichmann
Settlement, (d) the IDYL Settlement, and (e) the Release Provi-
sions (the "Supplemental Modifications" and together with the
Original Plan Modifications, the "Plan Modifications"). The
Plan Modifications were presented at the Confirmation Hearing
and will only affect Aetna, DKB, the Reichmann Entities,
Svenska Handelsbanken, Bank Leumi and Coopers & Lybrand OYDL,
Inc./Limited. Each of Aetna, DKB, the Reichmann Entities,
Svenska Handelsbanken, Bank Leumi, Sanwa and Coopers & Lybrand
OYDL, Inc./Limited has consented in writing to the Plan Modifi-
cations. Other than as set forth above, the Plan Modifications
do not adversely change the treatment of the claim of any cred-
itor or the interest of any equity security holder who has not
accepted in writing the Plan Modifications. To the contrary,
the Plan Modifications will clarify existing settlements and
agreed treatments with parties in interest. The Plan Modifica-
tions preserve the Plan, as negotiated, and the rights of all
parties as set forth therein. (Simon Affidavit, | 148).
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IX.
CONDITIONS PRECEDENT TO CONFIRMATION DATE
A. Other than as set forth in the following two
paragraphs, each of the conditions precedent to confirmation of
the Plan that are set forth in section 22.1 of the Plan have
been waived or deemed satisfied by the Plan Proponents. (Simon
Affidavit, | 43; Ahern Affidavit, || 9, 10; Nordholm Affidavit,
| 2).
B. The condition precedent set forth in section
22.1.2 requiring entry of the Confirmation Order will be satis-
fied by entry of this order confirming the Plan.
C. The condition precedent set forth in section
22.1.5 requiring entry of an order confirming the 970 Plan and
the Tower B Co. Plan will be satisfied by entry of the order
confirming the 970 Plan and the Tower B Co. Plan.
X.
MISCELLANEOUS
A. Transfers Under the Plan.
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Transfers under the Plan (collectively, the "Plan
Transfers") consist of the following, all of which are to occur
on or prior to the Effective Date: (i) transfers and grants by
one or more of the Debtors, the 970 Debtors or the debtors
under the Tower B Co. Plan (Tower B Co. or WFC Finco) (collec-
tively, the "Chapter 11 Debtors") and/or to Chapter 11 Debtors,
of ownership interests in and encumbrances affecting the Core
Properties, in connection with the treatments provided in the
Plan, (ii) the Tower D Financing, and (iii) transfers of vari-
ous other assets by Chapter 11 Debtors into Liquidating Corp.,
in each case as the same may be further detailed in amendments
to the Restructuring Transactions on or prior to the Effective
Date.
B. The Plan Transfers Are Governed by the Exemptions
Provided in Section 1146(c) of the Bankruptcy Code
1. The Plan Transfers are necessary to effectuate
the Plan. (Simon Affidavit, | 150).
2. Pursuant to paragraph 44 of the Restructuring
Transactions, as set forth in Schedule 18 of the Plan, the
Tower D Financing requires that Tower D be encumbered by a
mortgage in the amount of approximately $440,000,000.
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3. Pursuant to the Second Amended Plan, the Tower D
Financing was to be implemented by, in part, the amendment,
consolidation, and restatement of Tower D Co.'s existing mort-
gage loan in the principal amount of $250,000,000, and the
acquisition of the mortgagee's interest in such mortgage by the
new secured lender, all in conformity with the Tower D Financ-
ing as provided by the Plan. (Beltram Affidavit, | 3). Fur-
ther, with respect to the balance of the Tower D mortgage to be
given pursuant to the Tower D Financing, the Second Amended
Plan contemplated that Tower D Co. would assume (i) a portion
of the U.S. Finco Mortgages currently encumbering the real
property known as One Liberty Plaza and securing debt owed by
Liberty Plaza Co., a New York limited partnership and a Debtor,
and (ii) the DKB Mortgage Loan currently encumbering the real
property known as 245 Park Avenue and securing debt owed by 245
Park Co., a New York general partnership and a Debtor. The
Second Amended Plan further contemplated that the mortgagees'
positions in such restructured mortgage loans would then be
transferred to the secured lender under the Tower D Financing.
(Beltram Affidavit, | 4).
4. The New York State and New York City mortgage
recording taxes constitute a "stamp tax or similar tax" for
purposes of section 1146(c) of the Bankruptcy Code.
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5. The mortgage that will be delivered and recorded
on Tower D to secure the Tower D Financing constitutes the mak-
ing or delivery of an instrument transferring an interest in
property for purposes of section 1146(c) of the Bankruptcy
Code.
6. Devco has funded and will continue to fund the
costs associated with the Tower D Financing and will control
and effect the consummation of the Tower D Financing because it
is reasonably necessary to consummate the Plan.
7. The Tower D Financing is the only effective
means for the Debtors to realize the full value of their inter-
est in Tower D. (Simon Affidavit, | 154).
8. The Tower D Financing is for the benefit of the
Debtors and their creditors. The Tower D Financing is neces-
sary to fund the required payments to the Debtors' creditors
under the Plan and, to the extent available, provides needed
working capital for the Reorganized Debtors. (Simon Affidavit,
| 152).
9. The Tower D Financing is necessary to achieve a
viable reorganized company. (Simon Affidavit, | 157).
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10. New York State and New York City have no objec-
tion to the application of the exemption of section 1146(c) of
the Bankruptcy Code to the Tower D Financing.
11. Based on the above, the Court finds that, con-
sistent with the requirements of section 1146(c) of the Bank-
ruptcy Code, the Plan Transfers are not subject to taxation
under any state or local law imposing a stamp, transfer or
similar tax, including the New York State Real Estate Transfer
Tax and the New York City Real Property Transfer Tax applicable
to deeds, assignments of leases and interests in real property
and the New York City and New York State Mortgage Recording
Taxes applicable to mortgages.
C. Tower B Equity. After giving effect to the satisfac-
tion of claims arising from the Club Loan secured by pledges of
partnership interests in Tower B of the World Financial Center,
there is no value remaining in the equity of Tower B Co. that
is owned by Devco GP to satisfy any subordinate pledge of
Equity Interests in Tower B Co. given by Devco GP to Svenska
Handelsbanken, as assignee.
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D. Co-Proponent Distributions.
1. Section 3 of the Plan relating to the distribu-
tions to the Co-Proponents is fair and reasonable and the
Co-Proponents are not receiving consideration under the Plan of
a value greater than the Allowed amount of their Claims and
Equity Interests and the Co-Proponents' Capital Infusion.
2. The Co-Proponents have acted in good faith in
negotiating, proposing and voting on the Plan, and the distri-
butions to the Co-Proponents under the Plan are not subject to
disallowance or disgorgement on any basis or for any reason.
CONCLUSIONS OF LAW
I.
JURISDICTION AND VENUE
A. Jurisdiction. Pursuant to sections 1334 and 157,
title 28, United States Code, and the Standing Order of Refer-
ral of Cases to Bankruptcy Judges of District Court Judge Rob-
ert T. Ward dated July 10, 1984, this Court has jurisdiction to
consider the motion of the Debtors and the Co-Proponents
(collectively, the "Plan Proponents") to confirm the Plan. The
Confirmation Hearing is a core proceeding under section
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157(b)(2)(L), title 28, United States Code. The Debtors are
entities eligible for relief under section 109 of the Bank-
ruptcy Code.
B. Venue. The principal place of business of each of
the Debtors is New York, New York. Accordingly, venue in the
Southern District of New York, for the Reorganization Cases was
proper as of the Petition Date pursuant to 28 U.S.C.
Section 1408 and continues to be proper.
II.
NOTICE
A. The Court concludes that the Debtors complied with
the April 23 Scheduling Order, the May 23 Scheduling Order, and
the Disclosure Statement Order, in providing notice of the Dis-
closure Statement Hearing and the Confirmation Hearing in the
method and manner as prescribed in those orders and that all
persons entitled to and required to receive notice of the Dis-
closure Statement Hearing and the Confirmation Hearing pursuant
to the Bankruptcy Code, applicable non-bankruptcy law, and the
Local Bankruptcy Rules have received due, proper and adequate
notice of such hearings and have had an opportunity to appear
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at and be heard at such hearings. Mullane v. Central Hanover
Bank & Trust Co., 339 U.S. 306, 314, (1950).
III.
SETTLEMENTS
A. Pursuant to section 1123(b)(3) of the Bankruptcy Code
and Bankruptcy Rule 9019, all settlements and compromises
incorporated in the Plan pursuant to section 1123(b)(3) are
reasonable, fair and equitable and in the best interests of the
Debtors' estates.
B. This Court is required to make an independent deter-
mination of the fairness to the Debtors and their estates of
each of the settlements embodied in the Plan. See, e.g., Pro-
tective Comm. for Indep. Stockholders of TMT Trailer Ferry,
Inc. v. Anderson, 390 U.S. 414, 424, reh'g denied, 391 U.S. 909
(1968); In re W.T. Grant Co., 699 F.2d 599, 605-06 (2d Cir.),
cert. denied, 464 U.S. 822 (1983).
C. In approving each compromise and settlement of poten-
tial claims, this Court has considered:
1. the balance of the likelihood of success of
claims asserted by the claimants against the
likelihood of success of the defenses or coun-
terclaims possessed by the Debtors;
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2. the balance of the likelihood of success of
claims asserted by the Debtors against the like-
lihood of success of the defenses or counter-
claims possessed by the claimants;
3. the complexity, cost and delay of litigation
that would result in the absence of settlements;
4. whether any creditor of the Debtors or other
party in interest has objected to the settlement
and the acceptance of the Plan by a substantial
majority of the holders of claims; and
5. the fact that the Plan, which give effect to the
settlement, is the product of extensive
arm's-length and good faith negotiations between
and among the Plan Proponents and the claimants.
See, e.g., Drexel v. Loomis, 35 F.2d 800, 806 (8th Cir. 1929);
In re Texaco, Inc., 84 B.R. 893, 902 (Bankr. S.D.N.Y.), appeal
dismissed, 92 B.R. 38 (S.D.N.Y. 1988); In re Lion Capital
Group, 49 B.R. 163, 175 (Bankr. S.D.N.Y. 1985); In re Carla
Leather, Inc., 44 B.R. 457, 466 (Bankr. S.D.N.Y. 1984), aff'd,
50 B.R. 764 (S.D.N.Y. 1985).
D. Approval of a settlement does not require a
"mini-trial" on the merits. See In re Blair, 538 F.2d 849,
851-852 (9th Cir. 1976); In re Int'l Distrib. Ctrs., Inc., 103
B.R. 420, 423 (S.D.N.Y. 1989); In re Tampa Chain Co., Inc., 70
B.R. 25, 26 (S.D.N.Y. 1987); In re Heissinger Resources Ltd.,
67 B.R. 378, 383 (C.D. Ill. 1986); In re Holywell Corp., 93
B.R. 291, 295-296 (Bankr. S.D. Fla. 1988). Significantly, it
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is commonly accepted that in assessing the fairness of a com-
promise or settlement embodied in a plan of reorganization, the
court does not have to be convinced that the compromise or
settlement is the best possible agreement or that the parties
have maximized their recovery. Nellis v. Shugrue, 165 B.R.
115, 123 (S.D.N.Y. 1994) (the task of the bankruptcy judge is
not to determine whether the settlement was the best that could
have been obtained). Further, a judge is not required to
assess the minutia of each and every claim being compromised
in a settlement. (Id.).
E. Each of the Plan Settlements falls within the range
of reasonableness for the resolution of complex litigation, and
is fair and equitable and in the best interests of the Debtors,
their estates, and their creditors and Equity Interest holders.
Each of the Plan Settlements has been negotiated at
arm's-length and has been entered into in good faith. With
limited funds available in the Debtors' estates, it is in the
best interests of the Debtors to reach consensus amongst the
major creditor groups. The Plan Settlements avoid costly and
time-consuming litigation, paving the way toward achieving a
successful reorganization of the Debtors. The Plan Settlements
collectively remove substantial impediments to a successful
restructuring and reorganization of the Debtors. The avoidance
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of long and complicated litigation is one of the principal
rationales for entering into settlements with creditors. See
In re Baldwin United Corp., 43 B.R. 888 (Bankr. S.D. Ohio 1984)
(approving a compromise and finding that the value of a settle-
ment was significantly enhanced and the Debtors received addi-
tional value by eliminating the possibility of costly liti-
gation). Moreover, approval of the Plan Settlements signifi-
cantly reduces the risk of liquidation of the Debtors' estates,
thereby preserving value for the benefit of the Debtors' credi-
tors. See Exhibit "H" to the Disclosure Statement -- "Liquida-
tion Analysis."
F. Each of the Plan Settlements reflects a reasonable
balance of the risk and expense of litigation against the bene-
fits of early resolution of the disputes and issues addressed
by each settlement. In re Teltronics Servs., Inc., 762 F.2d
185, 188-89 (2d Cir. 1985); In re W.T. Grant Co., 699 F.2d at
608; In re Int'l Distrib. Ctrs., Inc., 103 B.R. at 423.
G. The transfers of the rights, interests and properties
pursuant to each of the Plan Settlements are not being made for
less than reasonably equivalent value, are not fraudulent as to
any creditors of the Debtors, are not intended to hinder or
delay any creditors of the Debtors, and are in the best
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interests of the Debtors, their estates, and their creditors
and equity interest holders.
IV.
THE SUBSTANTIVE CONSOLIDATIONS UNDER THE PLAN
ARE APPROPRIATE UNDER APPLICABLE LAW
A. Legal Test. With respect to the legal grounds for
substantive consolidation, in Union Savings Bank v.
Augie/Restivo Baking Co., Ltd. (In re Augie/Restivo), 860 F.2d
515 (2d Cir. 1988), the Second Circuit Court of Appeals out-
lined guidelines to assist courts in determining whether sub-
stantive consolidation is appropriate in a particular case,
each of which is a variant of the following two critical
factors:
(i) Whether creditors dealt with the entities as a
single economic unit and did not rely on their
separate identity in extending credit; or
(ii) Whether the affairs of the debtors are so entan-
gled that consolidation will benefit all
creditors.
Augie/Restivo, 860 F.2d at 518 (emphasis added).
B. The Court concludes that, based on the facts as set
forth in the findings of fact herein, the existence of the
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three separate legal Entities that compromise the Consolidated
OLP Entities was unknown and in effect "invisible" to the cred-
itors of such Entities. Therefore, creditors did not rely on
the separate credit of such Entities, and consolidation of such
entities does not prejudice the rights of the creditors of
those entities.
C. The Court finds and concludes that, based on the
facts as set forth in the findings of fact herein, the exis-
tence of the three separate legal Entities that compromise the
Consolidated 245 Entities was unknown and in effect "invisible"
to the creditors of such Entities. Therefore, creditors did
not rely on the separate credit of such Entities, and consoli-
dation of such Entities does not prejudice the rights of the
creditors of those Entities.
D. The Court concludes that, based on the facts as set
forth in the findings of fact herein, (i) creditors dealt with
the Entities that comprise each of the consolidated groups of
Entities under the Plan as a single economic unit and did not
rely on their separate identities in extending credit, and (ii)
the affairs of the Debtors that are to be substantively consol-
idated under the Plan are so entangled that consolidation will
benefit all creditors. (Id.).
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E. Accordingly, the Court concludes that the substantive
consolidation of the Consolidated Devco Entities, Consolidated
Realty Corp. Entities, Consolidated OLP Entities, and Consoli-
dated 245 Entities is appropriate under the circumstances.
(Id.).
V.
THE PROVISIONS OF THE PLAN GOVERNING THE
RELEASES, INJUNCTION AND THE WAIVER OF
CLAIMS ARE CONSISTENT WITH SECTIONS 105, 1129
AND OTHER PROVISIONS OF THE BANKRUPTCY CODE
A. This Court has jurisdiction to approve the Release
Provisions, Injunction Provisions and waiver of Claims provi-
sions in section 24.5 (the "Waiver of Claims") under sections
1334(a), (b) and (d), title 28, United States Code.
B. Section 105(a) of the Bankruptcy Code permits the
approval of the Release Provisions and Waiver of Claims and
issuance of the Injunction, especially where, as here, such
provisions are essential to the formulation and implementation
of the Plan as provided in section 1123(a)(5) of the Bankruptcy
Code, confer material benefits on the Debtors' estates and are
in the best interests of holders of Claims against and Equity
Interests in the Debtors.
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C. On the basis of the written record and the evidence
presented at the Confirmation Hearing, this Court finds and
concludes that it has jurisdiction to approve the Release Pro-
visions, Injunction Provisions and Waiver of Claims, that such
provisions of the Plan are consistent with section 105 and 1129
of the Bankruptcy Code and other applicable provisions of the
Bankruptcy Code, and that they are in the best interests of the
Debtors' estates. See A.H. Robins Co., Inc. v. Piccinin, 788
F.2d 994, 1002-03 (4th Cir.), cert. denied, 479 U.S. 876
(1986); In re Johns-Manville Corp., 801 F.2d 60, 63-64 (2d Cir.
1986).
D. Any conclusion of law deemed to be a finding of fact
shall be treated as such, and any finding of fact deemed to be
a conclusion of law shall be treated as such.
VI.
COMPLIANCE WITH SECTION 1129 OF THE BANKRUPTCY CODE
A. Section 1129(a)(1) -- Compliance of the Plan with
Applicable Provisions of the Bankruptcy Code.
1. The Court finds and concludes that the Plan sat-
isfies all the applicable provisions of the Bankruptcy Code.
2. Section 1123(a)(1) -- Designation of
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Claims and Interests.
Section 1123(a)(1) of the Bankruptcy Code provides
that a plan must designate classes of claims and interests. In
accordance with section 1123(a)(1) of the Bankruptcy Code, sec-
tion 6 of the Plan designates classes of Claims against and
Equity Interests in the various Debtors other than Administra-
tive Expense Claims and Priority Tax Claims.12 The Plan ade-
quately and properly classifies all Claims and Equity Interests
and, accordingly, satisfies section 1123(a)(1) of the Bank-
ruptcy Code.
3. Section 1122(a) -- Classification
a. Section 1122(a) of the Bankruptcy Code pro-
vides that a plan may place a claim or interest in a particular
class if such claim or interest is substantially similar to the
other claims or interests of such class. A classification
scheme satisfies section 1122(a) of the Bankruptcy Code when a
reasonable basis exists for the classification scheme and the
claims or interests within each particular class are substan-
tially similar. See In re Boston Post Road Ltd. Partnership,
21 F.3d 477 (2d Cir. 1994), cert denied, 115 S. Ct. 897 (1995);
_________________________
12 Classes of Administrative Expense Claims and Priority Tax
Claims are not required to be designated pursuant to sec-
tion 1123(a)(1) of the Bankruptcy Code.
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In re Chateaugay Corp., 89 F.3d 942 (2d Cir. 1996); In re Jer-
sey City Medical Ctr., 817 F.2d 1055, 1060-61 (3d Cir. 1987);
In re U.S. Truck Co., 800 F.2d 581, 586 (6th Cir. 1986); In re
LeBlanc, 622 F.2d 872, 879 (5th Cir. 1980).
b. In accordance with section 1122(a)(1) of
the Bankruptcy Code, the Court concludes that section 6 of the
Plan separately classifies Claims against and Equity Interests
in the various Debtors together with Claims or Equity Interests
that are substantially similar to the other Claims or Equity
Interests of such class. The Plan accordingly satisfies sec-
tion 1122(a) of the Bankruptcy Code.
4. Section 1122(b) -- Administrative
Convenience Class.
a. In accordance with section 1122(b) of the
Bankruptcy Code, the convenience classes established in sec-
tions 5.3 and 8.6 of the Plan are reasonable and necessary for
administrative convenience.
5. Section 1123(a)(2) -- Specification
of Impaired Classes.
Section 1123(a)(2) of the Bankruptcy Code provides
that a plan must specify any class of Claims or Interests that
is not impaired under the Plan. The Plan identifies impaired
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classes of Claims and Equity Interests and provides for their
treatment. Section 17.2 of the Plan identifies each of Consol-
idated Devco Class 1, Consolidated Realty Corp. Class 1, SF
Holdings Class 1, Devco Canada Class 1, Equity Canada Class 1,
Consolidated OLP Class 1, Tower A Co. Class 1, Tower Corp.
Class 1, Consolidated 245 Class 1 and Tower B Leaseco Class 1
as unimpaired, and such classes are conclusively presumed to
accept the Plan pursuant to section 1126(f) of the Bankruptcy
Code. Section 17.1 of the Plan provides that each of Tower
Corp. Class 5 and Tower B Leaseco Class 5 will receive no dis-
tribution under the Plan and, accordingly, each such class is
conclusively deemed to have rejected the Plan pursuant to sec-
tion 1126(g) of the Bankruptcy Code. Each of the remaining
classes is identified under section 17.1 of the Plan as
impaired. The Plan accordingly satisfies section 1123(a)(2) of
the Bankruptcy Code.
6. Section 1123(a)(3) -- Specification of
Treatment of Impaired Claims and Interests.
Section 1123(a)(3) of the Bankruptcy Code provides
that a plan must specify the treatment of each impaired class
of Claims and Equity Interests. Sections 7, 8, 9, 10, 11, 12,
13, 14, 15 and 16 of the Plan specify the treatment of each
impaired class of Claims and Equity Interests. The Plan
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accordingly satisfies section 1123(a)(3) of the Bankruptcy
Code.
7. Section 1123(a)(4) -- Same Treatment Within Each
Class Unless Agrees to Different Treatment.
Section 1123(a)(4) of the Bankruptcy Code requires a
plan to provide the same treatment for each claim or interest
of a particular class, unless the holder of the claim or inter-
est agrees to less favorable treatment of such particular claim
or interest. With respect to each class of Claims and Equity
Interests under the Plan other than Consolidated Devco Class 11
and Consolidated 245 Class 8, the Plan provides the same treat-
ment for each Claim or Equity Interest in such class. Consoli-
dated Devco Class 11 has two subclasses: Subclass 7.11.1 pro-
vides the treatment for the holders of Unaffiliated Unsecured
Claims and Subclass 7.11.2 provides the treatment for
Co-Proponent Unsecured Claims. In respect of Consolidated
Devco Class 11, the Co-Proponents have agreed to accept less
favorable treatment in order to provide the distributions to
holders of Unaffiliated Unsecured Claims. Consolidated 245 has
two subclasses: Subclass 15.8.1 provides the treatment for
JMB's Equity Interest in 245 Park Co., and Subclass 15.8.2 pro-
vides the treatment for the Equity Interests of 245 Holding LP,
245 Corp. and Equityco in 245 Park Co. Each of JMB and 245
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Holding LP, 245 Corp. and Equityco have agreed to their respec-
tive treatments in Consolidated 245 Class 8. The Plan accord-
ingly satisfies section 1123(a)(4) of the Bankruptcy Code.
8. Section 1123(a)(5) -- Means of Implementation
a. Section 1123(a)(5) of the Bankruptcy Code
provides that a plan must provide adequate means for its imple-
mentation. Section 18 of the Plan and the Restructuring Trans-
actions described in Schedule 18 to the Plan provide adequate
means for implementation of the Plan. Those provisions relate
to, among other things: (i) the Restructuring Transactions;
(ii) the distribution of property of the Debtors' estates to
those having an interest in such property of the estate; and
(iii) the amendment to any one or more of the Debtors' certifi-
cates or articles of incorporation, by-laws or codes of regula-
tions or other similar constituent documents.
b. Section 23.2 of the Plan provides adequate
means for implementation of the Plan relating to the revesting
of assets in Newco LP free and clear of all Liens, Claims and
encumbrances. Each of the settlements in section 4 of the Plan
and each of the provisions in sections 7 through 16 of the
Plan, relating to the treatment of Secured Claims, together
with sections 23.2 and 24 of the Plan, provide adequate means
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for the implementation of the Plan relating to (i) the satis-
faction and/or modification of any existing Liens, and (ii) the
refinancing or curing of defaults and extension of the Debtors'
mortgage indebtedness. The Plan accordingly satisfies section
1123(a)(5) of the Bankruptcy Code.
9. Section 1123(a)(6) -- Prohibition Against the
Issuance of Nonvoting Equity Securities.
a. Section 1123(a)(6) of the Bankruptcy Code
requires a plan to provide for the inclusion in the charter of
the debtor, if the debtor is a corporation, or of any corpora-
tion to which the debtor transfers all or any part of the debt-
or's estate or with which the debtor has merged or consoli-
dated, of a provision prohibiting the issuance of non-voting
equity securities.
b. Section 1123(a)(6) is not applicable to
those Debtors, successors in interest to the Debtors (including
Newco LP), and Entities to which property of the Debtors is
being transferred to under the Plan, which are partnerships or
limited liability companies, because such Entities do not have
corporate charters. See Butters v. Mountain Side Holdings,
Inc. (In re Mountain Side Holdings, Inc.), 142 B.R. 421, 423
(D. Colo. 1992) (section 1123(a)(6) does not apply to limited
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partnerships); In re Sovereign Group, 1984-21 Ltd., 88 B.R.
325, 328 (Bankr. D. Colo. 1988) (section 1123(a)(6) does not
apply to partnerships).
c. Section 1123(a)(6) of the Bankruptcy Code
also requires a plan to provide, as to the several classes of
securities of the reorganized Entity possessing voting power,
for an appropriate distribution of power among such classes in
accordance with section 1123(a)(6) of the Bankruptcy Code. The
Plan accordingly satisfies section 1123(a)(6) of the Bankruptcy
Code.
10. Section 1123(a)(7) -- Selection of
Officers and Directors.
Section 1123(a)(7) of the Bankruptcy Code requires
that the manner of selection of any director, officer or trus-
tee of the reorganized debtor, or any successor to such offi-
cer, director or trustee, be consistent with the interests of
creditors and equity interest holders and with public policy.
In accordance with section 1123(a)(7) of the Bankruptcy Code,
section 18.1 of the Plan provides that Newco LP will be gov-
erned by Managing GP, which will hold a 1% general partner
interest in Newco LP. The business and affairs of Managing GP
will be managed by and under the direction of its board of
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directors, which will have ten (10) members. The Chief Execu-
tive Officer of Managing GP will be a member of this board.
The certificate of incorporation of Managing GP will provide
for cumulative voting in any election of directors. In addi-
tion, the Co-Proponents (or Affiliates designated by them) will
become stockholders of Managing GP on the Effective Date and
will enter into a stockholders' agreement setting forth, among
other things, the rights of such parties with respect to the
nomination and election of directors of Managing GP. The Plan
accordingly satisfies section 1123(a)(7) of the Bankruptcy
Code.
11. Section 1123(b)(1) -- Impairment
Section 17 of the Plan impairs or leaves
unimpaired, as the case may be, each class of Claims or Equity
Interests.
12. Section 1123(b)(1) -- Executory Contracts and
Unexpired Leases_____________________________
a. The assumption of the executory contracts and
unexpired leases being assumed under the Plan listed on Sched-
ule 21.1 thereof, as such schedule has been amended from time
to time, and in the Surviving Documents Agreement is (i) in the
best interests of the Debtors, their estates, and their
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creditors and Equity Interest holders, (ii) within the Debtors'
sound business judgment, and (iii) is necessary to the imple-
mentation of the Plan.
b. The rejection of the executory contracts and
unexpired leases being rejected under the Plan is (i) in the
best interests of the Debtors, their estates, and their credi-
tors and Equity Interest holders, (ii) within the Debtors'
sound business judgment, and (iii) necessary to the implementa-
tion of the Plan.
13. Section 1123(b)(3) -- Retention, Enforcement and
Settlement of Claims Held by the Debtors________
a. Section 4 of the Plan provides provisions
for the settlement of various Claims. A detailed discussion of
each of the settlements incorporated in the Plan (the "Plan
Settlements") is set forth herein.
b. Section 24.5 of the Plan provides that, as
of the Effective Date, the Debtors waive the right to prosecute
and release, on behalf of themselves and their respective
estates, any avoidance or recovery actions under sections 542,
544, 545, 547, 548, 549, 550, 551 and 553 of the Bankruptcy
Code or any other Causes of Action, or rights to payment of
Claims, that belong to or could have been raised by or on
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behalf of the Debtors or Debtors in Possession or their respec-
tive estates, other than or in connection with any such actions
that were commenced on or before the Effective Date. Newco LP,
as a successor to the Debtors, shall retain and may prosecute
any such actions that may be pending on the Effective Date.
However, nothing in section 24.5 of the Plan shall be deemed to
waive any right of any Debtor or Debtor in Possession to assert
avoidance or recovery actions under sections 542, 544, 545,
547, 548, 549, 550, 551 and 553 of the Bankruptcy Code or any
other Causes of Action defensively, including by way of setoff,
recoupment or counterclaim.
14. Section 1123(b)(6) -- Other Provisions Not
Inconsistent with Applicable Provisions
of the Bankruptcy Code.
The Plan includes additional appropriate provisions
that are not inconsistent with applicable provisions of the
Bankruptcy Code.
B. Section 1129(a)(2) -- Compliance with
Applicable Provisions of the Bankruptcy Code.
1. The Plan Proponents and their respective direc-
tors, officers, employees, agents, and professionals have acted
in "good faith" within the meaning of sections 1125(e), 1126(e)
and 1129(a)(3) of the Bankruptcy Code.
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2. The Plan Proponents have complied with the pro-
visions of the Bankruptcy Code, the Bankruptcy Rules, appli-
cable non-bankruptcy law, the Local Bankruptcy Rules and the
specific rules of this Court throughout the Reorganization
Cases.
3. The solicitation of votes from holders of Claims
and Equity Interests was made following approval and dissemina-
tion of the Disclosure Statement to holders of Claims and
Equity Interests in classes that are impaired under the Plan,
and was made in good faith and in compliance with the appli-
cable provisions of the Bankruptcy Code and the Bankruptcy
Rules. The Ballots of holders of Claims and Equity Interests
entitled to vote on the Plan were properly solicited and tabu-
lated. (Stevenson Affidavit).
4. The Plan Proponents have complied with all
orders of this Court and have fulfilled all of the obligations
and duties owed to their respective estates as required by and
set forth in sections 1107 and 1108 of the Bankruptcy Code.
The Plan Proponents have accordingly satisfied section
1129(a)(2) of the Bankruptcy Code.
5. Section 1129(a)(2) of the Bankruptcy Code
requires the proponent of a plan to comply with all of the
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applicable provisions of the Bankruptcy Code. The Plan Propo-
nents have complied with all applicable provisions of the Bank-
ruptcy Code, as required by section 1129(a)(2) of the Bank-
ruptcy Code, including provisions governing notice, disclosure
and solicitation in connection with the Plan, the Disclosure
Statement, and all other matters considered by this Court in
connection with the Reorganization Cases. See In re
Johns-Manville Corp., 68 B.R. 618, 630 (Bankr. S.D.N.Y. 1986),
aff'd in part, rev'd in part, 78 B.R. 407 (S.D.N.Y. 1987),
aff'd sub nom. Kane v. Johns-Manville Corp., 843 F.2d 636 (2d
Cir. 1988); In re Toy & Sports Warehouse, Inc., 37 B.R. 141,
149 (Bankr. S.D.N.Y. 1984); H.R. Rep. No. 595, 95th Cong., 1st
Sess. 412 (1977); S. Rep. No. 989, 95th Cong. 2d Sess. 126
(1978).
6. Good, sufficient and timely notice of the Con-
firmation Hearing and all other hearings in these Reorganiza-
tion Cases has been given to all holders of Claims and Equity
Interests and all other parties in interest to whom notice was
required to have been given.
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C. Section 1129(a)(3) -- Proposal of the
Plan in Good Faith.
1. Section 1129(a)(3) of the Bankruptcy Code states
that a plan must be proposed in good faith and not by any means
forbidden by law. See Kane v. Johns-Manville Corp., 843 F.2d
636, 649 (2d Cir. 1988); Koelbl v. Glessing (In re Koelbl), 751
F.2d 137, 139 (2d Cir. 1984) (quoting Manati Sugar Co. v. Mock,
75 F.2d 284 (2d Cir. 1935)); In re Texaco Inc., 84 B.R. 893,
899 (Bankr. S.D.N.Y.), appeal dismissed, 92 B.R. 38 (S.D.N.Y.
1988).
2. The Plan was proposed in good faith and not by
any means forbidden by law.
D. Section 1129(a)(4) -- Bankruptcy Court
Approval of Certain Payments as Reasonable.
1. Section 1129(a)(4) -- Bankruptcy Code requires
that all payments made or to be made by the plan proponent, by
the debtor or by a person issuing securities or acquiring prop-
erty under the plan, for services or for costs and expenses in
or in connection with the case, or in connection with the plan
and incident to the case, have been approved by, or are subject
to the approval of, the court as reasonable.
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2. Each of the Employment Contracts and the compen-
sation provided therein are approved as within the Debtors'
sound business judgment.
3. Section 5 of the Plan provides that all payments
to professionals will be (i) subject to review and approval by
this Court upon final application pursuant to sections 327,
328, 330, 331, 503(b) or 1103 of the Bankruptcy Code, or
(ii) paid in accordance with prior orders of this Court approv-
ing the retention of certain professionals. The Plan accord-
ingly satisfies section 1129(a)(4) of the Bankruptcy Code.
E. Section 1129(a)(5) -- Disclosure of Identity and
Affiliations of Proposed Management, Compensation of
Insiders and Consistency of Management Proposals with
the Interests of Creditors and Public Policy.
1. The Debtors have disclosed in the Disclosure
Statement, and in evidence presented at the Confirmation Hear-
ing, the identity of the individuals who will hold positions
with the Debtors or their successors after confirmation of the
Plan and have shown that the service of such individuals is
consistent with the interests of creditors and Equity Interest
holders and with public policy.
2. The Debtors have disclosed in the Disclosure
Statement and in evidence presented at the Confirmation
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Hearing, the identity of any insider who will be employed or
retained by Newco LP and the nature of any compensation for
such insider. The Plan accordingly satisfies section
1129(a)(5) of the Bankruptcy Code.
F. Section 1129(a)(6) -- Approval of Rate Changes.
Section 1129(a)(6) of the Bankruptcy Code requires a
debtor to obtain the approval of any governmental regulatory
commission, with jurisdiction over the debtor, with respect to
any rate changes provided for in the debtor's plan of reorgani-
zation. The Plan does not provide for any changes in rates
that require regulatory approval of any governmental agency.
The Plan accordingly satisfies section 1129(a)(6) of the Bank-
ruptcy Code.
G. Section 1129(a)(7) -- Best Interests of Creditors.
1. Section 1129(a)(7) of the Bankruptcy Code
requires each creditor or equity interest holder in an impaired
class must either have voted to accept the plan of reorganiza-
tion, or will receive or retain under such plan on account of
such claim or interest property of a value, as of the effective
date of such plan, that is not less than the amount that such
holder would receive or retain if the debtor were liquidated
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under chapter 7 of the Bankruptcy Code. See In re Crowthers
McCall Pattern, Inc., 120 B.R. 279, 297 (Bankr. S.D.N.Y. 1990).
2. Based on the evidence presented at the Confirma-
tion Hearing and the Financial Appendix to the Disclosure
Statement, with respect to each impaired class of Claims or
Equity Interests for each Debtor, each holder of a Claim or
Equity Interest will receive or retain under the Plan on
account of such Claim or Equity Interest property of a value,
as of the Effective Date, that is not less than the amount that
such holder would receive or retain if the debtor were liqui-
dated on the Effective Date under chapter 7 of the Bankruptcy
Code. The Plan accordingly satisfies section 1129(a)(7) of the
Bankruptcy Code.
H. Section 1129(a)(8) -- Acceptance of the Plan by Each
Impaired Class._____________________________________
1. Section 1129(a)(8) of the Bankruptcy Code
requires that, with respect to each class of claims or inter-
ests under a plan, such class has either accepted the plan or
is not impaired under the plan.
2. With the exception of Consolidated Devco
Class 7, Tower Corp. Class 5 and Tower B Leaseco Class 5 (which
classes are deemed to have not accepted the Plan pursuant to
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section 1126(g) of the Bankruptcy Code), all classes of Claims
and Equity Interests under the Plan have either voted to accept
the Plan or are not impaired under the Plan.
3. The treatment provided to the holders of Claims
and Equity Interests in Consolidated Devco Class 7, Tower Corp.
Class 5 and Tower B Leaseco Class 5 complies with the require-
ments of section 1129(b) of the Bankruptcy Code. The Plan
accordingly satisfies the requirements of section 1129(a)(8) of
the Bankruptcy Code.
I. Section 1129(a)(9) -- Treatment of Claims
Entitled to Priority Pursuant to Section 507(a)
of the Bankruptcy Code.
1. Section 1129(a)(9) of the Bankruptcy Code pro-
vides for certain mandatory treatment of claims entitled to
priority under the Bankruptcy Code. Section 5.1 of the Plan
provides that each holder of an Administrative Expense Claim
will be paid in Cash (i) in full upon the later of (a) the
Effective Date and (b) the date that is ten (10) Business Days
after an order of the Bankruptcy Court with respect to such
Administrative Expense Claims becomes a Final Order or
(ii) upon such other terms as may be mutually agreed upon
between such holder of an Administrative Expense Claim and any
of the Debtors. As required by section 1129(a)(9)(B) of the
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Bankruptcy Code, sections 7.1, 8.1, 9.1, 10.1, 11.1, 12.1,
13.1, 14.1, 15.1 and 16.1 of the Plan provide that each holder
of a Priority Non-Tax Claim that is an Allowed Claim will be
paid in Cash in full on the Effective Date. Consistent with
section 1129(a)(9)(C) of the Bankruptcy Code, section 5.2 of
the Plan provides that, on the Effective Date: (i) with
respect to each Debtor or substantively consolidated group of
Debtors (other than Tower B Leaseco), each holder of an Allowed
Priority Tax Claim shall be distributed on account of such
Allowed Priority Tax Claim a Tax Note from such Debtor or sub-
stantively consolidated group of Debtors, or the successor(s)
in interest thereto, that complies with the requirements of
section 1129(a)(9)(C) of the Bankruptcy Code or such other,
more favorable treatment as the Debtors in their sole discre-
tion shall elect; and (ii) each holder of an Allowed Priority
Tax Claim against Tower B Leaseco shall receive a payment in
Cash equal to the amount of such Allowed Priority Tax Claim.
The Plan accordingly satisfies the requirements of section
1129(a)(9) of the Bankruptcy Code.
J. Section 1129(a)(10) -- Acceptance by at
Least One Impaired Class.
1. Section 1129(a)(10)) of the Bankruptcy Code pro-
vides that at least one impaired class of claims must accept a
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plan of reorganization, determined without including any accep-
tance of such plan by any insider. With the exception of Con-
solidated Devco Class 7, Tower Corp. Class 5 and Tower B
Leaseco Class 5 (which classes are deemed to have not accepted
the Plan pursuant to section 1126(g) of the Bankruptcy Code),
all classes of Claims and Equity Interests under the Plan have
either voted to accept the Plan or are not impaired under the
Plan.
2. Sterling National, the only holder of a Claim in
Consolidated Devco Class 7, failed to vote on the Debtors' Plan
and, thus, has not accepted the Plan. As indicated in the
Stevenson Affidavit, and as reflected in the record of the Con-
firmation Hearing, each respective plan constituting this Plan
satisfies section 1129(a)(10) of the Bankruptcy Code because at
least one impaired class in each such Plan has voted to accept
the Plan determined without including any acceptance of the
Plan by an insider holding a Claim in each such class.
(Stevenson Affidavit, | 40). The Plan accordingly satisfies
the requirements of section 1129(a)(10) of the Bankruptcy Code.
3. Notwithstanding the lack of compliance with sec-
tion 1129(a)(8) of the Bankruptcy Code with respect to Consoli-
dated Devco Class 7, the Plan is confirmable because, as is set
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forth more fully in the Findings of Fact, the Plan satisfies
the requirement of section 1129(b) of the Bankruptcy Code with
respect to such classes.
K. Section 1129(a)(11) -- Feasibility of the Plan.
1. Section 1129(a)(11) of the Bankruptcy Code
requires that a plan be "feasible", and that the debtor or its
successor under such plan is not likely to require liquidation
or further financial reorganization, except as provided under
such plan. In re Texaco, Inc., 84 B.R. 893, 907 (Bankr.
S.D.N.Y. 1988), appeal dismissed, 92 B.R. 38 (Bankr. S.D.N.Y.
1988) (citing In re Johns-Manville Corp., 68 B.R. 618, 635
(Bankr. S.D.N.Y. 1986), aff'd in part, 78 B.R. 407 (S.D.N.Y.
1987), aff'd sub nom. Kane v. Johns-Manville Corp., 843 F.2d
636 (2d Cir. 1988)); In re Clarkson, 767 F.2d 417, 420 (8th
Cir. 1985) (citing Chase Manhattan Mortgage and Realty Trust v.
Bergman (In re Bergman), 525 F.2d 1171, 1179 (2d Cir. 1978)).
2. On the basis of information presented in the
Plan, at the Confirmation Hearing, in the various affidavits in
support of confirmation of the Plan, and as detailed in the
Disclosure Statement, this Court concludes that confirmation of
the Plan is not likely to be followed by the liquidation of, or
the need for further financial reorganization of, any of the
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Debtors, except to the extent that such liquidation is required
by or contemplated under the Plan. The Plan accordingly satis-
fies the requirements of section 1129(a)(11) of the Bankruptcy
Code.
L. Section 1129(a)(12) -- Payment of Bankruptcy Fees.
1. Section 1129(a)(12) of the Bankruptcy Code
requires that either all fees payable under section 1930,
title 28, United States Code, as determined by the court at the
hearing on confirmation of the plan, have been paid or that the
plan provides for the payment of all such fees on the effective
date of the plan.
2. Section 26.1 of the Plan provides that all fees
payable pursuant to section 1930, title 28, United States Code,
shall be paid by Newco LP on the Effective Date. The Plan
accordingly satisfies the requirements of section 1129(a)(3) of
the Bankruptcy Code.
M. Section 1129(a)(13) -- Retiree Benefits.
1. Section 1129(a)(13) of the Bankruptcy Code
requires the continuation of payment of all retiree benefits,
at the level established pursuant to section 1114 of the Bank-
ruptcy Code at any time prior to confirmation of the plan, for
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the duration of the period for which the debtor has obligated
itself to provide such benefits.
2. Section 26.2 of the Plan provides that on and
after the Effective Date, pursuant to section 1129(a)(13) of
the Bankruptcy Code, Newco LP or its designee shall continue to
pay all retiree benefits (within the meaning of section 1114 of
the Bankruptcy Code), at the level established in accordance
with subsection (e)(1)(B) or (g) of section 1114 of the Bank-
ruptcy Code, at any time prior to the Confirmation Date for the
duration of the period that any of the Debtors has obligated
itself to provide such benefits to any Retiree under any
Retiree Benefit Plan. The Plan accordingly satisfies the
requirements of section 1129(a)(13) of the Bankruptcy Code.
N. Bankruptcy Rule 3016(b).
1. The Plan is dated and identifies the Entities
submitting the Plan.
O. Section 1129(b) -- Confirmation of the Plan
Over the Nonacceptance of Certain Impaired Classes.
1. The Plan satisfies the requirements of 1129(b)
of the Bankruptcy Code because, with respect to each class of
Claims and Equity Interests that has failed to accept the Plan
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(Consolidated Devco Class 7) or is deemed to not have accepted
the Plan (Tower Corp. Class 5 and Tower B Leaseco Class 5), the
Plan does not discriminate unfairly and is fair and equitable
with respect to such classes.
2. The Court finds and concludes that Sterling
National is fully provided for under the Plan, and pursuant to
section 1129(b)(2)(A)(iii) will realize the indubitable equiva-
lent of its Claims. The Plan accordingly satisfies the
requirements of section 1129(b) of the Bankruptcy Code.
P. Section 1129(d) -- Tax Avoidance.
1. There has been no objection filed by any govern-
mental entity alleging that the principal purpose of the Plan
is the avoidance of taxes or avoidance of the requirements of
section 5 of the Securities Act of 1933, as amended.
VII.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
A. Pursuant to section 1123(b)(2) of the Bankruptcy Code
and section 21.1 of the Plan, as of the Effective Date, all
executory contracts and unexpired leases to which the Debtors
are party are rejected, except for those executory contracts or
unexpired leases that (a) have been assumed pursuant to Final
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Order of this Court prior to the Confirmation Date, (b) are
listed on Schedule 21.1 to the Plan, (c) are the subject of a
separate motion filed under section 365 of the Bankruptcy Code
by any of the Debtors and pending on the Confirmation Date or
(d) have Merrill Lynch as a party and appear in the Surviving
Documents Agreement, which agreement is to be executed on the
Effective Date.
B. The Debtors' decisions regarding the assumption and
assignment of the executory contracts and unexpired leases are
based on and are within the sound business judgment of the
Debtors, are necessary to the implementation of the Plan, and
are in the best interests of the Debtors, their estates, and
their creditors and equity interest holders. NLRB v. Bildisco
& Bildisco, 465 U.S. 513, 523 (1984); Control Data Corp. v.
Zelman (In re Minges), 602 F.2d 38, 42 (2d Cir. 1979).
VIII.
THE TRANSFERS OF PROPERTIES UNDER THE PLAN ARE
GOVERNED BY THE EXEMPTIONS PROVIDED IN SECTION
1146(c) OF THE BANKRUPTCY CODE
A. In order to qualify for a section 1146(c) exemption,
"the underlying tax (1) must be a stamp tax or similar tax,
(2) imposed upon the making or delivery of an instrument trans-
ferring an interest in property, and (3) in connection with a
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-161-
confirmed bankruptcy Plan." In re Kerner Printing Co., Inc.,
188 B.R. 121, 124 (Bankr. S.D.N.Y. 1995) (citing City of N.Y.
v. Baldwin League of Indep. Schs. (In re Baldwin League of
Indep. Schs.), 110 B.R. 125, 126 (S.D.N.Y. 1990) (Kram, J.)
(affirming an oral opinion by Blackshear, B.J.); (In re
Amsterdam Ave. Dev. Assocs., 103 B.R. 454, 456 (Bankr. S.D.N.Y.
1989) (Buschman, B.J.). Each of the Plan Transfers satisfies
the above-listed criteria.
B. In accordance with section 1146(c) of the Bankruptcy
Code, the transfer or vesting of any real or personal property
or the granting of any security interests in property in accor-
dance with the Plan or the Confirmation Order pursuant to the
Plan Transfers described above are not subject to taxation
under any state or local law imposing a stamp, transfer or
similar tax, including the New York State Real Estate Transfer
Tax and the New York City Real Property Transfer Tax applicable
to deeds, assignments of leases and interests in real property
and the New York City and New York State Mortgage Recording
Taxes applicable to mortgages. In re 995 Fifth Ave. Assocs.,
L.P., 963 F.2d 503 (2d Cir. 1992), cert. denied 506 U.S. 97.
IX.
MODIFICATIONS TO THE PLAN
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A. The notice provided by the Plan Proponents of the
modifications to the Plan was adequate and appropriate under
the circumstances and, accordingly, shall be, and hereby is
approved. The Plan Modifications comply in all respects with
section 1127 of the Bankruptcy Code, Bankruptcy Rule 3019,
Local Bankruptcy Rule 3019-1, and all other provisions of the
Bankruptcy Code. No additional disclosure under section 1125
of the Bankruptcy Code is required with respect to the Modifi-
cations. Accordingly, pursuant to section 1127 of the Bank-
ruptcy Code and Bankruptcy Rule 3019, all holders of Claims and
Equity Interests that have accepted or are conclusively pre-
sumed to have accepted the Plan are deemed to have accepted the
Modifications to the Plan.
Dated: New York, New York
September 20, 1996
/s/ James L. Garrity, Jr.
------------------------------
United States Bankruptcy Judge
Exhibit T3E.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- -------------------------------x
In re : Chapter 11 Case Nos.
92 B 42698 (JLG)
OLYMPIA & YORK :
REALTY CORP., et al., (Jointly Administered)
:
Debtors.
:
- -------------------------------x
DEBTORS' DISCLOSURE STATEMENT PURSUANT
TO SECTION 1125 OF THE BANKRUPTCY CODE FOR
THE SECOND AMENDED JOINT PLAN OF REORGANIZATION
WEIL, GOTSHAL & MANGES LLP KAYE, SCHOLER, FIERMAN,
Attorneys for Debtors and HAYS & HANDLER LLP
Debtors in Possession Attorneys for Olympia & York
(except Olympia & York Tower Tower B Lease Company
B Lease Company) 425 Park Avenue
767 Fifth Avenue New York, New York 10022
New York, New York 10153 (212) 836-8000
(212) 310-8000
Dated: New York, New York
August 9, 1996
<PAGE>
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I. INTRODUCTION
Olympia & York Realty Corp. ("Realty Corp.")1, Olympia & York SF
Holdings Corporation ("SF Holdings"), O&Y Equity (Canada) Ltd. ("Equity
Canada"), O&Y (U.S.) Development Canada, Ltd. ("Devco Canada" and together with
Realty Corp., SF Holdings and Equity Canada, the "Canadian Debtors"), O&Y (U.S.)
Development Company, L.P. ("Devco"), O&Y (U.S.) Development General Partner
Corp. ("Devco GP"), O&Y Equity Company, L.P. ("Equityco"), O&Y Equity General
Partner Corp. ("Equity GP"), Olympia & York Real Estate (U.S.A.) Inc.,
("OYREUSA"), Baden Real Estate Corp. ("Baden" and together with Devco, Devco GP,
Equityco, Equity GP and OYREUSA, the "O&Y (U.S.) Debtors") and each of the other
entities listed on Schedule 1 hereto (collectively, with the Canadian Debtors
and the O&Y (U.S.) Debtors, the "Debtors", and each, a "Debtor") submit this
Disclosure Statement pursuant to section 1125 of the United States Bankruptcy
Code, 11 U.S.C. ss. 101 et. seq. (the "Bankruptcy Code"), to creditors of the
Debtors (collectively, the "Creditors") and holders of the equity interests of
the Debtors (collectively, the "Equity Interest Holders") in connection with (i)
the solicitation of acceptances or rejections from Creditors and Equity Interest
Holders on the Second Amended Joint Plan of Reorganization, dated August 9, 1996
(the "Plan"), proposed by the Debtors and Carena Bancorp U.S., Inc. ("Carena"),
Battery Park Holdings Inc. ("BPHI"), Canadian Imperial Bank of Commerce
("CIBC"), Citibank, N.A. ("Citibank") and Dragon Holdings Limited ("Dragon")
(collectively, the "Co-Proponents", and together with the Debtors, the "Plan
Proponents"), and filed by the Plan Proponents with the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court"), and (ii)
the hearing on confirmation of the Plan scheduled for September 11, 1996. Unless
otherwise defined herein, all capitalized terms contained herein will have the
meanings ascribed to them in the Plan.
On August 9, 1996, after notice and a hearing, the Bankruptcy Court
approved this Disclosure Statement as containing information of a kind and in
sufficient detail adequate to enable hypothetical, reasonable investors typical
of the Creditors and the Equity Interest Holders in each class under the Plan to
make an informed judgment as to whether to accept or reject the Plan. APPROVAL
OF THIS DISCLOSURE STATEMENT BY THE BANKRUPTCY COURT DOES NOT, HOWEVER,
CONSTITUTE A DETERMINATION BY THE BANKRUPTCY COURT AS TO THE FAIRNESS OR THE
MERITS OF THE PLAN.
- --------
1 Capitalized terms used, but not otherwise defined herein, shall have the
meaning assigned to such terms in the Plan.
<PAGE>
-3-
EACH CREDITOR AND EQUITY INTEREST HOLDER SHOULD READ THIS DISCLOSURE
STATEMENT, THE PLAN, AND THE OTHER EXHIBITS TO THIS DISCLOSURE STATEMENT AND THE
PLAN IN THEIR ENTIRETY BEFORE VOTING ON THE PLAN.
ALL EXHIBITS OR SCHEDULES TO THIS DISCLOSURE STATEMENT ARE EITHER
ANNEXED HERETO OR ARE CONTAINED IN A SEPARATE EXHIBIT VOLUME WHICH WERE FILED
WITH THE CLERK OF THE BANKRUPTCY COURT ON MAY 13, 1996 AND SUPPLEMENTED WITH
CERTAIN ADDITIONAL MATERIALS ON AUGUST 2, 1996 AND AUGUST 9, 1996. EXCEPT TO THE
EXTENT THAT THE PLAN IS AMENDED TO DELETE ONE OR MORE OF THE EXHIBITS THERETO,
THE EXHIBITS TO THE PLAN WILL BE FILED NO LATER THAN SEVEN (7) DAYS PRIOR TO THE
CONFIRMATION HEARING. NOTWITHSTANDING THE FOREGOING, THE DEBTORS ANTICIPATE THAT
ALL OF THE EXHIBITS CURRENTLY SET FORTH AND DESCRIBED IN THE PLAN WILL BE FILED
NO LATER THAN SEVEN (7) DAYS PRIOR TO THE CONFIRMATION HEARING. ALL EXHIBITS OR
SCHEDULES TO THIS DISCLOSURE STATEMENT OR THE PLAN MAY BE INSPECTED AT THE
OFFICE OF THE CLERK OF THE BANKRUPTCY COURT DURING NORMAL COURT HOURS. CREDITORS
AND EQUITY INTEREST HOLDERS MAY OBTAIN COPIES OF THE EXHIBITS AND SCHEDULES TO
THE DISCLOSURE STATEMENT AND THE PLAN, ONCE FILED, UPON WRITTEN REQUEST ONLY TO
THE FOLLOWING ADDRESS:
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Attn.: Michael I. Schor, Esq.
PLAN PROVISION SUMMARIES AND ALL OTHER STATEMENTS MADE IN THIS
DISCLOSURE STATEMENT ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PLAN,
THE OTHER EXHIBITS AND SCHEDULES HERETO AND THERETO AND ANY OTHER DOCUMENTS
REFERENCED HEREIN OR THEREIN.
Pursuant to the provisions of the Bankruptcy Code, only classes of
claims or equity interests that are "impaired" and that are not deemed to have
rejected the Plan under section 1126(g) of the Bankruptcy Code are entitled to
vote to accept or reject the plan. Any class of claims or equity interests that
is "unimpaired" is not entitled to vote to accept or reject the plan. As set
forth in section 1124 of the Bankruptcy Code, a class is "impaired" by the plan
if the legal, equitable, or contractual rights attaching to the claims or equity
interests of that class are modified. See "Voting and Confirmation of the Plan
- -- Who May Vote".
The Claims and Equity Interests in each of Consolidated Devco Class 1,
Consolidated Realty Corp. Class 1, SF Holdings Class 1, Devco Canada Class 1,
Equity Canada Class 1, Consolidated OLP Class 1, Tower A Co. Class 1, Tower
Corp. Class 1, Consolidated 245 Class 1 and Tower B Leaseco Class 1 are not
<PAGE>
-4-
impaired under the Plan, and each such Class is, therefore, conclusively deemed
to have accepted the Plan. The holders of Claims or Equity Interests in each of
Consolidated Devco Class 12, Consolidated Realty Corp. Class 7, Devco Canada
Class 4, Equity Canada Class 4, Tower Corp. Classes 4 and 5 and Tower B Leaseco
Class 5 will not receive or retain any property under the plan on account of
such Claims and Interests, and each such Class is, therefore, conclusively
deemed to have rejected the Plan. The Claims in each of Consolidated Devco
Classes 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11, Consolidated Realty Corp. Classes 2,
3, 4, 5 and 6, SF Holdings Classes 2 and 3, Devco Canada Classes 2 and 3, Equity
Canada Classes 2 and 3, Consolidated OLP Classes 2, 3, 4, 5 and 6, Tower A Co.
Classes 2, 3, 4, 5 and 6, Tower Corp. Classes 2 and 3, Consolidated 245 Classes
2, 3, 4, 5, 6, 7 and 8, and Tower B Leaseco Classes 2, 3 and 4 are impaired
under the Plan, and the holders of Claims or Equity Interests in such Classes
are entitled to vote to accept or reject the Plan.
The Bankruptcy Code requires as a condition to confirmation of a
consensual plan of reorganization that each impaired class of claims or equity
interests accept the plan. The Bankruptcy Code defines "acceptance" of a plan by
a class of claims as acceptance by holders of at least two-thirds in dollar
amount and more than one-half in number of the allowed claims in that class who
cast ballots for acceptance or rejection of the plan. Under the Bankruptcy Code,
acceptance by a class of equity interests requires the acceptance by the holders
of at least two-thirds of the allowed equity interests of that class held by the
holders of equity interests who cast ballots for acceptance or rejection of the
plan.
In order for the Plan to be confirmable under section 1129(a) of the
Bankruptcy Code, the Plan must be accepted by the requisite majorities of
holders of Claims or Equity Interests in each of Consolidated Devco Classes 2,
3, 4, 5, 6, 7, 8, 9, 10 and 11, Consolidated Realty Corp. Classes 2, 3, 4, 5 and
6, SF Holdings Classes 2 and 3, Devco Canada Classes 2 and 3, Equity Canada
Classes 2 and 3, Consolidated OLP Classes 2, 3, 4, 5 and 6, Tower A Co. Classes
2, 3, 4, 5 and 6, Tower Corp. Classes 2 and 3, Consolidated 245 Classes 2, 3, 4,
5, 6, 7 and 8, and Tower B Leaseco Classes 2, 3 and 4. For a complete
description of the requirements for acceptance of the Plan, see "Voting and
Confirmation of the Plan -- Requirements for Confirmation of the Plan".
The Plan also provides that the Debtors may seek to confirm the Plan
under section 1129(b) of the Bankruptcy Code, notwithstanding the non-acceptance
of the Plan by one or more impaired classes of Claims or Equity Interests.
Section 1129(b) of the Bankruptcy Code permits the confirmation of a plan of
<PAGE>
-5-
reorganization notwithstanding the non-acceptance of the plan by one or more
impaired classes of claims or equity interests. Under that section, a plan of
reorganization may be confirmed by the Bankruptcy Court if it does not
discriminate unfairly and is "fair and equitable" with respect to the
non-accepting class. For a discussion of the consequences of a non-consensual
confirmation of the Plan, see "Voting and Confirmation of the Plan --
Non-Consensual Confirmation of the Plan -- 'Cramdown'".
After carefully reviewing this Disclosure Statement, including the
Exhibits and Schedules hereto, each Creditor holding an Allowed Claim and each
Allowed Equity Interest Holder in an impaired class should vote on the enclosed
Ballot and return the Ballot in the pre-addressed envelope so that it is
received by 5:00 p.m. Eastern Daylight Time on or before September 4, 1996.
Please note that the Plan contains certain provisions for elections to be made
by Creditors on the Ballot. Accordingly, please review the Ballot carefully to
determine if your claim falls within a class entitled to make an election under
the Plan. Please vote and return your Ballot to the Debtors' Ballot Agent:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Telephone: (212) 440-9820
(800) 223-2064 (Toll Free)
Fax Number: (212) 440-9009
Attn: Mr. John C. Stephenson
If you have any questions about this Disclosure Statement or the Plan,
the procedure for voting, or if you did not receive a Ballot, received a damaged
Ballot or lost your Ballot, please call Georgeson & Company Inc., Attention: Mr.
John C. Stephenson, the Debtors' Ballot Agent, at either (212) 440- 9820 or
(800) 223-2064 (Toll Free).
TO BE COUNTED, YOUR BALLOT MUST BE SIGNED AND RECEIVED AT THE ADDRESS
SPECIFIED ABOVE BY 5:00 P.M. EASTERN DAYLIGHT TIME ON OR BEFORE SEPTEMBER 4,
1996. ANY BALLOT RECEIVED WHICH DOES NOT INDICATE EITHER AN ACCEPTANCE OR
REJECTION OF THE PLAN WILL BE DEEMED TO CONSTITUTE AN ACCEPTANCE OF THE PLAN.
BALLOTS SUBMITTED BY FACSIMILE WILL NOT BE ACCEPTED. ONLY ORIGINALLY SIGNED
BALLOTS WILL BE COUNTED.
The Bankruptcy Court has scheduled a hearing to consider the
confirmation of the Plan, pursuant to section 1128 of the Bankruptcy Code, (the
"Confirmation Hearing") on Wednesday September 11, 1996 at 2:00 p.m. before the
Honorable James L. Garrity, Jr., United States Bankruptcy Judge, in Courtroom
610-2
<PAGE>
-6-
on the Sixth Floor of the United States Bankruptcy Court, Southern District of
New York, Alexander Hamilton Custom House, One Bowling Green, New York, New
York. The Bankruptcy Court has directed that objections, if any, to the
confirmation of the Plan be served and filed on or before August 28, 1996 at
5:00 p.m. Eastern Daylight Time. See "Voting and Confirmation of the Plan --
Confirmation Hearing". The Confirmation Hearing may be adjourned from time to
time by the Bankruptcy Court without further notice except for an announcement
of an adjournment date made at the Confirmation Hearing or at any subsequently
adjourned Confirmation Hearing.
THE DEBTORS BELIEVE THAT THE PLAN PROVIDES THE BEST POSSIBLE
RECOVERIES TO THEIR CREDITORS AND EQUITY INTEREST HOLDERS. THEREFORE, THE
DEBTORS BELIEVE THAT ACCEPTANCE OF THE PLAN IS IN THE BEST INTERESTS OF EACH AND
EVERY CLASS OF CREDITORS AND EQUITY INTEREST HOLDERS, AND RECOMMEND THAT YOU
VOTE TO ACCEPT THE PLAN.
ALL PROJECTED RECOVERIES OF HOLDERS OF ALLOWED CLAIMS AND ALLOWED
EQUITY INTERESTS SET FORTH HEREIN ARE BASED ON THE FINANCIAL INFORMATION SET
FORTH IN THE FIRST AMENDED FINANCIAL APPENDIX ANNEXED HERETO AS EXHIBIT B AND
THE ASSUMPTIONS SUMMARIZED THEREIN AND THROUGHOUT THE ENTIRETY OF THIS
DISCLOSURE STATEMENT. ALL SUCH RECOVERIES ARE MERELY PROJECTED RECOVERIES, BASED
ON ASSUMPTIONS WHICH ARE SET FORTH IN THE FIRST AMENDED FINANCIAL APPENDIX. TO
THE EXTENT THAT ACTUAL RESULTS VARY FROM THE ASSUMPTIONS, RECOVERIES MAY VARY
FROM THE PROJECTIONS.
THIS DISCLOSURE STATEMENT HAS BEEN PREPARED BY THE DEBTORS AND DOES
NOT NECESSARILY REFLECT ALL OF THE VIEWS OF THE CO-PROPONENTS.
UNLESS OTHERWISE INDICATED, ALL DOLLAR AMOUNTS USED OR REFERENCED
HEREIN OR IN THE PLAN ARE UNITED STATES DOLLAR AMOUNTS.
<PAGE>
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II. OVERVIEW OF THE PLAN OF REORGANIZATION
A. GENERAL
The Plan is primarily an "equity conversion" plan, pursuant to which
the majority of claims against the holding companies of O&Y (U.S.) (including
Devco, Equityco, U.S. Finco and certain other of the O&Y (U.S.) Debtors) will be
converted into equity interests in the entities to be created or reorganized
under the Plan -- i.e., Newco LP, Managing GP and Liquidating Corp. Claims
against any property-level companies of O&Y (U.S.) that own the Core Properties
will generally either (i) in the case of Allowed General Unsecured Claims on
account of operating Liabilities, be paid in full (except in the case of Tower A
Co., which is a participating entity in the Plan), or (ii) in the case of claims
secured by a Core Property, be restructured on the terms described under the
captions "Summary of the Plan of Reorganization" and "Background History of
Olympia & York -- Business of the U.S. Operations -- Current Status of O&Y
(U.S.) in 1996 -- Core Properties" in this Disclosure Statement. In addition,
under the Plan, certain outside partner interests in the entities owning certain
of the Core Properties will, or may at such partner's option, be "rolled up"
into Newco LP in exchange for either Class A Interests or, in the case of JMB,
for interests in 245 Park Holding LP, which will, in turn, own Class A
Interests. Finally, Class B Interests will be distributed to the holders of
Allowed General Unsecured Claims in Consolidated Realty Corp. Class 6.
1. Interests in Newco LP
Under the Plan, four groups of Creditors or Equity Interest Holders
will be receiving shares in Newco LP on account of their Allowed Claims against,
or Equity Interests in, the Debtors (or, in certain cases, O&Y (U.S.)). Those
four Creditor and Equity Interest Holder groups are: (i) holders of Allowed
Unaffiliated Unsecured Claims, on account of their Allowed Claims in
Consolidated Devco Class 11, for Class A Interests having a value on the
Confirmation Date equal to 2.29% of such holder's Allowed Unaffiliated Unsecured
Claim; (ii) Consolidated Realty Corp. General Unsecured Creditors (including
Citibank) for Class A Interests based on the value of the Undisputed Realty
Corp. Assets and Class B Interests based on the value of the Disputed Realty
Corp. Assets, which interests will have an aggregate estimated value of between
$8.4 million - $47 million, depending on the ultimate resolution of the disputes
relating to the Disputed Realty Corp. Assets; (iii) JMB, through 245 Holding LP
(the successor to 245 Park Co.), on account JMB's Allowed Equity Interests in
245 Park Co., for at least $30 million of Class A Interests; and (iv) the
Co-Proponents, for the remainder of the
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Class A Interests, Class B Interests (in accordance with section 8.6 of the
Plan) and a 1% General Partner Interest in Newco LP (which interest will be held
by Managing GP and will have the same rights in respect of distributions and
allocations as the Class A Interests but shall entitle Managing GP to all of the
rights, and subject Managing GP to all of the obligations, of a general partner
under the Newco LP Partnership Agreement and applicable law), on account of:
(a) the recoveries of BPHI in accordance with the BPHI
Settlement (see "Significant Developments in the
Debtors' Chapter 11 Cases -- BPHI Settlement");
(b) the recoveries of the Co-Proponents as the holders
of the Club Loan, distributions in respect of
which are to be received by the Co-Proponents
pursuant to the January 12th Settlement Agreement;
(c) the recoveries of CIBC, on account of its Allowed
Secured Claims in Consolidated Devco Class 3;
(d) the recoveries of the Co-Proponents on account of
their Allowed Unsecured Claims in Consolidated
Devco Class 11, which are estimated in the amount
of $310 million; and
(e) the Co-Proponents' Capital Infusion of $75
million.
2. The Co-Proponents
The Plan is being jointly proposed by the Debtors and the
Co-Proponents, whose Claims against and Equity Interests in the Debtors (and
certain affiliates) are described more fully below.
BPHI and Carena: Carena is a subsidiary of Carena Developments
Limited, which is a major real estate development and
investment company with property holdings in both the United
States and Canada. BPHI is a wholly-owned subsidiary of Carena
and certain of its affiliates and is the entity through which
Carena holds certain of its property interests in the United
States. BPHI holds various partner interests in various O&Y
(U.S.) entities that control Towers A, B and D of the World
Financial Center, constituting approximately a nominal 26%
equity interest in Tower A, a nominal 35% equity interest in
Tower B and a nominal 17% equity interest in Tower D. BPHI
also holds certain Unsecured Claims in Consolidated Devco
Class 11 that O&Y (U.S.)
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and BPHI have agreed to settle in the aggregate Allowed amount
of approximately $22.25 million. In addition, pursuant to the
January 12th Settlement Agreement, Carena will acquire,
together with certain of the other Co-Proponents, from Apollo
and the other current holders of the Club Loan, all of their
respective interests in the Club Loan as well as the Allowed
Unsecured Claims held by Apollo in the approximate amount of
$91 million.
CIBC: CIBC is a bank organized under and governed by the laws
of Canada. CIBC holds (i) a claim in the projected amount, as
of June 30, 1996, of approximately $75,658,000 plus interest
accruing from and after June 30, 1996 through the Effective
Date and attorneys' fees and expenses incurred through the
Effective Date that are payable in accordance with the
governing loan documents and applicable law, against U.S.
Finco, Devco and Devco GP, which is secured by a pledge of O&Y
(U.S.)'s equity interests in Liberty Plaza Co., OLP Co. and
Trinity Place Co. and pledges and collateral assignments of
certain subordinated notes and mortgages held by U.S. Finco,
as well as (ii) Unsecured Claims held by CIBC or its
affiliates in Consolidated Devco Class 11 of approximately $46
million. In addition, pursuant to the January 12th Settlement
Agreement, CIBC or its affiliate will acquire, together with
certain of the other Co-Proponents, from Apollo and the other
current holders of the Club Loan, all of their respective
interests in the Club Loan as well as the Allowed Unsecured
Claims held by Apollo in the approximate amount of $91
million.
Citibank: Citibank is one of the largest commercial banks in
the United States. Among other claims, Citibank holds
approximately $85 million of Unsecured Claims in Consolidated
Devco Class 11 and Citibank, or its affiliates, holds
approximately $267 million of General Unsecured Claims against
Realty Corp. In addition, pursuant to the January 12th
Settlement Agreement, Citibank or its affiliate will acquire,
together with certain of the other Co-Proponents, from Apollo
and the other current holders of the Club Loan, all of their
respective interests in the Club Loan as well as the Allowed
Unsecured Claims held by Apollo in the approximate amount of
$91 million.
Dragon Holdings Limited: Dragon is a real estate
development and investment corporation, associated with
financier Li KaShing, with its principal offices in
<PAGE>
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Hong Kong. Dragon (and/or its affiliates) holds
certain Unsecured Claims against Consolidated Devco and
Realty Corp. related to 60 Broad Street, New York, New
York, which Devco and Realty Corp. have agreed to
settle at approximately $60 million. Dragon will
continue to hold claims against O&Y Concord 60 Broad
Street Company, an affiliate of the Debtors.
The Co-Proponents in the aggregate own, or will own or control the
right to deliver, at least $133.25 million in principal amount of the notes
issued in the aggregate original principal amount of $970 million by, among
others, the predecessors to 237 Park Avenue Associates LLC and 1290 Associates
LLC, and secured by mortgage liens relating to the properties located at 237
Park Avenue, New York, New York and 1290 Avenue of the Americas, New York, New
York (the "970 Notes"), to effectuate the January 12th Settlement Agreement. In
exchange for such 970 Notes and the other transfers and considerations set forth
in the January 12th Settlement Agreement, the Co-Proponents in the aggregate
will own all of the General Unsecured Claims in Consolidated Devco Class 11
currently held by Apollo, which will be Allowed Co-Proponent Unsecured Claims.
After giving effect to the distributions of Class A Interests and
Class B Interests to (a) the holders of Allowed Unaffiliated Unsecured Claims in
accordance with section 7.11.1 of the Plan, (b) the holders of Allowed General
Unsecured Claims against any of Realty Corp., OYREUSA and/or Baden in accordance
with section 8.6 of the Plan and (c) JMB, on account of its Allowed Equity
Interest in 245 Park Co., in accordance with section 15.8.1 of the Plan, the
Co-Proponents, on account of their respective Allowed Claims and Allowed Equity
Interests in accordance with the Plan and the Restructuring Transactions, will
be distributed the General Partner Interest in Newco LP, the remaining Class A
Interests, Class B Interests (in accordance with section 8.6 of the Plan) and
100% of the Liquidating Corp. Shares (the "Residual Newco Equity") in partial
consideration of the Co-Proponents' Capital Infusion and the Allowed
Co-Proponent Unsecured Claims. The General Partner Interest and a 1% Class B
Interest will be held by the Co-Proponents through Managing GP, a newly-formed
corporation to be owned by the Co-Proponents. Other than in respect of the
Equity Interests in Newco LP held by the Co-Proponents through Managing GP, the
Co-Proponents will hold their remaining Equity Interests in Newco LP (either
directly or indirectly), as each determines. The Co-Proponents will enter into a
stockholders' agreement with respect to their ownership in, and the governance
of, Managing GP. The Co-Proponents will enter into a stockholders' agreement
with respect to their ownership in, and the governance of, Managing GP.
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B. SUMMARY DESCRIPTION OF ENTITIES AS REORGANIZED OR CREATED
UNDER THE PLAN
The following is an overview of the various entities as organized or
reorganized under the Plan, the classification and treatment of Claims and
Equity Interests under the Plan, and the expected recoveries to be realized
under the Plan. The following summary is qualified in its entirety by reference
to the provisions of the Plan, a copy of which was filed with the Bankruptcy
Court simultaneously with the filing of this Disclosure Statement.
Under the Plan, the six Core Properties listed below will be the
foundation of the reorganized company:
o World Financial Center Tower A, New York, New York
("Tower A")
o World Financial Center Tower B, New York, New York
("Tower B")
o World Financial Center Tower D, New York, New York
("Tower D")
o One Liberty Plaza, New York, New York ("OLP")
o 245 Park Avenue, New York, New York ("245 Park")
o 53 State Street, Boston, Massachusetts ("53
State")
The Core Properties will be owned through Newco LP, a Delaware limited
partnership. For a complete description of each of the Core Properties and the
restructured terms, if any, of the mortgage and pledge debt related thereto, see
"Background History of Olympia & York -- Business of the U.S. Operations --
Current Status of O&Y (U.S.) in 1996 -- Core Properties".
The following is a diagram of the ownership structure for the Core
Properties through Newco LP (the "Newco Structure Chart").
<PAGE>
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NEWCO STRUCTURE CHART
<PAGE>
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The assets and Liabilities and ownership structure of certain of the
Entities depicted in the Newco Structure Chart are briefly discussed in this
section. For a more complete description of the ownership of Newco LP, see
"Means of Implementation/Flow of Assets".
a. Newco LP
The principal holding company which will directly and indirectly own
at least a majority and controlling interest in all six Core Properties is Newco
LP. On or before the Effective Date, Newco LP will be created and established as
a Delaware limited partnership. Managing GP will own a 1% General Partner
Interest and 1% of the Class B Interests. The remaining Class A Interests will
be owned by the holders of Allowed Unaffiliated Unsecured Claims in Consolidated
Devco Class 11, JMB (through 245 Holding LP) and the Co-Proponents, either
directly or indirectly, in accordance with sections 4.3, 7.2, 7.4, 7.11, 8.2,
12.3, 14.2, 15.2 and 15.5 of the Plan.
The remaining Class B Interests will be owned, either directly or
indirectly, by the holders of Allowed Unsecured Claims in Consolidated Realty
Corp. Class 6 (including the Co- Proponents). Class B Interests entitle the
holders thereof, in the aggregate, to participate in any value realized from
successful prosecution of certain litigations with respect to the Disputed
Realty Corp. Assets. For a further description of the Disputed Realty Corp.
Assets, see "Background History of Olympia & York -- Business of the U.S.
Operations -- Current Status of O&Y (U.S.) in 1996 -- Realty Corp. Assets".
b. Managing GP
Managing GP will be organized as a Delaware corporation, and 100% of
its capital stock will be owned by the Co-Proponents.
c. Devco GP
On the Effective Date, Equity GP will be merged with and into Devco
GP, with Devco GP as the surviving corporation. On the Effective Date, Newco LP
will own 100% of the outstanding common stock of Devco GP. The business and
affairs of Devco GP will be managed by and under the direction of a board of
directors elected by Newco LP, Devco GP's sole stockholder.
<PAGE>
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d. Liquidating Corp.
Liquidating Corp. will be organized on or before the Effective Date
for the sole purpose of liquidating the Non-Core Properties owned by O&Y (U.S.)
that are not transferred directly or indirectly to Newco LP. The Co-Proponents
will hold 100% of the issued and outstanding shares of the capital stock of
Liquidating Corp.
C. SUMMARY DESCRIPTION OF CERTAIN SUBSTANTIVE CONSOLIDATIONS
UNDER THE PLAN
1. Substantive Consolidation
All assets and Liabilities of each of Devco, Devco GP, Equityco,
Equity GP, U.S. Finco, and O&Y Finco (collectively, "Consolidated Devco" or the
"Consolidated Devco Entities" and each entity, a "Consolidated Devco Entity")
will be substantively consolidated. On the Effective Date, each Claim filed, or
to be filed, in the Reorganization Cases of the Consolidated Devco Entities will
be deemed filed against Consolidated Devco and will be deemed one Claim against,
and obligation of, Consolidated Devco.
All assets and Liabilities of Realty Corp., OYREUSA and Baden
(collectively, "Consolidated Realty Corp.") will be substantively consolidated.
On the Effective Date, each Claim filed, or to be filed, in the Reorganization
Cases of Realty Corp., OYREUSA or Baden will be deemed filed against
Consolidated Realty Corp. and will be deemed one Claim against, and obligation
of, Consolidated Realty Corp.
All assets and Liabilities of Liberty Plaza Co., OLP Co. and Trinity
Place Co. (collectively, "Consolidated OLP") will be substantively consolidated.
On the Effective Date, each Claim filed, or to be filed, in the Reorganization
Cases of Liberty Plaza Co., OLP Co. and Trinity Place Co. will be deemed filed
against Consolidated OLP and will be deemed one Claim against, and obligation
of, Consolidated OLP.
All assets and Liabilities of 245 Park Co., 245 Holding LP and 245
Corp. (collectively, "Consolidated 245") will be substantively consolidated. On
the Effective Date, each Claim filed, or to be filed, in the Reorganization
Cases of 245 Park Co., 245 Park Holding LP and 245 Corp. will be deemed filed
against Consolidated 245 and will be deemed one Claim against, and obligation
of, Consolidated 245.
See "Summary of the Plan of Reorganization for the Debtors --
Description of Substantive Consolidations".
<PAGE>
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SUMMARY CHART OF RECOVERIES FROM ENTITIES UNDER THE PLAN
Debtor Against Which Entity From Which You
You Hold A Claim Recover Under The Plan
---------------- ----------------------
1 Realty Corp. Consolidated Realty
Corp.
2 SF Holdings SF Holdings
3 Equity Canada Equity Canada
4 Devco Canada Devco Canada
5 Devco Consolidated Devco
6 Devco GP Consolidated Devco
7 Equityco Consolidated Devco
8 Equity GP Consolidated Devco
9 OYREUSA Consolidated Realty
Corp.
10 Baden Consolidated Realty
Corp.
11 U.S. Finco Consolidated Devco
12 Tower A Co. Tower A Co.
13 WFC Tower Corp. WFC Tower Corp.
14 Tower B Leaseco Tower B Leaseco
15 O&Y Finco Consolidated Devco
16 245 Park Co. Consolidated 245
17 245 Corp. Consolidated 245
18 245 Park Avenue Consolidated 245
Holding Co.
19 OLP Co. Consolidated OLP
20 Liberty Plaza Co. Consolidated OLP
21 Trinity Place Co. Consolidated OLP
<PAGE>
-16-
2. O&Y Affiliates2 That Are Chapter 11
Debtors But Are Not Participating in the Plan
a. Olympia & York World Financial Center Finance
Corp.
b. Chicago-Superior Associates
c. Devco 11601-A, L.P.
d. Devco 11601-B, L.P.
e. 11601 Holding Corp.
f. Olympia & York Tower B Company
g. 237 Park Avenue Associates LLC
h. 1290 Associates LLC
D. SETTLEMENTS AND AGREEMENTS IMPLEMENTED BY THE PLAN
The Plan implements certain settlements and agreements, each of which
is described below.
1. Settlement of Intercompany Claims
The Plan provides for a settlement of all claims held by the Debtors
and/or any Wholly-Owned Affiliate and/or Controlled Affiliate against any other
Debtor and/or Wholly-Owned Affiliate and/or Controlled Affiliate. This
settlement is a compromise of certain accounts, reflected on the books and
records of O&Y (U.S.), which represent transactions between O&Y Affiliates.
Since, in most cases, the amount owed by one O&Y Affiliate to another is offset
by a corresponding receivable from such entity (each such transaction being
reflected on the books and records of O&Y (U.S.)), the Debtors have determined
to settle these accounts in the manner described below:
On the Effective Date, all Claims held by a Debtor, a Wholly-Owned
Affiliate or a Controlled Affiliate against a Debtor, a Wholly-Owned Affiliate
or a Controlled Affiliate shall be released and cancelled in accordance with the
Restructuring Transactions and, to the extent not so released and cancelled,
released and cancelled in consideration for the mutual release and cancellation
of any and all Claims held by a Debtor, a
- --------
2 See Exhibit I hereto for a list of all O&Y Affiliates.
<PAGE>
-17-
Wholly-Owned Affiliate or a Controlled Affiliate against such Debtor,
Wholly-Owned Affiliate or such Controlled Affiliate; provided, however, that
section 4.1 of the Plan shall not release and eliminate the Claims of Tower B
Co. against WFC Fincorp3 and the Claims of Olympia & York Maiden Lane Company to
Olympia & York Maiden Lane Finance Corp.4, the U.S. Finco/OLP Claims not
contributed to OLP under the Restructuring Transactions and the Claims of Tower
A Co. against Tower A Holding and Devco remaining outstanding under the
Restructuring Transactions.5 Notwithstanding the foregoing, all postpetition
Claims held by a Debtor, a Wholly-Owned Affiliate or a Controlled Affiliate
against a Debtor, a Wholly-Owned Affiliate or a Controlled Affiliate that arise
by reason of (a) the guarantee by a Debtor of the payment of postpetition
professional fees and expenses of another Debtor in accordance with the DIP
Order, (b) any Cash assets required to be advanced to Devco and deposited in
accordance with the DIP Loan and the DIP Order, including the proceeds of any
postpetition asset sale occurring prior to the Effective Date required to be
repaid under the DIP Loan and DIP Order, (c) the Services Agreements approved by
the Bankruptcy Court by order dated October 11, 1995, (d) the Restructuring
Transactions, and (e) the terms of the January 12th Settlement Agreement, shall
not be released and cancelled. To the extent the postpetition Claims described
in clauses (a), (b), (c) and (e) above are Claims against one or more the
Debtors, such Claims shall be treated as Administrative Expense Claims under the
Plan.
For a more detailed description of the Settlement of Intercompany
Claims and the factual basis for such Settlement, see "Significant Developments
in the Debtors' Chapter 11 Cases -- Intercompany Settlement".
2. The January 12th Settlement Agreement
The January 12th Settlement Agreement forms the basis for the
structure of the Plan: the organization of Newco LP around the Core Properties
and the organization of an independent real estate investment trust (a "REIT")
owned by the 970
- --------
3 This claim is not being cancelled for the reasons set forth in the Tower B
Co. Plan. 4This claim is not being cancelled because it relates to an issue
between non-debtor third parties, which parties are currently in a
foreclosure proceeding before another court. 5The preceding two claims are
not being cancelled so that such claims may be used in a tax-efficient
manner which benefits the Debtors.
<PAGE>
-18-
Noteholders, which REIT will own two other O&Y (U.S.) properties, namely 237
Park Avenue, New York, New York ("237 Park"), and 1290 Avenue of the Americas,
New York, New York ("1290 Avenue of the Americas"). The January 12th Settlement
Agreement contemplates a series of transactions between and among the Debtors,
Apollo Real Estate Investment Fund, L.P. ("Apollo"), a significant secured and
unsecured creditor of the Debtors which presently holds, among other things,
approximately 81% of the Club Loan, and the Co-Proponents, in which the current
holders of the Club Loan will transfer the Club Loan, along with Apollo's
Allowed Unsecured Claims against O&Y (U.S.) in the approximate aggregate amount
of $91 million, to certain of the Co-Proponents in exchange for certain 970
Notes to be delivered by certain of the Co-Proponents to the current holders of
the Club Loan and certain other consideration described in the January 12th
Settlement Agreement. The January 12th Settlement Agreement also provides that a
condition precedent to its effectiveness is the entry of an order of the Court
allowing, and thereby resolving various potential disputes with respect to,
various claims of the Debtors, the Co- Proponents and Apollo.
In the event the January 12th Settlement Agreement has not been
approved in all respects by a Final Order on or before the commencement of the
Confirmation Hearing, the January 12th Settlement Motion is incorporated and
made a part of the Plan, and the Plan will constitute a motion of the Debtors
requesting: (a) all of the relief requested in the January 12th Settlement
Motion; (b) approval of the transfer of Claims, properties, interests in
property and assets under the January 12th Settlement Agreement prior to the
Effective Date; and (c) approval of the protections afforded to the Claims,
properties, interests in property and assets to be transferred under the January
12th Settlement Agreement as of the date of transfer irrespective of whether the
Effective Date occurs.
For a detailed discussion of the January 12th Settlement Agreement,
see "Significant Developments in the Debtors' Chapter 11 Cases -- The
Exclusivity Litigation and the January 12th Settlement Agreement".
3. BPHI Settlement
The BPHI Settlement is a compromise of certain claims by and between
certain of the Debtors and BPHI arising from their relationship as direct and/or
indirect partners in the partnerships owning Towers A, B and D of the World
Financial Center. The BPHI Settlement contemplates the following:
On the Effective Date, all Claims of BPHI against the Debtors will be
resolved and compromised and BPHI will exchange
<PAGE>
-19-
its Claims against the Debtors and its Equity Interests in and Claims against
the BPHI Partnerships as follows:
o BPHI (or its designee) will be distributed on
account of (i) its Equity Interests in the BPHI
Partnerships, (ii) the Claims of BPHI against
Tower B Co. and the BPHI Partnerships, and (iii)
the Claims of BPHI against Devco (to the extent of
and in its capacity as a partner in the BPHI
Partnerships) and certain other Debtors, that
number of Class A Interests representing 30.06%
of the ownership of Newco LP (before taking into
account the Co-Proponents' Capital Infusion).
o On the Effective Date, BPHI shall fund 48.75% of
the Co-Proponents' Capital Infusion.
o BPHI will have an Allowed General Unsecured Claim
against Devco in the amount of $22,250,000, which
Allowed Claim will receive the treatment accorded to
holders of Allowed Co-Proponent Unsecured Claims
against the Consolidated Devco Entities.
o In addition to the releases provided in the Plan
and in the Tower B Co. Plan, Tower B Co. and the
O&Y Affiliates and the Controlled Affiliates, on
the one hand, and BPHI, on the other hand, will
execute and deliver mutual releases of all
Liabilities and Causes of Action relating to all
acts and omissions occurring prior to the
Effective Date with respect to the Debtors, the
Plan, the Reorganization Cases, Tower B Co., the
Tower B Co. reorganization case and the Tower B
Co. Plan.
For a detailed discussion of the issues between O&Y (U.S.) and BPHI
and a complete description of the settlement thereof, see "Significant
Developments in the Debtors' Chapter 11 Cases -- BPHI Settlement".
4. Merrill Lynch Settlement
Merrill Lynch, through leasehold interests held by certain of its
affiliates, is the largest tenant of O&Y (U.S.), leasing (on a triple-net basis)
substantially all of the space in Towers B and D of the World Financial Center.
Merrill Lynch has various claims against certain O&Y Affiliates arising out of
this relationship and certain O&Y Affiliates have claims against Merrill Lynch,
as well. O&Y (U.S.) has negotiated a settlement
<PAGE>
-20-
of all of these claims with Merrill Lynch on the following basic
terms:
o Merrill Lynch will consent to the assumption by
Devco and Tower A Co. pursuant to section 365 of
the Bankruptcy Code of the Operator Component of
the Project Operating Agreement and the assignment
of such WFC Operator Component to Newco LP. In
accordance with section 365(b) of the Bankruptcy
Code, Merrill Lynch/WFC/L, Inc. or its designee
will be entitled to the release of the funds held
in the Merrill Lynch Escrow and the O&Y Affiliates
will release any and all claims for the return of
the funds held in the Merrill Lynch Escrow.
o Merrill Lynch/WFC/L, Inc. will consent to all
Available Cash of Tower B Leaseco being used: (i)
to pay in full Administrative Expense Claims,
Allowed Priority Tax Claims and Allowed Priority
Non-Tax Claims against Tower B Leaseco; (ii)
thereafter, as a distribution on account of the
Merrill Lynch/Tower B Leaseco Secured Claim equal
to $502,000 to the Merrill Lynch Capital Fund to
be held by Merrill Lynch and to be used to fund
the River Water By-Pass Project and certain window
and facade repairs required to be made to Tower B;
and (iii) thereafter, to pay each holder of an
Allowed General Unsecured Claim against Tower B
Leaseco such holder's Ratable Proportion of the
Available Cash of Tower B Leaseco, after giving
effect to clauses (i) and (ii) above.
o Merrill Lynch/WFC/L, Inc. will have an Allowed
General Unsecured Claim against Tower B Leaseco of
$93,000,000 and, to the extent such Allowed
General Unsecured Claim against Tower B Leaseco
will not receive payment in full in accordance
with section 16.4 of the Plan, Merrill
Lynch/WFC/L, Inc. will have an Allowed
Unaffiliated Unsecured Claim against Devco arising
from Devco's guarantee of the obligations of Tower
B Leaseco, which Allowed Claim shall be in an
amount equal to the difference between $93,000,000
and the amount of any distributions received by
Merrill Lynch/WFC/L, Inc. on account of its
Allowed General Unsecured Claim against Tower B
Leaseco will receive the treatment afforded to
holders of Allowed Unaffiliated Unsecured Claims
against Consolidated Devco, pursuant to section
7.11.1 of the Plan.
<PAGE>
-21-
o Merrill Lynch will consent to the modification and
amendment of the Tower D Co. Partnership
Agreement, which modification and amendment will
provide for the elimination of the debt service
and principal limitations applicable to a
refinancing of mortgage debt relating to Tower D
as set forth in section 16 of such partnership
agreement.
o Merrill Lynch will cooperate in effectuating a
refinancing of the indebtedness on Tower D of the
World Financial Center on terms which are mutually
acceptable to Merrill Lynch, the Co-Proponents and
the Debtors. Such financing is expected to take the
form of a securitized rated debt.
o Merrill Lynch will consent to the modification and
amendment of the Tower B Reimbursement Agreement and
the Tower D Reimbursement Agreement, which
modifications and amendments shall provide, among
other things, for:
o the limitation of the recourse provisions of the
Tower B Reimbursement Agreement and the Tower D
Reimbursement Agreement such that the obligations
under such agreements will only be recourse to
Tower B Co. and Tower D Co., respectively;
o the provisions of the Tower D Reimbursement
Agreement will be guaranteed by Newco LP;
provided, however, that such guarantee shall not
cover matters for which Merrill Lynch Tower D
Partner is obligated under the Tower D Co.
Partnership Agreement;
o the make-whole provisions relating to Floors 26,
27 and 28 of Tower B in the Tower B Reimbursement
Agreement will be deleted; and
o in connection with the Tower B Refinancing
contemplated by section 7.1 of the Tower B Co.
Plan or any other refinancing of Tower B, Merrill
Lynch/WFC/L, Inc. will cooperate with respect to
modifications of the Tower B Reimbursement
Agreement.
o In exchange for the consideration provided by
Merrill Lynch in paragraphs (d) and (e) above and
in the Tower B Co. Plan, Merrill Lynch/WFC/L, Inc.
<PAGE>
-22-
will elect on the Ballot to be distributed with
respect to the Plan and the Tower B Co. Plan:
(i) a payment in Cash to Merrill Lynch/WFC/L, Inc.
equal to $26,400,000, payable on the Effective
Date, plus interest at the rate of 9% per annum
for the period commencing on July 1, 1996 and
ending on the Effective Date; or
(ii) a rent reduction on the Merrill Lynch Tower D
Lease equivalent to the Cash payment determined in
clause (i) of the immediately preceding paragraph,
which will be recovered over a period of at least
five (5) years following the Effective Date using
an annual discount rate (payable monthly in
advance) of 6.73%.
o With respect to the Tower D Reimbursement
Agreement: (i) there shall be a first-priority
nonrecourse pledge to Merrill Lynch of the equity
in Tower D Co. owned (subject to the terms of
section 7.4 of the Plan), directly or indirectly,
by the O&Y Affiliates, BPHI and/or Newco LP, as
the successor to the O&Y Affiliates, to secure the
obligations of Tower D Co. under the Tower D
Reimbursement Agreement; (ii) any claim arising
under the Tower D Reimbursement Agreement shall be
subordinate only to the Tower D Mortgage Debt and
no remedies will be exercisable against Tower D
Co. until the Tower D Mortgage Debt is satisfied;
and (iii) until the Tower D Mortgage Debt is
satisfied, Merrill Lynch will agree not to pursue
collection of such amounts due or interest
accruing thereon under the Tower D Reimbursement
Agreement.
o The Shared Management Agreement for Tower D shall
be modified to delete (effective as of July 1,
1996) 100% of the management fee (currently
$227,000 annually). Merrill Lynch shall be
provided an initial credit of $33,000, increasing
by 3% annually, for a total initial credit of
$260,000, against the operating and other costs
payable by Merrill Lynch under such agreement,
and, as modified, assumed and assigned to Newco
LP. The present value of the amounts described in
this paragraph shall be increased at a rate of 9%
<PAGE>
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per annum from July 1, 1996 through the Effective
Date.
For a detailed discussion of the Merrill Lynch Settlement, see
"Significant Developments in the Debtors' Chapter 11 Cases -- Merrill Lynch
Settlement".
5. Unsecured Creditors' Agreement
The Debtors have reached a settlement with the Official Committee of
Unsecured Creditors (the "Creditors' Committee") of all Allowed Unaffiliated
Unsecured Claims against Consolidated Devco. The Creditors' Committee recommends
that all holders of Unaffiliated Unsecured Claims against Consolidated Devco
accept the treatment for such claims described herein and in the Plan and vote
on the Ballot distributed with the Plan to accept the Plan. The terms of the
Unsecured Creditors' Agreement are as follows:
On the Effective Date and in accordance with the Restructuring
Transactions, each holder of an Allowed Unaffiliated Unsecured Claim against the
Consolidated Devco Entities shall be distributed consideration having a value
equal to 8% of the amount of such Allowed Unaffiliated Unsecured Claim. Such
consideration shall be comprised of (a) Class A Interests having a value on the
Confirmation Date equal to 2.29% of such holder's Allowed Unaffiliated Unsecured
Claim, and (b) a Convertible Note Interest having a value equal to 5.71% of such
Allowed Unaffiliated Unsecured Claim. In the aggregate, the amount distributed
to each holder of an Unaffiliated Unsecured Claim against Consolidated Devco
under clauses (a) and (b) will result in a recovery to such holder of 8(cent) on
each dollar of claims held by such holder.
For a detailed discussion of the Unsecured Creditors' Agreement, see
"Significant Developments in the Debtors' Chapter 11 Cases -- Unsecured
Creditors' Agreement".
6. TIAA Settlement
The TIAA Settlement settles the claims of Teachers' Insurance and
Annuity Association of America ("TIAA") arising out of litigations that TIAA has
commenced alleging that certain of the Debtors breached loan commitment
agreements with TIAA and certain other motions brought by TIAA in the Bankruptcy
Court.
The TIAA Settlement contemplates that TIAA will receive a Cash payment
of $6.5 million on the Effective Date. The 53 State Street Segregated Funds
shall be released to TIAA and all claims that the Debtors or the O&Y Affiliates
may have relating
<PAGE>
-24-
to the 53 State Street Segregated Funds and the Tower A Segregated Funds shall
be released. TIAA will also receive a deferred cash payment of $3,000,000,
payable by a note issued by New Tower A LP, which will provide for a $1 million
cash payment from New Tower A LP (payable quarterly in arrears in four equal
installments of $250,000) on each of the first three anniversaries of the
Effective Date. The payment obligation under this note will be secured by a
collateral assignment of certain asset management fees payable to Newco LP
pursuant to section 13.2 of the Plan. TIAA will also have an Unaffiliated
Unsecured Claim against Consolidated Devco of $75,000,000, on account of which
TIAA will be distributed Class A Interests having a value equal $1,714,286 and
Convertible Note Interests having a face amount equal to $4,285,714. In
addition, TIAA, BPHI, Carena and the O&Y Affiliates (or their respective
successors) will execute and deliver mutual releases that are consistent with
the provisions of section 4.5 of the Plan.
For a further description of the TIAA Settlement, see "Significant
Developments in the Debtors' Chapter 11 Cases -- TIAA Litigations and TIAA
Settlement".
7. Bank of Nova Scotia Settlement
As discussed in detail below, the Bank of Nova Scotia has certain
claims arising out of its lending relationship with OYDL and related pledges of
certain notes (the "MCJV Notes"), secured by real property in Miami, Florida
(the "MCJV Lands"), owned by Baden (the "Baden Pledge") relating to the Miami
Center Joint Venture ("MCJV"). O&Y (U.S.) has reached a compromise with Bank of
Nova Scotia of all of its claims arising out of this relationship. The basic
terms of the Bank of Nova Scotia Settlement are as follows:
o Newco LP will be solely responsible for managing
the MCJV Lands, making all decisions with respect
to the conduct of litigation affecting the
interest of Newco LP in the MCJV Lands (including
any litigation with respect to the MCJV Notes),
and making all decisions with respect to all
matters pertaining to the maintenance, management
and marketing of the MCJV Lands.
o Newco LP will pay up to $4,500,000 of the costs
incurred with respect to the preservation,
maintenance, management, marketing and sale of the
MCJV Lands (including all unpaid real estate taxes
relating to the MCJV Lands), the enhancement of the
value of the MCJV Lands and the conduct of any
<PAGE>
-25-
litigation affecting the interest of Newco LP in
the MCJV Lands (the "Costs").
o Upon a sale of all or a portion of the MCJV Lands,
the proceeds thereof will be allocated as follows:
The first $15,000,000 in gross sale
proceeds from the sale of all or a
portion of the MCJV Lands will be
used to pay, among other things, any
then outstanding real estate taxes
(unless assumed by the purchaser),
any outstanding costs of the sale or
any prior sale that have not yet
been reimbursed to Newco LP and any
outstanding Cost Recovery Priority
with interest thereon at a rate
specified in section 4.7 of the
Plan. The balance of the first
$15,000,000 in gross sale proceeds
will be distributed 50% to Newco LP
and 50% to Bank of Nova Scotia. The
gross sale proceeds in excess of
$15,000,000 will be distributed 75%
to Newco LP and 25% to Bank of Nova
Scotia.
For a further description of the Bank of Nova Scotia Settlement, see
"Significant Developments in the Debtors' Chapter 11 Cases -- Bank of Nova
Scotia Settlement".
8. Toronto Dominion Settlement
The Debtors have reached a settlement with Toronto Dominion of any and
all claims that Toronto Dominion may have against any of the Debtors, including
Baden, arising out of a certain loan made by Toronto Dominion Bank referable to
the Independence Bay, Florida property (the "Chase Note"). The Chase Note was
originally made to York Chase Ronto Co., the predecessor in interest to York
Venture Co., and secured by first and second mortgages on the Independence Bay
property. As additional security, Baden unconditionally guaranteed the
obligations of York Chase Ronto Co. to Toronto Dominion. The settlement
compromises, among other things, any claims that Toronto Dominion may have
against Baden arising from such guarantee on the following terms:
On the Effective Date, in full satisfaction of the Toronto Dominion
Judgment Claims and all other Claims that Toronto Dominion may have against any
of Baden, York Venture Co. or all other O&Y Affiliates (including any Claims
under or related to the Toronto Dominion Letter of Credit), Toronto
<PAGE>
-26-
Dominion will be distributed (a) the Chase Note and any proceeds of the Chase
Note received after August 9, 1996 by the O&Y Affiliates prior to the Effective
Date and (b) a deed to the unsold property currently owned by York Venture Co.
located at Independence Bay; provided, however, that the transfer of such unsold
property shall remain subject to the rights and obligations set forth in the
Independence Bay Contracts. To the extent that such property, or any portion
thereof, is sold prior to the Effective Date pursuant to the Independence Bay
Contracts, the proceeds thereof (net of the costs of sale) shall be delivered to
Toronto Dominion upon the consummation of such sale. In the event that such
transactions are not consummated prior to the Effective Date, Toronto Dominion
shall assume and perform any and all obligations under the Independence Bay
Contracts from and after the Effective Date, and shall indemnify and hold
harmless York Venture Co., the Debtors, the Debtors in Possession, any and all
other O&Y Affiliates and each of their respective successors in interest from
any and all Liabilities that may arise from the failure of Toronto Dominion to
specifically perform the Independence Bay Contracts from and after the Effective
Date.
For a further description of the Toronto Dominion Settlement, see
"Significant Developments in the Debtors' Chapter 11 Cases -- Toronto Dominion
Settlement".
9. Reichmann Settlement
Certain of the Debtors have claims against the Reichmann Family (and
certain corporations controlled by members of the Reichmann Family
(collectively, the "Family Corps.")) (the Reichmann Family and the Family Corps.
are referred to collectively herein as the "Reichmann Entities") arising from
the Reichmann Family's status as 100% shareholders in OYDL and, as a result of
such position, from the operation and management decisions made by certain
members of the Reichmann Family who participated in the management of the
Canadian Debtors and O&Y (U.S.). O&Y (U.S.) has agreed to settle its claims
against the Reichmann Entities (the "O&Y (U.S.)/Reichmann Claims"), and the
Reichmann Entities have agreed to settle their claims against O&Y (U.S.) (the
"Reichmann Claims" and/or "Reichmann Bank Claims"), on the following basic
terms:
o On the Effective Date, the Debtors, the Debtors in
Possession and the O&Y Affiliates will release the
O&Y (U.S.)/Reichmann Claims, and the Reichmann
Entities will release the Reichmann Claims. The
release provided in the preceding sentence does
not in any way release O&Y 25 Realty Company, O&Y
25 Realty Company, L.P. and U.S. Holdings from any
Liabilities; provided, however, that the Reichmann
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<PAGE>
-27-
Entities will be exculpated from all Liabilities
arising from the status of one or more of the
Reichmann Entities as a direct or indirect partner of
O&Y 25 Realty Company, O&Y 25 Realty Company, L.P.
and U.S. Holdings. This release shall not prohibit
the use by one or more of the Debtors, the Debtors in
Possession and the O&Y Affiliates of the O&Y
(U.S.)/Reichmann Claims as an affirmative defense or
a counterclaim.
o If A.R.F. Corp. acquires title to the Reichmann
Bank Claims from Svenska Handelsbanken and Bank
Leumi prior to the Effective Date, A.R.F. Corp.
shall subordinate the Reichmann Bank Claims to
Allowed General Unsecured Claims against
Consolidated Devco and/or Consolidated Realty
Corp., as the case may be (with the effect that
the Reichmann Bank Claims shall receive no
distribution under the Plan), or transfer the
Reichmann Bank Claims as directed by one or more
of the Debtors, the Debtors in Possession and the
O&Y Affiliates.
o If A.R.F. Corp. does not acquire title to the
Reichmann Bank Claims prior to the Effective Date,
the Svenska Claims will be reserved for in the
Class 8.6 Disputed Claims Equity Escrow and the
Bank Leumi Claims will be reserved for in the
Subclass 7.11.1 Disputed Claims Debt/Equity
Escrow. The Disbursing Agent shall continue to
maintain reserves on account of the Reichmann Bank
Claims until such time as Svenska Handelsbanken
and Bank Leumi shall have elected to either (a)
receive the Old Bridge Lands in full satisfaction
of their respective interests in such Claims or
(b) receive the respective distributions reserved
for on account of the Svenska Claims and the Bank
Leumi Claims. Such election shall determine
title to the Svenska Claims and the Bank Leumi
Claims.
o In the event Svenska Handelsbanken and Bank Leumi
elect to receive the treatment provided in clause
(a) of the preceding paragraph, Svenska
Handelsbanken and Bank Leumi shall transfer the
Reichmann Bank Claims to A.R.F. Corp. and A.R.F.
Corp. shall subordinate such Claims to Allowed
General Unsecured Claims against Consolidated
Devco and/or Consolidated Realty Corp., as the
case may be (with the effect that the Reichmann
<PAGE>
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Bank Claims shall receive no distribution under the
Plan), or transfer the Reichmann Bank Claims as
directed by one or more of the Debtors, the Debtors
in Possession and the O&Y Affiliates. In this event,
the reserves established on account of the Reichmann
Bank Claims will be released to the Co-Proponents.
o In the event Svenska Handelsbanken and Bank Leumi
elect to receive the treatment provided in clause
(b) of the second preceding paragraph, (a) Svenska
Handelsbanken will receive a distribution on
account of the Svenska Claims from the Class 8.6
Disputed Claims Equity Escrow and (b) Bank Leumi
will receive a distribution on account of the Bank
Leumi Claims from the Subclass 7.11.1 Disputed
Claims Debt/Equity Escrow. In consideration of
such distributions, on the Effective Date, Svenska
Handelsbanken and Bank Leumi shall transfer their
rights under the mortgages relating to the Old
Bridge Lands to A.R.F. Corp. and A.R.F. Corp.
shall transfer such mortgages to Newco LP or its
designee. In the event of such transfers, the
Reichmann Entities agree to sell the Old Bridge
Lands as directed by Newco LP or its designee.
o The Reichmann Entities will provide to the Debtors a
letter in the form previously provided to the Debtors
by counsel to the Reichmann Entities describing the
financial condition of MAT Investment, Inc.
o The Family Corps. will provide to the Debtors
their most recent financial statements and journal
entries reflecting significant transactions
subsequent to the date of such financial
statements in the form actually maintained by the
Family Corps. in the operation of their respective
businesses.
o The Reichmann Entities will cooperate in all
reasonable requests made by the Debtors to assist
them in confirming the Plan and any requests to
preserve and protect the assets of the Debtors,
the Debtors in Possession and the O&Y Affiliates;
provided, however, that, in no event shall this
-------- -------
agreement to cooperate require any Reichmann
Entity to take any action which could create,
impose or otherwise result in any liability to any
Reichmann Entity.
<PAGE>
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o In the event that subsequent to the Effective
Date, Coopers & Lybrand OYDL, Inc./Limited or any
other person claiming by, through, or under OYDL
or any successor holder of the 25 Realty Note,
maintains any action or proceeding challenging the
enforceability or propriety of the transfer or
subordination of the Reichmann Bank Claims in
accordance with this settlement, or to impose any
Liability on any Reichmann Entity as a result of
such transfer or subordination, Newco LP shall
defend any such action and will hold the Family
Corps. and each and every Reichmann Entity
harmless from any and all Claims, debts or
Liabilities based upon, arising out of and related
to such transfer or subordination.
For a further description of the history of the Reichmann Claims and a
detailed description of the terms of the settlement of the Reichmann Claims, see
"Significant Developments in the Debtors' Chapter 11 Cases -- Reichmann
Settlement".
10. American Express Settlement
The Debtors have entered into a settlement with the American Express
Company ("Amex"), the parcel tenant at Tower C of the World Financial Center, of
any and all claims that Amex may have against the Debtors owing to (i) Devco's
performance as Operator under the Project Operating Agreement for the World
Financial Center, and (ii) any obligation that Olympia & York WFC Retail Company
("Retailco"), or its general partners or predecessors in interest, may have to
Amex under a certain lease between Amex and Retailco (the "Amex/Retailco
Lease"). The terms of the settlement are as follows:
o Amex will cooperate in the construction of the
River Water By-Pass Project.
o The O&Y Affiliates will bear the entire cost of the
Merrill Lynch Settlement relating to the electric
arbitration, including legal fees.
o Tower A Co. will assume the WFC Operator Component of
the Project Operating Agreement and will designate
Newco LP or an Affiliate thereof to perform the
services described in the Project Operating
Agreement.
o All existing Claims between Amex and the O&Y
Affiliates with respect to the World Financial Center
will be released and forever barred.
<PAGE>
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o Amex will have an Allowed Unaffiliated Unsecured
Claim against Devco in the amount of $320,000 in
complete settlement of all Claims relating to the
World Financial Center, including Claims relating to
roof and window warranties, chilled water and other
charges under the Project Operating Agreement.
o Amex will have an Allowed Unaffiliated Unsecured
Claim against Devco in the amount of $4,000,000,
representing the maximum damages that Amex would
be allowed under the Bankruptcy Code for unpaid
rent and for damages if the Amex/Retailco Lease
had been rejected. The O&Y Affiliates will
continue to pay base rent at the existing rate
until February 28, 1997.
o The Amex/Retailco Lease will be restructured on
the terms contained in section 4.8 of the Plan.
11. Dragon Settlement
Dragon, one of the Co-Proponents, holds claims against the Debtors
related to Dragon's status as a partner with certain of the Debtors and certain
O&Y Affiliates in the entity which owns certain real property located at 60
Broad Street, New York, New York, namely O&Y Concord 60 Broad Street Company.
The Debtors and Dragon have negotiated a settlement of all claims which Dragon
holds against the Debtors arising out of such relationship on the following
basic terms:
On the Effective Date, in full satisfaction of any and all Claims of
Dragon against the Debtors, the Debtors in Possession and the O&Y Affiliates
(other than O&Y Concord 60 Broad Street Company), the Dragon Unsecured Claim
shall be Allowed in the amount of $60,000,000 and shall be provided the
treatment accorded to Allowed Co-Proponent Unsecured Claims set forth in section
7.11.2 of the Plan. Nothing herein or in the Plan will prejudice or in any way
release the Liens and Claims of Dragon against O&Y Concord 60 Broad Street
Company. In consideration of the treatment provided to Dragon in section 4.10 of
the Plan, Dragon shall release and waive all other Claims that it has or may
have against the Debtors, the Debtors in Possession and the O&Y Affiliates
(other than O&Y Concord 60 Broad Street Company).
<PAGE>
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12. Oppenheimer Indirect Capital Contribution
and Treatment of Oppenheimer Claim
Oppenheimer & Co. ("Oppenheimer") has certain claims against the
Debtors, and in particular Tower A Co., arising out of its relationship with
certain of the O&Y Affiliates as a partner in Tower A Co. In compromise of its
claims against the Debtors, and in consideration for contributing $6 million to
assist the Debtors in consummating the TIAA Settlement, Oppenheimer will receive
the following treatment:
On the Effective Date, (a) in order to assist Tower A Co. in its
settlement with TIAA, and subject to a resolution of the partnership issues
relating to Tower A as set forth below, Oppenheimer will contribute to the
capital of Tower A Associates the sum of $6,000,000 which will ultimately be
used by Tower A Co. to fund $6,000,000 of the Cash payments required to be made
to TIAA in accordance with section 4.5 of the Plan and (b) in full satisfaction
and settlement of all Claims that Oppenheimer has filed or could have filed
against any of the Debtors, the Debtors in Possession and the O&Y Affiliates
(other than Oppenheimer's Claim against Devco relating to commercial rent taxes
and any Claims arising in connection with Oppenheimer's lease of space at Tower
A) and all Claims arising in connection with Oppenheimer's indirect Equity
Interest in Tower A Co., Oppenheimer will have an Allowed Unaffiliated Unsecured
Claim against Devco arising out of the partnership agreement for Tower A Co. in
an agreed amount equal to $60,000,000, which Claim shall receive the treatment
described in section 7.11.1 of the Plan.
Oppenheimer and the Debtors have agreed that the Tower A Co.
Partnership Agreement shall be amended in the following manner:
The Tower A Co. Partnership Agreement will be amended to include a
provision that specially allocates a portion of the federal income tax deduction
attributable to the TIAA settlement to TALP in an amount equal to the
Oppenheimer contribution. Tower A Co. will report the TIAA settlement as a
deductible payment for federal income tax purposes.
The receivable due to Tower A Co. from BPHI, Devco and Tower A Holding
(the "Tower A Partner Receivable") will be amended to accrue interest at 10.5%
per annum, compounded semi-annually. Such interest will be due and payable upon
a repayment of the Tower A Partner Receivable. Tower A Co.'s tax reporting for
interest accruals on the Tower A Partner Receivable will conform to the
obligor's reporting of such interest accruals.
<PAGE>
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All existing preferences in the Tower A Co. Partnership Agreement will
be deleted.
The Tower A Co. Partnership Agreement will be amended to explicitly
acknowledge that the Restructuring Transactions involving Tower A Co. will not
increase the amount of gain allocable to TALP under section 704(c) of the IRC or
increase TALP's share of "partnership minimum gain" (as such term is defined in
Treasury Regulation ss. 1.704-2(c)) as described in Treasury Regulation ss.
1.704-2(g)(1) and that the aggregate book value of the assets of Tower A Co.
will be unchanged as a result of the Restructuring Transactions.
Section 7.1(c) of the Tower A Co. Partnership Agreement will be
amended to provide that if the 1987 assumptions of portions of the Sanwa
indebtedness made by the partners of Tower A Co. result in an Adjusted Capital
Deficit (as defined in the Tower A Co. Partnership Agreement) for TALP, unless
otherwise required by explicit authority to the contrary, items of Tower A Co.
income and gain shall first be specially allocated to all partners of Tower A
Co. other than TALP until the Adjusted Capital Deficits of such other partners
have been eliminated before any income or gain is allocated to TALP pursuant to
such section 7.1(c).
As of the closing of the Restructuring Transactions, all provisions of
the Tower A Co. Partnership Agreement requiring one party to indemnify the other
with respect to tax terminations will be deleted (including the Target
Allocations, as defined in the Tower A Co. Partnership Agreement). All partners
will waive any Claims against the Debtors, with respect to tax terminations in
connection with or prior to the Restructuring Transactions will be waived
provided that Oppenheimer receives an Allowed Unaffiliated Unsecured Claim in
the amount of $60,000,000.
Any other amendment to the Tower A Co. Partnership Agreement, or any
tax reporting by Tower A Co. that is inconsistent with the tax reporting
contemplated by section 4.11 of the Plan or otherwise adversely affects
Oppenheimer, shall require the consent of Oppenheimer, which consent shall not
be unreasonably withheld.
E. CLASSIFICATION AND TREATMENT SUMMARY
The following table briefly summarizes the classification and
treatment of Claims and Equity Interests under the Plan. In no case will any
Creditor receive more than 100% of its Allowed Claims.
<PAGE>
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Classes Type of Claim and Treatment
Administrative
Claims, Priority
Tax Claims and
Convenience Claims
Administrative Expense Claims
o On the Effective Date, each holder of an
Administrative Expense Claim will receive a
payment in Cash equal to the Allowed Amount of its
Claim unless such holder agrees to a different
treatment of its Claim.
o Distributions to holders of Administrative Expense
Claims will be made (a) upon the later of (i) the
Effective Date and (ii) the date that is ten (10)
Business Days after an order of the Bankruptcy
Court with respect to any such Administrative
Expense Claim becomes a Final Order or (b) upon
such other terms as may be mutually agreed upon
between such holder of the Claim and any of the
Debtors.
o See section 5.1 of the Plan.
Priority Tax Claims
o Each holder of an Allowed Priority Tax Claim
(except those holding such claims against Tower B
Leaseco) will receive on the Effective Date a Tax
Note that complies with the requirements of
section 1129(a)(9)(C) of the Bankruptcy Code or
such other, more favorable treatment, as the
Debtors in their sole discretion shall elect.
<PAGE>
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o Each holder of an Allowed Priority Tax Claim
against Tower B Leaseco will receive on the
Effective Date a payment in Cash equal to the
amount of such Claim.
o See section 5.2 of the Plan.
Consolidated Devco Convenience Claims
o Paid in Cash, in full, on the Effective Date,
subject to the Employee Withholding Requirement
for Consolidated Devco Convenience Claims that are
Compensation Claims.
o See section 5.3 of the Plan.
Consolidated Devco
Consolidated Devco
Class 1 Priority Non-Tax Claims against
Consolidated Devco
o Unimpaired.
o Each holder of an Allowed Priority Non-Tax Claim
against Consolidated Devco will be distributed a
payment in Cash on the Effective Date equal to the
amount of its Allowed Priority Non-Tax Claim.
o See section 7.1 of the Plan.
Consolidated Devco Secured Club Loan Claims against
Class 2 Devco GP, Equity GP, Devco, Equityco,
and U.S. Finco
o Impaired.
o On the Effective Date, the New Club Loan
Disbursing Agent will receive Class A Interests
having a value equal to the lesser of (a) the
Allowed Club Loan Claims and (b) the value on the
Confirmation Date of the
<PAGE>
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Collateral securing the Allowed Club Loan Claims
pledged by Devco, Devco GP, Equityco, Equity GP
and U.S. Finco.
o In accordance with this sections 7.2, 8.2, 14.2
and 15.2 of the Plan and without duplication, the
New Club Loan Disbursing Agent will be
distributed, in the aggregate and in full
satisfaction of the Allowed Club Loan Claims,
Class A Interests having a value equal to the
lesser of (a) the Allowed Club Loan Claims and (b)
the value on the Confirmation Date of the
Collateral securing the Allowed Club Loan Claims
pledged by any Debtor under the Plan.
o See section 7.2 of the Plan.
Consolidated Devco Secured CIBC/OLP Claims Against Devco
Class 3 and U.S. Finco
o Impaired.
o The CIBC/OLP Claims will be Allowed in the amount
of $75,658,000 plus interest accruing from and
after June 30, 1996 through the Effective Date
(plus any unpaid attorneys' fees and expenses
incurred through the Effective Date that are
payable under the agreements evidencing the
CIBC/OLP Claims).
o On the Effective Date, CIBC (or its designee) will
receive Class A Interests having an aggregate
value equal to the lesser of (a) the amount of the
Allowed CIBC/OLP Claims on the Effective Date and
(b) the value, as of the Confirmation Date, of the
Collateral securing the Allowed CIBC/OLP Claims.
<PAGE>
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o See section 7.3 of the Plan.
Consolidated Devco Secured Sumitomo Bank/Tower D Pledge
Class 4 Loan Claims against Devco and Devco
GP
o Impaired.
o Sumitomo Bank will receive a payment in Cash of
$74,750,000 plus any unpaid and accrued interest
at the rate of LIBOR plus 100 basis points accrued
on the Sumitomo Bank/Tower D Pledge Loan together
with any costs and expenses payable under Sumitomo
Bank/Tower D Pledge Loan the through the Effective
Date.
o On the Effective Date, the Sumitomo Bank/Tower D
Pledge Loan and any Claims otherwise arising under
or related to the such pledge loan or any of the
guarantees, mortgages or security interests issued
in connection therewith will be released and
cancelled in consideration of the treatment
provided in the Plan.
o See section 7.4 of the Plan.
Consolidated Devco Secured Citibank Letter of Credit
Class 5 Claims against the Consolidated Devco
Entities
o Impaired.
o On the Effective Date, Citibank will receive the
Collateral that secures the reimbursement
obligation under the Citibank Letter of Credit.
o See section 7.5 of the Plan.
Consolidated Devco Secured Citibank Swap
Class 6 Claims Against Devco
<PAGE>
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o Impaired.
o On the Effective Date, Citibank will receive the
Collateral (a certain Cash account which held
$443,507.31 as of March 31, 1996) that secures the
Secured Citibank Swap Claim to the extent such
Claim is an Allowed Secured Claim. The Deficiency
Claim on the Allowed Citibank Swap Claim will
receive the treatment afforded to Co- Proponent
Unsecured Claims set forth in section 7.11.2 of
the Plan.
o See section 7.6 of the Plan.
Consolidated Devco Secured Sterling National Letter of
Class 7 Credit Claims against Devco GP
o Impaired.
o On the Effective Date, Sterling National will
receive the Sterling National Amended and Restated
Reimbursement Agreement, pursuant to which Newco
LP will be substituted for Devco GP as the obligor
on such reimbursement agreement.
o See section 7.7 of the Plan.
Consolidated Devco Secured 245 Park Co. Partnership
Class 8 Claims against Devco
o Impaired.
o On the Effective Date, the holders of the Allowed
245 Park Co. Partnership Claims against Devco will
receive the distributions provided to the holders
of Allowed Equity Interests in 245 Park Co.
pursuant to section 15.8.2 of the Plan.
<PAGE>
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o See section 7.8 of the Plan.
Consolidated Devco CIBC/Lost Note Indemnity Claims
Class 9 Against O&Y Finco, Equityco and
Equity GP
o Impaired.
o On the Effective Date, CIBC will receive the CIBC
Amended and Restated Indemnity Agreement, pursuant
to which Newco LP will be substituted for O&Y
Finco, Equityco and Equity GP as the obligor on
such indemnity agreement.
o See section 7.9 of the Plan.
Consolidated Devco Insured Claims Against the
Class 10 Consolidated Devco Entities
o Impaired.
o On the Effective Date, each holder of an Insured
Claim will only be entitled to maintain actions
against and obtain payment solely from an
insurance company under an insurance policy or
policies issued by such company to, or for the
benefit of, any of the Consolidated Devco
Entities.
o See section 7.10 of the Plan.
Consolidated Devco General Unsecured Claims against the
Class 11 Consolidated Devco Entities
o Impaired.
o Unaffiliated Unsecured Claims:
On the Effective Date each holder of an Allowed
Unaffiliated Unsecured Claim against the
Consolidated Devco Entities will be distributed
consideration having a value
<PAGE>
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equal to 8% of the amount of such Allowed
Unaffiliated Unsecured Claim. Such consideration
will consist of (a) Class A Interests having a
value on the Confirmation Date equal to 2.29% of
such holder's Allowed Unaffiliated Unsecured
Claim, and (b) a Convertible Note Interest having
a value equal to 5.71% of such Allowed
Unaffiliated Unsecured Claim.
o Co-Proponent Unsecured Claims:
Each Co-Proponent has agreed to subordinate the
Allowed Co- Proponent Unsecured Claims held by
such Co-Proponent to enable the holders of Allowed
Unaffiliated Unsecured Claims to receive the
distributions under section 7.11.1 of the Plan.
After all distributions required by section 7.11.1
of the Plan have been made, the Residual Newco
Equity shall be distributed to the Co-Proponents
on account of, among other things, the
Co-Proponents' Capital Infusion and the Allowed
Co-Proponent Unsecured Claims.
o See section 7.11 of the Plan.
Consolidated Devco Equity Interests in the Consolidated
Class 12 Devco Entities
o Impaired.
o Each holder of an Equity Interest in any of the
Consolidated Devco Entities will receive no
distribution, will retain no value on account
thereof and Consolidated Devco Class 12 will,
therefore, be conclusively deemed to have rejected
the Plan.
<PAGE>
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o See section 7.12 of the Plan.
Consolidated Realty
Corp.
Consolidated Realty Priority Non-Tax Claims against
Corp. Class 1 Realty Corp., Baden and OYREUSA
o Unimpaired.
o On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Realty Corp., Baden
or OYREUSA will receive a payment in Cash equal to
the amount of its Allowed Claim.
o See section 8.1 of the Plan.
Consolidated Realty Secured Club Loan Claims against
Corp. Class 2 OYREUSA
o Impaired.
o On the Effective Date, the New Club Loan
Disbursing Agent will receive Class A Interests
having a value equal to the lesser of (a) the
Allowed Club Loan Claims and (b) the value on the
Confirmation Date of the Collateral securing the
Allowed Club Loan Claims pledged by OYREUSA, after
taking into account the treatment of the OpCo
Notes set forth in the Restructuring Transactions.
o In accordance with sections 7.2, 8.2, 14.2 and
15.2 of the Plan and without duplication, the New
Club Loan Disbursing Agent shall be distributed,
in the aggregate and in full satisfaction of the
Allowed Club Loan Claims, Class A Interests having
a value equal to the lesser of (a) the Allowed
Club Loan Claims and (b) the
<PAGE>
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value on the Confirmation Date of the Collateral
securing the Allowed Club Loan Claims pledged by
any Debtor under the Plan.
o See section 8.2 of the Plan.
Consolidated Realty Toronto Dominion Judgment Claims
Corp. Class 3 against Baden
o Impaired.
o On the Effective Date, Toronto Dominion will
receive the consideration provided in the Toronto
Dominion Settlement described in section 4.6 of
the Plan.
o See sections 4.6 and 8.3 of the Plan.
Consolidated Realty Bank of Nova Scotia Claims against
Corp. Class 4 Baden
o Impaired.
o On the Effective Date, the Bank of Nova Scotia
will receive the consideration provided in the
Bank of Nova Scotia Settlement described in
section 4.9 of the Plan.
o See sections 4.9 and 8.4 of the Plan.
Consolidated Realty Insured Claims Against Consolidated
Corp. Class 5 Realty Corp.
o Impaired.
o On the Effective Date, each holder of an Insured
Claim will only be entitled to maintain actions
against and obtain payment solely from an
insurance company under an insurance policy or
policies issued by such company to, or for the
<PAGE>
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benefit of, any of Realty Corp., OYREUSA and/or
Baden.
o See section 8.5 of the Plan.
Consolidated Realty General Unsecured Claims against
Corp. Class 6 Realty Corp., OYREUSA and Baden
o Impaired.
o On the Effective Date, based on an election to be
made by each holder of a Claim in Consolidated
Realty Corp. Class 6 on such holder's Ballot, each
holder will receive distributions under either of
the following options:
o (a) On the Effective Date, the holder of a claim
in this class will receive such holder's Ratable
Proportion of (x) that number of Class A Interests
having a value as of the Confirmation Date equal
to the value of the Undisputed Realty Corp. Assets
and (y) 100% of the outstanding Class B Interests.
- or -
(b) On the Effective Date, the holder of a claim in
this class which qualifies as, and elects to be
treated as, a Realty Corp. Cash-Out Claim will
receive a payment in Cash equal to such holder's
Realty Corp. Cash-Out Claim.
o In the event that the aggregate amount of Cash to
be distributed on account of the Realty Corp.
Cash-Out Claims exceeds $500,000 (except to the
extent such amount is increased by the Debtors and
the Co-Proponents in their sole discretion), then
this election of alternative
<PAGE>
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treatments will be eliminated and each holder of a
Realty Corp. Cash-Out Claim will receive the
treatment provided in subsection (a) above.
o See section 8.6 of the Plan.
Consolidated Realty Equity Interests in Realty Corp.
Corp. Class 7
o Impaired.
o OYDL will receive no distribution on account of
its Equity Interest in Consolidated Realty Corp.,
will retain no value on account thereof and will,
therefore, be conclusively deemed to have rejected
the Plan.
o See section 8.7 of the Plan.
SF Holdings
SF Holdings Class 1 Priority Non-Tax Claims against SF
Holdings
o Unimpaired.
o On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against SF Holdings will
receive a payment in Cash equal to the Allowed
amount of such holder's Claim.
o See section 9.1 of the Plan.
SF Holdings Class 2 General Unsecured Claims against SF
Holdings
o Impaired.
o On the Effective Date, each holder of an Allowed
General Unsecured Claim against SF Holdings will
receive the lesser of (a) a payment in Cash equal
<PAGE>
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to the Allowed amount of such holder's Claim
against SF Holdings, if the Available Cash of SF
Holdings at the time is sufficient to fund similar
payment of all Allowed General Unsecured Claims
against SF Holdings, and (b) a payment in Cash
equal to such holder's Ratable Proportion of the
Available Cash of SF Holdings on the Effective
Date.
o In the event the holders of Allowed General
Unsecured Claims against SF Holdings are provided
the distribution provided in clause (b) above, if
any non- Cash assets of SF Holdings are converted
to Cash, each holder of an Allowed General
Unsecured Claim against SF Holdings will receive a
semi-annual distribution equal to such holder's
Ratable Proportion of the Cash realized from such
conversion.
o See section 9.2 of the Plan.
SF Holdings Class 3 Equity Interest in SF Holdings
o Impaired.
o On the Effective Date, the capital stock of SF
Holdings will be transferred to Newco LP.
o See section 9.3 of the Plan.
Devco Canada
Devco Canada Class 1 Priority Non-Tax Claims against Devco
Canada
o Unimpaired.
o On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Devco
<PAGE>
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Canada will receive a payment in Cash equal to
such holder's Allowed Claim.
o See section 10.1 of the Plan.
Devco Canada Class 2 Insured Claims Against Devco Canada
o Impaired.
o On the Effective Date, each holder of an Insured
Claim will only be entitled to maintain actions
against and obtain payment solely from an
insurance company under an insurance policy or
policies issued by such company to, or for the
benefit of, Devco Canada.
o See section 10.2 of the Plan.
Devco Canada Class 3 General Unsecured Claims against
Devco Canada
o Impaired.
o On the Effective Date, each holder of an Allowed
General Unsecured Claim against Devco Canada will
receive the lesser of (a) a payment in Cash equal
to the amount of such holder's Allowed General
Unsecured Claim against Devco Canada, if the
Available Cash of Devco Canada at the time is
sufficient to fund similar payment of all Allowed
General Unsecured Claims against Devco Canada, and
(b) a payment in Cash equal to such holder's
Ratable Proportion of the Available Cash of Devco
Canada on the Effective Date.
o In the event that the holders of Allowed General
Unsecured Claims against Devco Canada are provided
the distribution provided in clause (b) above, if
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any non-Cash assets of Devco Canada are converted
to Cash, each holder of an Allowed General
Unsecured Claim against Devco Canada will receive
a semi-annual distribution equal to such holder's
Ratable Proportion of the Cash (net of costs)
realized from such conversion of the non-Cash
assets.
o See section 10.3 of the Plan.
Devco Canada Class 4 Equity Interest in Devco Canada
o Impaired.
o OYDL will receive no distribution on account of
its Equity Interest in Devco Canada, will retain
no value on account thereof and will, therefore,
be conclusively deemed to have rejected the Plan.
o See section 10.4 of the Plan.
Equity Canada
Equity Canada Priority Non-Tax Claims against
Class 1 Equity Canada
o Unimpaired.
o On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Equity Canada will
be distributed a payment in Cash equal to the
amount of such holder's Allowed Claim.
o See section 11.1 of the Plan.
Equity Canada Insured Claims Against Equity Canada
Class 2
o Impaired.
<PAGE>
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o On the Effective Date, each holder of an Insured
Claim will only be entitled to maintain actions
against and obtain payment solely from an
insurance company under an insurance policy or
policies issued by such company to, or for the
benefit of, Equity Canada.
o See section 11.2 of the Plan.
Equity Canada General Unsecured Claims against
Class 3 Equity Canada
o Impaired.
o On the Effective Date, each holder of an Allowed
General Unsecured Claim against Equity Canada will
receive the lesser of (a) a payment in Cash equal
to the amount of such holder's Allowed General
Unsecured Claim against Equity Canada, if the
Available Cash of Equity Canada at the time is
sufficient to fund similar payment of all Allowed
General Unsecured Claims against Equity Canada,
and (b) a payment in Cash equal to such holder's
Ratable Proportion of the Available Cash of Equity
Canada on the Effective Date.
o In the event that the holders of Allowed General
Unsecured Claims against Equity Canada are
provided the distribution provided in clause (b)
above, if any non-Cash assets of Equity Canada are
converted to Cash, each holder of an Allowed
General Unsecured Claim against Equity Canada will
receive a semi-annual distribution equal to such
holder's Ratable Proportion of the Cash (net of
costs) realized from such
<PAGE>
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conversion of the non-Cash assets.
o See section 11.3 of the Plan.
Equity Canada Equity Interests in Equity Canada
Class 4
o Impaired.
o OYDL will receive no distribution on account of
its Equity Interest in Equity Canada, will retain
no value on account thereof and will, therefore,
be conclusively deemed to have rejected the Plan.
o See section 11.4 of the Plan.
Consolidated OLP
Consolidated OLP Priority Non-Tax Claims against OLP
Class 1 Co., Liberty Plaza Co. or Trinity
Place Co.
o Unimpaired.
o On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against OLP Co., Liberty
Plaza Co. and/or Trinity Place Co. will receive a
payment in Cash equal to the amount of its Allowed
Claim.
o See section 12.1 of the Plan.
Consolidated OLP Secured Sanwa/OLP Claims against
Class 2 Liberty Plaza Co., OLP Co. and
Trinity Place Co.
o Impaired.
o On the Effective Date, Sanwa will receive the
Sanwa/OLP Restructured Mortgage Loan.
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o The Sanwa/OLP Mortgage Loan and the Liens on the
53 State Street Collateral (excluding the pledge
of O&Y 25 Realty Co.'s interest in 53 State
Limited) and any Claims otherwise arising under or
related to the Sanwa/OLP Mortgage Loan or any of
the guarantees, mortgages or security interests
issued in connection therewith will be released
and cancelled on the Effective Date.
o See section 12.2 of the Plan.
Consolidated OLP Secured U.S. Finco/OLP Claims against
Class 3 OLP Co., Liberty Plaza Co. and
Trinity Place Co.
o Impaired.
o After giving effect to the distribution to CIBC in
accordance with section 7.4 of the Plan in respect
of the CIBC/OLP Loan, CIBC, as the collateral
assignee of the U.S. Finco Mortgages, will elect
on behalf of U.S. Finco to contribute the Allowed
U.S. Finco/OLP Claims to the capital of New
Liberty Plaza LP to the extent provided in the
Restructuring Transactions.
o See section 12.3 of the Plan.
Consolidated OLP Insured Claims Against Liberty Plaza
Class 4 Co., OLP Co. and Trinity Place Co.
o Impaired.
o On the Effective Date, each holder of an Insured
Claim will only be entitled to maintain actions
against and obtain payment solely from an
insurance company under an insurance policy or
policies issued by
<PAGE>
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such company to, or for the benefit of, any of
Liberty Plaza Co., OLP Co. and Trinity Place Co.
o See section 12.4 of the Plan.
Consolidated OLP General Unsecured Claims against OLP
Class 5 Co., Liberty Plaza Co. or Trinity
Place Co.
o Impaired.
o On the Effective Date, each holder of an Allowed
General Unsecured Claim against OLP Co., Liberty
Plaza Co. and/or Trinity Place Co. will receive a
payment in Cash from Available Cash equal to the
amount of such Allowed Claim.
o See section 12.5 of the Plan.
Consolidated OLP Equity Interests in OLP Co., Liberty
Class 6 Plaza Co. and Trinity Place Co.
o Impaired.
o On the Effective Date, Devco and Devco GP will be
distributed Equity Interests in New Liberty Plaza
LP, the reorganized successor to OLP Co., Liberty
Plaza Co. and Trinity Place Co.
o See section 12.6 and 18.5 of the Plan.
Tower A Co.
Tower A Co. Class 1 Priority Non-Tax Claims against Tower
A Co.
o Unimpaired.
o On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Tower A
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Co. will be distributed a payment in Cash equal to
the Allowed amount of its Claim.
o See section 13.1 of the Plan.
Tower A Co. Class 2 Secured Sanwa/Tower A Claims against
Tower A Co.
o Impaired.
o On the Effective Date, Sanwa will receive the
Sanwa/Tower A Restructured Mortgage Loan which
will have the terms and conditions described in
section 13.2 of the Plan.
o On the Effective Date, the Sanwa/Tower A Mortgage
Loan and any Claims otherwise arising under or
related to the Sanwa/Tower A Mortgage Loan or any
of the guaranties, mortgages or security interests
issued in connection therewith, will be released
and cancelled in consideration of the Sanwa/Tower
A Restructured Mortgage Loan.
o See section 13.2 of the Plan.
Tower A Co. Class 3 TIAA Judgment Claims Against Tower A
Co.
o Impaired.
o On the Effective Date, TIAA will be distributed
the consideration provided in the TIAA Settlement
described in section 4.5 of the Plan.
o See section 4.5 of the Plan.
Tower A Co. Class 4 Insured Claims Against Tower A Co.
o Impaired.
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o On the Effective Date, each holder of an Insured
Claim will only be entitled to maintain actions
against and obtain payment solely from an
insurance company under an insurance policy or
policies issued by such company to, or for the
benefit of, Tower A Co.
Tower A Co. Class 5 General Unsecured Claims against
Tower A Co.
o Impaired.
o On the Effective Date, each holder of an Allowed
General Unsecured Claim against Tower A Co. will
be distributed its Ratable Proportion of $100,000
payable from the Available Cash of Tower A Co.
o See section 13.5 of the Plan.
Tower A Co. Class 6 Equity Interests in Tower A Co.
o Impaired.
o On the Effective Date, each holder of an Allowed
Equity Interest in Tower A Co. will have an
Allowed Equity Interest and will retain its
Allowed Equity Interest in Tower A Co.
o See section 13.6 of the Plan.
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Tower Corp.
Tower Corp. Class 1 Priority Non-Tax Claims against Tower
Corp.
o Unimpaired.
o On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Tower Corp. will be
distributed a payment in Cash equal to the Allowed
amount of its Claim.
o See section 14.1 of the Plan.
Tower Corp. Class 2 Secured Club Loan Claims against
Tower Corp.
o Impaired.
o On the Effective Date, the New Club Loan
Disbursing Agent will be distributed, on account
of the Allowed Secured Club Loan Claims against
Tower Corp., Class A Interests having a value
equal to the lesser of (a) the Allowed Club Loan
Claims and (b) the value on the Confirmation Date
of the Collateral securing the Allowed Club Loan
Claims pledged by Tower Corp.
o In accordance with this sections 7.2, 8.2, 14.2
and 15.2 of the Plan and without duplication, the
New Club Loan Disbursing Agent shall be
distributed, in the aggregate and in full
satisfaction of the Allowed Club Loan Claims,
Class A Interests having a value equal to the
lesser of (a) the Allowed Club Loan Claims and (b)
the value on the Confirmation Date of the
Collateral securing the Allowed Club Loan Claims
pledged by any Debtor under the Plan.
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o See section 14.2 of the Plan.
Tower Corp. Class 3 Insured Claims Against Tower Corp.
o Impaired.
o On the Effective Date, each holder of an Insured
Claim will only be entitled to maintain actions
against and obtain payment solely from an
insurance company under an insurance policy issued
by such company to, or for the benefit of, Tower
Corp.
o See section 14.3 of the Plan.
Tower Corp. Class 4 General Unsecured Claims against
Tower Corp.
o Impaired.
o Holders of General Unsecured Claims against Tower
Corp. will receive no distribution on account of
such Claims, will retain no value on account
thereof, and will, therefore, be conclusively
deemed to have rejected the Plan.
o See section 14.4 of the Plan.
Tower Corp. Class 5 Equity Interests in Tower Corp.
o Impaired.
o Holders of Equity Interests in Tower Corp. will
receive no distribution on account of such
Interests, will retain no value on account
thereof, and will, therefore, be conclusively
deemed to have rejected the Plan.
o See section 14.5 of the Plan.
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Consolidated 245
Consolidated 245 Priority Non-Tax Claims against 245
Class 1 Park Co., 245 Holding LP and 245
Corp.
o Unimpaired.
o On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against 245 Park Co., 245
Holding LP and/or 245 Corp. will be distributed a
payment in Cash equal to the Allowed amount of its
Claim.
o See section 15.1 of the Plan.
Consolidated 245 Secured Club Loan Claims Against 245
Class 2 Holding LP and 245 Corp.
o Impaired.
o On the Effective Date, the New Club Loan
Disbursing Agent will be distributed Class A
Interests having a value equal to the lesser of
(a) the Allowed Club Loan Claims and (b) the value
on the Confirmation Date of the Collateral
securing the Allowed Club Loan Claims pledged by
245 Holding LP and 245 Corp.
o In accordance with sections 7.2, 8.2, 14.2 and
15.2 of the Plan and without duplication, the
Disbursing Agent shall be distributed, in the
aggregate and in full satisfaction of the Allowed
Club Loan Claims, Class A Interests having a value
equal to the lesser of (a) the Allowed Club Loan
Claims and (b) the value on the Confirmation Date
of the Collateral securing the Allowed Club Loan
Claims pledged by any Debtor under the Plan.
o See section 15.2 of the Plan.
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Consolidated 245 Secured Aetna Mortgage Loan Claims
Class 3 against 245 Park Co.
o Impaired.
o On the Effective Date, the Aetna Restructured
Mortgage Loan Documents shall be executed and
delivered to Aetna.
o On the Effective Date, the Aetna Mortgage Loan and
any Claims otherwise arising under or related to
the Aetna Mortgage Loan or any of the guarantees,
mortgages or security interests issued in
connection therewith shall be released and
cancelled in consideration of the Aetna
Restructured Mortgage Loan.
o See section 15.3 of the Plan.
Consolidated 245 Secured DKB Mortgage Loan Claims
Class 4 against 245 Park Co.
o Impaired.
o On the Effective Date, in full satisfaction of the
Allowed DKB Mortgage Loan Claims, the DKB
Restructured Mortgage Loan Documents shall be
executed and delivered to DKB.
o On the Effective Date, the DKB Mortgage Loan and
any Claim under or relating to the DKB Mortgage
Loan or any of the guarantees, mortgages or
security interests issued in connection therewith
shall be released and cancelled in consideration
of the DKB Restructured Mortgage Loan.
o See section 15.4 of the Plan.
Consolidated 245 Club Loan/245 Park Deficiency Claims
Class 5 Against 245 Holding LP and 245 Corp.
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o Impaired.
o On the Effective Date, the New Club Loan
Disbursing Agent shall receive the distributions
provided to the New Club Loan Disbursing Agent
(for the benefit of those Co-Proponents for which
it is agent) in accordance with sections 7.2, 8.2,
14.2 and 15.2 of the Plan.
o See section 15.5 of the Plan.
Consolidated 245 Insured Claims Against 245 Park Co.,
Class 6 245 Holding LP and 245 Corp.
o Impaired.
o On the Effective Date, each holder of an Insured
Claim against any of 245 Park Co., 245 Holding LP
and 245 Corp. shall only be entitled to maintain
actions against and obtain payment solely from an
insurance company under an insurance policy or
policies issued by such company to, or for the
benefit of, any of 245 Park Co., 245 Holding LP
and 245 Corp.
o See section 15.6 of the Plan.
Consolidated 245 General Unsecured Claims against 245
Class 7 Park Co., 245 Holding LP or 245 Corp.
o Impaired.
o On the Effective Date, each holder of an Allowed
General Unsecured Claim against 245 Park Co., 245
Holding LP and 245 Corp. will be distributed a
Cash payment equal to the amount of such Allowed
General Unsecured Claim against 245 Park Co., 245
Holding LP and 245 Corp.
o See section 15.7 of the Plan.
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Consolidated 245 Equity Interests in 245 Park Co., 245
Class 8 Holding LP and 245 Corp.
o Impaired.
o JMB Treatment: On the Effective Date, JMB will
retain its general partner interest in 245 Park
Co. and, after taking into account the
transactions effected by the Plan, 245 Park Co.
will own an interest in 245 Holding LP.
On the Effective Date, JMB will receive
distributions as follows: JMB will roll up its
interest in 245 Park Co. for (1) indirect Equity
Interests in Newco LP having an aggregate value
equal to the greater of (a) the Newco LP
Reorganization Value multiplied by 5.44% and (b)
$30,000,000; plus (2) a percentage of Class B
Interests as determined by the formula described
in section 15.8.1 of the Plan.
o Equity Interests of Equityco, Equity GP, 245
Holding LP and 245 Corp. in 245 Park Co.: On the
Effective Date, each holder of an Allowed Equity
Interest in 245 Park Co., 245 Holding LP and 245
Corp., other than JMB, will be distributed an
Equity Interest in New 245 Park LP, subject to the
rights of JMB to retain its partner interest in
245 Park Co., in accordance with section 15.8.1 of
the Plan.
o See section 15.8 of the Plan.
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Tower B Leaseco
Tower B Leaseco Priority Non-Tax Claims against Tower
Class 1 B Leaseco
o Unimpaired.
o On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Tower B Leaseco
will receive a payment in Cash equal to the amount
of its Allowed Claim.
o See section 16.1 of the Plan.
Tower B Leaseco Merrill Lynch/Tower B Leaseco Secured
Class 2 Claim
o Impaired.
o On the Effective Date, Merrill Lynch will receive
a Cash payment of $502,000.
o See section 16.2 of the Plan.
Tower B Leaseco Insured Claims Against Tower B
Class 3 Leaseco
o Impaired.
o On the Effective Date, each holder of an Insured
Claim will only be entitled to maintain actions
against and obtain payment solely from an
insurance company under an insurance policy or
policies issued by such company to, or for the
benefit of, Tower B Leaseco.
o See section 16.3 of the Plan.
Tower B Leaseco General Unsecured Claims against
Class 4 Tower B Leaseco
o Impaired.
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o On the Effective Date, each holder of an Allowed
General Unsecured Claim against Tower B Leaseco
will receive the lesser of (a) a payment in Cash
equal to the amount of such holder's Allowed
Claim, if the Available Cash of Tower B Leaseco at
the time is sufficient to fund similar payment of
all Allowed General Unsecured Claims against Tower
B Leaseco, and (b) a payment in Cash equal to such
holder's Ratable Proportion of the Available Cash
of Tower B Leaseco on the Effective Date.
o See section 16.4 of the Plan.
Tower B Leaseco Allowed Equity Interests in Tower B
Class 5 Leaseco
o Impaired.
o Each holder of an Allowed Equity Interest in Tower
B Leaseco will receive no distribution on account
of such Equity Interest, will retain no value on
account thereof and will, therefore, be
conclusively deemed to have rejected the Plan.
o See section 16.5 of the Plan.
F. PROJECTED RECOVERIES UNDER THE PLAN
1. General
The value of Newco LP will be derived from the value of the
six Core Properties to be directly and/or indirectly owned by Newco LP,
interests in certain assets of Realty Corp. and certain Non-Core Properties, and
management agreements relating to the Core Properties.
The Plan is premised, in part, on the following assumptions:
(i) the Equity Interests in Devco, Devco GP, Equityco and Equity GP are
valueless, (ii) the holders of such Equity Interests will be distributed or
retain nothing under the
<PAGE>
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Plan, and (iii) the holders of such Equity Interests are themselves insolvent.
All recoveries under the Plan by the Co-Proponents, General Unsecured
Creditors of Consolidated Devco and Consolidated Realty Corp. will be in the
form of some combination of Class A Interests, Class B Interests, a 1% General
Partner Interest in Newco LP and, in the case of holders of Allowed Unaffiliated
Unsecured Claims against Consolidated Devco, Convertible Note Interests.
2. Summary of Distributions of
Newco LP Equity Under the Plan
The Debtors project that, on the Effective Date, JMB, through 245
Holding LP, will be distributed at least $30 million in value of the equity in
Newco LP. The holders of Allowed Unaffiliated Unsecured Claims against
Consolidated Devco will own Class A Interests having a value on the Confirmation
Date equal to 2.29% of such holder's Allowed Unaffiliated Unsecured Claim, and
(b) a Convertible Note Interest having a value equal to 5.71% of such Allowed
Unaffiliated Unsecured Claim. The Consolidated Realty Corp. General Unsecured
Creditors (including the Co- Proponents) will own Class A Interests based on the
value of the Undisputed Realty Corp. Assets and Class B Interests based on the
value of the Disputed Realty Corp. Assets, which interests are estimated to have
a value between $8.4 million and $47 million. For a discussion of the Realty
Corp. Assets, see "Background History of Olympia & York -- Business of the U.S.
Operations -- Status of O&Y (U.S.) in 1996 -- Realty Corp. Assets". The Co-
Proponents will, on an aggregate basis, own all of the remaining Class A
Interests, Class B Interests (in accordance with section 8.6 of the Plan), 100%
of the issued and outstanding shares of Liquidating Corp. and, indirectly
(through Managing GP), the General Partner Interest in Newco LP.
The number of Class A Interests and Class B Interests that will be
distributed to each holder of an Allowed General Unsecured Claim in Consolidated
Realty Corp. Class 6 will be a function of the amount of Allowed General
Unsecured Claims in that Class and the value of the Disputed Realty Corp.
Assets. Based on the Debtors' books and records, the Debtors believe that the
range of the Allowed General Unsecured Claims in Consolidated Realty Corp. Class
6 will be between $345 million and $375 million.
<PAGE>
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THE RECOVERIES FOR ALLOWED GENERAL UNSECURED CLAIMS IN CONSOLIDATED
REALTY CORP. CLASS 6 SET FORTH IN THE CHART BELOW ASSUME THAT THE AMOUNT OF
ALLOWED GENERAL UNSECURED CLAIMS IN CONSOLIDATED REALTY CORP. CLASS 6 IS IN THE
RANGE LISTED ABOVE ($345-$375 MILLION). IN REACHING SUCH PROJECTED RECOVERIES,
THE DEBTORS HAVE ASSUMED THAT OBJECTIONS TO A SUBSTANTIAL NUMBER AND AMOUNT OF
CLAIMS WILL BE PROSECUTED BY THE DEBTORS. THE LEVEL OF ALLOWED GENERAL UNSECURED
CLAIMS IN CONSOLIDATED REALTY CORP. CLASS 6 AS OF THE EFFECTIVE DATE WILL DEPEND
UPON A NUMBER OF VARIABLES, INCLUDING THE NUMBER OF OBJECTIONS TO CLAIMS THAT
ARE FILED BY THE DEBTORS, THE TIMING OF THE HEARINGS TO CONSIDER SUCH
OBJECTIONS, THE TIMING OF THE DETERMINATION OF SUCH OBJECTIONS BY THE BANKRUPTCY
COURT, AND THE SUCCESS OF THOSE OBJECTIONS. ACCORDINGLY, NO ASSURANCE MAY BE
GIVEN AS TO THE LEVEL OF SUCH ALLOWED CLAIMS AS OF THE EFFECTIVE DATE. IF THESE
ASSUMPTIONS DO NOT PROVE TO BE CORRECT, THE CONSEQUENCES OF DELAYS IN
DETERMINATIONS RELATING TO THE DISPUTED UNSECURED CLAIMS COULD MATERIALLY LOWER
THE PROJECTED DISTRIBUTIONS UNDER THE PLAN.
THE PROJECTED RECOVERIES SET FORTH BELOW ARE PREDICATED UPON THE
ASSUMPTIONS SUMMARIZED IN THE FIRST AMENDED FINANCIAL APPENDIX, ANNEXED AS
EXHIBIT B IN THE SEPARATE EXHIBIT VOLUME TO THIS DISCLOSURE STATEMENT, AND
THROUGHOUT THE ENTIRETY OF THIS DISCLOSURE STATEMENT. THE RECOVERIES SET FORTH
BELOW ARE MERELY PROJECTED RECOVERIES, BASED ON ASSUMPTIONS WHICH ARE SET FORTH
IN THE PROJECTIONS, THE FIRST AMENDED FINANCIAL APPENDIX AND HEREIN. TO THE
EXTENT THAT ACTUAL RESULTS VARY FROM THE ASSUMPTIONS, RECOVERIES WILL VARY FROM
THE PROJECTIONS. CREDITORS AND HOLDERS OF EQUITY INTERESTS ARE ENCOURAGED TO
READ THE FIRST AMENDED FINANCIAL APPENDIX IN ITS ENTIRETY IN ORDER TO FULLY
UNDERSTAND THE MANNER IN WHICH THE PROJECTED RECOVERIES WERE DETERMINED.
<PAGE>
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Present Value
Recovery on
CONSOLIDATED DEVCO Allowed Claims
Class 1 Priority Claims 100%
Class 2 Club Loan Claims 95-100%
Class 3 CIBC Secured OLP Claim 100%
Class 4 Sumitomo Bank Secured Tower D Pledge Loan 100%
Class 5 Citibank Secured Letter of Credit Claims 100%
Class 6 Secured Citibank Swap Claims 100%
Class 7 Sterling National Secured Letter of
Credit Claims 100%
Class 8 245 Park Co. Partnership Claims (1)
Class 9 CIBC/Lost Note Indemnity Claims 100%
Class 10 Insured Litigation Claims 100%
Class 11 Unaffiliated General Unsecured Claims 8%
Class 12 Equity Interests in Consolidated Devco (2)
CONSOLIDATED REALTY CORP.
Class 1 Priority Claims 100%
Class 2 Club Loan Claims 95-100%
Class 3 Toronto Dominion Judgment Claims 74%
Class 4 Bank of Nova Scotia Claims 17%
Class 5 Insured Litigation Claims 100%
Class 6 General Unsecured Claims 2.2-13.6%(3)
Class 7 Equity Interests (4)
- --------
1 Creditors holding Claims in Consolidated Devco Class 8 will receive the
recovery set forth in Consolidated 245 Class 8.
2 Consolidated Devco Class 12, as an equity class, is not allowed in a dollar
amount.
3 Assumes value of Undisputed Realty Corp. Assets actually contributed to
Newco LP will have a value in the range of $8.4 - $47 million and that
there will be Allowed General Unsecured Claims against Consolidated Realty
Corp. in the range of $345 - $375 million.
4 Consolidated Realty Corp. Class 7, as an equity class, is not allowed in a
dollar amount.
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Present Value
Recovery on
SF HOLDINGS Allowed Claims
Class 1 Priority Claims 100%
Class 2 General Unsecured Claims 100%
Class 3 Equity Interests 5
DEVCO CANADA
Class 1 Priority Claims 100%
Class 2 Insured Litigation Claims 100%
Class 3 General Unsecured Claims 0%
Class 4 Equity Interests (5)
EQUITY CANADA
Class 1 Priority Claims 100%
Class 2 Insured Litigation Claims 100%
Class 3 General Unsecured Claims 0%
Class 4 Equity Interests (5)
- --------
5 SF Holdings Class 3, Devco Canada Class 4 and Equity Canada Class 4, as
equity classes, are not allowed in a dollar amount.
<PAGE>
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Present Value
Recovery on
CONSOLIDATED OLP Allowed Claims
Class 1 Priority Claims 100%
Class 2 Sanwa Secured OLP Claim 100%
Class 3 U.S. Finco Secured OLP Claim 100%
Class 4 Insured Litigation Claims 100%
Class 5 General Unsecured Claims 100%
Class 6 Equity Interests in Liberty Plaza Co.,
OLP Co. and Trinity Place Co. (6)
TOWER A CO.
Class 1 Priority Claims 100%
Class 2 Sanwa Secured Mortgage Loan Claim 100%
Class 3 TIAA Judgment Claims 43%(7)
Class 4 Insured Litigation Claims 100%
Class 5 General Unsecured Claims 10-25%(8)
Class 6 Equity Interests (6)
TOWER CORP.
Class 1 Priority Claims 100%
Class 2 Club Loan Claims 95-100%
Class 3 Insured Litigation Claims 100%
Class 4 General Unsecured Claims 0%
Class 5 Equity Interests (6)
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6 Consolidated OLP Class 6, Tower A Co. Class 6 and Tower Corp. Class 5, as
equity classes, are not allowed in a dollar amount.
7 This figure includes the recovery by TIAA on the Claim asserted against
Tower A Co. and Devco relating to WFC Tower A, however, it does not include
any liquidated amounts on Claims asserted by TIAA against Devco relating to
53 State Street. If such liquidated amounts were included, TIAA's recovery
on a percentage basis would be substantially lower.
8 Assumes that there will be Allowed General Unsecured Claims against Tower A
Co. in the range of $400,000 to $1 million.
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Present Value
Recovery on
CONSOLIDATED 245 Allowed Claims
Class 1 Priority Claims 100%
Class 2 Club Loan Claims 95-100%
Class 3 Aetna Secured Mortgage Loan Claim 100%
Class 4 DKB Secured Mortgage Loan Claim 100%
Class 5 Club Loan/245 Park Deficiency Claims 0%
Class 6 Insured Litigation Claims 100%
Class 7 General Unsecured Claims 100%
Class 8 JMB Equity Interests in 245 Park Co. (9)
Other Equity Interests in 245 Park Co.,
245 Holding LP and 245 Corp. (9)
TOWER B LEASECO
Class 1 Priority Claims 100%
Class 2 Merrill Lynch/Tower B Leaseco Secured Claims 100%
Class 3 Insured Litigation Claims 100%
Class 4 General Unsecured Claims 0.6%(10)
Class 5 Equity Interests (9)
G. CONDITIONS PRECEDENT TO CONFIRMATION OF THE PLAN AND THE
EFFECTIVE DATE OF THE PLAN
There are important conditions precedent to the Effective Date and the
Confirmation Date of the Plan. For a complete discussion of such conditions see
"Summary of the Plan of Reorganization for the Debtors -- Conditions Precedent
to the Confirmation Date and the Effective Date of the Plan".
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9 Consolidated 245 Class 8 and Tower B Leaseco Class 4, as equity classes,
are not allowed in a dollar amount.
10 Assumes that the funds available for distribution to General Unsecured
Creditors of Tower B Leaseco is approximately $600,000 and that there will
be Allowed General Unsecured Claims against Tower B Leaseco in the
approximate amount of $93 million.
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III. BACKGROUND HISTORY OF OLYMPIA & YORK
A. INTRODUCTION(3)
1. The Reichmann Family and
Development of the O&Y Enterprise
Evolving in the late 1950's out of a tile distribution company owned
by the Reichmann Family, Olympia & York, in its early years, engaged in the
construction of light industrial buildings, warehouses and small office
buildings in suburban Toronto, Canada.
Olympia & York's single largest building constructed in the 1960's was
Place Bell Canada in Ottawa, Ontario, Canada, which, through careful management
and innovative construction techniques, was built in record time at an extremely
competitive cost for its level of quality. This innovative and cost-effective
approach to construction became one of the hallmarks of Olympia & York.
Thereafter, Olympia & York's development efforts expanded and in 1971,
the First Canadian Place development in Toronto was built, including a 950-foot
72-story "First Bank Tower". First Canadian Place incorporated a full array of
shops, restaurants, services and amenities, including five acres of public
space.
By 1991, Olympia & York, through its parent corporation OYDL, had
gross assets of over $24.3 billion and had shareholders' equity of over $2.1
billion. OYDL's operations were divided up into three primary geographic areas:
Canada, the United Kingdom and the United States.
As of January 1, 1992, OYDL and its subsidiaries had incurred
consolidated (unaudited) liabilities of approximately $17 billion. Consequently,
OYDL and its subsidiaries faced substantial interest expense and principal
payment obligations. During the late 1980's and early 1990's, OYDL raised
substantial sums of money to finance its obligations by issuing to the public
short-term promissory notes or bonds, commonly described as
- --------
3 This "Introduction" section was composed primarily using materials from,
the Information Circular which was prepared by Olympia & York Developments
Limited ("OYDL") as part of its proceedings in Canada under the Companies'
Creditors Arrangement Act. O&Y (U.S.) does not have any independent
knowledge of the facts set forth in this Section, to the extent that such
facts were learned from the Information Circular.
<PAGE>
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commercial paper. In early 1992, OYDL had two commercial paper facilities
outstanding in an aggregate amount of approximately $650 million (the "O&Y
Commercial Paper"). The effect of this indebtedness upon the business and
operation of Olympia & York was complicated by the downturn in the world-wide
economy, which caused a severe recession in the world-wide commercial real
estate market, including Toronto, London and New York City where Olympia & York
owned substantial real estate holdings. At the same time that Olympia & York's
real estate portfolio was struggling against the tide of falling real estate
values, three other industries in which it maintained substantial holdings, the
forest products/newsprint, energy and transportation industries, experienced
their own worst recessions.
While OYDL's cash flow diminished as a result of the worldwide
economy, its cash flow demands increased, particularly due to its major
commitment, the development of Canary Wharf in London, England, which began in
1987. At that time, Canary Wharf was the world's largest private real estate
development project.
On February 13, 1992, the O&Y Commercial Paper was downgraded by
Dominion Bond Rating Service, one of two Canadian bond rating agencies. On March
18, 1992, Dominion Bond Rating Service issued an alert on O&Y Commercial Paper
and, as a result, the market for O&Y Commercial Paper disappeared and it became
impossible for OYDL to refinance its commercial paper obligations on maturity in
the commercial paper market. OYDL was forced to use funds which otherwise would
have been available to finance its ongoing operations to meet the significant
and unanticipated cash requirements resulting from its inability to refinance
its outstanding commercial paper obligations.
2. OYDL's Restructuring Efforts
In the wake of growing rumors concerning the cash crisis experienced
at OYDL, its lines of credit and other access to cash resources became
increasingly scarce. As a result, OYDL commenced negotiations with its lenders
aimed at a global restructuring of its obligations. On April 13, 1992,
representatives of OYDL met with more than ninety (90) of its lenders in
Toronto. At that meeting, OYDL submitted an initial restructuring plan and
provided its lenders with information books setting forth in detail its assets
and liabilities as well as the future prospects of Olympia & York as a whole.
Thereafter, OYDL met with its lenders, individually and in separate groups, on
virtually a daily basis in order to develop a comprehensive restructuring plan
in respect of all of its indebtedness.
<PAGE>
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OYDL's initial restructuring plan was not acceptable to its lenders
and on May 14, 1992, OYDL and certain of its affiliates, including the Canadian
Debtors, filed applications pursuant to the Canadian Companies' Creditors
Arrangement Act (the "CCAA") for authorization to file a Plan of Compromise and
Arrangement (a "CCAA Plan") thereunder (the "CCAA Case").
On May 21, 1992, the Ontario Court authorized the issuance of a
bankruptcy petition against OYDL and certain of its affiliates in order to
crystallize applicable preference periods under the Bankruptcy and Insolvency
Act (Canada) (the "BIA") (the "May 1992 Petition"). OYDL's CCAA Plan provided
Coopers & Lybrand OYDL, Inc./Limited with the ability to commence preference
actions under Canadian law (a "Preference Action") and the right to utilize
certain enhanced powers to seek to set aside preferential transactions provided
to a trustee in bankruptcy under the BIA, notwithstanding the fact that OYDL's
CCAA Plan was governed by the CCAA and not the BIA. OYDL's CCAA Plan further
provided that, in the event that a defendant to a Preference Action challenged
Coopers & Lybrand OYDL, Inc./Limited's ability to rely on the provisions of the
BIA when OYDL was not bankrupt, Coopers & Lybrand OYDL, Inc./Limited was
entitled to consent to the making of a receiving order in bankruptcy against
OYDL pursuant to the May 1992 Petition for the purpose of attempting to deal
with such jurisdictional arguments. Such an Order was made by the Ontario Court
on December 20, 1994 (the "December 20 Order") after a defendant to a Coopers &
Lybrand OYDL, Inc./Limited Preference Action challenged Coopers & Lybrand OYDL,
Inc./Limited's ability to rely on the provisions of the BIA when OYDL was not
bankrupt. The jurisdiction of the Ontario Court to make an Order "partially"
bankrupting OYDL was the subject of an appeal which was pending before the Court
of Appeal for Ontario was at the time the orders of the Ontario Court referred
to below were made.
A CCAA Plan for OYDL and certain other applicants in the CCAA
Case (the "CCAA Plan")(4) was sanctioned by the Ontario
- --------
4 The Canadian Debtors were among the original CCAA Canadian Applicants but
did not participate in the CCAA Plan (except with respect to certain
encumbered assets of SF Holdings). By resolution of the Independent Board
dated September 21, 1995, management of the Canadian Debtors was authorized
to abandon (dismiss) the CCAA Cases of Realty Corp., Devco Canada and
Equity Canada. By cross-motion in the Canadian Court dated January 23,
1996, the Canadian Debtors sought, among other things, to abandon the CCAA
Cases. The impact of the abandonment of the CCAA Cases would be to remove
any jurisdiction of the Canadian Court over (footnote continued on next
page)
<PAGE>
-70-
(Canada) Court of Justice (the "Ontario Court" or "Canadian Court") by order
dated February 5, 1993 (the "Sanction Order"). Under the CCAA Plan, which went
into effect on March 12, 1993: (i) secured creditors generally were permitted to
enforce their rights against their collateral upon consummation of the CCAA Plan
if the prescribed notice was given before consummation and, thereafter, are
permitted to enforce such rights upon prescribed notice; and (ii) the OYDL board
of directors was reconstituted and is comprised of three persons, two of whom
were appointed by the shareholders of OYDL and one of who was appointed by
Coopers & Lybrand OYDL Inc. ("Coopers & Lybrand OYDL, Inc./Limited"). Coopers &
Lybrand OYDL, Inc./Limited was appointed by the Ontario Court in the Sanction
Order to carry on, manage and supervise the business and affairs of OYDL in
accordance with the provisions of the CCAA Plan.
Prior to the consummation of the CCAA Plan, the board of
directors of OYDL delegated to Coopers & Lybrand OYDL, Inc./Limited all power
and authority of such directors which they were legally entitled to delegate
under Ontario law. Under the CCAA Plan, a Monitoring Committee (the "Monitoring
Committee") was established which was, and still is, comprised of nominees of
the unsecured creditors of OYDL. Coopers & Lybrand OYDL, Inc./Limited is
required, on a reasonable basis, to consult with the Monitoring Committee before
exercising or deciding not to exercise any of Coopers & Lybrand OYDL,
Inc./Limited's powers with respect to any material matter or on a less frequent
basis as agreed on by the Monitoring Committee. In addition, under the CCAA
Plan, 25 Realty LP, an affiliate of OYDL, pledged all of its assets to OYDL and,
in furtherance of that pledge, gave to
4 (Footnote continued from previous page) the bankruptcy cases of the
Canadian Debtors and would centralize all proceedings relating to the
reorganization of such Debtors in the U.S. Bankruptcy Court. Further, the
outcome of the Canadian Debtors' reorganization would be determined in the
United States solely by the Bankruptcy Court pursuant to the Bankruptcy
Code and other applicable law and without reference to the requirements of
the CCAA or other Canadian law. In the event that the Canadian Court rules
that the Canadian Debtors CCAA Cases may not be abandoned, it may be
necessary for such Canadian Debtors to have some aspects of the Plan
approved by the Canadian Court. A hearing on such cross-motion was held by
the Canadian Court on June 26, 1996. As discussed more fully herein, the
Canadian Court decided that, although it was premature to dismiss the CCAA
Cases in their entirety, certain motions with respect to the payment of
fees to Coopers & Lybrand OYDL, Inc./Limited should be heard exclusively by
the U.S. Bankruptcy Court.
<PAGE>
-71-
Coopers & Lybrand OYDL, Inc./Limited a power of attorney over, among other
things, the business, operation and management decisions of 25 Realty LP.
Beginning in March 1993 and continuing to date, Coopers & Lybrand
OYDL, Inc./Limited has wound down the affairs of OYDL and the other CCAA
Applicants, except the Canadian Debtors.5 As of September 30, 1995, OYDL's
Canadian assets, excluding court actions, had an estimated value, according to
Coopers & Lybrand OYDL, Inc./Limited, of between $14.5 and $33 million.
By 1995, OYDL only employed five non-support personnel in Canada and
had total general and administrative costs of less than $500,000 per year. In
its report to the OYDL creditors distributed in December 1995, Coopers & Lybrand
OYDL, Inc./Limited stated that, in its opinion, OYDL's CCAA Plan should not
continue and a distribution to OYDL's unsecured creditors should be made. In
this regard, in early June, 1996, Coopers & Lybrand OYDL, Inc./Limited filed a
motion in the Canadian Court seeking to have OYDL adjudged a bankrupt pursuant
to the BIA.
Upon the motion of Coopers & Lybrand OYDL, Inc./Limited brought before
the Honorable Mr. Justice Blair of the Ontario Court on June 6, 1996, OYDL was
adjudged a bankrupt under the BIA and it was ordered (by way of companion orders
made in OYDL's CCAA and Canadian bankruptcy cases) that all of the property,
assets and undertakings of OYDL be vested in Coopers & Lybrand Limited (an
affiliate of Coopers & Lybrand OYDL, Inc.) (the "Trustee") as trustee in
bankruptcy of OYDL's bankrupt estate pursuant to the May 1992 Petition (the
"Full Bankruptcy Order"). Unlike the December 20 Order, which contemplated that
the claims of the creditors of OYDL would continue to be dealt with in
accordance with OYDL's CCAA Plan, the Full Bankruptcy Order provides for such
claims to be dealt with in accordance with the provisions of the BIA.
The effect of Full Bankruptcy Order on the ongoing litigation between
SF Holdings and Coopers & Lybrand OYDL, Inc./Limited over the Disputed SF Cash
being held by Coopers & Lybrand OYDL, Inc./Limited is to vest Coopers & Lybrand
OYDL, Inc./Limited's right to act as plaintiff in such litigation in the
Trustee. However, the fact that a bankruptcy of OYDL has occurred does not, per
se, have any impact of the status of such
- --------
5 The information in this and the next paragraph was collected exclusively
from reports of Coopers & Lybrand OYDL, Inc./Limited to the Class 28
creditors. O&Y (U.S.) does not have any independent knowledge of the facts,
or their accuracy, set forth in these paragraphs.
<PAGE>
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litigation. Furthermore, the Debtors believe, based upon their good faith
investigation, legal analysis and advice from their counsel, that the BIA filing
by OYDL will not have any appreciable effect on their ability to confirm the
Plan.
In addition to the foregoing, on June 26, 1996, a motion by the
Canadian Debtors in their CCAA Cases was heard by Mr. Justice Blair of the
Ontario Court (the "Forum Motion"). The Forum Motion was brought by the Canadian
Debtors in response to the motion brought by Coopers & Lybrand OYDL,
Inc./Limited, on behalf of OYDL (the "OYDL Reimbursement Motion"), for
reimbursement of approximately $Cdn. 8.2 million in fees and expenses paid by
OYDL to Coopers & Lybrand OYDL, Inc./Limited in respect of:
(1) costs and expenses Coopers & Lybrand OYDL,
Inc./Limited alleges were incurred in caring for
and administering the affairs of the Canadian
Debtors from the time of the appointment of
Coopers & Lybrand OYDL, Inc./Limited in February
1993 to the time that a management team was
formally retained in February 1995 (the
"Administrative Claim"); and
(2) costs and expenses paid to Coopers & Lybrand OYDL,
Inc./Limited by OYDL in respect of Coopers & Lybrand
OYDL, Inc./Limited's fees and expenses in respect of
its participation in the Chapter 11 restructuring
proceedings of the Debtors (the "Restructuring
Claim").
The relief sought in the Forum Motion was an Order staying the OYDL
Reimbursement Motion on the ground that the Bankruptcy Court was the proper
forum for the adjudication of such claims. Mr. Justice Blair found that the
Bankruptcy Court was the proper forum for the adjudication of the Restructuring
Claim, which he found to represent approximately $Cdn. 7.0 million of the $Cdn.
8.2 million claimed, and that portion of the OYDL Reimbursement Motion was
stayed owing to its former "management" of such entities. The Forum Motion did
not deal with the litigation over the Disputed SF Cash and no decision with
respect thereto was made by Mr. Justice Blair.
Finally, Coopers & Lybrand OYDL, Inc./Limited had control over a
number of Canadian bank accounts of the Canadian Debtors. On June 25, 1996,
Coopers & Lybrand OYDL, Inc./Limited's Canadian counsel, Borden & Elliot,
informed the Canadian Debtors that Coopers & Lybrand OYDL, Inc./Limited had paid
certain funds into the Ontario Court to the benefit of the Canadian Debtors as
follows:
<PAGE>
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(i) Realty Corp. - $90,361.78 and Cdn.$ 13,346.55;
(ii) Equity Canada - $27,861.40 and Cdn.$ 1,146,137.56;
(iii) Devco Canada - $2,344.93 and Cdn.$ 569,814.67;
(iv) SF Holdings - $2,898.613.72 and Cdn.$ 16,427.19
B. BUSINESS OF THE U.S. OPERATIONS
1. O&Y (U.S.)
In late 1976, Olympia & York looked toward the United States for
future growth opportunities. The springboard into the United States was the 1977
acquisition of eight buildings comprising approximately 12,000,000 square feet
of prime office space in downtown and midtown Manhattan, known as the Uris
Portfolio. Thereafter, O&Y (U.S.) commenced construction of a series of office
towers ranging from 500,000 to 2,500,000 square feet in New York, Boston,
Hartford, Chicago, Dallas, Los Angeles, Seattle, Portland and Orlando, some of
which were developed in partnership with local interests.6
By 1992, O&Y (U.S.) had developed into the largest private commercial
office building landlord in New York City, and had additionally established a
presence in Los Angeles, Boston, Portland, Hartford, Orlando, Chicago and
Dallas. O&Y (U.S.) owned, and continues to own, substantially all of its
commercial office buildings through two chains of interlocking partnerships and
subsidiary corporations: (i) the Devco Chain, of which the primary holding
partnership is Devco, and (ii) the Equityco Chain, of which the primary holding
partnership is Equityco.
a. Devco and Equityco
Devco and Equityco are the current owners of a number of partner
interests in partnerships which own various direct or indirect freehold and/or
leasehold interests in completed office buildings in New York and other major
U.S. cities. The collective portfolio consists of interests in the office
buildings acquired by O&Y (U.S.) in the Uris Portfolio, and various acquisitions
and developments since the acquisition of the Uris Portfolio. As of June 30,
1992, O&Y (U.S.) owned interests in office buildings containing approximately 28
million rentable square feet. The greatest concentration of those properties is
in New York City, in 14 office buildings -------- 6In addition to its real
estate holdings, as of December 31, 1991, O&Y (U.S.) held corporate investments
in Hyperion Ventures, L.P. and Retail Property Trust, which together had an
aggregate book value of over $29 million.
<PAGE>
-74-
representing approximately 23 million rentable square feet of
space. As of June 30, 1992, the management team and staff of O&Y
(U.S.) was approximately 225 persons.
The following tables set out (i) the completed office buildings and
other properties in the United States in which O&Y (U.S.) owned an interest as
of June 30, 1992 and as of December 31, 1995, (ii) the aggregate percentage
interests owned by Devco or Equityco in such buildings through all subsidiary
partnerships or corporations, (iii) the rentable area of such building, (iv) the
1990 and 1996 current estimated values of such properties, and (v) the amount of
debt on such properties in 1992 and 1996:
<PAGE>
-75-
<TABLE>
<CAPTION>
Devco and Equityco Properties(7)
Nominal Rentable Area 1990 Mortgage 1996 Mortgage
Ownership (thousands of Current Value Debt As Current Value Debt as
Interest(8) sq. ft.) (in millions) of 1992 (in millions) of 1996
-------- ------------- ------------- --------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
One WFC, N.Y.C. 48.25% 1,511 $661 M $480 M $480 M $480 M
Two WFC, N.Y.C. 65.00% 2,581 $995 M $800 M $965 M $856 M
Four WFC, N.Y.C. 32.00% 1,814 $675 M $325 M(9) $659 M $325 M(9)
One Liberty Plaza, N.Y.C. 100.00% 2,124 $597 M $355 M(11) $400 M(10) $375 M(11)
245 Park Avenue, N.Y.C. 51.75% 1,618 $802 M $388 M $549 M(10) $384 M(12)
53 State Street, Boston 24.75% 1,120 $398 M $145 M $190 M $145 M
237 Park Avenue, N.Y.C. 53.50% 1,140 $471 M $970 M(13) $897 M(14) $897 M(13)
1290 6th Ave., N.Y.C. 53.50% 1,964 $643 M $970 M(13) $897 M(14) $897 M(13)
2 Broadway, N.Y.C. 53.50% 1,587 $253 M $970 M(13) N/A N/A
Olympia Centre, Chicago 88.00% 532 $112 M $ 80 M $ 80 M $ 80 M
425 Lexington Ave., N.Y.C. 100.00% 679 $268 M $294 M $294 M(14) $294 M
59 Maiden Lane, N.Y.C. 100.00% 1,047 $271 M $200 M $127 M(14) $127 M
11601 Wilshire Blvd., L.A. 50.00% 469 $140 M $ 80 M $ 76 M $ 80 M
One Commercial Plaza, Hartford 100.00% 631 $ 96 M $ 78 M $ 78 M(14) $ 78 M
60 Broad Street, N.Y.C. 50.10% 1,014 $ 75 M $ 50 M $ 55 M(14) $ 55 M
125 Broad Street, N.Y.C. 9.75% 1,348 $362 M $277 M N/A N/A
55 Water Street, N.Y.C. 51.75% 3,644 $806 M $548 M N/A N/A
1250 Broadway, N.Y.C. 49.00% 693 $126 M $ 50 M N/A N/A
320 Park Avenue, N.Y.C. 51.75% 664 $130 M $130 M N/A N/A
1999 Bryan Street, Dallas 78.00% 722 $ 99 M $ 83 M N/A N/A
400 South Hope St., L.A. 45.00% 662 $238 M $130 M N/A N/A
One Corporate Center, Hartford 50.00% 410 $ 41 M $ 31 M N/A N/A
KOIN Center, Portland 100.00% 322 $ 40 M $ 24 M N/A N/A
One Financial Plaza, Spring. 50.00% 242 $ 19 M $ 16 M N/A N/A
Olympia Place, Orlando 100.00% 359 $ 92 M $ 56 M N/A N/A
Winter Park Plaza, Winter Park 100.00% 85 $ 15 M $ 3 M N/A N/A
------ -------- ------- -------- -------
TOTAL 28,982 $8,425 M $5,593 M $4,828 M(15) $4,176 M
</TABLE>
- --------
7 The designation "Not Applicable" ("N/A") as used in the "1996 Current
Value" column refers to those circumstances where a property listed is, as
of the date hereof, no longer owned by O&Y (U.S.) because it has been sold,
foreclosed on by the lender, transferred by deed-in-lieu of foreclosure, or
otherwise transferred to a third party. Accordingly, in those
circumstances, the "Mortgage Debt" column is also designated N/A.
8 Effective interests in cash flows from the buildings may differ from
nominal ownership interests because of partnership distribution priorities,
swap agreements, partner loans and other items.
9 This mortgage debt figure on Tower D includes the mortgage loan principal
of Sumitomo and the Sumitomo Pledge Loan secured by a pledge of O&Y
(U.S.)'s interests in Tower D.
10 The 1996 Current Value figures listed for 245 Park Avenue and One Liberty
Plaza do not include certain value adjustments, which adjustments resulted
from lease terminations and occurred subsequent to the valuations of such
buildings.
11 This mortgage debt figure on OLP includes the mortgage loans of Sanwa and
the CIBC loan to U.S. Finco secured by a pledge of subordinate mortgages on
OLP and by O&Y (U.S.)'s equity interests in the Entities which own OLP.
12 This mortgage debt figure does not include any amounts for accrued default
interest on the mortgage loans of Aetna and DKB.
13 237 Park Ave, 1290 6th Ave. and 2 Broadway are three buildings which secure
a single bond indenture with an original principal amount of $970 million.
14 These properties have a current value substantially below the outstanding
balances on the mortgage debt relating to such properties. As a result, the
1996 current value is listed herein as equivalent to the 1996 mortgage debt
relating to such property.
15 The total of 1996 Current Values is overstated to the extent that the
outstanding balances of mortgage debt exceed the current value of the
properties identified in footnote 14.
<PAGE>
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b. Realty Corp./OYREUSA/Baden(16)
The vast majority of O&Y (U.S.)'s non-commercial office buildings and
other real estate holdings are held outside of the Devco and Equityco ownership
chains through Realty Corp., OYREUSA and Baden.(17)
<TABLE>
<CAPTION>
Baden Properties
Nominal Rentable Area 1990 Mortgage 1996 Mortgage
Ownership (thousands of Current Value Debt As Current Value Debt as
Interest(18) sq. ft.) (in millions) of 1992 (in millions) of 1996
---------- ------------- ------------- -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Wood Ranch, California 100.00% N/A $ 37.8 M(19) $ 15 M N/A N/A
Chino Hills, California 100.00% N/A $ 15.0 M(19) $ 6 M N/A N/A
Miami Center, Miami 50.00% N/A $ 55.0 M $ 0 $ 17 M $ 0
Two Clinton Square, NY 50.00% N/A $ 10.0 M(19) $ 0 N/A N/A
La Santa Maria, Miami 50.00% N/A $ 10.7 M $ 0 N/A N/A
Independence Bay, Florida(20) 100.00% N/A $ 19.0 M(19) $ 9 M $ 6 M $10.4 M
---------- ------ ------ -------
TOTAL $148.4 M $ 30 M $ 23 M $10.4 M
</TABLE>
For a discussion of the properties that are no longer owned by Devco, Equityco
or Baden, see "Background History of Olympia & York -- Business of the U.S.
Operations -- Non-Core Asset Dispositions from 1992-1995".
- --------
16 The designation "Not Applicable" ("N/A") as used in the "1996 Current
Value" column refers to those circumstances where a property listed is, as
of the date hereof, no longer owned by O&Y (U.S.) because it has been sold,
foreclosed on by the lender, transferred by deed-in-lieu of foreclosure, or
otherwise transferred to a third party. Accordingly, in those
circumstances, the "Mortgage Debt" column is also designated N/A.
17 Realty Corp. is a Delaware corporation which owns 100% of the outstanding
shares of OYREUSA. OYREUSA is a Delaware corporation which owns 90% of the
outstanding shares of Baden. Baden, a Delaware corporation, directly or
indirectly owns interests in various partnerships, joint ventures and
tenancies in common holding interests in other real estate developments and
undeveloped land. The remaining 10% of Baden is owned by Olympia & York
(U.S.) Holdings Company, a New York general partnership, which is owned 80%
by Realty Corp. and 20% by the Reichmann family through a chain of wholly-
owned entities.
18 Effective interests in cash flows from the buildings may differ from
nominal ownership interests because of partnership distribution priorities,
swap agreements, partner loans and other items.
19 Since an appraisal was not available, this number indicates book value of
the property.
20 This property was formerly owned 37.5% by O&Y (U.S.) with two third-party
partners. Substantially all of the undeveloped lands at Independence Bay
are under contract to be sold to unrelated third parties in a series of
closings which will begin in mid-June, 1996.
<PAGE>
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2. Restructuring of the U.S. Operations
At the same time that OYDL was experiencing a liquidity crisis in
Canada, O&Y (U.S.) also experienced its own liquidity crisis. The O&Y (U.S.)
crisis was caused and then exacerbated by its inability to obtain financial
support from OYDL as it had in the past. The first significant instance of
OYDL's inability to support O&Y (U.S.) manifested itself on March 23, 1992.
On March 23, 1992, Olympia & York Tower B Company ("Tower B Co.") was
required to make a $62 million annual interest payment to WFC Fincorp, which in
turn was required to pay such amount to the Tower B Noteholders as required
under the Tower B Notes. Although Tower B Co. had advanced the rents received
from Merrill Lynch/WFC/L Inc., a large tenant at Tower B, to various O&Y (U.S.)
and OYDL affiliates (which otherwise would have been available to make the $62
million annual interest payment), these affiliates were unable to repay such
amounts at that time.
Through negotiations with the Tower B Noteholders, O&Y (U.S.) was able
to obtain for a time a formal standstill from the Noteholders. The standstill
required O&Y (U.S.) to sequester all rents received from Merrill Lynch and to
transfer such rents to the Indenture Trustee for the Tower B Noteholders (the
"Indenture Trustee") on a monthly basis. The Tower B Noteholders would then
apply such rents to the missed interest payment and to the fees and expenses of
the Tower B Noteholders and the Indenture Trustee. The formal standstill expired
in June 1992, and the Tower B Noteholders refused to extend the standstill.
However, since that time and continuing until the commencement of the WFC
Fincorp chapter 11 case on July 18, 1995, WFC Fincorp, in response to the threat
of foreclosure by the Tower B Noteholders, remitted 100% of the rents received
by Tower B Co. from Merrill Lynch to the Tower B Noteholders, who applied such
rents as they wished.
After the Tower B missed interest payment, on April 1, 1992, O&Y
(U.S.) was unable to refinance the matured first mortgage on OLP held by Sanwa.
Four days later, on April 5, 1992, the holders of the Club Loan transmitted a
notice of default to O&Y (U.S.) alleging that the Tower B missed interest
payment was a default under the Club Loan, since O&Y (U.S.)'s partner interests
in Tower B were pledged to secure the Club Loan.
O&Y (U.S.) was able to reach an informal standstill with Sanwa on the
mortgage obligations at OLP.
<PAGE>
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On May 19, 1992, O&Y (U.S.) publicly announced its liquidity crisis at
a meeting of the holders of the 55 Water Street bonds, and informed the 55 Water
Street bondholders that it would be unable to support the financial obligations
of the partnership that owned 55 Water Street. O&Y (U.S.) suggested that the
bondholders form a committee for the purpose of discussing the possibility for a
consensual restructuring of the 55 Water Street obligations.
Over the next three months, various other defaults occurred or were
alleged to have occurred and certain creditors instituted litigation against O&Y
(U.S.). As a result, to explain its financial condition and to solicit
accommodations from its creditors, O&Y (U.S.) held a meeting of its creditors on
September 30, 1992.
The September 30th meeting included almost every major creditor of O&Y
(U.S.). The meeting was the first major step in the restructuring of O&Y (U.S.)
and in many respects established the conceptual foundation for the progress made
to date. At the September 30th meeting, O&Y (U.S.) announced three primary
objectives of its business plan:
1. To restore the company's financial health by
rebuilding cash flow and generating new sources of
capital through refinancing and/or equity
infusion;
2. To meet all financial obligations in a fair,
rational and orderly manner by restructuring
secured debt and negotiating settlements with
unsecured and undersecured Claimants; and
3. To enhance the company's performance and reputation
as a superior real estate entity which would own and
manage -- for itself and others -- a select group of
outstanding commercial properties.
However, O&Y (U.S.) recognized that such objectives could not be
achieved without instituting the following principles:
1. All properties were to be placed on a cash flow
mortgage basis;
2. Unsecured creditors and secured creditors whose
collateral did not generate positive cash flow
were not to be paid currently;
<PAGE>
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3. Secured lenders were asked to extend existing
loans which matured on or before December 31, 1995
for a period of five years from the maturity date
at a 6% interest rate;
4. A cash management program providing for the
payment of operating expenses, taxes, leasing
costs and mortgage interest, before excess cash
would be made available to O&Y (U.S.) for other
purposes, was to be adhered to;
5. O&Y (U.S.) would not provide additional funding to
operate properties which had negative cash flow,
including 60 Broad Street, 55 Water Street, 125 Broad
Street, One Corporate Center, 2 Broadway 1999 Bryan
Street, One Commercial Plaza and One Financial Plaza;
6. Excess cash flow from all properties was to be
used to fund the ongoing operations of O&Y (U.S.);
7. An asset sales program was to be instituted which
focused on the sale of non-core holdings;
8. No money was to be paid to or received from the
Reichmann family, OYDL or any other non-O&Y (U.S.)
entity;
9. No new collateral was to be provided to lenders
except in exchange for advances of new money; and
10. O&Y (U.S.) was to make full financial disclosure
to its creditors on a regular basis.
O&Y (U.S.) also requested the formation of a committee of creditors to
facilitate the restructuring process. Subsequent to the September 30th meeting,
an informal committee was created which consisted of Citibank, as chairman,
Chemical Bank, Salomon Brothers, CIBC, First National Bank of Chicago, Dragon,
Sanwa, Westpac Banking Corporation and Credit Agricole.
As part of its business plan announced at the September 30th meeting,
O&Y (U.S.) implemented an exit strategy of disposing of certain non-performing
assets to prevent a further drain on its resources and to minimize its
liabilities. The business plan, approved by management of O&Y (U.S.) in 1992-93,
distinguished between (i) "core" properties around which a plan of
reorganization could be based and "Newco" ultimately would be created, and (ii)
"non-core" properties which were contemplated to be sold, transferred to
creditors in lieu of foreclosure or
<PAGE>
-80-
otherwise disposed of. As discussed immediately below, O&Y
(U.S.) was very successful from 1992 to 1995 in disposing of its
non-core properties, such that by 1995, O&Y (U.S.) had
substantially reduced its liabilities.
3. Non-Core Asset Dispositions from 1992-1995
Since 1992, asset dispositions have taken the form of pre-arranged
chapter 11 plans of reorganization (e.g., 55 Water Street, 125 Broad Street,
1250 Broadway and 2 Broadway), returning the properties to the lenders in
exchange for certain debt forgiveness (e.g., One Corporate Center, One Financial
Plaza, Wood Ranch, 400 South Hope Street and 1999 Bryan Street) and cash sales
to third parties (e.g., Cypress Creek, KOIN Center, 320 Park Avenue, Winter Park
Plaza, Olympia Place, Chino Hills, and certain other properties). Since 1992,
O&Y (U.S.), through its asset divestiture program, has reduced its liabilities
by approximately $1.4 billion and has received approximately $70 million in
cash.
For a detailed listing and brief discussion of the Non- Core Asset
Dispositions, see Exhibit C to this Disclosure Statement.
With respect to the disposition of 125 Broad Street and in connection
with the implementation of the plan of reorganization relating to 125 Broad
Street that was confirmed by the Bankruptcy Court on December 30, 1994, the
CIBC/Lost Note Indemnity was issued to CIBC by O&Y Finco, Equityco and Equity
GP. Immediately prior to closing the transactions contemplated by the
confirmation order dated December 30, 1994, O&Y (U.S.) informed CIBC that none
of the O&Y Affiliates could locate a $25,000,000 promissory note dated August 5,
1991, made by 3832 Associates to the National Bank of Canada and endorsed to O&Y
Finco that was to be delivered to CIBC in connection with its acquisition of
partner interests in 3832 Associates under the plan of reorganization for 125
Broad Street. In light of this extraordinary development, CIBC agreed to close
the transaction only after O&Y Finco, Equityco and Equity GP agreed to fully
indemnify CIBC for any claims arising out of the Lost Note, and agreed (i) that
claims under the CIBC/Lost Note Indemnity would be separately classified from
all other unsecured claims against O&Y Finco, Equityco and Equity GP, (ii) that
claims under the CIBC/Lost Note Indemnity would be left unimpaired under and
"ride through" any future plan of reorganization for the Debtors, (iii) that the
Debtors would not seek to disallow, limit or estimate any claims arising
thereunder, and (iv) that the Debtors would actively oppose any creditor
attempts to have any claims arising under the CIBC/Lost Note Indemnity
disallowed, limited or estimated.
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For a discussion of the treatment of the CIBC/Lost Note Indemnity, see
"Summary of the Plan of Reorganization for the Debtors -- Consolidated Devco
Class 10".
4. Creditor Disputes
In November 1992, BPHI, a partner of O&Y (U.S.) in the World Financial
Center and one of the Co-Proponents, commenced a lawsuit against O&Y (U.S.)
alleging, among other things, that O&Y (U.S.) was, among other things, diverting
partnership funds, improperly withholding partnership distributions which should
have been distributed to BPHI and impairing BPHI's partnership rights in
negotiations with third parties. O&Y (U.S.) answered the complaint with the
counter-allegations set forth in detail below. After intense negotiations, O&Y
(U.S.) and BPHI settled their disputes. For a further discussion of the
litigation between BPHI and certain of the Debtors and the settlement thereof,
see "Significant Developments in the Debtors' Chapter 11 Cases -- BPHI
Settlement".
In addition, two other creditors of O&Y (U.S.) instituted lawsuits for
claims related to a reimbursement obligation under a letter of credit and a
termination payment under an interest rate agreement. As with other creditors,
O&Y (U.S.) was able to reach informal standstill agreements with both of these
creditors, enabling O&Y (U.S.) to continue with the restructuring process.
On December 2, 1992, another meeting of O&Y (U.S.) creditors was held.
At that meeting, O&Y (U.S.) management discussed the progress it had made in
instituting the business plan. O&Y (U.S.) also discussed the progress of the
restructurings with property lenders and of the asset disposition program. In
addition, O&Y (U.S.) informed its creditors that it had reached an agreement
with the City of New York for an extended payment schedule of real estate taxes
which would improve cash flow.
For the first six months of 1993, O&Y (U.S.) continued to fulfill its
business plan by meeting with its secured lenders with respect to restructuring
its obligations to them. There were usually two steps to any negotiation with a
secured lender. The first was reaching an agreement on cash management
consistent with the principles announced at the September 30, 1992 meeting. The
second was reaching a long-term agreement on restructuring the principal and
interest rate accruing on such principal. During the first six months of 1993,
O&Y (U.S.) met with virtually all of the secured lenders to, and third-party
partners in, the various O&Y (U.S.) properties and negotiated term sheets with,
among others:
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970 Noteholders - 237 Park Avenue, 1290 Avenue of the
Americas and 2 Broadway, New York, New York
Sumitomo Life Realty (N.Y.) Inc. - 425 Lexington
Avenue, New York, New York
The Sanwa Bank Limited - One Liberty Plaza and World
Financial Center Tower A, New York, New York
59 Maiden Lane Noteholders - 59 Maiden Lane, New York,
New York
BPHI - World Financial Center Towers A, B and D, New
York, New York
In November 1993, O&Y (U.S.), Svenska Handelsbanken ("Svenska"), Bank
Leumi Trust Company of New York ("Leumi") and the Reichmann family negotiated a
multiparty settlement under which Svenska and Leumi agreed to forbear from
enforcing their claims against O&Y (U.S.) or U.S. Holdings for a period of five
years. In exchange, the Reichmann Family gave those creditors a mortgage on, and
a right to exchange their claims for, certain undeveloped land owned by the
Reichmann family in New Jersey.
5. The Current Status of O&Y (U.S.) in 1996
As of October 11, 1995, O&Y (U.S.), through the business and
restructuring plans discussed in detail below, had reduced its operations in
commercial office buildings to ownership interests in 14 commercial office
buildings in the United States. In addition, O&Y (U.S.) had reduced its
ownership of non-commercial office building properties to only three significant
properties. The properties in which O&Y (U.S.) currently retains ownership
interests include the six Core Properties around which the Plan is structured,
and 11 significant Non-Core Properties which O&Y (U.S.) anticipates disposing of
during 1996 or early 1997.
a. Core Properties(21)
The Core Properties, including a description of such properties, their
existing and proposed ownership structures
- --------
21 Three properties which were formerly designated as Core Properties, 1290
Avenue of the Americas, 237 Park Avenue and 11601 Wilshire, have been or
will be transferred to third parties pursuant to either the January 12th
Settlement Agreement and/or a plan of reorganization for the
property-owning entities of 1290 Avenue of the Americas and 237 Park
Avenue.
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(including outside partners, if any), existing and proposed debt structures and
their major tenants, are described immediately below. Nominal ownership
interests are indicated, although effective interests in cash flows from the
properties may differ from nominal ownership interests because of partnership
distribution priorities, swap agreements, partner loans and other factors.
The World Financial Center, New York, New York
The World Financial Center is comprised of approximately 8,000,000
rentable square feet of prime commercial office space and is developed around
four first-class office buildings. Towers A, B and D are controlled by O&Y
(U.S.) and are discussed in detail below. Tower C is owned by, and is the world
headquarters for, American Express Company, Inc. O&Y (U.S) retains no ownership
interest in Tower C.
The land on which Towers A, B and D are constructed is leased on a
long term basis from Battery Park City Authority ("BPCA"), an agency of the
State of New York. The ground leases for Towers A, B and D do not expire until
2069 and require Tower A Co., Tower B Co. and Tower D Co., the tenants under the
ground leases, to pay BPCA approximately $2.5 million, $4.4 million and $2
million in ground rent in 1996, respectively.
(1) WFC Tower A, New York, New York
Tower A is a 40-story commercial office building which was completed
in 1985 and has a net rentable area of 1,510,987 square feet, of which
approximately 94% is currently leased. The major tenants in Tower A are
Oppenheimer & Co., Inc., Dow Jones Company, Inc., National Financial Services
Corporation (an affiliate of Fidelity Investments) and Nikko Securities Co.,
Int'l. In response to the likelihood that an adverse decision would be rendered
in the very near future in an action commenced by TIAA against Devco and Tower A
Co. then pending before the Supreme Court of the State of New York, New York
County, Tower A Co. filed a voluntary chapter 11 petition on October 11, 1995.
Existing Ownership Structure - Tower A was constructed by O&Y (U.S.) and is
currently owned by Tower A Co. Tower A Co. is nominally owned 47.91% by O&Y
(U.S.), approximately 26% by BPHI and approximately 26% by an affiliate of
Oppenheimer Group, Inc., a major tenant in Tower A Co. The equity interests
owned, directly or indirectly, by O&Y (U.S.) in Tower A have been pledged to the
holders of the Club Loan to secure the obligations of Devco under the Club Loan.
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Proposed Ownership Structure - New Tower A Corp. will be organized as a Delaware
corporation. New Tower A LP will be organized as a Delaware limited partnership.
New Tower A LP will own Tower A. New Tower A LP will have TALP as a 26.2626263%
limited partner, Newco LP as a 70.6666667% limited partner and New Tower A Corp.
as a 3.070707% sole general partner.
Projected Net Operating Income for 1996 - $51,728,000
Existing Debt Structure - Tower A is encumbered by a $480 million note and first
mortgage from Sanwa (the "Sanwa/Tower A Mortgage"). The loan which is secured by
the Sanwa/Tower A Mortgage is non-recourse and matures on January 25, 1999 (the
"Sanwa/Tower A Mortgage Loan"). The interest rate on the Sanwa/Tower A Loan is
8.893125%.
Proposed Debt Structure - On the Effective Date, in full satisfaction of the
Sanwa/Tower A Claims against Tower A Co., Sanwa will be distributed the
Sanwa/Tower A Restructured Mortgage Loan, which will provide for the following:
Initial Loan
Balance: $480,000,000, less the sum of (i)
amortization paid during the
chapter 11 case and (ii) the
Initial Paydown.
Initial Paydown: $15,000,000, funded from the Cash
currently held by Tower A Co.
Initial Settlement
Distribution: $5,000,000 to Newco LP, funded from
the Cash currently held by Tower A
Co.
Initial Distribution: None.
Maturity: 7 years from the Effective Date,
but not later than December 31,
2003.
Restructuring Fee: 50 basis points on the Initial Loan
Balance, 50% payable when the
Confirmation Order becomes a Final
Order and 50% payable on the
Effective Date, in each case
payable from the Available Cash of
Tower A.
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Interest Rate: 8.893125% until January 25, 1999,
thereafter Sanwa's cost of funds
plus 50 basis points until
maturity. Prior to the
Confirmation Hearing, Sanwa shall
propose, subject to the agreement
of New Tower A LP, when and to what
extent the interest rate is to be
fixed for the period from January
1, 1999 until maturity.
Amortization/
Payment Terms: Interest shall be paid monthly in
arrears. All available Cash, after
payment of expenses and deposits in
reserves to the extent described
below, will be applied quarterly to
amortization of the Sanwa/Tower A
Restructured Mortgage Loan.
Cash Flow
Application: Cash flow will be applied in the
following priority:
(i) operating expenses, including
property management fees and
reserves for PILOT (payment in
lieu of taxes) and ground rent
payments and for insurance
(which reserves will be
established on the Effective
Date);
(ii) interest on the Sanwa/Tower A
Restructured Mortgage Loan;
(iii) deposits to the Cash reserve
for leasing and capital costs
to the extent required by the
Business Plan approved by
Sanwa;
(iv) leasing costs and capital
expenditures, to the extent
not paid from the Cash
reserves;
(v) $1,000,000 in asset management
fees, payable quarterly in
arrears in 1997-1999, but no
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asset management fees
thereafter; and
(vi) the balance quarterly to Sanwa
to amortize the Sanwa/Tower A
Restructured Mortgage Loan.
Cash Reserves on the
Effective Date: Initially, $25,000,000, which will
be available for leasing costs and
capital expenditures, the amount and
expenditure of which will be pursuant to
the Business Plan approved by Sanwa.
Management Fees: Property management fees of 2% of
gross revenues, except that with respect
to revenues from leases signed after
October 11, 1995 the fee shall be 1%.
Standard leasing commissions (50%
thereof when the tenant is represented
by a broker). Asset management fees of
$1 million per annum in 1997-1999 only.
Collateral: First mortgage on leasehold estate and a
first Lien on Cash reserves.
Recourse: Nonrecourse.
TIAA: TIAA will have no further Claims
whatsoever against Tower A or Tower A
Co., except as expressly provided in
section 4.5 of the Plan.
Oppenheimer: The settlement terms with Oppenheimer
are subject to Sanwa's review to insure
that such terms are consistent with
Sanwa's understanding.
Business Plan: Annually, the managing agent of
the building will present to Sanwa for
its review and approval, not to be
unreasonably withheld, provided that it
conforms with sound ownership practices
for first class office buildings in New
York City, a "Business Plan", which
shall be updated on a quarterly basis
and
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shall be updated more frequently if
circumstances warrant. The managing
agent shall manage the Building in
accordance with the Business Plan. The
Business Plan shall include the
following:
(a) Annual "Budgets", on a Cash basis,
broken down by month, for (A) revenues,
(B) operating expenses, (C) capital
expenditures (exclusive of lease-up
costs), and (D) lease-up costs, which
shall be subject to Sanwa's review and
approval in accordance with the
foregoing standards. Operating expenses
will include third-party costs, such as
professional and consultants' fees to
the extent that such fees are ordinarily
paid in addition to property management
and asset management fees, subject to
reasonable restrictions on payments to
Affiliates. In addition, quarterly and
no later than the first Business Day
after the 20th day of the first month
after each calendar quarter, the
managing agent shall provide an actual
operating statement, which will also
show variances from the prior quarter's
Budget and compare actual year-to-date
performance to the Budget for the
year-to-date period. The managing agent
shall provide a written explanation of
each variance that exceeds the lesser of
(x) $50,000 or (y) 10% of the approved
Budget for that line item. Upon request
of Sanwa, the managing agent shall
deliver to Sanwa evidence satisfactory
to Sanwa of payment of operating
expenses required to have been paid in
accordance with the Budget. In addition,
prior to the Effective Date, the
managing agent shall provide Sanwa with
a description of current and anticipated
capital expenditures for 1996 through
2001.
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(b) Annual "Leasing Reports", detailing
leasing activity and programs for the
prior calendar year shall be presented
to Sanwa by the leasing agent, comparing
the actual activity to the prior year's
projected activity. Each Leasing Report
shall also (A) describe major
anticipated leasing events, such as
vacancies, renewals, terminations (due
to anticipated tenant bankruptcies or
defaults), modifications or take-back
opportunities, (B) generally describe
the proposed strategy for dealing with
such anticipated leasing events, (C) set
forth proposed leasing parameters for
entering into new or renewal leases in
the building, including credit standards
for tenants, minimum base rent and
maximum tenant allowances (whether in
the form of free rent, construction or
other inducements or allowances), and
(D) a proposed leasing budget. The
proposed strategy, leasing parameters
and leasing budget shall conform to
sound leasing practices for first class
office buildings in New York City. New
Tower A LP may amend, modify or
terminate leases in accordance with the
approved Leasing Report and Business
Plan. The monthly report of operating
expenses shall be accompanied by copies
of all newly executed leases and
amendments, extensions, etc. of existing
leases.
Leasing/Management: A designee of Newco LP will be the
leasing agent and the managing agent for
the building during the remaining term
of the Sanwa/Tower A Restructured
Mortgage Loan, subject to the
requirements of this section. Such
Entity will be entitled, as the leasing
agent for the building, to a standard
commission for leases for which
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there is no broker and to 50% of a
standard commission for leases for which
the tenant is represented by a broker. A
schedule of leasing commissions shall be
proposed by the O&Y Affiliates prior to
the Effective Date, which shall be
subject to Sanwa's approval; provided,
however, that such schedule shall not
exceed the schedule for leasing
commissions for space owned by Newco LP
in the other "core" New York City
buildings owned by Newco LP (other than
buildings for which there is no unleased
office space in excess of 10,000
rentable square feet projected prior to
the maturity of the existing Sanwa/Tower
A Loan, subject to periodic verification
by Sanwa). Newco LP's designee may be
dismissed as leasing and managing agent
and as asset manager upon the occurrence
and during the continuance of an event
of default. In addition, at Sanwa's
option, Newco LP's designee may be
dismissed as managing agent and asset
manager if occupancy of the building
falls below 85% or due to the failure to
manage the building within the approved
Budget, exclusive of (A) emergency
items, (B) tenant defaults and
bankruptcies, (C) items approved by
Sanwa, (D) failure to manage the
building within the approved Budget due
to receipt of revenues either prior to
or later than the anticipated receipt or
due to payment of expenses prior to or
later than the anticipated payment,
provided in either case that the actual
receipt or payment, as the case may be,
is within sixty (60) days of the
projected receipt or payment, and (E)
increases caused by labor contracts
affecting commercial buildings generally
or increases in utility costs that
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affect commercial buildings generally,
it being understood (x) that the Budget
will, to the extent that it is
reasonably possible to anticipate such
increases (but not the amount of such
increases), so state, and (y) that Newco
LP will provide specific information
about such increased expenses within
thirty (30) days after such information
is available to Newco LP. If Sanwa
exercises the foregoing right, the
existing leasing and/or management
contracts will be terminated on thirty
(30) days' notice and contracts with
persons satisfactory to Sanwa will be
executed and delivered. Thereafter, no
further leasing, property management or
asset management fees will be paid to
Newco LP, as the case may be.
Loan Sales: The limitation set forth in a
side letter dated January 25, 1989 on
Sanwa's right to participate or assign
the Sanwa/Tower A Restructured Mortgage
Loan expired on January 25, 1992. The
remaining limitations in the side letter
on Sanwa's right to participate or
assign the Sanwa/Tower A Restructured
Mortgage Loan, in whole or in part, will
be eliminated. If Sanwa determines that
it wishes to solicit bids for the
purchase of all or substantially all of
its rights and obligations as lender to
New Tower A LP, Sanwa shall give not
less than twenty (20) days' written
notice of its intention to solicit bids
to New Tower A LP. In addition, if a
prospective purchaser solicits an
opportunity to make a bid to purchase
all or substantially all of Sanwa's
rights and obligations as lender to New
Tower A LP, and Sanwa wishes to provide
information to such
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prospective purchaser of a nature that
requires or makes advisable a
confidentiality agreement between Sanwa
and such prospective purchaser, within
two Business Days after entering into
such confidentiality agreement, Sanwa
shall give notice thereof to New Tower A
LP. Other than the rights and
obligations expressly set forth in the
preceding two sentences, Sanwa shall
have no other obligations and Tower A
Co. shall have no other rights with
respect to the sale by Sanwa of any of
Sanwa's rights and obligations as lender
to New Tower A LP.
Events of Default: The Sanwa/Tower A
Restructured Mortgage Loan will contain
customary events of default in similar
circumstances, including, but not
limited to, the following events of
default:
(i) Failure to comply with a cash
management system to be agreed
upon;
(ii) Bankruptcy of New Tower A LP or
New Tower A Corp.;
(iii) Failure to pay all monthly
expenses under items (i) and (ii)
of "Cash Flow Application;" and
(iv) Failure to cooperate in the
replacement of a leasing or
management agent following an
event of default under a leasing
or management contract; and
(v) Events of default under the
Sanwa/Tower A Loan.
Consent to Use
of Cash Collateral: Sanwa shall consent to the use of
its Cash Collateral to be used to
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fund the distributions to the holders of
Administrative Expense Claims, Allowed
Priority Tax Claims, Allowed Priority
Non-Tax Claims and Allowed General
Unsecured Claims in accordance with
sections 5.1, 13.1 and 13.5 of the Plan.
Bankruptcy Remote
Structure: A bankruptcy remote structure will
be provided as set forth in section
18.7.3 of the Plan.
On the Effective Date, the Sanwa/Tower A Mortgage Loan and any Claims
otherwise arising under or related to the Sanwa/Tower A Mortgage Loan or any of
the guarantees, mortgages or security interests issued in connection therewith,
shall be released and cancelled in consideration of the Sanwa/Tower A
Restructured Mortgage Loan.
(2) World Financial Center Tower B,
New York, New York
Tower B is a 45-story commercial office building which was completed
in 1985 and has a net rentable area of 2,581,228 square feet, of which
approximately 99% is currently leased. The major tenant in Tower B is Merrill
Lynch. The upper fifteen (15) floors of office space (which cover 615,759 square
feet of space) were subleased by Merrill Lynch to Tower B Leaseco (the "Tower B
Sublease"), and in turn sub-subleased to various tenants, including Commerzbank
AG and Mitsubishi Bank. Merrill Lynch has asserted that the Tower B Sublease was
terminated immediately prior to the commencement of the Tower B Leaseco chapter
11 case.
Existing Ownership Structure - Tower B was constructed by O&Y (U.S.) and is
currently owned by Tower B Co. Tower B Co. is nominally owned approximately 65%
by O&Y (U.S.) and approximately 35% by BPHI. The equity interests owned by O&Y
(U.S.), directly or indirectly, in Tower B have been pledged, first, to the
holders of the Club Loan to secure the obligations of Devco under the Club Loan,
and second, to Svenska to secure a $1 million obligation of Devco GP and Tower B
Holding I.
Proposed Ownership Structure - On the Effective Date, Tower B Co. and Tower B
Holding I will be dissolved and reconstituted as New York general partnerships
which will bear the same names. Pursuant to the Restructuring Transactions, BPHI
will own indirectly (through Tower B Co. and Tower B Holding I) a portion of its
Class A Interests. On the Effective Date, WFC Tower B Co.
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LP, a Delaware limited partnership, will be formed by the filing of a
certificate of limited partnership with the Delaware Secretary of State. In
accordance with the Restructuring Transactions, WFC Tower B Co. LP will own
Tower B. Newco LP will own indirectly (through WFC Tower B Holding LP, a newly
formed Delaware limited partnership) a 99% limited partner interest in WFC Tower
B Co. LP. The 1% general partner interest in WFC Tower B Co. LP will be owned by
a subsidiary of one or more of the Co- Proponents, WFC Tower B GP Corp., a
Delaware corporation to be formed on the Effective Date.
Projected Net Operating Income for 1996 - $69,158,000
Existing Debt Structure and Description of Relevant Litigations The debt on
Tower B is held through WFC Fincorp, which itself is a chapter 11 debtor before
the Bankruptcy Court. WFC Fincorp is indirectly owned approximately 65% by O&Y
(U.S.) and approximately 35% by BPHI. WFC Fincorp issued certain 7.75% Secured
Notes due March 25, 1998 (collectively, the "Tower B Notes"). The Tower B Notes
are dollar equivalent, yen- denominated obligations which upon issuance had an
aggregate face amount of $800,000,000. The Tower B Notes were issued to the
Tower B Noteholders under an Indenture (the "Indenture"), dated as of December
14, 1988, among WFC Fincorp, Devco and Bank of New York, as successor Indenture
Trustee to Manufacturers Hanover Trust Company and NationsBank of Virginia,
N.A., as Indenture Trustee. The Tower B Notes are to be repaid in the then U.S.
dollar equivalent of (Y)98.64 billion. The Tower B Notes bear interest from
December 14, 1988 at the rate of 7.75% per annum on $800,000,000.
In order to hedge against currency exchange rate exposure, Devco
purchased certain long-term Yen forward contracts, under which it had the right
to purchase (Y)98.64 billion on March 25, 1998, the date on which Tower B Co.
has to repay such Yen amounts to Finance Corp. The effect of these transactions
was to fully protect Tower B Co. (and through certain other agreements, Devco
and Devco GP) from the currency risk (other than the failure of the
counter-parties to the Yen forward contracts to perform) arising from its
obligation to pay Finance Corp. (Y)98.64 billion on March 25, 1998.
On or about January 31, 1992 and continuing until February 18, 1992,
Tower B Co. sold all (Y)98.64 billion long-term Yen forward contracts it owned
for $33.6 million. Tower B Co. then transferred the entire $33.6 million to U.S.
Finco.
The proceeds of the issuance of Tower B Notes were loaned by WFC
Fincorp to Tower B Co., which used the proceeds to retire the then-existing
construction loan secured by Tower B.
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There is a dispute between O&Y (U.S.) and the Tower B Noteholders as to the
current amount of the debt owed to such Noteholders on account of the Tower B
Notes. In January 1996, the Tower B Noteholders filed a proof of claim in WFC
Fincorp's case seeking to recover the U.S. dollar equivalent of (Y)98.64 billion
as of July 14, 1995, the date on which the Indenture Trustee for the Tower B
Notes served what purported to be a formal written notice of acceleration under
the Indenture. The Debtors, Tower B Co. and WFC Fincorp have all contested the
validity, enforceability and amount of the claim of the Tower B Noteholders and
such claim is the subject of several pending litigations before the Bankruptcy
Court.
As collateral for the Tower B Notes, Tower B Co. issued to WFC Fincorp
certain mortgage notes, in the aggregate original principal amount of
$800,000,000, bearing interest at a rate of 7.75% per annum, payable annually
and due on March 25, 1998 (the "Tower B Mortgage Notes"). In addition, Tower B
Co. issued the Excess Amount Note and a mortgage on Tower B securing such note
(the "Excess Amount Mortgage") to WFC Fincorp in order to cover the potential
yen/dollar exchange rate exposure that WFC Fincorp is subject to due to the fact
that the Tower B Notes are yen denominated. Devco guaranteed Tower B Co.'s
obligation under the Excess Amount Note. WFC Fincorp collaterally assigned the
Tower B Mortgage Notes and the Excess Amount Note to the Tower B Noteholders as
additional security for the Tower B Notes. The Debtors, Tower B Co. and WFC
Fincorp have all contested the validity, enforceability and amount of any
alleged obligations that any of the aforementioned entities might have under the
Excess Amount Note and Excess Amount Mortgage and such alleged obligations are
the subject of ongoing litigation before the Bankruptcy Court. This litigation
has been indefinitely postponed by the Bankruptcy Court because of the
settlement of claims between the Tower B Noteholders and the aforementioned O&Y
(U.S.) affiliates which, when consummated, will resolve the pending issues in
such litigation.
For a further discussion of such litigations and a summary of the
settlement thereof as reflected in the Tower B Plan, see "Significant
Developments in the Debtors' Chapter 11 Cases -- Related Chapter 11 Filings --
Tower B Co. and WFC Fincorp".
(3) World Financial Center Tower D,
New York, New York
Tower D is a 34-story commercial office building which was completed in 1987 and
has a net rentable area of 1,813,659 square feet, of which approximately 99% is
currently leased. Tower D,
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together with Tower B, houses the worldwide headquarters of
Merrill Lynch.
Existing Ownership Structure - Tower D was constructed by O&Y (U.S.) and is
currently owned by Tower D Co. Tower D Co. is nominally owned 33.15% by O&Y
(U.S.), 17.85% by BPHI and 49% by HQ North Co., Inc. ("HQ North"), an affiliate
of Merrill Lynch. The equity interests owned by O&Y (U.S.) in Tower D have been
pledged to Sumitomo Bank to secure the obligations of O&Y (U.S.) under the
Sumitomo Bank/Tower D Pledge Loan (as described below).
Proposed Ownership Structure - Tower D Co., Tower D Holding I and Tower D
Holding II will each be reorganized as Delaware limited partnerships named WFC
Tower D LP, New Tower D Holding I LP and New Tower D Holding II LP,
respectively. By the Effective Date, WFC Tower D GP Corp. will be organized as a
Delaware corporation by the filing of a certificate of incorporation with the
Delaware Secretary of State. Newco LP will own all of the outstanding stock of
WFC Tower D GP Corp. WFC Tower D LP will own Tower D. New Tower D Holding I LP
will hold a 48% limited partner interest, New Tower D Holding II LP will hold a
2% limited partner interest, WFC Tower D GP Corp. will hold a 1% general partner
interest, Merrill Lynch Tower D Partner will hold a 48.1% limited partner
interest and an affiliate of Merrill Lynch Tower D Partner will own a 0.9%
general partner interest in WFC Tower D LP. Newco LP will hold a 99% limited
partner interest and Tower Holding I Corp. will hold a 1% sole general partner
interest in New Tower D Holding I LP.
Projected Net Operating Income for 1996 - $48,672,000
Existing Debt Structure - Tower D is encumbered by a first mortgage which
secures a loan from Sumitomo Bank in the principal amount of $250 million, plus
interest and other charges (the "Sumitomo Bank/Tower D Mortgage Loan"). The
Sumitomo Bank/Tower D Mortgage Loan is non-recourse and matures on February 25,
2003. The interest rate on the Sumitomo Bank/Tower D Mortgage Loan is 9% until
1998 and 9.05% thereafter until maturity. Sumitomo Bank, along with certain
other participants, also has a $74.75 million pledge loan secured by O&Y
(U.S.)'s partner interests in Tower D (the "Sumitomo Bank/Tower D Pledge Loan").
The Sumitomo Bank/Tower D Pledge Loan matured on February 26, 1993. By order of
the Bankruptcy Court dated December 1995, adequate protection payments in the
form of quarterly interest have been paid on the Sumitomo Bank/Tower D Pledge
Loan retroactive to Devco's Petition Date.
Proposed Debt Structure - A refinancing of the mortgage debt on Tower D held by
Sumitomo (the "Tower D Refinancing") has been negotiated with Merrill Lynch and
Chase Securities, Inc.
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("Chase") and shall be implemented on the Effective Date. The proceeds of such
refinancing shall, in part, be used to pay in full the Sumitomo Bank/Tower D
Pledge Loan on the Effective Date. The principal terms of the proposed Tower D
refinancing are as follows:
Initial Loan Amount: Approximately $425 million in the form
of rated debt securities (the
"Securities") to be offered in a private
placement to institutional investors
under S.E.C. Rule 144A.
Expected Closing
Date: Effective Date of the Plan
Placement Fee: 1.25% of the initial loan amount
Placement Agents: Merrill Lynch will be lead manager of
the refinancing, will place and/or
underwrite 75% of the Securities and
will entitled to receive 75% of the
placement fee. Chase will be co-manager
of the refinancing, will place and/or
underwrite 25% of the Securities and
will be entitled to receive 25% of the
placement fee.
Term: Coterminous with the Tower D Merrill
Lease (September 30, 2013)
Interest Rate: Anticipated to be a fixed 7.5%,
based upon rates as of the date hereof
Amortization: The loan shall fully amortize over the
term of the Merrill Lynch Tower D Lease
(17 years).
Use of Proceeds: The Tower D Refinancing is expected to
generate net proceeds of approximately
$405 million after payment of
transaction costs (including
reimbursement by Tower D Co. of
transaction costs, if any, incurred by
the Co-Proponents in connection with the
refinancing). Such net proceeds shall
be used as follows:
first, to pay Sumitomo $250 million
to satisfy the outstanding principal
amount owed on the Tower D Mortgage
Loan plus
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an amount required to fund the swap
termination costs to be incurred by
Sumitomo in connection with such
pre-payment of the Sumitomo
Bank/Tower D Mortgage Loan (expected
to be approximately $25 million
based on current rates); and
second, the excess to be distributed to
Newco LP, where it will be used:
first, to pay to Sumitomo $74.75
million to satisfy the Sumitomo
Bank/Tower D Pledge Loan; and
second, to fund any
payments required to be
made under the Plan on the
Effective Date thereof and
for the application of the
excess to be used in any
manner as may be determined
by Newco LP.
Required Consents: The Co-Proponents (BPHI, CIBC, Citibank,
Dragon) and Merrill Lynch.
Condition: It will be a condition to the Tower D
Refinancing that the Plan shall become
effective.
As described immediately above, a portion of the proceeds of
the Tower D Refinancing will be used to pay Sumitomo Bank, on account of the
Sumitomo Bank/Tower D Pledge Loan Claims, a payment in Cash of $74,750,000 plus
any unpaid and accrued interest at the rate of LIBOR plus 100 basis points. In
return for such cash payment, the Sumitomo Bank/Tower D Pledge Loan and any
Claims otherwise arising under or related to the Sumitomo Bank/Tower D Pledge
Loan or any of the guarantees, mortgages or security interests issued in
connection therewith shall be released and cancelled.
(4) One Liberty Plaza, New York, New York
One Liberty Plaza ("OLP") is a 53-story commercial office building which was
completed in 1971 and has a net rentable area of 2,100,000 square feet, of which
approximately 86% is currently leased. The major tenants of OLP are Cleary,
Gottlieb, Steen & Hamilton, Bank of Nova Scotia, NYLCare Health Plans, Inc. (an
affiliate of New York Life Insurance Company), Credit Suisse and Long Term
Credit Bank of Japan.
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Existing Ownership Structure - OLP is currently owned by three O&Y (U.S.)
entities: Olympia & York OLP Company, a New York general partnership, Trinity
Place Company, a New York general partnership and O&Y Liberty Plaza Company, a
New York limited partnership (collectively, the "OLP Companies"). The OLP
Companies are indirectly owned 100% by O&Y (U.S.).
Proposed Ownership Structure - New OLP Corp. will be organized as a Delaware
corporation. Devco GP and Devco will transfer their respective partnership
interests in OLP Co. and Trinity Place Co. to Liberty Plaza Co., with OLP Co.
and Trinity Place Co. being dissolved by reason of such transfers. Liberty Plaza
Co., as successor to the respective assets and Liabilities of OLP Co. and
Trinity Place Co., will be reorganized as New Liberty Plaza LP, with New OLP
Corp. as a 1% sole general partner and Newco LP as a 99% limited partner.
Projected Net Operating Income for 1996 - $33,826,000
Existing Debt Structure - OLP is encumbered by a first mortgage securing a
$294.5 million loan from Sanwa (the "Sanwa/OLP Loan"). The Sanwa/OLP Loan is
non-recourse and matured in 1992. The interest rate on the Sanwa/OLP Loan is, at
the OLP Companies' option, Prime Rate or LIBOR + 1%. In connection with a series
of paydowns of the first mortgage loan owed to Sanwa by U.S. Finco, U.S. Finco
received $205 million in subordinated notes secured by second, third and fourth
mortgages on OLP (the "U.S. Finco Mortgages"). The U.S. Finco Mortgages and
subordinated notes are non-recourse against the borrowers. The U.S. Finco
Mortgages and the subordinated notes which they secure are pledged and
collaterally assigned to CIBC to secure a $55 million principal amount loan from
CIBC to U.S. Finco (the "CIBC/OLP Loan"). The CIBC/OLP Loan is a recourse
obligation against Devco, Devco GP and U.S. Finco which matured in 1992, and is
also secured by pledges of Devco's and Devco GP's partner interests in the OLP
Companies. The interest rate on the CIBC/OLP Loan is, at the OLP Companies'
option, Prime Rate or LIBOR + 1%.
Proposed Debt Structure - On the Effective Date, in full satisfaction of the
Allowed Sanwa/OLP Claims against Liberty Plaza Co., OLP Co. and Trinity Place
Co., Sanwa shall be distributed the Sanwa/OLP Restructured Mortgage Loan, which
will have the following terms and conditions:
Initial Loan Balance: $294,552,443, less the amount of
the Initial Paydown described
below.
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Initial Paydown/
Distribution: The amount of Cash available after
providing for (a) the funding of
the Real Estate Tax and Insurance
Reserve and the Cash reserve
described below; (b) payment of
chapter 11 costs, Administrative
Expense Claims, Allowed Priority
Tax Claims, Allowed Priority Non-
Tax Claims and Allowed General
Unsecured Claims in accordance with
the treatment accorded such Allowed
Claims in the Plan, and (c) the
Restructuring Fee described below,
shall be used to fund the Initial
Paydown to Sanwa and an Initial
Distribution to the holders of the
Equity Interests in OLP, in each
case equal to one-half of such
available amount.
Maturity: 7 years from the Effective Date,
but not later than December 31,
2003.
Restructuring Fee: 1% of the initial loan balance, 50%
payable when the Confirmation Order
becomes a Final Order and 50%
payable on the Effective Date, in
each case payable from the
Available Cash of OLP.
Interest Rate: LIBOR or Sanwa's cost of funds plus
175 basis points for 5 years. On
the earlier of the fifth
anniversary of the Effective Date
and January 1, 2002, Sanwa's spread
shall be increased to 200 basis
points until maturity. Specific
decisions about fixing the rate
will be made by the owners of New
Liberty Plaza LP, subject to
Sanwa's approval, which approval
shall not be unreasonably withheld.
Amortization/Payment Terms: Interest shall be
paid monthly in arrears.
All excess Cash available
during each of the first
five years of the Sanwa/OLP
Restructured Mortgage Loan
will be split 50% to
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amortization and 50% to the
owners of New Liberty Plaza
LP or their designees
(including, for this
purpose, the asset
management fee), subject to
adjustment beginning in
1999, as provided below.
After the fifth anniversary
of the Effective Date, all
excess cash flow will be
reserved until an amount is
reached that, in Sanwa's
reasonable judgment, will
be sufficient to pay all
leasing costs (including
tenant improvements and
leasing commissions, taking
into account projected
vacancy periods) for lease
expirations and any
reasonably anticipated
other vacancies scheduled
or anticipated to occur
prior to December 31, 2005;
thereafter the 50%/50%
split of excess cash flow
will resume with no minimum
amortization, subject to
adjustment as provided
below.
It is agreed that, not
later than December 31,
2001, total principal
payments (including the
Initial Paydown) shall
total not less than total
principal payments would
have been after five years
on a loan amortizing on a
level payment schedule over
20 years with a beginning
balance of $294,552,000.
Beginning on January 1,
1999, the 50%/50% split
between amortization and
distributions will be
subject to adjustment to
increase amortization
payments to Sanwa in order
to generate total principal
payments to Sanwa in
accordance with this
paragraph.
It is also agreed that, not
later than December 31,
2003, total principal
payments shall total not
less than total principal
payments would have been
after seven years on a loan
amortizing on a level
payment schedule over 20
years with
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a beginning balance of
$294,552,000; provided,
however, that amortization
of principal in 2002 and
2003 shall be subordinate
to the establishment of
reserves for leasing costs
as provided above. In 2002
and 2003, the 50%/50% split
after establishment of
reserves for leasing will
be subject to adjustment to
increase amortization
payments to Sanwa in order
to generate total principal
payments to Sanwa in
accordance with this
paragraph.
Real Estate Tax and
Insurance Reserve: On the Effective Date, a Real
Estate Tax and Insurance Reserve
will be established to provide for
a balance of $3,342,500 as of
September 30, 1996, increasing by
$1,114,000 per month through
December 31, 1996 and by the amount
necessary to fund the timely
payment of insurance premiums.
After the Effective Date, monthly
deposits equal to one-twelfth of
the total annual payments for real
estate taxes, water and sewer
charges and insurance premiums will
be made to the Real Estate Tax and
Insurance Reserve so as to
accumulate a sufficient balance to
allow timely payment of all real
estate taxes, water and sewer
charges and insurance premiums when
due.
Cash Flow Application: Cash flow will be applied in the
following priority:
(i) operating expenses, including
property management fees and
reserves for real estate taxes
(which reserves will be
established on the Effective
Date);
(ii) interest on the Sanwa/OLP
Restructured Mortgage Loan;
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(iii) top up Cash reserve to the amount
required for leasing costs and
asbestos removal in accordance
with the Business Plan described
below;
(iv) capital expenditures and leasing
costs to the extent not paid from
reserves; and
(v) remaining Cash will be split with
50% going to amortization on the
Sanwa/OLP Restructured Mortgage
Loan and 50% being distributed to
the owners of New Liberty Plaza
LP or their designees. The 50%
distribution to the owners of New
Liberty Plaza LP or their
designees will include asset
management fees, subject to
adjustment as described above to
achieve the required minimum
amortization after five years and
seven years.
Cash Reserves: The initial deposit will be such
amount as is necessary to achieve a
balance of $7,200,000 not later
than December 31, 1996, plus the
sum of any unexpended amounts for
(a) leasing costs (including
payments to or for the benefit of
tenants and leasing commissions)
required with respect to existing
leases and (b) capital costs
(including asbestos removal) at an
agreed upon level for 1996. Cash
reserves will be available for
leasing costs, asbestos removal and
other approved uses. Deposits to
and expenditures from the Cash
reserves shall be in accordance
with the Business Plan. Beginning
on the Effective Date, Cash
reserves will be increased to and
maintained at the level necessary
to pay all leasing costs (as
reasonably estimated by Sanwa) for
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existing scheduled and
anticipated vacancies
within the succeeding 24
months, which shall be
carried out in accordance
with the Business Plan;
provided, however, that in
1997 not less than
$12,500,000 shall be
deposited in the Cash
reserves or expended from
1997 revenues for leasing
costs and other capital
expenditures. As described
above in
Amortization/Payment Terms,
all excess cash flow in the
last two years of the loan
will be reserved until a
reserve amount is
established to cover
upcoming vacancies
scheduled or anticipated
through December 31, 2005.
Asbestos Removal: All remaining asbestos shall be
removed from the building as soon
as reasonably possible. The cost
of such removal shall be paid from
the Cash reserves.
Management Fees: Property management fees of 2% of
gross revenues, except that with
respect to revenues from leases
signed after the Effective Date the
fee shall be 1%. Standard leasing
commissions shall be paid (50%
thereof when the tenant is
represented by a broker). Asset
management fees of 0.5% in the
first and second year after the
Effective Date, and thereafter
0.35% until maturity, of Gross
Asset Value, as determined by
trailing four quarters of Net
Operating Income, payable at the
level of priority described above
and in accordance with the
requirements set forth in Cash Flow
Application.
Collateral: First mortgage on OLP and a Lien on
Cash reserves. The existing pledge
of the O&Y Affiliates' Equity
Interests in 53 State Street will
be released. (No release of
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existing pledge of O&Y 25
Realty Co.'s interest in 53
State Limited).
Recourse: Nonrecourse. Sanwa will waive all
Claims against OYDL and Sanwa's
guaranty Claim against Devco will
be estimated at zero and
disallowed.
No Subordinate
Financing: If there are not sufficient funds
in the Cash reserves to permit
timely payment of all leasing costs
as the result of leasing occurring
more quickly than is currently
anticipated or otherwise, the
shortfall necessary to pay such
costs shall be provided by the
owners of New Liberty Plaza LP.
Neither the building nor the
revenues of the building may be
used as Collateral for any loan
obtained by the owners of New
Liberty Plaza LP.
Business Plan: Annually, the managing agent of the
building will present to Sanwa for
its review and approval, not to be
unreasonably withheld, provided
that it conforms with sound
ownership practices for first class
office buildings in New York City
and does not impair the ability of
New Liberty Plaza LP to repay Sanwa
at maturity, a "Business Plan",
which shall be updated on a
quarterly basis and shall be
updated more frequently if
circumstances warrant. The
managing agent shall manage the
building in accordance with the
Business Plan. The Business Plan
shall include the following:
(a) Annual "Budgets", on a
Cash basis, broken down by
month, for (A) revenues,
(B) operating expenses, (C)
capital expenditures
(exclusive of lease-up
costs), and
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(D) lease-up costs, which
shall be subject to Sanwa's
review and approval in
accordance with the
foregoing standards.
Operating expenses will
include third-party costs,
such as professional and
consultants' fees to the
extent that such fees are
ordinarily paid in addition
to property management and
asset management fees. In
addition, quarterly and no
later than the first
business day after the 20th
day of the first month
after each calendar
quarter, the managing agent
shall provide an actual
operating statement, which
will also show variances
from the prior quarter's
Budget and compare actual
year-to-date performance to
the Budget for the
year-to-date period. The
managing agent shall
provide a written
explanation of each
variance that exceeds the
lesser of (x) $50,000 or
(y) 10% of the approved
Budget for that line item
on a year-to-date basis.
(b) Annual "Leasing
Reports", detailing leasing
activity and programs for
the prior calendar year
shall be presented to Sanwa
by the leasing agent,
comparing the actual
activity to the prior
year's projected activity.
Each Leasing Report shall
also (A) describe major
anticipated leasing events,
such as vacancies,
renewals, terminations (due
to anticipated tenant
bankruptcies or defaults),
modifications or take-back
opportunities, (B)
generally describe the
proposed strategy for
dealing with such
anticipated leasing events,
(C) set forth proposed
leasing parameters for
entering into new or
renewal leases in the
building, including credit
standards for tenants,
minimum base rent and
maximum tenant allowances
(whether in the form of
free rent,
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construction or other
inducements or allowances),
and (D) a proposed leasing
budget. The proposed
strategy, leasing
parameters and leasing
budget shall be subject to
Sanwa's prior approval,
which shall not be
unreasonably withheld,
provided that they conform
to sound leasing practices
for first class office
buildings in New York City
and do not impair the
ability of New Liberty
Plaza LP to pay Sanwa in
full at maturity.
Notwithstanding the
foregoing, including the
parameters set forth in the
Leasing Report, eligibility
for applying the Cash
reserves shall be governed
by the leasing standards to
be agreed upon by Sanwa and
the Debtors. New Liberty
Plaza LP may amend, modify
or terminate leases in
accordance with the
approved Leasing Report and
Business Plan. The monthly
report of operating
expenses shall be
accompanied by copies of
all newly executed leases
and amendments, extensions,
etc., of existing leases.
Consent to Use
of Cash Collateral: Sanwa shall consent to the use of
its Cash Collateral to be used to
fund the distributions to the
holders of Administrative Expense
Claims, Allowed Priority Tax
Claims, Allowed Priority Non-Tax
Claims and Allowed General
Unsecured Claims in accordance with
sections 5.1, 12.1 and 12.5 of the
Plan.
Outside Closing Date: If the Effective Date is after
December 31, 1996, Sanwa shall be
paid monthly amounts calculated as
interest on the Sanwa/OLP Mortgage
Loan at a rate of LIBOR plus 175
basis points for the period
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commencing December 31, 1996 and
ending on the Effective Date.
Ownership/Bankruptcy
Remote Structure: A bankruptcy remote structure will
be provided as set forth in section
18.5.3 of the Plan.
Events of Default: The Sanwa/OLP Restructured Mortgage
Loan will contain customary events
of default in similar
circumstances, including, but not
limited to, the following events of
default:
(i) Failure to comply with a cash
management system to be agreed
upon;
(ii) Bankruptcy of New Liberty Plaza
LP or New OLP Corp.;
(iii) Failure to pay all monthly
expenses under items (i) and (ii)
of "Cash Flow Application";
(iv) Failure to cooperate in the
replacement of a leasing or
management agent following an
event of default under a leasing
or management contract; and
(v) Events of default under the
Sanwa/OLP Loan.
Other Provisions: Leasing/Management shall be
consistent with the Tower A Plan.
Minimum Leasing Standards and Lease
Approval Standards will be agreed
upon in a manner that reflects
current market conditions.
On the Effective Date, the Sanwa/OLP Mortgage Loan and the
Liens on the 53 State Street Collateral (excluding the pledge of O&Y 25 Realty
Company's interest in 53 State Limited) and any Claims otherwise arising under
or related to the Sanwa/OLP Loan or any of the guarantees, mortgages or security
interests issued in connection therewith shall be released and cancelled in
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consideration of the Sanwa/OLP Restructured Mortgage Loan. Sanwa, as the holder
of the Allowed Sanwa/OLP Claims, shall not be entitled to any additional
distribution by reason of an Allowed Sanwa/OLP Claim filed against other Debtors
for the same loss or damage or otherwise arising under or related to the
Sanwa/OLP Loan or any of the guarantees, mortgages or security interests granted
in connection therewith.
(5) 245 Park Avenue, New York, New York
245 Park Avenue ("245 Park") is a 45-story commercial office building which was
completed in 1970 and has a net rentable area of 1,617,779 square feet, of which
approximately 97% is currently leased. The major tenants of 245 Park are Bear
Stearns, Industrial Bank of Japan, Cooperative Centrale Raiffeneisen- Boerenleen
Bank, B.A. (Rabobank) and The Nippon Credit Bank, Ltd.
Existing Ownership Structure - 245 Park is currently owned by 245 Park Avenue
Company, a New York general partnership ("245 Park Co."). 245 Park Co. is
nominally owned 51.64% by O&Y (U.S.) and 48.36% by an affiliate of JMB Realty
Corporation ("JMB"). The equity interests owned, directly or indirectly, by O&Y
(U.S.) in 245 Park have been pledged to the holders of the Club Loan to secure
the obligations of Devco under the Club Loan.
Proposed Ownership Structure - 245 Holding LP will be reconstituted as a
Delaware limited partnership. If JMB does not elect the JMB/245 Park Member
Option in accordance with section 15.8.1 of the Plan, JMB will hold a 99%
limited partner interest and Devco GP will hold a 1% general partner interest in
245 Holding LP. 245 Holding LP will hold a 5.4949% Class A Interest in Newco LP.
New 245 Park LP will be organized as a Delaware limited partnership. Newco LP
will hold a 99% limited partner interest and 245 Corp. will hold a 1% sole
general partner interest in New 245 Park LP.
Projected Net Operating Income for 1996 - $69,158,000.
Existing Debt Structure - 245 Park is encumbered by a first mortgage securing a
loan from Aetna in the outstanding principal amount of $191,410,761 million as
of the Petition Date for 245 Park Co., without taking into account any accrual
of default interest (the "Aetna Mortgage Loan"). The Aetna Mortgage Loan is
non-recourse and matured on October 1, 1993. The contract interest rate on the
Aetna Mortgage Loan is 12% and the default rate of interest is 18%. From and
after the date of maturity of the Aetna Mortgage Loan, 245 Park Co. continued to
pay interest thereon at the contract rate.
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245 Park is also encumbered by second, third and fourth mortgages securing notes
from DKB, in the aggregate outstanding principal amount as of the Petition Date
for 245 Park Co. of $192.5 million, without taking into account any accrual of
default interest (the "DKB Mortgage Loan"). The DKB Mortgage Loan is
non-recourse and matured on October 1, 1994. The contract interest rate on the
DKB Mortgage Loan range from LIBOR +.8125% to 9.275% and the default interest
rate is LIBOR + 3%. As with the Aetna Mortgage Loan, from and after the date of
maturity of the DKB Mortgage Loan, 245 Park Co. continued to pay interest
thereon at the contract rate.
Proposed Debt Structure -
Aetna Mortgage Loan Treatment
Aetna shall be distributed on the Effective Date, in full
satisfaction of the Allowed Aetna Mortgage Loan Claims, the Aetna Restructured
Mortgage Loan which shall provide for the following:
Initial Loan Balance: $190,680,717 as of September 30,
1996.
Settlement Fee: $2,000,000.
Interest Rate: The mortgage equivalent of the 10-
Year treasury note rate plus 250
basis points.
Term: 10 years from the Effective Date.
Amortization: Interest only in years 1 through 3.
Thereafter, debt service shall be
payable in years 4-10 based upon a
30-year amortization schedule.
Default Interest
Consideration: In full settlement of all accrued
and unpaid default interest on the
Aetna Mortgage Loan, Aetna shall
receive:
$5,000,000 in Cash on the Effective
Date.
$2,000,000 in Cash paid on January
2, 1998.
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The 245 Park Note issued by
New 245 Park LP having an
original principal amount
of $11,750,000, due on the
maturity of the Aetna
Restructured Mortgage Loan,
bearing interest at a rate
of 7%, and entitled to no
amortization.
Cash Reserve: An initial deposit of $20,000,000
will fund a Cash reserve to be used
for leasing costs, capital
improvements and real estate taxes.
The Cash reserve shall be increased
by deposits of funds generated by
245 Park Avenue. It is anticipated
that the Cash reserve will contain
approximately $45,000,000 by
December 31, 2002.
Cash Flow Priority: Net cash flow from the operations
of 245 Park Avenue after payment of
operating expenses (including the
property management fees described
below) and real estate taxes shall
be allocated according to the
following priority:
a. To the 245 Park Senior Lender
to pay interest and principal
on the Aetna Restructured
Mortgage Loan.
b. To DKB to pay interest on the
DKB Restructured Mortgage
Loan.
c. To DKB to pay the following
Minimum Scheduled Amortization
payments:
Minimum Scheduled
Year Amortization
---- ------------
1999 $ 5,000,000
2000 5,000,000
2001 5,000,000
2002 5,000,000
----- -----------
Total $20,000,000
d. To a Cash reserve to fund the
following maximum reserve
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payments for leasing, capital
and other costs at the
building.
Maximum
Year Reserve Funding
---- ---------------
1996 $ 7,500,000
1997 13,000,000
1998 15,000,000
1999 20,000,000
2000 14,000,000
2001 14,000,000
2002 18,500,000
---- ------------
Total $102,000,000
e. To pay the owners of New 245 Park
LP or its designee the asset
management fees and leasing
commissions set forth below under
"Management Fees and Leasing
Commissions".
f. To DKB to pay the balance of the
following Maximum Amortization
after taking into account the
payment of the Minimum Scheduled
Amortization in priority c.
Maximum
Year Amortization
---- ------------
1999 $13,500,000
2000 13,500,000
2001 13,500,000
2002 13,500,000
---- -----------
Total $54,000,000
g. To the Cash reserve.
To the extent cash flow
from the property or from
reserves is insufficient in
any period to make all
payments provided for
herein, unpaid amounts will
be accrued and paid during
the next period after all
expenses for higher
priorities have been paid.
Lower priority expenses
will only be paid after
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all higher priority expenses have
been paid in full.
Subordinate
Financing: The DKB Restructured Mortgage Loan
will be restructured in accordance
with section 15.4 of the Plan. No
additional subordinate financing
shall be permitted.
Management Fees and
Leasing Commissions: Newco LP or its designee will
provide both property management
and asset management services to
New 245 Park LP and will be
compensated out of cash flow as
follows: (i) a property management
fee equal to 2% of collected gross
revenues from existing leases and
1% of collected gross revenues from
all leases signed in the future;
(ii) an annual asset management fee
equal to .5% of Gross Asset Value
in years 1 and 2 and .35% of Gross
Asset Value thereafter; and (iii)
leasing commissions for leasing
transactions equal to (a) a full
standard commission for leasing
transactions if the tenant is not
represented by an outside broker
and (b) a 50% override on
commissions paid to outside
brokers.
Prepayment Option: The Aetna Restructured Mortgage
Loan will be prepayable at any time
subject to payment of the
prepayment penalty described below.
The prepayment penalty shall be the
present value (discounted at the
rate described in clause (y) below)
of the differential between (x) the
interest which the Senior Lender
would receive under the Aetna
Restructured Mortgage Loan and (y)
the interest the Senior Lender
would receive by reinvesting the
prepayment amount at an assumed
rate equal to an on-the-run
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treasury security of comparable maturity
to the remaining term of the Aetna
Restructured Mortgage Loan plus the
spread outlined in the following chart:
Period Spread
------ ------
First 102 months 50 basis points
Next 12 months 100 basis
points
The treasury rate to be used for
purposes of calculating the prepayment
penalty shall be an interpolated
treasury of approximately the same term
as the term of the Aetna Restructured
Mortgage Loan remaining at prepayment.
Notwithstanding anything
else herein to the
contrary, there shall be no
prepayment penalty during
the final six months of the
Aetna Restructured Mortgage
Loan.
Consent to Use
of Cash Collateral: Aetna shall consent to the use of
its Cash Collateral to be used to
fund the distributions to the
holders of Administrative Expense
Claims, Allowed Priority Tax
Claims, Allowed Priority Non-Tax
Claims, Allowed DKB Mortgage Claims
and Allowed General Unsecured
Claims in accordance with sections
5.1, 15.1, 15.4 and 15.7 of the
Plan.
Recourse: Nonrecourse.
Bankruptcy Remote: A bankruptcy remote structure in
accordance with section 18.6.3 of
the Plan.
On the Effective Date, the Aetna Mortgage Loan and any Claims
otherwise arising under or related to the Aetna Mortgage Loan or any of the
guarantees, mortgages or security interests
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issued in connection therewith shall be released and cancelled in consideration
of the Aetna Restructured Mortgage Loan.
DKB Mortgage Loan Treatment
As of the date of the approval of this Disclosure Statement by
the Bankruptcy Court, the Debtors and DKB have not yet reached agreement as to
all of the provisions to be included in the DKB Restructured Mortgage Loan
Documents, and the Debtors have been advised by DKB that certain of the
provisions set forth below are not acceptable to DKB. For that reason, DKB has
expressly reserved and has not waived its right to object to confirmation of the
Plan. The Plan provides the following treatment for DKB:
On the Effective Date, in full satisfaction of the Allowed DKB
Mortgage Loan Claims, the DKB Restructured Mortgage Loan Documents shall be
executed and delivered to DKB, which
shall provide for the following:
Initial Paydown: DKB shall be repaid $103,500,000 of
principal on the Effective Date.
Initial Loan Balance: After paydown, $89,000,000.
Settlement Fee: $1,157,000 payable on the Effective
Date.
Interest Rate: DKB's fixed rate cost of funds plus
175 basis points, per annum.
Interest shall be paid monthly, in
arrears.
Maturity Date: December 31, 2002.
Amortization: DKB shall receive annual
amortization payments in accordance
with "Cash Flow Priority" below.
The payments shall consist of a
minimum and a maximum amortization
to be paid out of available cash
flow as follows:
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Maximum Minimum Scheduled
Year Amortization Amortization
---- ------------ ------------
1999 $13,500,000 $ 5,000,000
2000 13,500,000 5,000,000
2001 13,500,000 5,000,000
2002 13,500,000 5,000,000
---- ----------- -----------
Total $54,000,000 $20,000,000
Extension Option: New 245 Park Co. shall have the
option at the maturity of the DKB
Restructured Mortgage Loan to
extend the maturity of the
unamortized balance thereof (not to
exceed $50 million) for an
additional 4-year term (i.e., upon
----
exercise of such option by New 245
Park Co., the extended maturity of
the DKB Restructured Mortgage Loan
would be coterminous with the Aetna
Restructured Mortgage Loan). The
DKB Restructured Mortgage Loan as
so extended will be amortized with
net cash flow after payment or
funding of:
a. operating expenses of 245 Park
Avenue (including the property
management fees described in
"Management Fees and Leasing
Commissions" below);
b. capital, leasing and other
costs at the property and
appropriate reserves therefor;
c. real estate taxes and
appropriate reserves therefor;
d. interest and principal on the
Aetna Restructured Mortgage
Loan to the 245 Park Senior
Lender; and
e. asset management fees and
leasing commissions payable to
Newco LP or its designee as
described in "Management Fees
and Leasing Commissions"
below.
<PAGE>
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Collateral: Second, third and fourth mortgages
(with related assignments of rents
and leases and security agreements)
relating to 245 Park Avenue will be
consolidated into a second mortgage
(with related assignments of rents
and leases and security agreements)
on the Effective Date.
245 Park Senior
Loan: The DKB Restructured Mortgage Loan
will be fully subordinate to a
first mortgage loan with a term of
10 years. The combined balance of
the first and second mortgage loan
will not exceed $300,000,000. To
the extent that the first mortgage
loan exceeds $211,000,000, the DKB
Restructured Mortgage Loan will be
reduced on a dollar for dollar
basis. The amortization schedule
of the DKB Restructured Mortgage
Loan will then be adjusted on a
pro rata basis.
--- ----
Remedies: The DKB Restructured Mortgage Loan
will be fully subordinate to the
mortgage securing the 245 Park
Senior Loan. The DKB Restructured
Mortgage Loan will be cross-
defaulted with the 245 Park Senior
Loan; provided, however, that DKB
shall not be entitled to exercise
any remedies under the DKB
Restructured Mortgage Loan unless
and until the 245 Park Senior
Lender has exercised and exhausted
all of its remedies in respect of
the 245 Park Senior Loan or has
otherwise been provided for in
full.
Cash Reserve: An initial deposit of $20,000,000
will fund a Cash reserve to be used
for leasing costs, capital
improvements and real estate taxes.
The Cash reserve shall be increased
by deposits of funds generated by
245 Park Avenue. The maximum of
such additional deposits into the
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Cash reserve shall be $102,000,000 over
the term of the DKB Restructured
Mortgage Loan, with the maximum of such
deposits per annum to be made in
accordance with the following schedule:
Maximum
Year Reserve Funding
---- ---------------
1996 $ 7,500,000
1997 13,000,000
1998 15,000,000
1999 20,000,000
2000 14,000,000
2001 14,000,000
2002 18,500,000
---- ------------
Total $102,000,000
Cash Flow Priority: Subject to the terms of "Extension
Option," net cash flow from the
operations of 245 Park Avenue after
payment of operating expenses
(including the property management
fees described below) and real
estate taxes shall be allocated
according to the following
priority:
a. To the 245 Park Senior Lender
to pay interest and principal
on the Aetna Restructured
Mortgage Loan.
b. To DKB to pay interest on the
DKB Restructured Mortgage
Loan.
c. To DKB to pay the following
Minimum Scheduled Amortization
payments:
Minimum Scheduled
Year Amortization
---- ------------
1999 $ 5,000,000
2000 5,000,000
2001 5,000,000
2002 5,000,000
---- ---------
Total $20,000,000
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d. To a Cash reserve to fund the
following maximum reserve
payments for leasing, capital
and other costs at the
building.
Maximum
Year Reserve Funding
---- ---------------
1996 $ 7,500,000
1997 13,000,000
1998 15,000,000
1999 20,500,000
2000 14,000,000
2001 14,500,000
2002 18,500,000
---- ------------
Total $102,000,000
e. To pay the owners of New 245
Park LP or its designee asset
management fees and leasing
commissions.
f. To DKB to pay the balance of
the following Maximum
Amortization after taking into
account the payment of the
Minimum Scheduled Amortization
in priority c.
Maximum
Year Amortization
---- ------------
1999 $13,500,000
2000 13,500,000
2001 13,500,000
2002 13,500,000
---- ----------
Total $54,000,000
g. To the Cash reserve.
To the extent cash flow from the
property or from reserves is
insufficient in any period to make all
payments provided for herein, unpaid
amounts will be accrued and paid during
the next period after all expenses for
higher priorities have been paid. Lower
priority expenses will only be paid
after
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all higher priority expenses have
been paid in full.
Subordinate
Financing: No additional financing subordinate
to the DKB Restructured Mortgage
Loan shall be permitted.
Management Fees and
Leasing Commissions: Newco LP or its designee will
provide both property management
and asset management services to
New 245 Park LP and will be
compensated out of cash flow as
follows: (i) a property management
fee equal to 2% of collected gross
revenues from existing leases and
1% of collected gross revenues from
all leases signed in the future;
(ii) an annual asset management fee
equal to .5% of Gross Asset Value
in years 1 and 2 and .35% of Gross
Asset Value thereafter; and (iii)
leasing commissions for leasing
transactions equal to (a) a full
standard commission for leasing
transactions if the tenant is not
represented by an outside broker
and (b) a 50% override on
commissions paid to outside
brokers.
Prepayment Option: New 245 Park LP shall pay to DKB
(i) the actual cost of unwinding
interest rate swaps to be entered
into by DKB (and/or its
participants and affiliates) with a
third party as of the Effective
Date under which fixed amounts are
paid equal to DKB's fixed rate cost
of funds underlying the DKB
Restructured Mortgage Loan (and
LIBOR is received), and (ii) any
other actual breakage costs; but
New 245 Park LP shall be entitled
to a prepayment discount to the
extent of any termination payment
DKB (and/or its participants and
affiliates) receives as a result of
<PAGE>
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an unwind of such swaps upon
prepayment.
Consent to Use
of Cash Collateral: DKB shall consent to the use of its
Cash Collateral to be used to fund
the distributions to the holders of
Administrative Expense Claims,
Allowed Priority Tax Claims,
Allowed Priority Non-Tax Claims,
Allowed Aetna Mortgage Loan Claims
and Allowed General Unsecured
Claims in accordance with sections
5.1, 15.1, 15.3 and 15.7 of the
Plan.
On the Effective Date, the DKB Mortgage Loan and any Claim
under or relating to the DKB Mortgage Loan or any of the guarantees, mortgages
or security interests issued in connection therewith shall be released and
cancelled in consideration of the DKB Restructured Mortgage Loan.
(6) 53 State Street, Boston, Massachusetts
53 State Street ("53 State") is a 40-story commercial office building which was
completed in 1985 and has a net rentable area of 1,120,162 square feet, of which
approximately 97% is currently leased. The major tenants of 53 State are Boston
Consulting Group, Choate, Hall & Stewart and Goodwin Proctor & Hoar.
Ownership Structure - 53 State is currently owned by Olympia & York State
Limited Partnership, a Massachusetts limited partnership ("53 State Limited").
53 State Limited is nominally owned 25% by O&Y (U.S.), 25% by 25 Realty LP and
50% by affiliates of Nomura, Babcock & Brown ("NBB"). The O&Y (U.S.) direct and
indirect equity interests in 53 State Limited and the 25 Realty LP equity
interests in 53 State Limited have been pledged to Sanwa to secure the
obligations of the OLP Companies under the Sanwa OLP Mortgage Loan.
Proposed Ownership Structure - On the Effective Date, O&Y (U.S.)'s partner
interests in 53 State Limited will be held through 53 Holding Company LP.
Otherwise, the ownership structure of 53 State Limited will be unaffected and
the existing partners in such partnership will retain such interests. Newco LP
will hold a 99% managing member interest in 53 Holding Company LP and Devco GP
will hold a 1% member interest therein.
Projected Net Operating Income for 1996 - $23,826,000
<PAGE>
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Existing Debt Structure - 53 State is encumbered by a first mortgage lien
securing a loan from an affiliate of NBB in the outstanding principal amount of
$145 million (the "NBB Mortgage Loan"). The NBB Mortgage Loan is non-recourse
and matures on July 26, 1998. The interest rate on the NBB Mortgage Loan is
9.25% per annum. O&Y (U.S.) and 25 Realty LP must fund, to the extent of
distributions, the interest payments due on the NBB Mortgage Loan and, in
certain circumstances, certain refinancing costs.
Proposed Debt Structure - The Plan will not modify or affect the NBB Mortgage
Loan. However, under the Plan and in consideration of the restructuring of the
Sanwa/OLP Mortgage Loan, Sanwa will release the pledge of the 53 State Street
Collateral.
Related Litigation - There have been a series of litigations between certain of
the Debtors and TIAA relating to an alleged breach of a loan commitment
agreement with TIAA for permanent mortgage financing for 53 State. For a further
discussion of such litigation and the settlement thereof, see "Significant
Developments in the Debtors' Chapter 11 Cases -- TIAA Litigations and TIAA
Settlement".
b. Non-Core Properties
The seven major Non-Core Properties that are currently owned by O&Y
(U.S.) include:
(1) Olympia Center, Chicago -- A 63-story mixed use building located
in Chicago, Illinois completed in 1984 and having 336,000 rentable square feet
of office space (86% of which is leased), 196,000 rentable square feet of retail
space (currently fully leased to Neiman Marcus) and upper floors which have been
sold as residential condominiums. Chicago-Superior Associates ("CSA"), the O&Y
(U.S.) affiliate owning O&Y (U.S.)'s interest in Olympia Center, filed a chapter
11 petition on November 1, 1995. It is presently contemplated that O&Y (U.S.)'s
interest in Olympia Center will be transferred by agreement, through CSA's
chapter 11 proceeding, to the first mortgagee in return for a forgiveness of any
deficiency claims that such first mortgagee might be entitled to receive against
CSA and any O&Y (U.S.) affiliate of CSA.
(2) 425 Lexington Avenue, New York -- A modern 31-story office tower
located in midtown Manhattan across the street from Grand Central Station,
having 679,560 rentable square feet of space, approximately 99.7% of which is
leased, with the primary tenants being the law firm of Simpson, Thacher &
Bartlett and CIBC, and having street-front stores leased to a number of
retailers. A pre-negotiated chapter 11 plan of reorganization
<PAGE>
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for Orion Limited Partnership ("Orion", the O&Y (U.S.) entity which owns the
building) has been agreed to by O&Y (U.S.) and the first mortgagee, Sumitomo
Life Realty (N.Y.), Inc. ("Sumitomo Life"), pursuant to which all of O&Y
(U.S.)'s interests in 425 Lexington Avenue will be transferred to Sumitomo Life
in return for a forgiveness of any and all claims, including deficiency claims,
relating to 425 Lexington Avenue that it may have against any of the Debtors or
the O&Y Affiliates. On August 8, 1996, Orion filed a chapter 11 petition, along
with a plan of reorganization and accompanying disclosure statement which, among
other things, embodies the agreement between O&Y (U.S.) and Sumitomo Life with
respect to 425 Lexington Avenue.
(3) 59 Maiden Lane, New York -- A 43-story office building located in
lower Manhattan, the base of which was completed in 1929 and the tower of which
was completed in 1965, having a net rentable area of 1,046,652 square feet, a
substantial portion of which has been leased to the Federal Reserve Bank of New
York and Home Insurance Corp. There is a foreclosure action pending against the
O&Y (U.S.) entity that owns the building and an order of foreclosure on the
property was entered in November 1995.
(4) 60 Broad Street, New York -- A 39-story office tower located in
lower Manhattan that was completed in 1963, has 1,014,041 of rentable square
feet and has experienced significant vacancy due to the bankruptcy of Drexel
Burnham Lambert, a substantial former tenant at the building. Dragon (and/or its
affiliates) holds certain unsecured claims against Consolidated Devco and
Consolidated Realty Corp., related to 60 Broad Street, which Devco and Realty
Corp. have agreed to settle at approximately $60 million. Dragon will continue
to hold claims against Concord 60 Broad Street Co., an affiliate of the Debtors.
(5) One Commercial Plaza, Hartford -- A 26-story office building
located in Hartford, Connecticut, built upon an 87,000 square foot site leased
on a long-term basis from the City of Hartford, having approximately 684,000
rentable square feet of space, approximately 40% of which is leased, and the
major tenants of which include Trans General, IBM and the law firm of Robinson
Cole. O&Y (U.S.) has placed in escrow with counsel for the first mortgagee,
Sumitomo Bank, documents that (i) effectuate a transfer of title to the property
to the mortgagee or the mortgagee's designee at any time, at the request of the
mortgagee; (ii) consent to entry of a final decree in a foreclosure action at
the request of the mortgagee; and (iii) which state that O&Y (U.S.) will
otherwise cooperate in a potential transfer of title to the property to the
mortgagee or the mortgagee's designee.
<PAGE>
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(6) Miami Center (undeveloped lands), Miami -- Four non-contiguous
parcels of real property located east of Southeast 2nd Avenue and west of
Biscayne Bay, north of the Miami River and south of 2nd Street S.E., in Miami,
Florida, totalling approximately 9.02 acres of land, a parcel of which has
frontage on Biscayne Bay and the Miami River.
(7) Independence Bay (undeveloped lands), Florida -- An approximately
127-acre proposed residential development and commercial business park located
in Broward County, Florida, together with approximately two commercial parcels
totalling approximately 12 acres located on the southwest quadrant of S.W. 10th
Street and Powerline Road within the City of Deerfield Beach. Substantially all
of the undeveloped lands at Independence Bay are under contract to be sold to
unrelated third parties in a series of closings which will begin in the summer
of 1996.
c. Realty Corp. Assets
The primary assets owned by Realty Corp., OYREUSA and Baden are
briefly described below. All of such assets, other than the Miami Center
undeveloped lands and the SF Holdings Cash, are undisputed and are not subject
to litigation (collectively, the "Undisputed Realty Corp. Assets"). O&Y (U.S.)'s
interests in Miami Center and the SF Holdings Cash are subject to certain
disputes, discussed in more detail below (collectively, the "Disputed Realty
Corp. Assets"). The Realty Corp. Assets are as follows:
(1) Amland Equity Corp. Note -- A note issued by Amland Equity Corp.
("Amland") on June 10, 1993 to Baden, which is due and payable on March 31, 2001
in the principal face amount of $7,544,000 with interest payable thereon on a
quarterly basis at the Citibank Prime Rate plus 1% and secured by interests in
certain condominium and cooperative apartment units located in New York City and
Washington, D.C., as consideration for the sale to Amland of O&Y (U.S.)'s
interest in certain joint ventures which own condominium and cooperative
apartments in New York City and Washington, D.C. The Debtors value the Amland
Equity Corp. Note at approximately $4.2 million. O&Y (U.S.) is currently
negotiating a sale for cash of the Amland Equity Corp. Note with several
prospective purchasers and expect to present a sale proposal to the Bankruptcy
Court for approval some time the summer of 1996.
(2) Upper Dublin (undeveloped land), Pennsylvania -- Eight parcels of
undeveloped land, totaling approximately 93 acres in an area zoned for office or
light industrial use, which are 50% owned by Realty Corp., through Baden, in a
joint venture
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between South Brunswick Industrial Properties, L.P. (an unrelated
third party) and Pennland Properties Corp. (a wholly-owned
subsidiary of Baden). The Debtors value the Upper Dublin land at
between $1.0 million and $2.5 million.
(3) Miami Center, Florida -- As described above, Miami Center is a
parcel of real estate which is owned by the Realty Group in a joint venture
entitled Miami Center Joint Venture ("MCJV") with Mr. Theodore R. Gould, who has
granted all of his rights and interests in MCJV to Mr. Fred Stanton Smith, as
his chapter 11 liquidating trustee (the "Gould Trustee") in the pending case of
In re Holywell Corp., Case Nos. 84-01590/94-BKC- PGH, before the United States
Bankruptcy Court for the Southern District of Florida. The Debtors value the
Miami Center lands at between $17.0 million and $18 million.
The Realty Group (i.e., Realty Corp., OYREUSA and/or Baden) has loaned
in excess of $110 million to MCJV which indebtedness is evidenced by certain
notes held by the Realty Group (the "MCJV Notes"). An affiliate of the Realty
Group is one of the two joint venturers involved in this development project.
The other joint venture partner is Mr. Gould. Mr. Gould was the debtor in an
individual chapter 11 bankruptcy case during the mid-1980's. A plan of
liquidation was confirmed in his case which provided, among other things, for
the Gould Trustee to liquidate the assets of Mr. Gould for the benefit of his
creditors, primarily the Bank of New York, including his interest in the MCJV.
During the Gould bankruptcy, an arbitration proceeding was concluded
between the MCJV partners which set a senior priority for repayment of most of
MCJV's indebtedness to the Realty Group and placed the O&Y (U.S) venture partner
in charge of MCJV's operations. In exchange for a payment of $6.3 million, the
Gould Trustee signed a letter agreement pursuant to which the Gould Trust was
bound by the arbitration award. This payment was an advance on (or against) any
distribution in respect of Gould's interest in the venture. The O&Y (U.S.)
venture partner made a claim against the Gould Trust for its share of the
carrying costs. The court ruled that the Gould Trust could not be held
responsible for carrying costs until the property was liquidated, refinanced or
sold. The value of the MCJV property has declined substantially. The most recent
appraisal places the value of the property at approximately $17 million.
Until 1993, MCJV was primarily managed out of Toronto. In view of the
Realty Group loans to MCJV, MCJV is insolvent and does not have the ability to
meet its financial obligations. The Realty Group, as the creditor that is owed
over $110 million, is entitled to the value of the property. Nevertheless, the
Gould
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Trustee retains a nominal interest which has made it difficult to move the
property into development. There is currently litigation pending to determine
the relative rights of the Gould Trustee, the Bank of New York (a creditor of
the Gould Trust) and the Realty Group. The Realty Group may be able to recover
some of the carrying costs shortfall from the Trust after the property is
liquidated, refinanced or sold, but litigation would probably be required as the
Trustee maintains that the Trust's obligation to pay carrying costs is
non-recourse and may only be satisfied out of the proceeds of such liquidation,
refinancing or sale.
In February 1992, the Realty Group pledged approximately $39 million
of the MCJV Notes to the Bank of Nova Scotia ("BNS") to secure a certain swap
agreement between BNS and OYDL. The swap was terminated due to OYDL's inability
to perform, and a termination claim in excess of $39 million was asserted by BNS
against OYDL. The MCJV Notes that were not pledged to BNS were subordinated to
the payment of the pledged notes. No value was ever received by the Realty Group
in respect of this pledge of its most significant unencumbered asset and,
therefore, the Debtors believe that the pledge of the $39 million of the MCJV
Notes was a fraudulent conveyance.
The Debtors have reached a settlement with BNS relating to the claims
against them arising out of BNS' involvement with MCJV. For further details of
this settlement, see "Significant Developments in the Debtors' Chapter 11 Cases
- -- Bank of Nova Scotia Settlement".
(4) Baden Asset Purchases from Devco, Equityco and U.S. Finco -- The
Realty Group owns the following assets which were acquired from Devco, Equityco
and U.S. Finco on October 11, 1995: (i) all right, title and interest of Devco
in the proceeds of the settlement, concluded pursuant to a settlement agreement
dated as of November 4, 1992 between and among the McCourt-Broderick Limited
Partnership, David T. Chase, Devco and certain other parties (the "McCourt
Settlement Agreement") with respect to certain claims asserted in connection
with title to two parcels of real property located in Boston, Massachusetts, all
as further described in the McCourt Settlement Agreement; (ii) all right, title
and interest of U.S. Finco in that certain Promissory Note dated September 20,
1994 having a face amount of $2.5 million made by Chase Family Limited
Partnership No. 2 and payable to the order of U.S. Finco (the "Chase Note"); and
(iii) all right, title and interest of Equityco in that certain Negotiable
Promissory Note dated August 20, 1995 having a face amount of $4,357,258.09 made
by E.M. Warburg, Pincus & Co., Inc. payable to the order of O&Y Equity Corp.,
Olympia & York Holdings Corp. and Fame Associates, as tenants in common, and
previously assigned to Equityco (the
<PAGE>
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"Warburg Pincus Note"). The Debtors value the McCourt Settlement
Agreement, the Chase Note and the Warburg Pincus Note at
approximately $4.6 million, $1.69 million and $3.2 million,
respectively.
(5) SF Holdings Cash -- Historically, SF Holdings held as its primary
assets marketable securities of U.S.-based issuers. At this time, SF Holdings
has Cash and Cash equivalent proceeds of its marketable securities in the
approximate amount of $20 million. These Cash proceeds are the only assets of SF
Holdings following consummation of the CCAA Plan for OYDL. They represent the
excess or unencumbered proceeds of the marketable securities that were owned by
SF Holdings and sold by it pursuant to orders of the Bankruptcy Court and the
Ontario Court of Justice in 1992. Approximately $17.5 million these proceeds are
currently being held in an account at Sterling National (the "Indemnity
Account") and is pledged to indemnify members of the Protocol Board for any
liability that may arise as a result of their service in such capacity. Other
than the Cash and Cash equivalents held in the Indemnity Account, the remaining
SF Holdings Cash is being held improperly by Coopers & Lybrand OYDL,
Inc./Limited in Canada and is subject to an action in Canada to have such Cash
and/or Cash equivalents returned to the Canadian Debtors. Coopers & Lybrand
OYDL, Inc./Limited is alleging that it has a superior right to the SF Holdings
Cash on account of (i) the action against Realty Corp. and SF Holdings described
in detail below and (ii) its restructuring fee claim of approximately Cdn. $9
million against the Canadian Debtors.
The assets of SF Holdings were pledged as collateral for various loans
to OYDL. Pursuant to sales of such assets occurring during 1992, these lenders
were satisfied and it was believed that following the CCAA Plan for OYDL and the
return of SF Holdings securities to the remaining pledge lenders, SF Holdings
had no other creditors. At this time, all that remains to wind up SF Holdings'
affairs and distribute its remaining assets to Realty Corp., its corporate
parent, is a resolution of a lawsuit brought by Coopers & Lybrand OYDL,
Inc./Limited against SF Holdings and Realty Corp. to establish OYDL as a
substantial creditor of SF Holdings allegedly entitled to all of its remaining
assets.
The premise of the lawsuit brought by Coopers & Lybrand OYDL,
Inc./Limited is to undo or void an intercompany transaction between Realty Corp.
and SF Holdings which eliminated a significant intercompany claim in favor of
OYDL. The intercompany loan arose as part of a series of transactions by which
SF Holdings was capitalized. SF Holdings was capitalized by a combination of
contributions of assets and a number of intercompany loans. Although most of the
assets that were
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contributed to SF Holdings were marketable securities transferred subject to a
pledge in favor of certain secured lenders of OYDL, the intercompany loan
transactions reflected an amount equal to the full or gross market value of the
securities transferred rather than the net of such assets' value over the
existing pledge loans. This treatment did not constitute a clear presentation of
the economic value of SF Holdings. For various tax and other reasons, these
intercompany balances essentially survived. These intercompany loans failed to
account for the OYDL debt burdening the securities that were "sold" to SF
Holdings and its predecessor in interest.
Prior to OYDL's application to proceed under the CCAA in 1992, there
were some unpledged assets in SF Holdings. OYDL wished to borrow more money
secured by those few remaining unencumbered assets of SF Holdings. The lender,
Hong Kong & Shanghai Banking Corporation ("HKSB"), was satisfied with the SF
Holdings assets as collateral, but was troubled by the intercompany loan balance
appearing in the financial statements of SF Holdings. HKSB required SF Holdings
and OYDL to reconcile the OYDL debt burdening the securities as a reduction in
their value and a grossed-up intercompany payable, which made SF Holdings appear
to be substantially insolvent. SF Holdings and its corporate parent, Realty
Corp., acted to remove this intercompany loan balance. Once the balance sheet
was modified to reflect the economic reality of SF Holdings and its assets, the
loan in the amount of $25 million to OYDL and the additional pledge of SF
Holdings' assets were consummated.
Later in 1992 and in 1993, SF Holdings, insofar as its secured
creditors were concerned, participated in the CCAA Plan of OYDL. Pursuant to the
CCAA Plan, the OYDL lenders whose loans were secured by property of SF Holdings
were able to take their collateral and apply it to satisfy their debt. During
the pendency of the CCAA proceedings for OYDL and SF Holdings, securities owned
by SF Holdings were sold generating over $443.6 million in proceeds, the bulk of
which were used to satisfy certain secured obligations of OYDL. The payments to
satisfy OYDL's secured debts gave rise to a claim in favor of SF Holdings
against OYDL by way of subrogation, indemnity or contribution. In fact, the
Information Circular that accompanied the CCAA Plan for OYDL, and that was
signed by OYDL and SF Holdings, acknowledged that SF Holdings had claims in
excess of $362 million against OYDL. Subsequent to publication of the
Information Circular, an additional sale of securities owned by SF Holdings and
pledged to OYDL lenders occurred in December 1992. According to the financial
statements of SF Holdings, the net proceeds from the sale of these additional
securities was approximately $82.2 million, of which approximately $81.3 million
was used to repay the claims of certain of OYDL's secured
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creditors. As a result, SF Holdings' claim against OYDL by way of subrogation,
indemnity or contribution increased by approximately $82.2 million, for an
aggregate claim in excess of $443 million.
In June 1993, Coopers & Lybrand OYDL, Inc./Limited commenced a lawsuit
in reliance upon the CCAA Plan of OYDL and the Sanction Order of the Canadian
Court permitting the commencement of the CCAA Cases, which Plan and Order
enabled Coopers & Lybrand OYDL, Inc./Limited to bring lawsuits that would
typically only be available in a bankruptcy proceeding, not a CCAA proceeding.
In essence, Coopers & Lybrand OYDL, Inc./Limited is suing SF Holdings and Realty
Corp. seeking to reverse or void the intercompany transaction that OYDL directed
Realty Corp. and SF Holdings to undertake to enable OYDL to borrow an additional
$25 million, and seeking to restore the large intercompany balance from HKSB in
favor of OYDL. If successful, such restoration of the intercompany claim would
establish OYDL as holding the largest (and possibly only) creditor claim against
SF Holdings, entitling OYDL to benefit from any remaining assets of SF Holdings
as a creditor with priority over Realty Corp. and its creditors.
Currently, although the service of the Notice of Action and related
Statement of Claim has occurred under Canadian law, prosecution of the lawsuit
is subject to the automatic stay imposed by section 362(a) of the Bankruptcy
Code. Coopers & Lybrand OYDL, Inc./Limited has filed a motion in the Bankruptcy
Court seeking to lift the automatic stay to permit it to pursue the lawsuit in
Canada. The Debtors have responded, taking the position that (i) the service of
the Notice of Action in violation of the automatic stay was void and the statute
of limitations on bringing any action has expired and (ii) even if such action
were allowed to proceed, it should be adjudicated by the Bankruptcy Court. The
Bankruptcy Court has not yet ruled on Coopers & Lybrand OYDL, Inc./Limited's
motion to lift the automatic stay.
The Debtors contemplate that any Cash beneficially owned by SF
Holdings will be held by SF Holdings in one or more segregated accounts of SF
Holdings until such time as the disputes among the Debtors, Citibank and Coopers
& Lybrand OYDL, Inc./Limited have been resolved.
For a further discussion of the litigation with respect to the above
described dispute with Coopers & Lybrand OYDL, Inc./Limited and the relevance of
the OYDL bankruptcy filing to such litigation, see "Background History of
Olympia & York -- Introduction -- OYDL's Restructuring Efforts".
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d. Club Loan
(1) General. The Club Loan is a loan made on June 21, 1991 in the
original principal amount of $160 million, and secured by, inter alia, pledges
of partner interests owned by Devco and Equityco in partnerships owning three
Core Properties and two Non-Core Properties.22 The three Core Properties are
Tower A, Tower B and 245 Park and the two Non-Core properties are 11601 Wilshire
and 59 Maiden Lane.
Although Devco is the borrower under the Club Loan, each of Equityco,
U.S. Finco and OYREUSA pledged certain interests in partnerships or property to
the holders of the Club Loan to secure Devco's obligations. Of the $160 million
loaned by the original holders of the Club Loan to Devco, $50 million was loaned
by Devco to Equityco.
The Club Loan is currently held by Apollo (approximately 81.25%), the
Trust Company of the West and Westdeutsche Landesbank Girozentrale. Upon
approval of the January 12th Settlement Agreement, all of the interests in the
Club Loan will be transferred to certain of the Co-Proponents in return for the
consideration described herein.
(2) Amount of the Club Loan. Under the January 12th Settlement
Agreement, the Club Loan Claims are to be allowed in the amount of approximately
$165.5 million as of October 11, 1995, exclusive of postpetition interest, fees,
costs and charges, without deduction or setoff, and the Club Loan Claims and the
Liens granted to secure the Club Loan Claims are to be finally determined to be
valid, enforceable and non-avoidable.
(3) Alleged Fraudulent Conveyance Claims. Under the January 12th
Settlement Agreement, the Debtors have determined, in their informed and
reasonable judgment, to release all claims that they could assert relating to
the Club Loan, including potential fraudulent conveyance claims (the "Fraudulent
Conveyance Claims"). In that regard, the Debtors have determined that a
prosecution of a fraudulent conveyance action with respect to the Club Loan
would be fruitless and would result in a time-consuming and costly litigation
with little, if any, corresponding benefit to the Debtors' estates.
In evaluating the reasonableness of their release of the potential
Fraudulent Conveyance Claims, the Debtors considered the factors enunciated by
the United States Supreme -------- 22The O&Y (U.S.) interests in a sixth
property, 400 South Hope Street, also were originally in the collateral package.
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Court and other courts in relevant case law. First, the probability of success
in prosecuting a fraudulent conveyance claim is remote. Second, such litigation
would be extremely complex, costly and time-consuming, thereby depleting the
estates of assets that otherwise could be used to satisfy Creditors. Third,
counsel for the Debtors, based upon its legal analysis and professional
judgment, has consistently ascribed no value to such claims. Lastly, and equally
as important, it is highly likely that such litigation would be fruitless
because of the well-established rule that substantive consolidation moots a
fraudulent conveyance claim as between the entities which are consolidated. A
substantive consolidation of the entities which would comprise Consolidated
Devco is contemplated to occur under the Plan based upon the facts set forth in
"Summary of the Plan of Reorganization for the Debtors -- Description of
Substantive Consolidation". Therefore, it is likely that any Fraudulent
Conveyance Claim with respect to the Club Loan collateral will be mooted by such
substantive consolidation.
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IV. CORPORATE GOVERNANCE OF O&Y (U.S.)
AND DEVELOPMENT OF THE DEBTORS' PLAN OF REORGANIZATION
A. ESTABLISHMENT OF THE EXAMINER'S CORPORATE GOVERNANCE
PROTOCOL
Perhaps the single most important event in the restructuring of O&Y
(U.S.) in 1993 was the approval of the corporate governance agreement known as
the "Protocol". The Protocol was the vehicle resolution of certain disputes
between Olympia & York's United States and Canadian creditors over who should
govern the O&Y (U.S.) restructuring. The Canadian unsecured and undersecured
creditors whose claims were not satisfied under the CCAA Plan of OYDL believed
Coopers & Lybrand OYDL, Inc./Limited should choose the board of directors for
the Canadian Debtors, and, in turn, O&Y (U.S.). The O&Y (U.S.) creditors
disagreed.
By motion dated March 14, 1993, Citibank requested the appointment of
John E. Zuccotti as a responsible officer for the Canadian Debtors. After a
hearing, on May 28, 1993, the Bankruptcy Court denied Citibank's motion but, sua
sponte, appointed an examiner (the "Examiner") to harmonize the CCAA proceedings
and the chapter 11 proceedings. On May 29, 1993, former United States Secretary
of State, Cyrus R. Vance, was named the Examiner. After meeting throughout the
month of June with all interested parties, on June 23, 1993, the Canadian
Debtors, Coopers & Lybrand OYDL, Inc./Limited and the creditors of O&Y (U.S.)
reached an agreement. The agreement, which became known as the "Protocol", was
approved by the Bankruptcy Court on July 15, 1993 and the Canadian Court on July
26, 1993.
The Protocol established a nine-person Board of Directors for each of
the Protocol Corporations (the "Independent Board" or the "Board"). The
nine-person Board included the Chief Executive Officers of each of O&Y (U.S.)
(at the time, and currently, John E. Zuccotti) and Coopers & Lybrand OYDL,
Inc./Limited (at the time, and through May 28, 1996, Robert E. Lowe), as well as
seven independent directors of prominence with substantial experience in the
real estate business. The original and current seven independent members of the
Independent Board are:
1. Richard R. Shinn, Chairman of the Board
2. Willard C. Butcher, Chairman of the Finance
Committee
3. William G. Davis
4. William D. Hassett, Chairman of the Audit Committee
5. Richard Ravitch, Chairman of the Compensation
Committee
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6. Frederick P. Rose
7. John C. Whitehead
On July 27, 1993, the Independent Board was impaneled and held its
first meeting. Thereafter, the Independent Board has met approximately 65 times
from its first meeting a July 27, 1993 through August 9, 1996, not including 16
meetings of the Finance Committee, nine meetings of the Compensation Committee
and five meetings of the Audit Committee. On May 28, 1996, Mr. Lowe resigned as
a member of the Independent Board without stating a reason for such resignation.
It is presently unclear whether Coopers & Lybrand OYDL, Inc./Limited will
nominate a successor to succeed Mr. Lowe as its nominee on the Independent
Board. As of August 9, 1996, Coopers & Lybrand OYDL, Inc./Limited has not
appointed a successor to Mr. Lowe.
From July 1993 to the spring of 1994, although the Independent Board
was still familiarizing itself with O&Y (U.S.) and its creditors, management, at
the Board's direction, continued extensive negotiations with lenders. These
discussions led to detailed term sheets for the restructuring of the debt on a
number of Core Properties and several Non-Core Properties. During that time,
management, at the Board's direction, also explored the availability of new
capital for use in an overall restructuring.
B. DEVELOPMENT OF THE DEBTORS' PLAN OF REORGANIZATION
1. Newco Plan Outline
a. Formation of the Newco Plan Outline
On April 6, 1994, management and its advisors briefed the Independent
Board on the restructuring alternatives available to O&Y (U.S.). This
presentation explored the possibilities for fashioning a restructured, successor
company, "Newco", to carry on a streamlined, viable business owning and
operating first-class commercial office properties. Each of the possible
restructuring plans for a reorganized O&Y (U.S.) were based on the agreed, and
in some cases proposed, term sheets for the restructuring of approximately $3.6
billion in mortgage debt on the Core Properties (which at the time, and
continuing until the January 12th Settlement Agreement, included ten
properties). The alternatives were also driven by management's and its advisors'
assessment of the principal tax, chapter 11 and other legal issues that were
likely to shape any Newco restructuring.
At the conclusion of the April 6, 1994 meeting, the Independent Board
commissioned a task force of management, O&Y (U.S.) counsel and advisors, and
representatives of Coopers &
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Lybrand OYDL, Inc./Limited (the "Newco Working Group") to prepare a report on
the feasibility and structure of Newco. This report was presented to the
Independent Board in July 1994 and the Independent Board directed that a Newco
restructuring be pursued.
From April through September 1994, the Newco Working Group met
frequently to discuss the formation of Newco and other restructuring
possibilities. On July 26, 1994, the Newco Working Group met with the
Independent Board and reported its findings at that time. In August 1994, the
Independent Board instructed Lazard Freres & Co. LLC to seek an outside investor
for O&Y (U.S.).
In September 1994, management, with the assistance of counsel and
other advisors, prepared and presented to the Independent Board for review a
three-volume summary of an overall Newco restructuring plan for O&Y (U.S.) (the
"Newco Plan Outline"). The Newco Plan Outline included details about
effectuating the contemplated restructuring through a chapter 11 plan of
reorganization.
Volume I of the Newco Plan Outline described a Newco restructuring
based on previously negotiated restructuring term sheets for the debt securing
several of the Core Properties and the then current negotiations and discussions
with the secured lenders to the other Core Properties. It also provided several
restructuring alternatives to pledge lenders and unsecured creditors: a
conversion of their debt to equity in Newco; an exchange for new five-year debt
obligations; or, if sufficient new capital could be raised by Newco, a Cash
pay-off. Volume II of the Newco Plan Outline was comprised of all agreed term
sheets to date with mortgagees, pledge lenders and partners as well as term
sheets proposed by management with any such constituents with whom negotiations
were continuing. Volume III of the Newco Plan Outline was a financial analysis
of the proposed Newco, setting forth Cash flow projections to test the
feasibility of the contemplated Newco as well as equity distributions, and data
for determining such equity distributions based on various assumed scenarios
among the options provided the various constituents. Notably, Volume III
illustrated in one model the Newco equity distribution on the dual assumptions
that both the holders of the Club Loan and BPHI would elect to convert their
respective claims and interests into Newco equity. Under that model, in the view
of O&Y (U.S.)'s management, neither the holders of the Club Loan nor BPHI alone
was entitled to control of Newco.
After full discussion between management and the Independent Board and
certain modifications, principally intended to facilitate the negotiating
process, the September summary was
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finalized for use with constituents. On November 29, 1994, the Independent Board
unanimously approved the presentation of the Newco Plan Outline by management to
constituents as a framework for plan negotiations. On December 6, 1994, the
Newco Plan Outline was distributed to Creditors.
The Newco Plan Outline served as a basis for general consensus among
the principal parties in interest relating to certain key elements of Newco,
including its core assets and capital structure, tax planning structure and the
use of an UPREIT as the primary vehicle for parties in interest to participate
in the equity of Newco in satisfaction of their claims.
The principal parties in interest that pursued discussions with O&Y
(U.S.) regarding the Newco Plan Outline were Apollo, BPHI, CIBC, Dragon,
Citibank and Coopers & Lybrand OYDL, Inc./Limited. During all phases of the plan
negotiations, O&Y (U.S.) attempted to build consensus by providing parties in
interest with all information necessary to allow the negotiations to continue.
Those parties which had not already pursued a due diligence review of O&Y (U.S.)
were aided in doing so. On a regular basis, management of O&Y (U.S.) had
conversations with one or more of the significant parties in interest, including
BPHI, Apollo, CIBC, Citibank and Coopers & Lybrand OYDL, Inc./Limited, as well
as numerous discussions with property-level creditors, partners and unsecured
creditors.
The Newco Plan Outline had identified as an option an exchange (or
"roll-up") of BPHI's interests in the World Financial Center for equity in
Newco. In early 1995, after negotiations with BPHI and CIBC, and with their
support, management presented to the Independent Board amendments to the Newco
Plan Outline to provide for the exchange of all of BPHI's and CIBC's interests
in the Canadian Debtors and O&Y (U.S.) (collectively, the "U.S. Operations") for
equity in Newco.
Throughout the spring and summer of 1995, the BPHI Group, on the one
hand, and Apollo, Tishman Speyer and Coopers & Lybrand OYDL, Inc./Limited
(collectively, the "A/T/S Group"), on the other hand, submitted competing plan
proposals to O&Y (U.S.) based upon the Newco Plan Outline. On July 25, 1995,
representatives of each of the A/T/S Group, the BPHI Group and Citibank met
separately with the Independent Board. The BPHI Group presented its plan
proposal; the A/T/S Group presented its plan proposal; and Citibank informed the
Independent Board of the role it foresaw itself playing in the restructuring of
the U.S. Operations and that it was carefully considering the various plan
proposals with a view to negotiating a position of support for one or the other
proposal, with modifications. Annexed hereto as
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Exhibit I is a chronology of the restructuring proposals submitted by various
creditors to the Debtors for review.
In early September 1995, O&Y (U.S.) was advised that Citibank had
entered into an agreement in principle to work with the BPHI Group on an overall
restructuring of the U.S. Operations. Based on the merits of the various plan
proposals and the circumstances of the U.S. Operations, on September 5, 1995,
management of O&Y (U.S.) orally recommended to the Independent Board the key
features of a plan proposal that was subsequently formalized. This process
resulted in the Newco Reorganization Plan Outline (the "Newco Plan Proposal"),
which was based upon the Newco Plan Outline and the latest BPHI Group proposal
and reflected the support of Citibank.
2. Independent Board Approval of Newco
Plan Outline and Chapter 11 Filings
On September 18, 1995, the Independent Board held an informational
meeting relating to the plan proposals. On September 20, 1995, the day before
the Independent Board was to vote on the Newco Plan Proposal, the A/T/S Group
transmitted a letter to Mr. Zuccotti urging him to postpone the Independent
Board's action on the Newco Plan Proposal. Management of O&Y (U.S.) and the
Independent Board believed they could wait no longer for the A/T/S Group to
reach a consensus with the other significant parties in interest.
On September 21, 1995, the Independent Board voted to approve the
Newco Plan Proposal. The BPHI Group Proposal, reflected in the Newco Plan
Proposal, modified the Newco Plan Outline to provide for: (1) a Cash infusion of
$167 million; (2) a roll-up of the CIBC/OLP Loan into Newco equity; (3) a roll-
up of BPHI's partner interests in the World Financial Center into Newco equity;
(4) a contribution by Citibank (and other Realty Corp. creditors), as Realty's
Corp.'s creditors, of approximately $20 million in Cash from SF Holdings and
approximately $40 million in value from OYREUSA and Baden; (5) distributions on
account of Allowed Unsecured Claims (including claims held by the Co-Proponents)
of more than $73 million in Newco equity if Apollo accepted the Newco Plan
Proposal and more than $42 million if it did not; and (6) treatment of the
holders of the Club Loan (including Apollo) with an option to accept the Newco
Plan Proposal and receive $115 million in Newco equity or reject the Newco Plan
Proposal and receive a substitute note equal to their allowed secured claims in
respect of the Club Loan.
At the same meeting on September 21, 1995 that the Independent Board
voted to approve the Newco Plan Proposal, the Independent Board adopted a
resolution that expressly authorized
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and directed management to continue to negotiate a restructuring based upon the
Newco Plan Proposal with all constituents.
Three dates affected the timing of the filing of the Debtors' chapter
11 cases. The first of those dates was October 15, 1995, the date on which a
settlement and forbearance agreement between the New York City Department of
Finance and Devco and Equityco expired, at which time the Department of Finance
could have seized O&Y (U.S.)'s assets. The forbearance agreement was entered
into as of August 29, 1995.
The second date was October 13, 1995, the date on which certain O&Y
(U.S.) partner interests which secure the Club Loan were to be sold at a public
sale. O&Y (U.S.) was notified of the public sale by the filing of notices of
foreclosure and public sale dated September 12, 1995 by the holders of the Club
Loan for the sale of certain partner interests and notes which secure the Club
Loan.
The third important date in the restructuring process which the
Independent Board considered was June 30, 1996. Under then existing New York
State Real Property Transfer Gains Tax laws, certain transfers of real estate to
qualifying REIT(s) were entitled to favorable tax treatment. The plan proposals
suggested by the various parties in interest each contemplated the formation of
one or more REIT(s) in connection with the reorganization of the U.S. Operations
so as to qualify for such favorable tax treatment. Qualifying for this
treatment, however, required the transfer of real estate to be subject to a
"binding contract" by June 30, 1996. This favorable tax treatment for transfers
involving a REIT has since been repealed by the New York State Legislature. The
Independent Board and management determined to file the chapter 11 cases by the
beginning of October 1995 in order to afford substantial time to implement a
plan of reorganization for the U.S. Operations that qualified for this formerly
available favorable tax treatment.
As a result of the potential negative effects of (i) New York City's
seizure of O&Y (U.S.) assets, (ii) the imminent public sale of the Club Loan
Collateral and (iii) the June 30, 1996 deadline for then available favorable New
York State Real Property Transfer Gains Tax treatment for certain transfers of
real estate to qualifying REIT(s), O&Y (U.S.) management decided that October
11, 1995 was the appropriate date for the chapter 11 filings.
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V. SIGNIFICANT DEVELOPMENTS IN THE
DEBTORS' CHAPTER 11 CASES
On October 11, 1995, the following eleven O&Y (U.S.) entities filed
chapter 11 petitions:
1. O&Y (U.S.) Development Company, L.P.
2. O&Y (U.S.) Development General Partner Corp.
3. O&Y Equity Company, L.P.
4. O&Y Equity General Partner Corp.
5. Olympia & York Real Estate (U.S.A.) Inc.
6. Baden Real Estate Corp.
7. O&Y (U.S.) Financial Company
8. WFC Tower A Company
9. O&Y WFC Tower Corp.
10. O&Y 245 Corp.
11. Olympia & York 245 Park Avenue Holding Company,
L.P.
By order dated October 11, 1995, the chapter 11 cases of these Debtors
were procedurally consolidated and are being jointly administered with the
chapter 11 cases of the Canadian Debtors.
On April 23, 1996 and in furtherance of the transactions contemplated
by the Plan and the January 12th Settlement Agreement, the following five
additional O&Y (U.S.) entities filed chapter 11 petitions:
1. 245 Park Avenue Company
2. O&Y Financial Company
3. Olympia & York OLP Company
4. O&Y Liberty Plaza Company
5. Trinity Place Company
On June 12, 1996 and in furtherance of the transactions contemplated
by the Plan and the January 12th Settlement Agreement, 11601 Holding Corp. filed
a chapter 11 petition.
A. THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS
On October 24, 1995, the United States Trustee appointed an Official
Committee of Unsecured Creditors (the "Creditors' Committee") in the chapter 11
cases of the U.S. Debtors.(23) The Creditors' Committee originally consisted of:
- --------
23 On May 21, 1992, the United States Trustee held an organizational meeting
and appointed an Official Committee of Unsecured Creditors in the chapter
11 cases of the Canadian Debtors and OYDL (the "OYDL Creditors'
Committee"). On March 12, 1993, as part of the dismissal of the OYDL
chapter 11 case, the OYDL Creditors' Committee was disbanded. Currently,
there is no creditors' committee in the chapter 11 cases of the Canadian
Debtors.
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1. Bank of New York, as successor Indenture Trustee
to Nationsbank of Tennessee, N.A., as Indenture
Trustee for the 970 Noteholders
2. Bank Leumi Trust Company of New York
3. Merrill Lynch/WFC/L, Inc.
4. Park-Lex Co.
5. Swiss Bank Corp.
On October 26, 1995, the United States Trustee altered the composition of the
Creditors' Committee to include Svenska Handelsbanken and Nationsbank of
Virginia, N.A., as Indenture Trustee for the Tower B Noteholders. In January
1996, Merrill Lynch/WFC/L, Inc. resigned from the Creditors' Committee. There
have been further changes to the composition of the Creditors' Committee since
January 1996. The current members of the Creditors' Committee are the Bank of
New York, Nationsbank of Virginia, N.A., Swiss Bank Corp. and Park-Lex Co.
By order dated November 20, 1995, the Bankruptcy Court approved the
retention of Kramer, Levin, Naftalis & Frankel as counsel to the Creditors'
Committee. By order dated December 22, 1995, the Bankruptcy Court approved the
Creditors' Committee's retention of Rothschild Inc. as its financial advisor.
The Debtors and their counsel and financial advisors have met with the
Creditors' Committee and its counsel and financial advisor on numerous
occasions. The Debtors have provided the Creditors' Committee with voluminous
information regarding the Debtors and other O&Y (U.S.) entities and their
operations, including information on leasing, property management, financial
reporting, valuation of various properties, financial projections and analyses
and potential claims.
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B. RELATED CHAPTER 11 FILINGS AND RELATED LITIGATIONS
1. WFC Fincorp & Tower B Co.
a. Background of WFC Fincorp
In an effort to preserve the interests of O&Y (U.S.) in Tower B, on
July 18, 1995, WFC Fincorp filed a chapter 11 petition. On August 8, 1995, the
Tower B Noteholders filed a motion to dismiss the chapter 11 case of WFC
Fincorp, or in the alternative to grant relief from the automatic stay (the "WFC
Motion to Dismiss"). On November 13, 1995, WFC Fincorp and Devco each filed a
response to the WFC Motion to Dismiss. On August 25, 1995, WFC Fincorp filed a
motion pursuant to Bankruptcy Rule 2019 requesting that the Tower B Noteholders
disclose the identity of the unofficial noteholders' steering committee (the
"2019 Motion"). On November 13, 1995, the Tower B Noteholders filed a response
to the 2019 Motion. At a hearing held on November 27, 1995, the Bankruptcy Court
heard argument with respect to the WFC Motion to Dismiss. On December 11, 1995,
each of WFC Fincorp, Devco and the Tower B Noteholders filed a post- hearing
memorandum of law with respect to the WFC Motion to Dismiss. On April 12, 1996,
the Bankruptcy Court denied the WFC Motion to Dismiss in its entirety and
granted the 2019 Motion in its entirety.
b. Background of Tower B Co.
Subsequently, on April 24, 1996, Tower B Co. filed a chapter 11
petition. That same day, Tower B Co. filed a complaint (the "Complaint")
commencing an adversary proceeding in its chapter 11 case against the Tower B
Noteholders, the Indenture Trustee for the Tower B Mortgage Notes (the
"Indenture Trustee") and WFC Fincorp. The Complaint seeks a declaratory
judgment, under the First through Fourth Causes of Action, that the Excess
Amount Note and the mortgage securing such Note (the "Excess Amount Mortgage")
are unenforceable as a matter of law and that any claim arising under such
Mortgage or Note against Tower B Co. must be disallowed. Alternatively, under
the Fifth Cause of Action, regardless of whether the Excess Amount Note or
Mortgage is enforceable, Tower B Co. seeks a declaration that the total amount
of the Tower B Noteholders claims thereunder do not exceed $741,880,000.
c. Excess Amount Note Litigation
(1) Complaint
The First Cause of Action alleges that, as the Offering Memorandum for
the Tower B Mortgage Notes stated could occur, the
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Excess Amount Mortgage was never recorded under New York's Real Property Law,
and, as an unrecorded conveyance of real property, it is void as against a
subsequent bona fide purchaser. Consequently, Tower B Co., as a debtor in
possession and pursuant to section 544(a)(3) of the Bankruptcy Code, has the
power of a bona fide purchaser (regardless of the Debtors' actual knowledge) to
void this unrecorded mortgage.
The Second Cause of Action alleges that the Excess Amount Mortgage and
the Excess Amount Note are unenforceable because, again as the Offering
Memorandum advised could occur, the Tower B Noteholders have not paid the
requisite New York State, City and County mortgage recording taxes, and under
the mandate of the Tax Law of New York, neither is enforceable.
The Third Cause of Action alleges that, since the Excess Amount
Mortgage and Excess Amount Note are nonrecourse against Tower B Co., and are
unenforceable against the property of the estate of Tower B Co., under section
502(b)(1) of the Bankruptcy Code, there is no allowable claim against Tower B
Co.
The Fourth Cause of Action alleges that, under section 2101 of the
Indenture for the Tower B Mortgage Notes, as stated in the Offering Memorandum,
any time after a "Qualifying Transfer" has occurred, WFC Fincorp and Devco (as
Primary Guarantor) may elect to have the Indenture Trustee terminate the Excess
Amount Note and Excess Amount Mortgage, and under Section 36(c) of the Excess
Amount Mortgage, Tower B Co. can require the Indenture Trustee to deliver a
satisfaction of the Excess Amount Mortgage and to cancel the Excess Amount Note.
The Indenture further provides that simultaneously with the termination of the
Excess Amount Mortgage and Excess Amount Note pursuant to section 2101, Devco
will continue to be obligated to pay the Excess Amount on an unsecured basis.
This Cause of Action further alleges that a Qualifying Transfer has occurred and
Tower B Co. intends to demand under section 36(c) of the Excess Amount Mortgage
that the Indenture Trustee deliver the satisfaction and cancellation, and
accordingly, all claims based upon the Excess Amount Mortgage and Note should be
disallowed as against Tower B Co.
The Fifth Cause of Action alleges that the Indenture Trustee and the
Tower B Noteholders wrongfully manipulated the process of calling a default, and
accelerating the obligation, under the Tower B Mortgage Notes to maximize the
recovery of the Noteholders. In support of such cause of action, Tower B Co. has
alleged that due to a liquidity crisis, the Missed Interest Payment was not
timely made. By letter dated April 2, 1992, before the expiration of the
applicable grace period to cure the default occasioned by the Missed Interest
Payment, the Indenture
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Trustee noticed a default under the Tower B Mortgage Notes. At the time of the
Missed Interest Payment, based on the then current exchange rate between the
U.S. dollar and the Yen, the U.S. dollar equivalent of the then outstanding
principal amount of the Tower B Notes was approximately $741,880,000. Although
the Tower B Noteholders continued to receive substantially all the cash flow
from Tower B after April 1992, on July 14, 1995, the Indenture Trustee served a
Notice and Declaration of Acceleration, citing as the basis therefor the March
25, 1992 Missed Interest Payment, which occurred three and one-half years
earlier.
Tower B Co. further alleges in its Complaint that pursuant to such
Notice and Declaration of Acceleration, the Indenture Trustee purports to have
triggered the provisions for determining the dollar amount owing on the Excess
Amount Note as of July 14, 1995, to take advantage of a very favorable Yen to
Dollar exchange rate to create and "lock-in" a windfall profit for the Tower B
Noteholders at the expense of the other creditors and the Debtors' estates. As a
result of this misuse of this provision, the Indenture Trustee purports to have
inflated the value of the Notes from approximately $742 million to approximately
$1.1 billion, and as a legal matter and in the interest of fairness and equity,
if the Excess Amount Mortgage and Excess Amount Note are found to be
enforceable, then the Excess Amount should be calculated as of the date of the
notice of default (April 2, 1992), and thus the aggregate principal amount due
on the Tower B Mortgage Notes is $741,880,000.
(2) Summary Judgment Motion
Tower B Co. sought and obtained the Bankruptcy Court's permission to
file a motion for summary judgment (the "Summary Judgment Motion") on an
expedited basis, and on April 26, 1996, Tower B Co. filed the Summary Judgment
Motion, on the First, Second and Third Causes of Action of the Complaint,
seeking the immediate entry of a declaratory judgment declaring that the Excess
Amount Mortgage and Excess Amount Note are unenforceable and null and void and
that the claims of the Indenture Trustee and the Tower B Noteholders based upon
said Mortgage and Note against Tower B Co. are disallowed. Under the schedule
set by the Court, the Indenture Trustee and the Tower B Noteholders filed a
response to the Summary Judgment Motion on May 13, 1996. Tower B Co. duly
responded to the papers filed by the Tower B Noteholders and the Indenture
Trustee on May 16, and oral argument on the Summary Judgment Motion was held on
May 17, 1996. The Summary Judgment Motion is currently awaiting decision by the
Bankruptcy Court.
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d. Other Litigations
In separate but related proceedings in their respective cases, WFC
Fincorp and Devco have sought an order from the Bankruptcy Court terminating the
Excess Amount Note and Excess Amount Mortgage pursuant to section 2101 of the
Indenture (for a discussion of this issue see the Fourth Cause of Action above)
and a determination that the amount owing under the Excess Amount Note, if any,
is to be determined as of the date of the notice of default and not as of the
Trustee's July 14, 1995 notice (for a discussion of this issue see the Fifth
Cause of Action above). The Bankruptcy Court has ordered that discovery on these
issues will proceed and that WFC Fincorp, Devco and Tower B Co. may jointly
participate in such discovery. The Bankruptcy Court has set a trial date for a
trial on these issues for July 29, 1996. However, this trial date has been
postponed indefinitely because of the settlement that has been reached between
the Debtors, WFC Fincorp, Tower B Co. and the Tower B Noteholders which, if
consummated, would compromise all of the claims to be adjudicated in this
litigation.
e. Tower B Noteholders' Settlement
In an effort to settle the various litigations described above, WFC
Fincorp., Tower B Co. and the Tower B Noteholders agreed to a term sheet which
outlined a joint plan of reorganization for WFC Fincorp and Tower B Co. The term
sheet contained two alternative recoveries for the Tower B Noteholders. The
primary recovery, if, among other things, a refinancing of Tower B is
accomplished, is a cash payment to the Tower B Noteholders in an amount
calculated by taking ninety-eight percent (98%) of the present value as of
September 1, 1996, of the rent paid by Merrill Lynch to Tower B Co. calculated
at the treasury yield on a date certain plus 140 basis points. Among other
things, including certain supplemental cash payments, the Tower B Noteholders
will also receive a non-interest bearing note due in 2013 (co-terminous with the
Merrill Lynch Tower B Lease) in the principal amount of $150 million plus an
amount equal to 25% of the amount, if any, by which the fair market value of
Tower B exceeds $600 million (the "Zero Coupon Note"). The Zero Coupon Note is
either payable in Cash or delivery of a 25% ownership interest in Tower B Co.
(or its successor).
The alternative recovery, if, among other things, a refinancing of
Tower B is not accomplished by March 10, 1997, is delivery to the Tower B
Noteholders of a restructured mortgage note in the approximate principal amount
of $870 million, maturing in 2013 (co-terminous with the Merrill Lynch Tower B
Lease) and bearing a 7.75% rate of interest. In addition, under
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this alternative, the Tower B Noteholders would also receive 49%
of the equity in Tower B Co. (or its successor).
f. WFC Fincorp and Tower B Co. Plan
On June 28, 1996, WFC Fincorp and Tower B Co. filed a joint plan of
reorganization (the "Tower B Plan") and accompanying disclosure statement (the
"Tower B Disclosure Statement") which was subsequently modified on July 26,
1996. The Tower B Plan was amended on July 22, 1996 to reflect the Tower B
Noteholders Settlement, described above, as well as certain provisions of the
Merrill Lynch Settlement. On July 26, 1996, the Bankruptcy Court approved a
disclosure statement to be used in connection with the solicitation of votes on
the Tower B Plan. On July 29, 1996, the Tower B Noteholders, by unanimous vote
of all such noteholders casting ballots (one noteholder abstained from voting),
voted to accept the above treatment (as reflected in the Tower B Plan) and all
other provisions of the Tower B Plan. A copy of the Tower B Plan and the
accompanying disclosure statement (in substantially the same form as was
approved by the Bankruptcy Court) are contained in the Exhibit Volume to this
Disclosure Statement as Exhibit N.
2. Chicago-Superior Associates
In an attempt to protect the assets of O&Y (U.S.) in Olympia Center,
on November 1, 1995, CSA filed a chapter 11 petition. By order dated December
11, 1995, the chapter 11 case of CSA was procedurally consolidated and is being
jointly administered with the chapter 11 cases of the U.S. Debtors. CSA is
presently negotiating a consensual plan of reorganization with the holder of the
first mortgage on Olympia Center pursuant to which Olympia Center would be
transferred to the first mortgagee in return for a forgiveness of any deficiency
claims such lender might have against CSA and certain other monetary
consideration to O&Y (U.S.) affiliates on account of intercompany liabilities
from CSA. In addition, under the present plan which is being negotiated, the
first mortgagee will pay all administrative and other claims, including all
general unsecured claims, against CSA.
3. Devco-11601-A, L.P. and Devco-11601-B, L.P.
In an attempt to preserve the interests of O&Y (U.S.) in 11601
Wilshire, on November 9, 1995, Devco 11601-A, L.P. and Devco 11601-B, L.P. each
filed a chapter 11 petition. By order dated November 13, 1995, the chapter 11
case of 11601-A was procedurally consolidated and is being jointly administered
with the chapter 11 case of 11601-B. On January 4, 1996, San Vicente Associates
("SVA") filed a motion to dismiss the chapter 11 cases
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of 11601-A and 11601-B, or, in the alternative, to grant relief from the
automatic stay (the "11601 Motion to Dismiss"). On January 19, 1996, 11601-A and
11601-B, and the Creditors' Committee each filed a response to the 11601 Motion
to Dismiss, objecting to the relief requested. At a hearing held on January 29,
1996, the Bankruptcy Court denied the 11601 Motion to Dismiss in its entirety.
On March 13, 1996, SVA instituted an adversary proceeding (the "SVA
Adversary Proceeding") against certain O&Y Affiliates, including Devco, Equityco
and the Wilshire Debtors (who are not participants in the Plan), seeking a
declaration that the joint venture agreement between these O&Y Affiliates and
SVA (the "Wilshire JV") was dissolved by virtue of certain alleged breaches of
the joint venture agreement by the O&Y Affiliates (including the contemplated
transfer by O&Y (U.S.) of its interests in the partnerships which are party to
the joint venture agreement to Apollo, pursuant to the January 12th Settlement
Agreement). On April 15, 1996, the Debtors and the Wilshire Debtors answered the
complaint of SVA filed in the adversary proceeding and asserted certain
counterclaims against SVA relating to its improper activities as a member of the
joint venture. Furthermore, the Debtors and the Wilshire Debtors pursued
additional claims against SVA for improperly using funds belonging to the joint
venture to pay SVA's private counsel's fees and disbursements. Further court
proceedings relating to the adversary proceeding between SVA, the Debtors and
the Wilshire Debtors have been postponed indefinitely because of the settlement
between such parties which, when consummated, will compromise all claims to be
litigated therein.
4. Olympia & York Tower B Lease Company
In an attempt to protect O&Y (U.S.)'s interest in the Tower B
Sublease, on January 10, 1996, Tower B Leaseco filed a chapter 11 petition. On
February 2, 1996, Merrill Lynch and Tower B Leaseco entered into a stipulation
pursuant to which Tower B Leaseco agreed not to seek an extension of time to
assume or reject the Tower B Sublease past March 8, 1996 to the extent such
right existed as of the Petition Date.
5. The OLP/245 Debtors
On April 23, 1996, in furtherance of the transactions contemplated by
the January 12th Settlement Agreement, 245 Park Avenue Company, O&Y Financial
Company, Olympia & York OLP Company, O&Y Liberty Plaza Company and Trinity Place
Company filed chapter 11 petitions. The claims against, and Interests in, these
Debtors are treated pursuant to the Plan.
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C. THE EXCLUSIVITY LITIGATION AND THE JANUARY 12TH SETTLEMENT
AGREEMENT
1. Initial Dispute Among the Parties
By motion dated August 24, 1995, the Canadian Debtors requested an
extension of their exclusive right to file a plan of reorganization and solicit
acceptances thereof from September 7, 1995 for an additional 30-day period (the
"August Exclusivity Motion"). By objections dated September 1, 1995, the A/T/S
Group and the Monitoring Committee (collectively, the "Objecting Parties")
objected to the relief requested in the August Exclusivity Motion. In addition,
the Ad Hoc Committee of 970 Noteholders (the "970 Committee", and collectively
with the Objecting Parties, the "Responding Parties") filed a response to the
August Exclusivity Motion.
At a hearing held on September 6, 1995, the Bankruptcy Court ordered
that, among other things, (i) a hearing on the August Exclusivity Motion and the
objections thereto was set for October 11, 1995 and (ii) the Canadian Debtors
and the Responding Parties would submit a joint schedule for discovery.
On September 14, 1995, O&Y (U.S.) transmitted the Newco Plan Outline
to the Responding Parties. On September 20, 1995, the A/T/S Group and the
Monitoring Committee each filed a supplemental objection to the August
Exclusivity Motion and Westdeutsche Landesbank Girozentrale, New York Branch and
Trust Company of the West each filed an objection to the August Exclusivity
Motion.
By motion dated September 28, 1995, the Canadian Debtors requested an
extension of their exclusive right to file a plan of reorganization and solicit
acceptances thereof which would be co-terminous with the 120-day and 180-day
exclusive periods of the U.S. Debtors that were to commence chapter 11 cases on
October 11, 1995 (the "September Exclusivity Motion").
On or about October 5, 1995, the Bankruptcy Court directed the
Examiner to assess and evaluate the status of plan negotiations among the
parties and the likelihood of resolving the outstanding exclusivity issues in
the near term. Pursuant to the Bankruptcy Court's direction, on or about October
12, 1995, the Examiner reported to the Bankruptcy Court that, due to the lack of
sufficient progress in consensual negotiations between the A/T/S Group and the
Co-Proponents, a hearing on the September Exclusivity Motion would likely be
necessary. In light of the Examiner's report and with a view toward accelerating
the process of plan negotiations among the parties, the Bankruptcy Court
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authorized and directed the Examiner to become directly involved
in such negotiations.
On October 12, 1995, a hearing was held before the Bankruptcy Court to
settle certain discovery issues, at which hearing the Bankruptcy Court
established (i) dates for the filing of briefs by both the A/T/S Group and
parties supporting its position and by the Debtors and parties supporting their
position and (ii) November 26, 1995 as the adjourned hearing date on the
September Exclusivity Motion.
By objection dated October 24, 1995, Trust Company of the West filed
an objection to the September Exclusivity Motion. By objection dated October 30,
1995, the A/T/S Group filed an objection to the September Exclusivity Motion and
requested that the Bankruptcy Court not only deny any further extension of the
Canadian Debtors' exclusive right to file a plan of reorganization and solicit
acceptances thereof, but also prematurely terminate the U.S. Debtors' exclusive
periods. By objection dated November 1, 1995, the Ad Hoc Committee of 970
Noteholders filed an objection to the September Exclusivity Motion and supported
Apollo's motion to terminate the U.S. Debtors' exclusive periods. By objection
dated November 2, 1995, the Bank of Nova Scotia filed an objection to the
September Exclusivity Motion.
On November 6, 1995, the A/T/S Group served their brief on the Debtors
and provided a copy to the Examiner. On November 13, 1995, the Debtors served
their brief on the A/T/S Group and provided a copy to the Examiner. However,
neither of the briefs was ever filed with the Bankruptcy Court.
2. Negotiations Among the Parties
with the Examiner's Assistance
At the request of the Examiner, and based on his understanding that
the parties desired to continue their negotiations, the hearing on the September
Exclusivity Motion was adjourned through December 1995 and into January 1996.
During the continued negotiations, it was revealed that a single Newco with both
the A/T/S Group and the Co-Proponents as major owners sharing control was
unlikely to be acceptable to either the A/T/S Group or the Co-Proponents. In
light of the inability of the A/T/S Group and the Co-Proponents to share
ownership and control of Newco, these negotiations focused on whether the
parties could negotiate a separation of their interests in the U.S. Operations.
The January 12th Settlement Agreement was ultimately negotiated to accomplish
this goal through an exchange of certain of each group's claims and collateral.
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3. The January 12th Settlement Agreement
On January 8, 1996, the Independent Board approved a series of
recitals and resolutions (the "January Resolutions") which, among other things,
authorized management to execute and deliver the January 12th Settlement
Agreement (as defined below). Seven directors voted in favor of the January
Resolutions. One director, William Davis, abstained, noting his relationship
with one of the Co-Proponents, namely CIBC, but consented to the Independent
Board's action and expressed his support for the January 12th Settlement
Agreement. Robert Lowe, Coopers & Lybrand OYDL, Inc./Limited's designee on the
Independent Board, voted against the January Resolutions.
In substance, the January 12th Settlement Agreement entered into as of
January 12, 1996 by and among Carena, BPHI, CIBC, Dragon, Citibank, Apollo and
O&Y (U.S.) (collectively, the "Settling Parties") contemplates, among other
exchanges and consideration, the allowance of claims, the release of claims,
releases for the benefit of the Debtors, the release of certain Collateral of de
minimis value which secures the Club Loan and the transfer of O&Y (U.S.)'s
interest in two tenant notes for the benefit of the 970 Noteholders.
Specifically, the January 12th Settlement Agreement contemplates the following:
Allowance of Claims. Under the January 12th Settlement Agreement, the
Club Loan, the $133.25 million in outstanding principal amount of 970
Notes held by the Co-Proponents or their affiliates (the "Co-Proponent
970 Notes"), and the Transferred Unsecured Claims (the latter two as
defined and described below) will be allowed in the full amounts set
forth in such agreement and that the Bankruptcy Court will determine
that there is no basis to disallow such claims pursuant to section
502(d) of the Bankruptcy Code.
Releases Given. Under the January 12th Settlement Agreement, O&Y (U.S.)
will release any and all claims as to the validity, avoidability,
priority, enforceability or amount of the claims being exchanged -- the
Club Loan, the Co-Proponent 970 Notes and the Transferred Unsecured
Claims. Under the January 12th Settlement Agreement, O&Y (U.S.) will
also release Apollo, Tishman Speyer and the other current holders of
the Club Loan from any and all claims arising out of their status as
parties in interest or as participants in the restructuring process.
The Debtors are aware of no actual claims included in these releases
except as discussed in the January 12th Settlement Agreement Motion.
These include:
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o the potential fraudulent conveyance claims
regarding the Club Loan(24);
o the potential claims described in the Debtors'
Exclusivity Brief relating to the alleged conduct of
Coopers & Lybrand OYDL, Inc./Limited, Tishman Speyer
and Apollo subsequent to March 7, 1995 period; and
o the potential claims arising out of the
acquisition by the Co-Proponents of the Co-
Proponent 970 Notes.
Releases Received. Under the January 12th Settlement Agreement, the
Debtors will receive the benefit of releases of certain significant
claims against them. First, the Debtors will receive a release from the
970 Noteholders of claims under the Master Cash Flow Agreement, which
could amount to over $200 million. Pursuant to the Master Cash Flow
Agreement, Equityco agreed to pay to the 970 Noteholders an amount
equal to the rental revenues which would be generated if the space in
the 970 Buildings which was unleased as of December 31, 1983 had been
leased at 1983 market terms. Equityco's obligations under the agreement
are to be reduced as third parties commence paying rent under qualified
leases of such unleased space. Equityco's payment obligation under the
Master Cash Flow Agreement is waived unless and until an "Event of
Default" exists. The Indenture for the 970 Notes does not provide for
the
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24 The Debtors, based on the advice of counsel, have always taken the position
that a prosecution of a fraudulent conveyance action against the Club Loan
would be fruitless and would only result in time-consuming and costly
litigation with no concomitant benefit to the Debtors' estates. It is
likely that such litigation would be fruitless because of the
well-established rule that substantive consolidation moots a fraudulent
conveyance claim.
For a detailed discussion of substantive consolidation, see "Summary of the
Plan of Reorganization for the Debtors -- Description of Substantive
Consolidations". For a detailed analysis of the Debtors' arguments against
a fraudulent conveyance action against the Club Loan and the effect of a
substantive consolidation of Consolidated Devco, see Memorandum of Law of
the Debtors in Support of Motion for Entry of an Order Approving a
Settlement Agreement Among the Debtors and Apollo, Carena, BPHI, CIBC,
Citibank, and Dragon, annexed hereto as Exhibit K.
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termination of this obligation; absent a discharge it might continue
until the debt issued under the Indenture is paid. In January 1996 an
Event of Default under the Indenture and the Master Cash Flow Agreement
occurred. Thus, the Indenture Trustee for the 970 Notes may assert that
Equityco's obligations under the Master Cash Flow Agreement are now due
and owing.
The claim of the 970 Noteholders under the Master Cash Flow is
significant. It may be valued as high as the difference between the
outstanding amount of the loan and the value of the collateral securing
the 970 Notes. The outstanding amount owed on account of the 970 Notes
is, as of December 1, 1995, $902,603,492.08. The 970 Buildings are
valued at between $660 million and $780 million. Accordingly, the claim
of the 970 Noteholders under the Master Cash Flow Agreement may be
between $122 million and $242 million. Exclusive of contingent or
disputed claims, a claim of this magnitude would increase the unsecured
claims by as much as one-third.
Second, the Debtors will receive from the Co-Proponents, Apollo,
Tishman Speyer and the other holders of the Club Loan, reciprocal
releases for any claims they may have against the Debtors arising out
of the restructuring process.
Assets Affected. First, O&Y (U.S.) will transfer certain
property constituting Club Loan Collateral which has de
minimis, if any, value. Such collateral includes:
o O&Y (U.S.)'s interests, to the extent thereof, in
the entities which indirectly own fifty percent
(50%) of the Equity Interests in 11601 Wilshire
(49% of such interests are pledged as collateral
for the Club Loan and a 1% de minimis interest is
not) are being released to the holders of the Club
Loan in return for a reduction in the amount due
under the Club Loan of $1,000,000; and
o Claims O&Y (U.S.) may have, if any, relating to
400 South Hope Street are being transferred to the
holders of the Club Loan.
Second, O&Y (U.S.) will cause to be transferred to
Apollo its Collateral under the Amended and Restated
Promissory Note dated November 29, 1990, as amended, made by
West 31st Street Associates in favor of Apollo (as successor
to Westpac Banking Corporation) in the amount of $19,775,583
as of October 11, 1995 (the "West 31st Street Loan"). The
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deficiency claim which arises from such note is among those unsecured
claims being transferred by Apollo to the Co- Proponents under the
January 12th Settlement Agreement.
Third, O&Y (U.S.) will agree to a separate reorganization plan
for the 970 Notes and the collateral securing such notes (the "970
Cases").
Fourth, O&Y (U.S.) will transfer certain tenant notes, one of
which is held by O&Y Finco and has a carrying value of $6.2 million and
the other of which is held by the Realty Group and has a carrying value
of $3.2 million.
Transfers by Non-Debtor Parties. Finally, the January 12th
Settlement Agreement contemplates the following transfers by
non-Debtor parties.
(1) Club Loan. The holders of the Club Loan will
transfer the Club Loan, modified and allowed as
described in the January 12th Settlement Agreement
Motion, to certain of the Co-Proponents. As
described above, immediately prior to such
transfer of the Club Loan, certain of the
Collateral pledged by Devco to secure the Club
Loan, i.e., O&Y (U.S.)'s ownership interests in
11601 Wilshire and 400 South Hope Street, will be
transferred or surrendered to the current holders
of the Club Loan, leaving as the primary
collateral for the Club Loan the equity interests
of O&Y (U.S.) in Towers A and B and 245 Park
Avenue.
(2) The Co-Proponent 970 Notes. Under the January
12th Settlement Agreement, the Co-Proponents will
deliver to the holders of the Club Loan the Co-
Proponent 970 Notes.
(3) The 5% Current Value of the 970 Buildings. Under
the January 12th Settlement Agreement, the 970
Noteholders have agreed to distribute five percent
(5%) of the current value of the 970 Buildings to
the current holders of the Club Loan. The Debtors
have consented to this distribution by the 970
Noteholders.
(4) Transferred Unsecured Claims. As additional
consideration for the proposed exchange with the
Co-Proponents under the January 12th Settlement
Agreement, Apollo will transfer all of the $91
million in unsecured claims that it holds against
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O&Y (U.S.) to the Co-Proponents. These claims are
summarized below and are collectively referred to
as the "Transferred Unsecured Claims":
o Salomon Brothers ("Salomon") Swap Claim:
Apollo purchased a 50% interest in a judgment
against Equityco in the amount of $65 million
with 9% simple interest from September 4,
1992 accruing thereon, arising out of a
confession of judgment by Equityco resulting
from a terminated interest rate swap
transaction with Salomon. Under the January
12th Settlement Agreement, it has been agreed
that Apollo's claim arising from this
transaction (with interest to October 11,
1995) equals $41.6 million.
o Demand Note Participation Claim: Apollo
purchased a $14 million principal amount
participation from First National Bank of
Chicago in a demand note that was issued by
Devco in connection with the sale of 320 Park
Avenue to Mutual of America. Under the
January 12th Settlement Agreement, it has
been agreed that the total amount due to
Apollo under the demand note as of October
11, 1995, including interest thereon, equals
$18.1 million.
o Bank of Montreal ("BMo") Claim: Apollo
purchased an unsecured claim against Devco
from BMo, arising out of a terminated
interest rate swap agreement. Under the
January 12th Settlement Agreement, it has
been agreed that the total amount due Apollo
on such claim, including interest to October
11, 1995, is $12.3 million.
o West 31st Street Deficiency Claim: The
deficiency claim which arises from O&Y
(U.S.)'s surrender to Apollo of the
Collateral securing the West 31st Street
Loan. Under the January 12th Settlement
Agreement, it has been agreed that, under
most circumstances, the total amount to be
received by the Co-Proponents on the
deficiency claim, including interest to
October 11, 1995, is $18.3 million.
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4. Significant Properties Claims and Other Interests to be
Transferred to Apollo and Other Holders of the Club
Loan Pursuant to the January 12th Settlement Agreement
or Otherwise Treated Under the 970 Plan
a. 1290 Avenue of the Americas, New York, New York: 1290 Avenue of the
Americas is a 43 story first class commercial office building, completed in
1963, with approximately 16 million rentable square feet of space. The building
will serve as the corporate headquarters for the Equitable Life Assurance
Society of the United States and houses other major tenants, including Warner
Communications, Inc., the Bank of New York, Robinson, Silverman, Pearce,
Aronsohn & Berman, and EMI Entertainment World, Inc.
b. 237 Park Avenue, New York, New York: 237 Park Avenue is a 23 story,
first class commercial office building with approximately 1.14 million rentable
square feet of space. The building was completed in 1981 as a comprehensive
renovation of an existing structure and now features an interior layout of an
open full atrium. O&Y (U.S.) is currently headquartered at this building,
although it is presently contemplated that O&Y (U.S.)'s offices will be
relocated to OLP in the late summer of 1996. In addition, the other primary
tenants at 237 Park Avenue are Swiss Reinsurance Company, U.S. Branch, E.M.
Warburg, Pincus & Co. and J. Walter Thompson Company.
c. Ownership Interests in 11601 Wilshire Boulevard, Los Angeles,
California: 11601 Wilshire Boulevard is a 24 story, first class commercial
office building with approximately 469,115 rentable square feet of space. The
building was developed in 1983 by a joint venture consisting of certain O&Y
(U.S.)-related entities and SVA. The building is home to several large scale
tenants, including Needham, Harper & Steers and Broad Inc. O&Y (U.S.)'s
interests in the partnerships which are members in the joint venture which owns
11601 Wilshire along with SVA are to be transferred to Apollo pursuant to the
January 12th Settlement.
d. West 31st Street, New York, New York: The West 31st Street Property
is a tract of vacant land located on the west side of Manhattan which has been
approved for a total of 1.6 million square feet of office development. The
property is approximately 133,000 square feet of which 39,000 square feet are
currently being used as a surface parking lot. The remainder of the site
contains an excavated easement for the railroad tracks entering Pennsylvania
Station.
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5. Bankruptcy Court Involvement with the
January 12th Settlement Agreement
On January 12, 1996, the Debtors filed the January 12th Settlement
Agreement Motion. The Debtors asserted, and continue to believe, that the
January 12th Settlement Agreement is in the best interests of the Debtors'
estates and their creditors. Annexed hereto as Exhibit L is a copy of the
Debtors' Memorandum of Law in Support of the January 12th Settlement Agreement
Motion. Certain parties, however, objected to the relief requested by the
Debtors in the January 12th Settlement Agreement Motion, including the
Creditors' Committee, Coopers & Lybrand OYDL, Inc./Limited, the Tower B
Noteholders, TIAA, SVA and Merrill Lynch (collectively, the "Objectors"). The
Objectors each requested extensive discovery from the Settling Parties,
including document production and interrogatories. Furthermore, the Objectors
indicated their desire to take the depositions of some 8-10 potential witnesses
prior to the hearing before the Bankruptcy Court on the January 12th Settlement
Agreement Motion. In response to such requests, the Bankruptcy Court established
a discovery schedule and set a hearing date on the January 12th Settlement
Agreement Motion for the second week of March, 1996, which hearing has been
adjourned.
The discovery process for the hearing on the January 12th Settlement
Agreement Motion lasted almost six weeks. Discovery included extensive document
production, written interrogatories and more than 10 depositions. At the end of
the discovery process, on February 29, 1996, the Objectors filed written
objections to the January 12th Settlement Agreement (collectively, the
"Objections"). In sum, the Objections focused primarily on four legal arguments:
(i) that the January 12th Settlement Agreement constituted a "de facto" plan of
reorganization for the Debtors which effectively pre-determined the outcome of
the voting on a plan of reorganization without giving creditors the required
protections of the solicitation and voting process prescribed by chapter 11 of
the Bankruptcy Code; (ii) that the January 12th Settlement Agreement was not
fair and equitable to the Debtors and was not in the best interests of their
estates; (iii) that the transfers of certain interests in property by the
Debtors were impermissible outside of a plan of reorganization; and (iv) that
the January 12th Settlement Agreement Motion constituted an impermissible
request to the Bankruptcy Court to render an advisory opinion with respect to
certain releases being granted under the January 12th Settlement Agreement.
In addition, SVA made other arguments that were unique to its
interests in 11601 Wilshire, namely, that the contemplated
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transfer of 11601 Wilshire was impermissible because of relevant
partnership law.
The Settling Parties drafted responses to the Objections and were
prepared to file the same on March 6, 1996. However, on March 5, 1996, the
Debtors and the Co-Proponents requested that the Bankruptcy Court adjourn the
hearing on the Approval Motion to May 13, 1996. The Bankruptcy Court further
requested that the Examiner facilitate negotiations between the Settling Parties
and the Objectors, with a view to resolving the differences raised between the
parties which were highlighted in the Objections. The Bankruptcy Court scheduled
a status conference between the parties for April 16, 1996, at which time the
Bankruptcy Court requested to be advised as to the status of the negotiations
between the Settling Parties and the Objectors. Based upon the report of counsel
at the status conference, the Bankruptcy Court further adjourned the hearing and
filing of responses to the Objections to the January 12th Settlement Agreement.
The Debtors, the Co-Proponents and Apollo have not yet filed written responses
to the Objections. Furthermore, pursuant to the settlements described herein,
the Creditors' Committee, Merrill Lynch, TIAA and the Tower B Noteholders have
withdrawn their Objections to the January 12th Settlement Agreement, subject to
the confirmation and consummation of the Plan and their receipt of the treatment
contemplated therein. SVA will withdraw its objections to the January 12th
Settlement Agreement and the SVA Adversary Proceeding will be dismissed upon the
finalization of a settlement agreement that is presently being documented among
SVA, certain of the Debtors and other O&Y Affiliates, Apollo and others (the
"SVA Settlement Agreement").
6. Proposed Amendment to the January 12th
Settlement Agreement
Since the execution of the January 12th Settlement Agreement, certain
revisions thereto have been necessitated by certain circumstances which have
occurred in the Debtors' chapter 11 cases and in the negotiation process leading
to many of the settlements incorporated in the Plan and the 970 Plan. The
Debtors, Apollo, the other holders of the Club Loan and the Co- Proponents are
negotiating certain modifications to the January 12th Settlement Agreement (the
"January 12th Settlement Amendment"). Although the January 12th Settlement
Amendment has not been executed by the parties thereto, it is anticipated that
such an amendment addressing the matters described below and in the immediately
following section V.C.7 below, will be finalized in the near future:
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o The confirmation process for the Plan and the 970
Plan will proceed on parallel tracks with: (a) the
order approving the 970 Disclosure Statement to be
entered on the same date as the order approving
this Disclosure Statement, and (b) the
confirmation hearing for the 970 Plan to be
scheduled for September 11, 1996, the date
previously set for the hearing on confirmation of
the Plan and the Tower B Co. Plan.
o The January 12th Settlement Agreement and the 970
Plan will be consummated promptly after: (a)
confirmation of the Plan, the 970 Plan and the
Tower B Co. Plan; (b) entry of an order by the
Bankruptcy Court approving the SVA Settlement
Agreement; (c) the Confirmation Order becomes a
Final Order, in a form satisfactory to (i) the
Debtors and the Co-Proponents, and (ii) the
current holders of the Club Loan, and; (d) the
order confirming the 970 Plan becomes a Final
Order, in a form satisfactory to the 970
Committee.
o It shall be a condition precedent to the
effectiveness of January 12th Settlement Agreement,
as amended, that the closing thereunder take place on
or before a date to be agreed upon.
o All interest collected by the Debtors or the O&Y
Affiliates on the Tenant Notes, from and after
January 1, 1996, shall be paid out in the manner
prescribed in the 970 Plan; provided, however,
that the Debtors shall have an allowed first
priority administrative claim in the 970 Cases in
the amount of $300,000, which amount may be
deducted from the amount due for the interest on
the Tenant Notes before payment is made from the
debtors in O&Y Cases to the debtors in 970 Cases.
o The Debtors will not assert any claim in the 970
Cases other than claims for payment of agreed
management fees and fees and expenses of
professionals directly employed in the 970 Cases
pursuant to court order. The debtors in the 970
Cases shall not assert any claim, other than those
provided for in the 970 Plan or related documents,
in the Debtors' chapter 11 cases.
o It shall be a condition precedent to the January
12th Settlement Agreement that Bankruptcy Court
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approval be obtained on or before September 11, 1996,
of a stipulation providing for: (a) settlement of the
claims of the current holders of the Club Loan to the
Debtors' and/or O&Y Affiliates partnership interests
in 400 South Hope, (b) the transfer of such interests
in 400 South Hope to the current holders of the Club
Loan and (c) the release of the claims asserted by
O'Melveny & Myers LLP and its affiliates against the
Debtors.
o The Debtors will pay to the holders of the Club Loan,
as an administrative expense, from time to time and
without necessity of any further court order, with
respect to legal services performed only in
connection with the chapter 11 cases of the Wilshire
Debtors, an amount equal to one-half of the sum of:
a. Post-May 10, 1996 fees and expenses of
Wachtell, Lipton, Rosen & Katz; less,
b. Post-May 10, 1996 fees and expenses of Weil,
Gotshal & Manges LLP; less,
c. Amounts paid by SVA to the current holders of
the Club Loan pursuant to paragraph 11
("Restoration of Funds") of the proposed SVA
Settlement Agreement.
o Following approval by the Bankruptcy Court on
notice to creditors of the payment by Devco of the
professional fees and expenses relating to the SVA
chapter 11 cases, the Debtors and the Wilshire
Debtors will waive all accrued and unpaid
management fees and expenses and will not assert
any claims for professional expenses related to
11601 Wilshire and the plan for the Wilshire
Debtors will so provide.
o In the event that the "Alternative to Tower B
Refinancing" described inss. 7.2 of the Tower B Co.
Plan becomes effective, then the portion of the
equity in Tower B not distributable to the Tower B
Noteholders under the Tower B Co. Plan shall be
allocated, subject to any funding obligations, 65%
to the current holders of the Club Loan (to the
extent necessary to pay the Club Loan in full) and
35% to the Co-Proponents.
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o Provided that the parties to the January 12th
Settlement Agreement and the January 12th
Settlement Amendment have complied with their
obligations thereunder, the current holders of the
Club Loan (including Apollo) will vote all of
their claims against the Debtors in their chapter
11 cases in favor of the Plan and the Co-
Proponents will vote all of their claims in the
970 Cases in favor of the 970 Plan.
o Each of the parties to the January 12th Settlement
Amendment will waive any right to assert any claims
pursuant to section 503(b) of the Bankruptcy Code
against any other party.
o None of the current holders of the Club Loan, the
Debtors, or the Co-Proponents, will amend, supplement
or waive, or consent to any amendment, supplement or
waiver of any term or condition of the 970 Plan or
the Plan, to the extent such amendment, supplement or
waiver would adversely affect the other.
7. Proposed SVA Settlement Agreement
Apollo and SVA have negotiated a settlement as between themselves
relating to the SVA disputes (the "SVA Settlement Agreement"). The terms of such
settlement between Apollo and SVA are described below. While negotiations are
continuing, at this time, none of the Debtors, the O&Y Affiliates or
Co-Proponents have agreed to the terms of the SVA Settlement Agreement. The
basic terms of the proposed SVA Settlement Agreement between SVA and Apollo are
as follows:
o SVA will consent to the transfer by the Debtors and
the O&Y Affiliates of their interests in 11601
Wilshire, as required by the January 12th Settlement
Agreement, so long as such transfer does not cause a
termination of the Wilshire JV for federal income tax
purposes.
o The Wilshire Debtors and SVA will enter into an
amendment to the Wilshire JV joint-venture agreement.
o SVA will consent to the assumption by the Wilshire
Debtors of the Wilshire JV joint-venture
agreement, as amended.
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o SVA, Apollo and certain other parties will enter into
a funding arrangement relating to the Wilshire JV.
o SVA and Apollo are seeking to have the Debtors and
the O&Y Affiliates will waive any and all claims
against SVA or the Wilshire JV for payment of
management fees pursuant to the Wilshire JV
joint-venture agreement or other similar agreements.
o SVA will dismiss, with prejudice, the SVA
Adversary Proceeding and all pending motions
relating thereto.
o SVA will agree to support the Plan and a plan of
reorganization for the Wilshire Debtors which
provides for terms which are consistent with the
proposed SVA Settlement Agreement.
o SVA and Apollo are seeking to have the Debtors,
the O&Y Affiliates, the Wilshire Debtors, SVA,
Tishman Speyer, Apollo and the other current
holders of the Club Loan deliver mutual releases
of any and all claims (of any kind or nature
whatsoever) relating in any manner to the 11601
Wilshire property, the Wilshire JV, the chapter 11
cases of the Debtors, the Wilshire Debtors and any
of the other O&Y Affiliates who are chapter 11
debtors and the actions of Tishman Speyer with
respect the effectuating a transfer of the 11601
Wilshire Property.
o SVA will refund fifty (50%) percent of the amounts
paid from assets of the Wilshire JV on account of the
fees of its counsel.
D. BPHI SETTLEMENT
1. BPHI Investment
On December 29, 1989, O&Y (U.S.) and BPHI closed the sale by O&Y
(U.S.) of approximately a 35% interest in certain partnerships owning interests
in Towers A, B and D of the World Financial Center to BPHI. Specifically, BPHI
acquired general partner interests in five partnerships which own interests in
Towers A, B and D of the World Financial Center, in a sublease of space in Tower
B and in retail space in the World Financial Center, plus a participation in
certain notes relating to Tower A issued by a sixth, associated partnership.
BPHI paid approximately $309 million in Cash and assumed approximately 35%
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of certain indebtedness owed by U.S. Finco to Tower B Co., in the amount of
approximately $114 million.(25) The interest in Tower A Co. which BPHI purchased
is subject to a prior pledge of such interest by Devco to secure approximately
$67 million of its debt but BPHI assumes no recourse liability on this
obligation. Pursuant to the BPHI Sale documents and the relevant partnership
agreements, regular partnership distributions were required to be made to BPHI
(and the other partners) out of available Cash flow.
2. BPHI Litigation
On November 20, 1992, BPHI instituted litigation in the Supreme Court
of the State of New York, New York County against Devco and various of the other
Debtors, by filing a complaint and a motion for certain provisional relief
seeking, among other things, an injunction preventing the Debtors from utilizing
any funds generated by the World Financial Center (except for use in the
continued operation and maintenance of the property) and the appointment of a
receiver for the World Financial Center.
In its complaint and in support of its motion for provisional relief,
BPHI alleged, among other things, that the Debtors (i) had diverted over
$75,000,000 belonging to partnerships in which BPHI had interests, including
over $62,000,000 which should have been paid to the Tower B Noteholders and
which failure to pay caused a default on mortgages on Tower B, (ii) had failed
to make partnership distributions owed to BPHI, despite their agreement to do
so, (iii) had failed to segregate partnership accounts, (iv) had failed to
provide BPHI full access to information regarding the partnerships' financial
affairs, and (v) had entered into agreements with third parties that impaired
BPHI's rights in the partnerships. For a detailed recitation of BPHI's claims as
set forth in the relevant pages of the Affidavit of Manfred Walt and BPHI's
Complaint, see Exhibits D and E to this Disclosure Statement.
The Debtors opposed BPHI's motion, denying BPHI's allegations, and
alleging, among other things, that (i) BPHI was aware of the O&Y (U.S.) Cash
management system and that system authorized the commingling of partnership
funds with other O&Y (U.S.) funds, (ii) BPHI had been advised that the delay in
paying the distributions was due to O&Y (U.S.)'s purported concerns that
- --------
25 The primary O&Y (U.S.) witness in the various litigations described herein
has stated that the $114 million debt assumed by BPHI in 1989 was always
understood by the parties as a tax accommodation to O&Y (U.S.) and was
never expected to have any economic consequences to BPHI.
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there was an undisclosed ownership interest by the Reichmann family in BPHI, and
BPHI's entitlement to partnership distributions may be subject to challenges by
creditors of O&Y (U.S.) because of that alleged undisclosed interest, and (iii)
there were issues regarding the proper characterization of the sale of the
partner interests in the World Financial Center to BPHI. For a detailed
recitation of O&Y (U.S.)'s defenses to BPHI's motion as set forth in relevant
pages of the Affidavit of Joel M. Simon in response to BPHI's motion, see
Exhibit F to this Disclosure Statement.
3. Settlement of the 1992 Litigation
On November 23, 1992, the next business day after commencement of the
litigation by BPHI, the Debtors and BPHI entered into a settlement agreement,
expressly without releasing or waiving any claims, rights or causes of action,
pursuant to which BPHI dismissed the litigation, and the Debtors agreed, among
other things, (i) to pay BPHI immediately $5,823,000 in escrow to be credited
against arrearages in distributions due to BPHI; (ii) that all future
distributions to BPHI from various partnerships would be made in a manner that
was consistent with practices prior to 1992 when distributions were regularly
made; (iii) that partnership revenues would be segregated and not commingled;
(iv) that partnership payments to other O&Y (U.S.) entities would be restricted;
(v) to provide BPHI various financial information regarding the partnerships,
and (vi) to provide BPHI with notice as to certain meetings with creditors that
could affect BPHI's interests in the partnerships. The November 23, 1992
agreement also contained a mutual standstill arrangement whereby BPHI and the
Debtors agreed, subject to various conditions, not to commence any action or
proceeding against each other for a certain period of time. For a more detailed
statement of this settlement, see the November 23, 1992 agreement, Exhibit G to
this Disclosure Statement.
4. BPHI Term Sheet
Subsequent to the Interim BPHI Settlement, the Debtors and BPHI
continued to negotiate a consensual resolution of the disputes between them
arising from their relationship as partners in the World Financial Center. Such
negotiations culminated in the presentation to, and approval by, the Independent
Board, of a term sheet between the Debtors and BPHI which constituted a
settlement of all claims and causes of action between such parties on December
2, 1994 (the "BPHI Settlement Term Sheet"). The BPHI Settlement Term Sheet
assumed a subsequent settlement with the Tower B Noteholders and thus did not
address the potential yen exposure that may exist under the yen denominated
Tower B Notes. It did provide that:
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o BPHI would receive a $34 million preference (plus
interest thereon from December 31, 1994) on any
distribution otherwise payable to Devco, from Tower B
Co. or New Tower B Holding LP;
o BPHI would receive a $1.2 million preference (plus
interest thereon from December 31, 1994) on any
distribution, otherwise payable to Devco, from
Tower A Co. or Tower A Holding;
o BPHI would receive a $19.4 million unsecured
promissory note from Devco and the ability to add any
additional claims arising from indemnities granted as
part of BPHI's investment in the World Financial
Center; and
o The partnership agreements of the BPHI Partnerships
would be modified to incorporate the terms of the
Interim BPHI Settlement and to give BPHI greater
rights to participate in decisions made by the BPHI
Partnerships.
5. Current BPHI Settlement
Further negotiations on the terms of the BPHI Settlement Term Sheet
have resulted in a further modification of such term sheet (the "BPHI
Settlement").(26) The terms of such Settlement are as follows:
On the Effective Date and in accordance with the terms of the Plan,
the Tower B Co. Plan and the Restructuring Transactions, the BPHI Settlement
shall be effective. In accordance with the BPHI Settlement, any and all Claims
of BPHI against the Debtors and Tower B Co. will be resolved and
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26 In the litigation regarding the January 12th Settlement Agreement, certain
parties alleged that Carena failed to give O&Y (U.S.) notice of, and an
opportunity to purchase, the 50% interest in BPHI which was sold to the
Reichmann Family and then subsequently to Arthur Shiff. The Debtors believe
that such allegations are unfounded because Paul Reichmann, an officer and
director of O&Y (U.S.) has maintained that he was aware of the transfers.
Moreover, in 1990 when the transfer to the Reichmann Family was completed,
it was only a few months after O&Y (U.S.) had sold the interest in the
first place and O&Y (U.S.) had no desire to repurchase that same interest.
In 1992, when the transfer to Shiff was completed, O&Y (U.S.) was
financially unable to repurchase the interest being sold by the Reichmann
Family.
<PAGE>
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compromised and BPHI will exchange its Claims against the Debtors and Tower B
Co. and Equity Interests in and Claims against the BPHI Partnerships as follows,
in accordance with the terms of section 7.11.2 of the Plan governing
distributions to the holders of Allowed Co-Proponent Unsecured Claims, and in
the case of such Equity Interests, in accordance with the terms of section 4.3
of the Plan as well as the Tower B Co. Plan.
(a) On the Effective Date, BPHI or its designee, in accordance with
the Restructuring Transactions, shall be distributed on account of (i) its
Equity Interests in the BPHI Partnerships, (ii) the Claims of BPHI against Tower
B Co. and the BPHI Partnerships, and (iii) the Claims of BPHI against Devco (to
the extent of and in its capacity as a partner in the BPHI Partnerships) and
certain other Debtors, Class A Interests representing 30.06% of the ownership of
Newco LP (before taking into account the Co-Proponents' Capital Infusion).27
(b) On the Effective Date, BPHI, in accordance with the Restructuring
Transactions, shall fund 48.75% of the Co- Proponents' Capital Infusion to be
effected in accordance with section 18.12 of the Plan.
(c) In addition to the consideration to be provided in accordance with
paragraph (a) above, on the Effective Date, BPHI shall have an Allowed General
Unsecured Claim against Devco in the amount of $22,250,000, which Allowed Claim
shall receive the same treatment accorded to holders of Allowed Co-Proponent
Unsecured Claims against the Consolidated Devco Entities in accordance with
section 7.11.2 of the Plan and BPHI shall have an unsecured Claim against Tower
B Co., which shall receive the treatment provided in the Tower B Co. Plan.
(d) On the Effective Date of the Plan and the effective date of the
Tower B Co. Plan, in addition to the releases provided in accordance with
section 24 of the Plan and in the Tower B Co. Plan, Tower B Co. and the O&Y
Affiliates and the Controlled Affiliates, on the one hand, and BPHI, on the
other hand, will execute and deliver mutual releases of all Liabilities and
Causes of Action relating to all acts and omissions occurring prior to the
Effective Date with respect to the Debtors, the Plan, the Reorganization Cases,
Tower B Co., the Tower B Co. reorganization case and the Tower B Co. Plan.
Without limiting the generality of the foregoing, (a) Tower B Co. and U.S. Finco
- -------- 27The 30.06% does not include any interests in Newco LP that BPHI and
or Carena will receive on account of Carena's interest as a holder of the Club
Loan after giving effect to the transfers contemplated by the January 12th
Settlement Agreement.
<PAGE>
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shall release BPHI from any and all Liabilities it may have or may be alleged to
have under the Tower B Co. Credit Agreement and (b) Tower B Co. and BPHI shall
release any and all Claims they may have against or may be alleged to have
against U.S. Finco with respect to any and all amounts which may be owed or
alleged to be owed by U.S. Finco to Tower B Co. under the Tower B Co. Credit
Agreement. In addition, under section 4.3 of the Plan and in accordance with
section 24 of the Plan, BPHI shall be released, in connection with the Plan and
the Tower B Co. Plan, from any (a) Liabilities relating to the making of any
loans or equity investments in any of the Debtors, the Debtors in Possession or
the O&Y Affiliates, (b) obligations or Claims under any statutory or decisional
law or principle which could require return, disgorgement, restitution or
repayment of any kind of payment of any damages with respect to amounts received
by BPHI prior to the Effective Date in respect of any investment (including
equity, debt or loan participation interests), (c) Claim relating to the
character (as debt or equity) or the enforceability in accordance with its terms
of any instrument evidencing any investment made by BPHI in any of the Debtors,
the Debtors in Possession or the O&Y Affiliates, (d) Claim with respect to an
avoidable transfer, and (e) Liabilities with respect to any Claim of any Entity
against any Debtor, Debtor in Possession or any O&Y Affiliate. On the Effective
Date, Newco LP will indemnify Tower B Co. and Tower B Holding I, entities
through which BPHI will own certain of their Equity Interests in Newco LP, for
any and all Liabilities arising prior to the Effective Date not released and
discharged under the Plan and the Tower B Co. Plan.
E. JMB AGREEMENT
On the Effective Date, JMB will retain its general partner interest in
245 Park Co. and, after taking into account the transactions effected by the
Plan, 245 Park Co. will own an interest in 245 Holding LP. On the Effective
Date, in full satisfaction of JMB's Equity Interest in 245 Park Avenue, JMB will
receive the following distributions:
JMB Distribution: JMB, through 245 Holding
LP, will roll up its interest in 245
Park Avenue for:
(1) on the Effective Date, indirect
Class A Interests in Newco LP having a
value equal to the greater of (a) the
Newco LP Reorganization Value multiplied
by 5.44% and (b) $30,000,000; plus
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(2) that percentage of Class B Interests
(that otherwise would be distributed to
the Co-Proponents) determined as
follows:
if the Newco LP Reorganization Value as
of the Confirmation Date is greater than
$551,000,000, then 5.44% of the Class B
Interests on the Effective Date; or
if the Newco Reorganization Value as of
the Confirmation Date is less than
$551,000,000, then no Class B Interests
on the Effective Date but thereafter, if
and at such time as (a) $551,000,000
minus (b) the sum of (i) the Newco LP
Reorganization Value as of the
Confirmation Date, and (ii) the dollar
amounts of the Net SF Cash and Net MCJV
Proceeds converted into Class A
Interests in accordance with section
18.1.1 of the Plan, is less than zero,
then 5.44% of the Class B Interests.
Dilutive Events: In determining JMB's distributions
pursuant to the preceding
subsection of section 15.8.1 of the
Plan, JMB's interests will be
diluted to the extent required to
reflect any transactions from and
after the Effective Date (other
than the contributions arising from
the conversion of Class B Interests
into Class A Interests, the
dilutive effect of which has been
taken into account in the
immediately preceding paragraph)
having a dilutive effect on
outstanding Class A Interests.
JMB Consent to
Waiver of Tower B
Condition: The condition precedent to the
Effective Date set forth in section
22.2.3 of the Plan may only be
waived by the Debtors and the Co-
Proponents with the consent of JMB.
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Exchange Rights: From and after the Effective Date,
JMB will have the right to exchange
its Equity Interest in 245 Holding
LP for Class A Interests which
would have had a value (based on
the value of such interests as of
the Confirmation Date as determined
by the Bankruptcy Court), in the
aggregate, equal to the value as of
the Confirmation Date of such 245
Holding LP interests, subject to
the restrictions on transfer
described in section 18.13 of the
Plan.
Newco LP Equity
Interests: In the event of a public offering
and sale of Class A Interests after
the Effective Date, JMB will
receive notice of such public
offering and sale and will be
provided an opportunity to exchange
its interest in 245 Holding LP for
Class A Interests, and if JMB does
so exchange its interests, JMB will
be provided the same "piggyback"
registration rights with respect to
its Class A Interests as those
provided to the Co-Proponents on
account of their Class A Interests.
JMB will be provided
tag-along rights in
accordance with section
18.13 of the Plan. In the
event JMB or any Affiliate
thereof seeks to sell its
direct or indirect Equity
Interests in Newco LP to a
bona fide purchaser, then
each of the Co-Proponents
will be entitled to a right
of first offer which will
enable such Entities to
purchase such Equity
Interests from JMB pro rata
on terms offered by JMB. If
the Co-Proponents, either
singly or collectively, do
not elect to purchase all
of the Equity Interests
offered by JMB within
thirty (30) days of such
offer, JMB will have the
right for ninety (90) days
thereafter to sell all of
such
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interests to any party
provided that the sale
price will be at least 95%
of the per interest price
offered to the
Co-Proponents.
JMB/245 Park
Member Option: JMB will have the right to elect
the JMB/245 Park Member Option if
one or both of the JMB/245
Conditions are not true on the
Effective Date. Notwithstanding
the foregoing, JMB will be required
to inform the O&Y Affiliates prior
to the thirtieth (30th) day after
the Confirmation Date whether it
will elect the JMB/245 Park Member
Option if one or both of the
JMB/245 Conditions are not
satisfied on the Effective Date.
Under the JMB/245 Park
Member Option, JMB will
exchange its general
partner interest in 245
Park Co. for a general
partner interest in New 245
Park LP in a percentage
adjusted in a manner to be
agreed upon to reflect the
improved capital structure
of New 245 Park LP as a
result of implementing the
Plan, in all events subject
to fixed loan and
preference amounts in the
aggregate amount of
$110,000,000 (plus interest
from and after June 30,
1996) in favor of Newco LP,
which $110,000,000 will be
allocated between loan and
preference amounts in the
same proportion as existing
under the 245 Park Co.
partnership agreement on
the Effective Date. The
loan amount will mature on
December 31, 2004. Both the
loan and preference amounts
will accrue interest at a
fixed rate equal to the
blended fixed rate to be
paid on the Aetna
Restructured Mortgage Loan
and the DKB Restructured
Mortgage Loan or on any
replacement financing. In
all events, Newco LP or its
designee will be the
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managing agent of New 245
Park LP with such rights as
are contained in the
partnership agreement for
245 Park Co. (but without
giving effect to JMB's
rights under its consent to
the Club Loan).
Sale of the 245
Park Property: New 245 Park LP, as the successor
to title of 245 Park Avenue, will
be prohibited from selling, and the
partners in New 245 Park LP will be
prohibited from causing the sale or
other transfer of, 245 Park Avenue
prior to January 2, 2000 without
the prior consent of JMB, except
that (a) JMB's consent will not be
required for any such sale in the
event that such sale or transfer
will be either (i) an involuntary
sale or transfer, including
pursuant to a foreclosure, or (ii)
a sale occurring on an emergency
basis, the nature of such emergency
basis to be agreed upon in the
definitive documentation to be
executed on or prior to the
Effective Date, and (b) JMB will
have no such consent rights in the
event that, in the reasonable
determination of a financial
advisor retained by Newco LP or its
designee to market any public or
private transaction for Equity
Interests in Newco LP, the
existence of such consent rights or
any other restriction on the sale
of 245 Park Avenue would have an
adverse effect on the marketing of
such equity transaction.
Allocation of Debt: JMB, as holder of a direct partner
interest in 245 Holding LP, which
holds a direct partner interest in
Newco LP, shall have a share of the
liabilities of Newco LP for
purposes of sections 704 and 752 of
the IRC. Newco LP and New 245 Park
LP and/or its designee(s) shall
adopt the "remedial allocation
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method" under Treasury
Regulations section
1.704-3, with respect to
245 Park Avenue, if
requested by JMB. It is
anticipated that, if the
"remedial allocation
method" is adopted, (i) 245
Holding LP's share of Newco
LP's liabilities secured by
245 Park Avenue will be
approximately $125,000,000
and (ii) taking into
account the liabilities
described in clause (i),
245 Holding LP's share of
Newco LP liabilities
secured by the Core
Properties identified in
the Plan, shall be equal to
or greater than
$200,000,000. It is also
anticipated that at least
$200,000,000 of such
liabilities will constitute
qualified nonrecourse
financing. In preparing any
income tax return, it is
further anticipated that
there will be no attachment
or statement that indicates
that there is more than one
activity for purposes of
section 465 of the IRC.
Management Fees and
Leasing Commissions: Newco LP or its designee will
provide both property management
and asset management services for
245 Park Avenue and will be
compensated out of cash flow as
follows: (i) a property management
fee equal to 2% of collected gross
revenues from existing leases and
1% of collected gross revenues from
all leases signed in the future;
(ii) an annual asset management fee
equal to 0.5% of Gross Asset Value
in the first two years after the
Effective Date and .35% of Gross
Asset Value thereafter; and (iii)
leasing commissions for leasing
transactions equal to (a) a full
standard commission for leasing
transactions if the tenant is not
represented by an outside broker
and (b) a 50% override on
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commissions paid to outside
brokers.
JMB Payments: Newco LP shall be obligated to pay
to JMB, for a period of five (5)
years after the Effective Date, a
monthly payment in an amount equal
to one-third of the property
management fees for 245 Park Avenue
payable to Newco LP or its designee
(the "JMB/245 Park Payments");
provided, however, that the JMB/245
Park Payments will not, in any
single year, be less than $400,000
or greater than $600,000; and
provided, further, that the JMB/245
Park Payments will not, in the
aggregate for such five-year
period, be less than $2,300,000.
The JMB/245 Park Payments will be
payable to JMB in all events,
including in the event that Newco
LP or its designee does not
receive, for any reason, the fees
referred to in the paragraph above.
Professional
Costs: JMB shall be reimbursed for the
costs and expenses (including fees
and expenses of legal and
accounting professionals) incurred
in implementing the transactions
contemplated by section 15.8.1 of
the Plan to a maximum amount of
$300,000.
Releases: In addition to the releases
provided in section 24 of the Plan,
JMB and the O&Y Affiliates will
execute and deliver mutual releases
of Claims between JMB and the O&Y
Affiliates, other than Claims and
interests arising in connection
with the transactions contemplated
by the Plan.
The distributions on account of the Equity Interests of JMB in 245
Park Co. provided above will be made in accordance with section 18.6 of the
Plan.
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F. THE MERRILL LYNCH SETTLEMENT
1. General
Certain affiliates of Merrill Lynch, namely Merrill Lynch WFC/L, Inc.
(the "ML Tenant") and Merrill, Lynch, Pierce, Fenner & Smith Incorporated, are
O&Y (U.S.)'s largest tenants, leasing approximately 4.3 million square feet in
aggregate in Towers B and D of the World Financial Center. The ML Tenant leases
approximately 2.5 million square feet in Tower B pursuant to a 25 year
triple-net lease expiring September 30, 2013 (the "Merrill Lynch Tower B
Lease"). The ML Tenant also leases approximately 1.8 million square feet in
Tower D pursuant to a 25 year triple-net lease expiring September 30, 2013 (the
"Merrill Lynch Tower D Lease"). As part of the Plan and the Tower B Co. Plan,
O&Y (U.S.) has negotiated a resolution of all of the claims between O&Y (U.S.)
and Merrill Lynch arising out of the Merrill Lynch Tower B Lease and the Merrill
Lynch Tower D Lease. The following sections detail the issues related to O&Y
(U.S.) and the ML Affiliates.
a. The Project Operating Agreement
The Project Operating Agreement (the "POA") establishes the relative
rights and obligations of the parcel tenants of the World Financial Center and
governs their relationship among each other with respect to the management,
operation, maintenance, restoration, repair and services of the common areas of
the World Financial Center. The parties to the POA are Battery Park City
Authority, as ground lessor, and the parcel tenants of the World Financial
Center, which currently includes Tower A Co., Tower B Co., Tower D Co. and
American Express Company and three of its affiliates. Because Tower B Co. and
Tower D Co. have net leased substantially all of Tower B and Tower D,
respectively, to the ML Tenant, such affiliates have succeeded to certain rights
and duties of Tower B Co. and Tower D Co. under the POA.
The POA requires all of the parcel tenants, among other things, to (i)
provide certain services to, and manage, operate, maintain, restore and repair
certain common areas of the World Financial Center and (ii) pay a share of the
cost of provision of such services. The POA also establishes a mechanism through
which the tenants are to perform the services and other obligations required
therein by designating an operator (the "Operator") to act as contractor on
behalf of the tenants to provide the services and to hold in trust for the
benefit of the tenants any monies which the operator receives for application in
accordance with the provisions of the POA.
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The POA designates Tower A Co. as operator, the obligations of which
were assumed by a predecessor in interest of Devco pursuant to an Assumption
Agreement, dated August 15, 1985.
Pursuant to sections 3.02(b) and 4.04(c) of the POA, Tower A Co., as
Operator, is obligated to provide electrical power to Towers B and D, which are
net leased to Merrill Lynch. In 1993, a dispute arose between Tower A Co. and
Merrill Lynch in which Merrill Lynch claimed that Tower A Co. had overcharged
for electrical power provided to Tower D. In conformity with the requirements of
the POA, the Merrill Lynch commenced an arbitration proceeding against Tower A
Co., as Operator, and Devco (as assignee) wherein they sought reallocation under
the POA of past electrical charges which Merrill Lynch was obligated to pay
under the Merrill Lynch Tower D Lease.
On March 16, 1995, the arbitration panel to which the case was
referred found that Merrill Lynch was entitled to be reimbursed certain excess
charges. The interim award, including 18% interest was calculated to be $2.8
million (the "Interim Award"). In July, 1995, Tower A Co. and Devco deposited
$1.25 million with the New York State Supreme Court as security for the Interim
Award, pending the confirmation of such award by the New York State Supreme
Court. On September 29, 1995, the arbitration panel awarded Merrill Lynch an
additional award in the amount of $976,765.35, plus 18% interest (the "Final
Award" and together with the Interim Award, the "Arbitration Award"). On October
6, 1995, Tower A Co. and Devco on the one hand, and Merrill Lynch on the other,
entered into an escrow agreement whereby Tower A Co. and Devco deposited an
additional $1.25 million with an escrow agent as partial satisfaction of the
arbitration award.
On May 31, 1995, Merrill Lynch moved in New York State Supreme Court
for confirmation of the Interim Award. On October 10, 1995, Merrill Lynch moved
for confirmation of the Final Award. Both motions were stayed by operation of
the automatic stay set forth in section 362 of the Bankruptcy Code upon the
chapter 11 filings of Tower A Co. and Devco. Tower A Co. and Devco, as debtors
and debtors in possession, consented to a modification of the automatic stay for
the limited purpose of having the court determine the motion for confirmation of
the Arbitration Award. Of the approximately $4.8 million plus interest awarded
to Merrill Lynch in the Arbitration Award, some $6.0 million (including interest
and attorneys' fees) may be outstanding. As described above, Tower A Co. has set
aside $2.5 million, $1.25 million in an escrow that is held by Merrill Lynch and
$1.25 million in an account held by the New York State Supreme Court for the
benefit of Merrill Lynch, in order to pay the Arbitration Award.
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In addition to the amounts owed by Devco and Tower A Co. to the
Merrill Lynch under the Arbitration Award, Devco has asserted that Merrill Lynch
owes Devco, as Operator, $732,000 with respect to Meter 2491 for retroactive
electric charges due to a faulty meter and $250,000 plus interest for Tower D
electric billing for the period covered by the arbitration on account of the
rate schedule changes determined in the arbitration.
As described more fully below, in the interests of effective
implementation of the Plan, Tower A Co. and Merrill Lynch have agreed to settle
their respective claims relating to the POA. First, Tower A Co. and Merrill
Lynch have agreed that Tower A Co. will assume, pursuant to section 365 of the
Bankruptcy Code, the operator role and the operator component provisions of the
POA. In connection with such assumption, and as required by section 365 of the
Bankruptcy Code, Merrill Lynch will receive, to the extent it has not already
received, the Merrill Lynch Escrow, and will retain and apply such money, which
together with the remainder of the Merrill Lynch Settlement, will be in full
satisfaction of the Arbitration Award.
Further, Tower A Co. (and Tower B Co. pursuant to its Plan of
Reorganization), in connection with its ground lease interest in the World
Financial Center, will assume, pursuant to section 365 of the Bankruptcy Code,
the POA and confirm that the POA (i) is a covenant that runs with the land and
(ii) will continue to bind the tenants of the World Financial Center and burden
their tenancies for both prepetition and postpetition obligations.
b. River Water By-Pass Agreement
There is an agreement in principle among the WFC Tenants under the POA
to construct, at a cost of $4 million, a redundant pipe to enable repair and
maintenance of the main river intake without requiring numerous or lengthy
shutdowns of HVAC operations. The costs of such construction are as follows:
o Share of expenses (in 000s):
ML Affiliates $1,602(28)
American Express 1,454
Tower A Co. 1,592
- --------
28 This figure includes $262,000 that was originally to be contributed by
Tower B Leaseco. Pursuant to the Merrill Lynch Settlement, in return for
the consideration passing to Merrill Lynch thereunder, Merrill Lynch has
agreed to assume Tower B Leaseco's obligations under the River Water
By-Pass Agreement.
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Retailco 165
Shared Areas 87
$4,900
c. Tower B Sublease
The ML Tenant had subleased approximately 615,000 square feet on
floors 29-44 to Tower B Leaseco on a back-to-back basis (the "Tower B
Sublease"). Tower B Leaseco had sub- subleased a substantial portion of the
Tower B Sublease space to various tenants at substantial annual projected
shortfalls from the amounts due under the Tower B Sublease. For a substantial
period, Devco funded the shortfalls with respect to the Tower B Sublease in
accordance with Devco's guaranty of same. Tower B Leaseco has not assumed the
Tower B Sublease and the ML Tenant has terminated the Tower B Sublease.
Termination of the Tower B Sublease gives rise to an unsecured claim in favor of
the ML Tenant against Tower B Leaseco and, absent substantive consolidation,
Devco, in their respective chapter 11 cases (in the case of Devco, pursuant to a
guarantee of the Tower B Sublease) of approximately $83 million to $95 million.
Tower B Leaseco's account has had on deposit approximately $2.5
million ($1.3 million as of Tower B Leaseco's Petition Date). Immediately prior
to Devco's Petition Date, Devco and U.S. Finco funded approximately $930,000 to
provide for Tower B Leaseco's shortfalls to the ML Tenant.
d. Reimbursement Agreement
In order to facilitate the financing of Towers B and D, Merrill Lynch
agreed under each of the Merrill Lynch Tower B Lease and Merrill Lynch Tower D
Lease to perform certain actions and make certain payments for the benefit of
Tower B Co. and Tower D Co., respectively. In order to implement the true intent
of Merrill Lynch' obligations in respect of Towers B and D, Tower B Co. and
Tower D Co., respectively, entered into a Reimbursement Agreement with Merrill
Lynch.
Under the Tower B Reimbursement Agreement and the Tower D
Reimbursement Agreement, Tower B Co. and Tower D Co. are each required to
reimburse Merrill Lynch for, among other things, the amounts paid by Merrill
Lynch for certain building-related operations and other expenses allocable to
space in the building which is not part of the premises leased by Merrill Lynch.
Included within such expenses are those related to the retail portions of Tower
B and Tower D. The retail space of Tower B (which is comprised of approximately
126,000 square feet) is leased and operated by Retailco, an O&Y Affiliate,
pursuant to the Retailco B Lease. The retail space of Tower D (which is
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comprised of approximately 83,000 square feet) is also leased and operated by
Retailco pursuant to the Retailco D Lease.
Furthermore, under the Reimbursement Agreement for Tower B, in
addition to the above, Tower B Co. is required to reimburse the ML Tenant for
the difference between a lower fair market rent and the specified rents for
floors 26, 27 and 28 after October 1, 1998. Likewise, the ML Tenant is required
to pay over to Tower B Co. any excess of fair market rent over specified rents
for floors 26, 27 and 28 after October 1, 1998.
e. Tower D Issues
An affiliate of Merrill Lynch, HQ North, Inc. ("HQ North" or "Merrill
Lynch Tower D Partner") is a 49% partner in Tower D. The Sumitomo Bank/Tower D
Mortgage Loan is due in the year 2003. HQ North has certain limited consent
rights with respect to refinancing the existing debt, which consent, under the
Merrill Lynch Settlement, will not be unreasonably withheld.
2. Terms of the Merrill Lynch Settlement
In settlement of the issues between O&Y (U.S.) and Merrill Lynch, as
set forth above, O&Y (U.S.) and Merrill Lynch will enter into the Merrill Lynch
Settlement on the terms set forth below.
On the Effective Date, and in accordance with the Tower B Co. Plan and
the Restructuring Transactions to which Merrill Lynch is a party, the Merrill
Lynch Settlement shall be effective. Under the Merrill Lynch Settlement, the
following Claims of Merrill Lynch will be resolved and compromised in full and
final settlement and disposition of all proofs of claim filed by Merrill Lynch
in the Reorganization Cases of the Debtors and the reorganization cases of Tower
B Co. and WFC Fincorp:
(a) Merrill Lynch, through its designees on the Management Committee
(as defined in the Project Operating Agreement) and as the beneficiaries of
certain rights granted to them under section 27.02 of the Merrill Lynch Tower B
Lease and section 27.02 of the Merrill Lynch Tower D Lease, shall consent to the
assumption by Devco and Tower A Co. pursuant to section 365 of the Bankruptcy
Code of the WFC Operator Component and the assignment of such WFC Operator
Component to Newco LP in accordance with section 21 of the Plan. The O&Y
Affiliates will confirm that the WFC Tenants Component of the Project Operating
Agreement is a covenant that runs with the land and binds the parcel tenants of
the World Financial Center and burdens their tenancies for both prepetition and
postpetition obligations. To the extent that any portion or component of the
Project Operating
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Agreement is an executory contract, Devco and Tower A Co. shall assume such
portion or component and assign such portion or component of the Project
Operating Agreement to Newco LP and Merrill Lynch, through its designees on the
Management Committee under the Project Operating Agreement, shall consent to
such assumption and assignment. In accordance with section 365(b) of the
Bankruptcy Code, Merrill Lynch/WFC/L, Inc. or its designee shall be entitled to
the release of the funds held in the Merrill Lynch Escrow and the O&Y Affiliates
shall release any and all Claims for the return of the funds held in the Merrill
Lynch Escrow. The O&Y Affiliates will not seek or pursue any Claims for legal
fees, the miswired electrical meter and the cost of time or money for personnel
or other resources incurred in connection with the arbitration matters relating
to the Tower D electricity charges. There will be no further action taken in
connection with such arbitration of the Claims which are described therein or
herein as against Merrill Lynch/WFC/L, Inc., and the O&Y Affiliates will assume
responsibility for any third-party Claims arising by reason of any action that
the O&Y Affiliates may take to collect or pursue such Claims from third parties.
(b) Merrill Lynch/WFC/L, Inc. shall consent to the provisions of the
Plan relating to Tower B Leaseco as set forth in sections 4.4 and 16 of the Plan
and to the provisions of the Tower B Co. Plan relating to Merrill Lynch/WFC/L,
Inc. as set forth therein. Merrill Lynch/WFC/L, Inc. shall consent to all
Available Cash of Tower B Leaseco being used: (i) to pay in full Administrative
Expense Claims, Allowed Priority Tax Claims and Allowed Priority-Non Tax Claims
against Tower B Leaseco; (ii) thereafter, as a distribution on account of the
Merrill Lynch/Tower B Leaseco Secured Claim equal to $502,000 to the Merrill
Lynch Capital Fund to be held by Merrill Lynch and to be used to fund the River
Water By-Pass Project and certain window and facade repairs required to be made
to Tower B; and (iii) thereafter, to pay each holder of an Allowed General
Unsecured Claim against Tower B Leaseco such holder's Ratable Proportion of the
Available Cash of Tower B Leaseco, after giving effect to clauses (i) and (ii)
above. Merrill Lynch will assert no other Claims against Tower B Leaseco in
relation to the River Water ByPass Project or against Tower B Co. for the Tower
B window and facade repairs currently under discussion as of the date hereof.
(c) Merrill Lynch/WFC/L, Inc. shall have an Allowed General Unsecured
Claim against Tower B Leaseco of $93,000,000 and, to the extent such Allowed
General Unsecured Claim against Tower B Leaseco shall not receive a payment in
full in accordance with section 16.4 of the Plan, Merrill Lynch/WFC/L, Inc.
shall have an Allowed Unaffiliated Unsecured Claim against Devco arising from
Devco's guarantee of the obligations of Tower B
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Leaseco, which Allowed Claim shall be in an amount equal to the difference
between $93,000,000 and the amount of any distributions received by Merrill
Lynch/WFC/L, Inc. on account of its Allowed General Unsecured Claim against
Tower B Leaseco and shall be provided a distribution thereon in accordance with
section 7.11.1 of the Plan.
(d) Merrill Lynch shall consent, pursuant to an instrument in form and
substance satisfactory to the Debtors, the O&Y Affiliates, the Co-Proponents and
Merrill Lynch, which instrument is to be filed with the Bankruptcy Court prior
to the Confirmation Hearing, to the modification and amendment of the Tower D
Co. Partnership Agreement, which modification and amendment will provide for the
elimination of the debt service and principal limitations applicable to a
refinancing of mortgage debt relating to Tower D as set forth in section 16 of
such partnership agreement; provided, however, that any refinancing of mortgage
debt relating to Tower D shall:
(i) permit annual partnership distributions of
$11,379,000 to Merrill Lynch Tower D Partner;
and
(ii) self-liquidate over the initial term of the
Merrill Lynch Tower D Lease, which initial
term is currently scheduled to expire on
September 29, 2013.
Merrill Lynch will cooperate in effectuating such a financing on terms which are
mutually acceptable (as determined in each party's sole discretion), provided
that such modifications will result in no cost to Merrill Lynch. Such financing
is a condition precedent to the Effective Date and is expected to take the form
of a securitized rated debt.
(e) Merrill Lynch shall consent, pursuant to an instrument in form and
substance satisfactory to the Debtors, the O&Y Affiliates, the Co-Proponents and
Merrill Lynch, which instrument is to be filed with the Bankruptcy Court prior
to the Confirmation Hearing, to the modification and amendment of the Tower B
Reimbursement Agreement and the Tower D Reimbursement Agreement, which
modifications and amendments shall provide that:
(i) there will be a limitation of the recourse
provisions of the Tower B Reimbursement
Agreement and the Tower D Reimbursement
Agreement such that the obligations under
such agreements will only be recourse to
Tower B Co. and Tower D Co., respectively;
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(ii) the provisions of the Tower D Reimbursement
Agreement will be guaranteed by Newco LP;
provided, however, that such guarantee shall
not cover matters for which Merrill Lynch
Tower D Partner is obligated under the Tower
D Co. Partnership Agreement;
(iii) the make-whole provisions relating to Floors
26, 27 and 28 of Tower B in the Tower B
Reimbursement Agreement will be deleted; and
(iv) in connection with the Tower B refinancing
contemplated by section 7.1 of the Tower B
Co. Plan or any other refinancing of Tower B,
Merrill Lynch/WFC/L, Inc. will cooperate with
respect to modifications of the Tower B
Reimbursement Agreement, including the
agreement by Merrill Lynch not to pursue
collection of amounts due or interest
accruing thereon (such interest at the annual
rate of prime plus 3% compounded monthly,
payable from the due date) under the Tower B
Reimbursement Agreement and the agreement by
Merrill Lynch to subordinate and forbear its
rights to pursue collection of such amounts
due or interest accruing thereon through at
least September 29, 2013; provided, however,
with respect to any refinancing of the
Funding Commitment Letter Loan (as defined in
the Tower B Co. Plan) or the ML Lease
Securitization (as defined in the Tower B Co.
Plan) during the initial term of the Merrill
Lynch Tower B Lease, if such refinancing
provides for funds (after repaying any
existing mortgage(s) and all expenses of
refinancing) which are not to be used for
Tower B building expenditures, including
costs of leasing, then all accrued and unpaid
amounts under the Tower B Reimbursement
Agreement must be paid and WFC Tower B Co. LP
must provide such reserves or other
assurances satisfactory to Merrill Lynch that
all amounts which thereafter may be payable
under the Tower B Reimbursement Agreement
will be paid; and provided, further, that any
such forbearance will not in any way
prejudice or impair in any way the validity
or enforceability of Merrill Lynch's Claim
under the Tower B Reimbursement Agreement.
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(v) Retailco shall be primarily responsible to
Merrill Lynch for the payment of all expenses
of the retail spaces of Tower B and Tower D
as such expenses are contemplated by the
Tower B Reimbursement Agreement and the Tower
D Reimbursement Agreement, and recourse to
Retailco shall include access to Retailco's
excess cash flow from its retail lease at
Tower D; and
(vi) Section 9.01(e) of each of the Merrill Lynch
Tower B Lease and the Merrill Lynch Tower D
Lease shall be amended to provide in each
case that the maximum loan condemnation
amount shall be based on a schedule to be
inserted which will match the amortization
schedule of the financing to be placed on
each of the leasehold interests in Tower B or
Tower D, respectively, on or about the
Effective Date (as defined in the Tower B Co.
Plan) of the Tower B Co. Plan, with respect
to Tower B, and the Effective Date of the
Plan with respect to Tower D, subject to
adjustment in the case of Tower B for the ML
Lease Securitization (as defined in the Tower
B Co. Plan).
(f) In exchange for the consideration provided by Merrill Lynch in
paragraphs (d) and (e) of above and in the Tower B Co. Plan, Merrill Lynch will
elect on the Ballots to be distri- buted with respect to the Plan and the Tower
B Co. Plan:
(i) a payment in Cash to Merrill Lynch/WFC/L,
Inc. equal to $26,400,000, payable on the
Effective Date, plus interest at the rate of
9% per annum for the period commencing on
July 1, 1996 and ending on the Effective
Date, or
(ii) a rent reduction on the Merrill Lynch Tower D
Lease equivalent to the Cash payment
determined in clause (i) of the immediately
preceding paragraph, which will be recovered
over a period of at least five (5) years
following the Effective Date using an annual
discount rate (payable monthly in advance) of
6.73%.
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(g) With respect to the Tower D Reimbursement Agreement:
(i) there shall be a first-priority nonrecourse
pledge to Merrill Lynch of the equity in
Tower D Co. owned, subject to the terms of
section 7.4 of the Plan, directly or
indirectly, by O&Y (U.S.), BPHI and/or Newco
LP, as the successor to the O&Y Affiliates,
to secure the obligations of Tower D Co.
under the Tower D Reimbursement Agreement;
(ii) any claim arising under the Tower D
Reimbursement Agreement shall be subordinate
only to the Tower D Mortgage Debt and no
remedies will be exercisable against Tower D
Co. until the Tower D Mortgage Debt is
satisfied; and
(iii) until the Tower D Mortgage Debt is satisfied,
Merrill Lynch will agree not to pursue
collection of such amounts due or interest
accruing thereon from any of the Entities
owning Tower D under the Tower D
Reimbursement Agreement; provided, however,
that such forbearance will not in any way
prejudice or impair the right of Merrill
Lynch to pursue Newco LP, as guarantor, or
impair in any way the validity or
enforceability of Merrill Lynch's claim under
the Tower D Reimbursement Agreement.
Interest (at the annual rate of prime plus 3%
compounded monthly) on such claim shall be
payable from the due date.
(h) The Shared Management Agreement for Tower D shall be modified to
delete (effective as of July 1, 1996) 100% of the management fee (currently
$227,000 annually). Merrill Lynch shall be provided an initial credit of
$33,000, increasing by 3% annually, for a total initial credit of $260,000,
against the operating and other costs payable by Merrill Lynch under such
agreement, and, as modified, assumed and assigned to Newco LP. The present value
of the amounts described in this paragraph shall be increased at a rate of 9%
per annum from July 1, 1996 through the Effective Date.
(i) With respect to any and all other agreements relating to the World
Financial Center, Merrill Lynch shall agree to accept Newco LP or its designee
as the successor to any O&Y Affiliate under such agreements. The following
agreements, as
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amended and assigned, will be assumed and assigned by the Debtors to Newco LP
under section 365 of the Bankruptcy Code:
(i) The Shared Management Agreement relating to
Tower B;
(ii) The Shared Management Agreement relating
to Tower D;
(iii) The Sublease dated September 29, 1988 between
Devco and Merrill Lynch/WFC/L, Inc. for the
Winter Garden and the Liberty Street Bridge
and certain other portions of Tower B;
(iv) The Sublease dated February 26, 1988 between
Devco and Merrill Lynch/WFC/L, Inc. for the
central plant and certain other portions of
Tower D;
(v) The Fire Safety Agreement dated February 26,
1988 between Merrill Lynch/WFC/L, Inc.,
Retailco and Devco; and
(vi) The Fire Safety Agreement dated September 29,
1988 between Merrill Lynch/WFC/L, Inc.,
Retailco and Devco.
(j) Merrill Lynch shall incur no additional costs or risks or adverse
impact with respect to the value of Tower D Co. as a result of any modifications
to the leases and agreements to which Retailco is a party.
(k) Merrill Lynch's obligation to proceed with the transactions
contemplated under the Merrill Lynch Settlement is conditioned upon it being
satisfied as to the assumption or rejection, as the case may be, of any
agreements of the Debtors, Tower B Co. or WFC Fincorp to which Merrill Lynch is
a party, and that such transactions will not result in (i) the termination of
the Tower D Co. partnership for federal income tax purposes or (ii) the
imposition of any other tax cost on Merrill Lynch (except as paid by the O&Y
Affiliates).
(l) Merrill Lynch agrees that it has no objection to the release by
Tower B Co. and Tower A Co. of any receivables or payables owed to them by their
partners or their Affiliates.
(m) In exchange for the entirety of the consideration provided to
Merrill Lynch in section 4.4 of the Plan and in the Tower B Co. Plan, Merrill
Lynch will support and vote to accept the Plan as well as the Tower B Co. Plan
(provided that Merrill
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Lynch's treatment under such plan is consistent with the terms in the Plan and
does not otherwise create additional cost to or adversely impact Merrill Lynch).
Those portions of the foregoing specifically relating to Tower B Co. shall be
effectuated under the Tower B Co. Plan. Merrill Lynch shall agree to the
designation of Newco LP or any Affiliate thereof (or such other Entity as
applicable) as the successor to any O&Y Affiliates at the World Financial
Center. The O&Y Affiliates will continue to address all other operating issues
between the O&Y Affiliates and Merrill Lynch to maximize the mutual benefits to
the O&Y Affiliates and Merrill Lynch. The settlement of the matters set forth
herein is subject to the documentation of same prior to the Confirmation Date
mutually acceptable to the parties thereto.
G. UNSECURED CREDITORS' AGREEMENT
On the Effective Date and in accordance with the Restructuring
Transactions, each holder of an Allowed Unaffiliated Unsecured Claim against the
Consolidated Devco Entities shall be distributed consideration having a value
equal to 8% of the amount of such Allowed Unaffiliated Unsecured Claim. Such
consideration shall be comprised of (a) Class A Interests having a value on the
Confirmation Date equal to 2.29% of such holder's Allowed Unaffiliated Unsecured
Claim, and (b) a Convertible Note Interest having a value equal to 5.71% of such
Allowed Unaffiliated Unsecured Claim.
The Convertible Note shall include the following terms and conditions:
Borrower: Newco LP.
Lender: The Convertible Note Indenture Trustee
on behalf of the holders of the
Convertible Note Interests.
Face Amount: 5.71% of the aggregate amount of
Allowed Unaffiliated Unsecured Claims
and Disputed Unaffiliated Unsecured
Claims in their Maximum Allowable
Amounts.
Maturity: 7-1/2 years from the Effective Date.
Interest Rate: 8% per annum until the second
anniversary of the Effective Date; 9%
per annum thereafter until maturity or
prepayment. Interest to be paid
quarterly in arrears.
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Interest shall accrue from
the earlier of the
Effective Date and December
1, 1996.
Scheduled Amortization: None.
Security: None.
Recourse: The Convertible Note will be fully
recourse to Newco LP.
Indenture: The terms of the Convertible Note will
be set forth in a note indenture dated
the Effective Date between Newco LP and
the Convertible Note Indenture Trustee,
such terms to include the terms set
forth in section 7.11.1 of the Plan, and
otherwise to be in a form that is
reasonably satisfactory to the Debtors,
the Co-Proponents, TIAA and the
Creditors' Committee.
Pre-Payment: At any time and from time to time on or
prior to the second anniversary of the
Effective Date, the Convertible Note
will be pre- payable in whole or in
part, at Newco LP's option, without
penalty. The Convertible Note Indenture
Trustee will be provided at least thirty
(30) days' advance notice of any
proposed pre-payment (which notice shall
be sent by the Convertible Note
Indenture Trustee to each holder of a
Convertible Note Interest) to provide
such holder with time to elect to
exercise its right to convert such
interest into a Class A Interest (the
"Conversion Right") prior to the
pre-payment date. From and after the
second anniversary of the Effective
Date, the Convertible Note may only be
pre-paid with the consent (or deemed
consent) of the holders of Convertible
Note Interests (such consent to be given
on a holder-by-holder basis as to
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such holder's Convertible Note
Interests). The mechanics and
timing of the aforementioned pre-
payments will be set forth in the
indenture for the Convertible Note.
The net proceeds of any
Post- Effective Date
Capital Infusion shall be
transferred (as a
contribution or in the form
of either debt or equity
subordinated to the
Convertible Note), directly
or indirectly, to Newco LP.
Newco LP shall apply any
Post-Effective Date Capital
Infusion (received by
contribution or otherwise)
to pre-payment of the
Convertible Note (to the
extent consented to or
deemed consented to by such
holders with respect to any
such infusion occurring
from and after the second
anniversary of the
Effective Date). The
Convertible Note Indenture
Trustee will be provided at
least thirty (30) days'
advance notice of the
proposed pre-payment (which
notice shall be sent by the
Convertible Note Indenture
Trustee to each holder of a
Convertible Note Interest)
to provide each holder with
time to elect to exercise
its Conversion Right.
The pre-payment provisions
of the preceding paragraph
shall not apply with
respect to contributions of
capital (whether in the
form of debt or equity) on
an emergency basis, the
nature of such emergency
events to be agreed upon
and set forth in the
indenture for the
Convertible Note.
Conversion Right: The Conversion Right will be
exercisable at any time and from
time to time only upon the written
notice (the "Conversion Notice")
from a holder of Convertible Note
Interests. The Conversion Notice
will be required to be delivered by
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such holder (each, an "Exercising
Holder") to the Convertible Note
Indenture Trustee who, promptly upon
receipt of such notice, will be required
to notify Newco LP thereof. The timing
and other mechanics of the exercise of
the Conversion Right will be set forth
in the indenture for the Convertible
Note and will be designed, among other
things, to allow for the exercise of
such right in connection with any
voluntary prepayment, or mandatory
prepayment with the proceeds of certain
Post-Effective Date Capital Infusions as
provided above, in each case prior to
the second anniversary of the Effective
Date. Each Exercising Holder will be
entitled to receive upon conversion of
its Convertible Note Interests that
percentage of Class A Interests that is
determined by dividing the principal
amount plus accrued interest outstanding
with respect to the Convertible Note
Interests tendered for conversion by a
conversion price to be determined on the
Effective Date based on the
reorganization price per Class A
Interest issued on the Effective Date,
adjusted in accordance with the
anti-dilution protections set forth
below under "Anti-Dilution Protections."
If Newco LP reasonably determines that
applicable law would require Newco LP to
withhold any taxes otherwise payable by
the relevant Exercising Holder in
respect of the conversion of a
Convertible Note Interest, each
Exercising Holder shall be required to
fund such tax withholding as a condition
to the exercise of its Conversion Right.
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Anti-Dilution
Protection: If a subsequent issuance of equity or
securities exchangeable for or
convertible into equity of Newco LP
occurs, then the conversion price shall
be adjusted to the extent appropriate
pursuant to a standard formula to be
agreed upon in accordance with customary
anti- dilution provisions. In addition,
if the Newco LP Equity Interests are
changed into or exchanged for a
different number or kind of securities
of or interests in Newco LP or of
another Entity or for Cash and/or other
property or any combination thereof by
reason of a merger, consolidation,
recapitalization, reclassification,
combination of interests, exchange of
interests or otherwise, the interests
subject to the Conversion Right shall be
appropriately and equitably adjusted in
number and kind (to the extent then
unexercised) such that the right to
purchase such interests shall thereafter
be exercisable for such other
securities, Cash and/or other property
as would have been received for the
interests subject to the Conversion
Right had the right to purchase such
interests been exercised in full
immediately prior to such transaction.
Any such adjustment will be made
successively each time a transaction
described in the immediately preceding
sentence is consummated.
Covenants: Until such time as Newco LP shall have
delivered a pre-payment notice providing
for payment in full of all outstanding
amounts under the Convertible Note
(regardless of whether the holders of
Convertible Note Interests shall have
elected to accept such pre-payment), and
funded (or set aside sufficient
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amounts to fund) the payments required
to be made to holders that elect to
accept such pre-payment (a "Full Payment
Triggering Event"), no restricted
payments, such as redemptions of Equity
Interests in Newco LP (other than
conversions or exchanges of Class B
Interests into or for Class A Interests)
or distributions of any kind in respect
of equity or subordinated debt (by
contract or structure) shall be made by
Newco LP, except in respect of (a) Tax
Advances or Withholding Advances or (b)
distributions of Equity Interests in
connection with an executive
compensation plan adopted post-
Effective Date by the Board of Directors
of Managing GP.
No Affiliate transactions other than on
arm's length terms will be permitted;
provided, however, that banking and
investment banking transactions that are
concluded as part of a public offering,
securi- tization, syndication or similar
distribution in which non-affiliated
financial intermediaries participate
shall be presumed to be on arm's length
terms but only to the extent that the
relevant Affiliates participate on the
same basis and capacity as the
non-affiliated financial intermediaries.
Any dispute as to whether any such
Affiliate transaction is arm's length
shall be resolved by binding arbitration
pursuant to procedures to be described
in the indenture for the Convertible
Note.
The Convertible Note Indenture Trustee
shall be provided financial information
relating to Newco LP and certain of its
Affiliates to be identified and agreed
upon by the
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Debtors, the Co-Proponents and the
Creditors' Committee.
The indenture for the Convertible Note
will contain other standard covenants,
representations and warranties to be
agreed upon by the Debtors, the
Co-Proponents and the Creditors'
Committee.
Tag-Along Rights: The holders of Class A
Interests shall be provided tag-along
rights in accordance with section 18.13
of the Plan.
H. REICHMANN SETTLEMENT
1. Reichmann Family Involvement With the U.S. Operations
From its inception in the late 1950's until the summer of 1992,
Olympia & York was a largely private, closely held "family" business. Members of
the Reichmann Family, including Paul Reichmann, Albert Reichmann and Ralph
Reichmann, held substantially all of the equity interests in OYDL, the ultimate
parent corporation of, among other entities, the entities comprising the U.S.
Operations. Given the substantial equity interests held by the Reichmann Family
in OYDL, certain of its members were highly active in the management of the
assets of OYDL and its subsidiary corporations. Indeed, until late 1992, Paul
Reichmann and his brother Albert Reichmann were directly and significantly
involved in the management of the U.S. Operations. Furthermore, both Paul and
Albert Reichmann had been members of the Boards of Directors or other governing
body of every significant entity in the U.S. Operations.
Financial information and other corporate information about Olympia &
York was not generally available to the public and was made available only as
required by lenders and other financial institutions extending credit
accommodations to one or more of the Olympia & York entities, including the U.S.
Operations. Paul Reichmann was also heavily involved in the development of many
of these financing arrangements. Furthermore, both Paul and Albert Reichmann
played integral roles in making investment and other business decisions for the
U.S. Operations and were directly involved in negotiating financing arrangements
for various of the real estate holdings owned by the U.S. Operations. Throughout
the 1980's, Paul and Albert Reichmann were also involved in directing the U.S.
Operations to make certain large charitable contributions. As a consequence of
their involvement with the U.S. Operations as officers, directors
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and shareholders, Paul, Albert and other members of the Reichmann Family had
fiduciary responsibilities to the entities comprising the U.S. Operations
(excluding certain partnerships with unrelated third parties).
2. Treatment of the Reichmann Family
Related Claims Under the CCAA Plan
As part of the CCAA Plan, Paul Reichmann and the other members of the
Reichmann Family were released by the Canadian creditors from all claims arising
out of their relationship with OYDL, its Canadian affiliates and the Canadian
Debtors. This release of claims followed substantial disclosure of various
transactions between certain of the Olympia & York related participants in the
CCAA Plan and the Reichmann Family in the Information Circular (the Canadian
equivalent of a disclosure statement) which was used to solicit votes on the
CCAA Plan. The Information Circular revealed, among other things, that (i)
substantial direct loans had been made by various of the subsidiaries of OYDL
and the Canadian Debtors to members of the Reichmann Family which obligations
were still outstanding, and (ii) substantial intercompany receivables existed
between certain of the affiliates of OYDL, the Canadian Debtors, the Reichmann
Family and certain Reichmann Family controlled entities, including P.R.F. Corp.,
A.R.F. Corp., R.R.F. Corp. and R. Investment Corp. (collectively the "Reichmann
Family Corps.").
In addition to the releases discussed above, the CCAA Plan provided
for (a) the continued ownership of OYDL by the Reichmann Family, but delegated
management of OYDL to Coopers & Lybrand OYDL, Inc./Limited, a court-appointed
administrator for OYDL under the CCAA Plan; and (b) the issuance of a note by
O&Y 25 Realty Co., guaranteed by 25 Realty LP and secured by all the assets of
25 Realty LP (the "25 Realty Note"). The 25 Realty Note is in the amount of
$124.4 million (the amount of the debt owed by 25 Realty to OYDL), is due in
full in ten years from the date of the consummation of the CCAA Plan for OYDL
and bears no interest for the first five years. Both O&Y 25 Realty Co. and 25
Realty are entities in which the equity interests are entirely held by certain
of the Reichmann Family Corps. The CCAA Plan did not in any way exculpate the
Reichmann Family Corps. from their liability on account of the 25 Realty Note.
Under the CCAA Plan, no claims were made against the Reichmann Family
for breach of fiduciary, fraud, mismanagement or the like.
<PAGE>
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3. Claims of the U.S. Operations
Against the Reichmann Family
As described above, Paul Reichmann, Albert Reichmann and other
Reichmann Family members and related business enterprises and corporations had
three established relationships with the U.S. Operations prior to the
commencement of the Canadian Debtors chapter 11 cases in May, 1992. It is out of
these relationships that the claims of the U.S. Operations against the Reichmann
Family first arose. These claims can be separated into four distinct categories:
1. Direct Claims. The Reichmann Family had direct
financial relationships with the U.S. Operations. Most
significantly, the books and records of the U.S.
Operations reflect advances made to, or on behalf of,
identified members of the Reichmann Family (the "Direct
Claims").
2. Intercompany Claims. The books and records of O&Y
(U.S.) reflect intercompany claims on account of
minority interests owned by certain special purpose
entities holding interests in one or more of the
partnerships owning 55 Water Street, 125 Broad Street
and 320 Park Avenue (the "Building Corps.")(29). Each
of the Building Corps. is owned or controlled by the
Reichmann Family. In addition, there are certain
intercompany claims on account of minority interests
and/or other financial relationships between O&Y (U.S.)
and 25 Realty Company, L.P., A.R.F. Corp. and Broad
Street Holding Company, L.P.
3. General Partner Liabilities. Prior to 1992, the Reichmann
Family had determined to own the U.S. Operations in
partnership form such that the primary equity interests in the
U.S. Operations were in the form of limited partnership
interests in Equityco, Devco and Finco. These partnership
interests were held by U.S. Holdings, a general partnership
which was 80% owned by Realty Corp., a wholly owned subsidiary
of OYDL, and 20% by 25 Realty, which is indirectly owned by
the Reichmann Family Corps.
As a result of this ownership structure, there are
liabilities owed by 25 Realty to one or more of
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29 In each of the Building Corps., OYDL owned preferred stock, which has since
been transferred to the Reichmann Family or entities controlled by the
Reichmann Family.
<PAGE>
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Equityco, Devco, Finco and U.S. Holdings which are
based upon the partnership structure and a "pass-
through" of such intercompany obligations through U.S.
Holdings to its general partners, Realty Corp. and O&Y
25 Realty Co.(30).
4. Breach of Fiduciary Duty/Liability Claims. Due to
the role of Paul Reichmann, Albert Reichmann and other
members of the Reichmann Family as officers, directors
and direct participants in the management of the U.S.
Operations prior to the summer of 1992, the U.S.
Operations may have certain causes of action for
actions or omissions that such Reichmann Family members
caused to occur (or caused to be omitted) which
adversely affected the U.S. Operations. Such claims
may include: (i) claims arising as a result of a breach
of fiduciary duty to the U.S. Operations by certain of
the members of the Reichmann Family, (ii) claims for
fraud, and (iii) liability claims for intentional or
grossly negligent mismanagement of the U.S. Operations.
4. Debtors' Assessment of the Viability of
Claims Against the Reichmann Family
Assessment of the Intercompany Claims. As of December 31, 1995,
according to the books and records of O&Y (U.S.), the intercompany claims on
account of minority interests between O&Y (U.S.) and the Building Corps and 25
Realty Company L.P. are approximately as follows:
o Claims by the Building Corps. against O&Y (U.S.) --
$14,700,000.
o Claims by O&Y (U.S.) against the Building Corps. --
$22,000,000.
o Claims by 25 Realty Co. L.P. against O&Y (U.S.) --
$12,400,000.
As of December 31, 1995, on account of other financial relationships,
O&Y (U.S.) has claims against 25 Realty Corp. L.P. and A.R.F. Corp.
approximately as follows:
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30 As stated above, the ultimate general partners of O&Y 25 Realty Co. and 25
Realty are the Reichmann Family Corps. Thus any liability of O&Y 25 Realty
Co. or 25 Realty on the above described intercompany obligations run to
their ultimate general partners -- the Reichmann Family Corps.
<PAGE>
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o Claims against 25 Realty Corp. L.P. -- $3,275,000
(excluding 125 Broad Street).
o Claims against A.R.F. Corp. -- $1,660,000 (re: Old
Bridge Lands)
o Claims against Broad Street Holding Co. L.P. --
$1,550,000 (re: 125 Broad Street).
Assessment of the Direct Claims. As of April 30, 1996, these claims
are approximately $11 million, consisting primarily of claims arising from
Reichmann Family member guarantees of obligations of an entity called MAT
Investments ("MAT") and loans for the benefit of charitable institutions and
other third parties. The Reichmann Family contends that these should be treated
as obligations of O&Y (U.S.) and not of them personally. The better argument is
that these were personal obligations of the Reichmann Family. To establish these
claims, however, would require extensive litigation. MAT has no assets available
as a source of any recovery.
Assessment of the General Partner Liability Claims. The largest source
of liability on such claims by the Reichmann Family Corps. to O&Y (U.S.) arises
from their liability as indirect general partners of 25 Realty Corp. L.P.
responsible for the substantial claims held by Devco, Equityco and Finco against
U.S. Holdings. The amount of this claim is approximately $278 million. Except as
set forth in the next sentence, a review of the assets of these entities
confirms that they have virtually no ability to meet these substantial
obligations to O&Y (U.S.). A.R.F. Corp., however, will hold claims against Devco
and Realty Corp. that were previously owned by Svenska Handelsbanken and Bank
Leumi pursuant to transactions that were approved by the Bankruptcy Court in the
November, 1993. The Bank Leumi claim against Consolidated Devco is in the
approximate amount of $19 million. The Svenska Handelsbanken claim against
Realty is in the approximate amount of $15 million. O&Y (U.S.) believes that
these claims have value both under the Plan and as potential currency in
settlements.
Assessment of the Breach of Fiduciary Duty/Liability Claims. As
discussed above, the investigation and disclosure that preceded the CCAA Plan
revealed that Paul, Albert and other members of the Reichmann Family were
extensively involved in the day-to-day management of both OYDL and O&Y (U.S.).
Consequently, as both OYDL and O&Y (U.S.) were in the vicinity of insolvency,
members of the Reichmann Family may have had a fiduciary duty to creditors of
such entities. As part of its assessment of the fiduciary duty claims, O&Y
(U.S.) focused on the major transactions occurring from late 1989 through the
present which
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involved the sale of a major asset or the making of a financial accommodation to
O&Y (U.S.) to determine whether such transaction constituted a breach of
fiduciary duty by any member of the Reichmann Family or, alternatively, whether
any member of the Reichmann Family was otherwise liable for negligence or fraud
in connection with the transaction. Specifically, O&Y (U.S.)'s review focused on
the following transactions: the acquisition by BPHI of its interests in the
World Financial Center; the investment by Dragon in 60 Broad Street; the
transactions surrounding the making of the Club Loan; the transactions
surrounding the making of the loan by Svenska Handelsbanken to U.S. Holdings and
the loan made by Bank Leumi to Devco (both of which loans are in the process of
being acquired by the Reichmann Family); the transactions surrounding the loan
made by CIBC secured by certain subordinate mortgages and equity pledges in OLP
and a first mortgage covering 1250 Broadway; and the sale of certain yen forward
contracts which were originally purchased as a hedge against the currency
exchange rate exposure associated with the Tower B Notes.
All of the parties affected by these transactions have either: (i)
settled their claims with O&Y (U.S.) (and such settlements are reflected in the
Plan); (ii) already released (pursuant to the CCAA Plan), or have agreed to
release, Paul Reichmann and the other members of the Reichmann Family who are
potentially liable on such claims; or (iii) sold the claims relating to such
transactions (i.e., the purchase by the Reichmann Family of the Svenska
Handelsbanken loan to U.S. Holdings and the Bank Leumi loan to Devco). Based on
its review as well as these circumstances, O&Y (U.S.) believes that little, if
anything, would be gained for the Debtors estates through the continued pursuit
and prosecution of these breach of fiduciary claims.
5. Reichmann Family Claims Against the U.S. Operations
The Reichmann Family and the Reichmann Family Corps. assert claims,
directly and indirectly, against the U.S. Operations (the "Reichmann Claims"),
including but not limited to, claims against Equityco which have been identified
in the chapter 11 case of 125 Broad Street in favor of DMML Limited ("DMML") and
608863 Ontario, Inc. ("608863") and which arise from, or are related to, the
partnerships among DMML, 608863 and/or Realty Corp. and one or more entities
constituting the U.S. Operations.
<PAGE>
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6. Terms of the Reichmann Settlement
In compromise of both the claims of the U.S. Operations against the
Reichmann Family and the Reichmann Family Corps. and the claims of the Reichmann
Family and the Reichmann Family Corps. against the U.S. Operations, a settlement
agreement has been reached (the "Reichmann Settlement"). The Reichmann
Settlement contemplates (i) mutual releases of claims between the U.S.
Operations, the Reichmann Family and the Reichmann Family Corps. (exclusive of
the claims held by O&Y (U.S.) against O&Y 25 Realty Co. and 25 Realty, although
the Reichmann Family Corps. are to be exculpated from any affirmative liability
for the O&Y (U.S.) Claims), (ii) continuing cooperation from the Reichmann
Family on a number of disputes between O&Y (U.S.) and others, notably Coopers &
Lybrand OYDL, Inc./Limited, by providing information and testimony to assist O&Y
(U.S.) in successfully resolving such disputes; and (iii) giving O&Y (U.S.)
control over the disposition and value represented by the Svenska Handelsbanken
and Bank Leumi claims (collectively, the "Reichmann Bank Claims").31 The
benefits to be derived from the Reichmann Settlement, in the Debtors informed
business judgment, outweigh the cost of releasing potential claims against the
Reichmann Family, especially given the Reichmann Family's asserted challenge to
such claims.
The terms of the Reichmann Settlement are as follows:
On the Effective Date, the Reichmann Entities shall release the
Reichmann Claims. On the Effective Date, the Debtors, the Debtors in Possession
and the O&Y Affiliates shall release the O&Y (U.S.)/Reichmann Claims to the
extent that such Claims have not otherwise been released pursuant to section 4.1
of the Plan or as a Restructuring Transaction pursuant to section 18 of the
Plan. The release provided in the preceding sentence shall not in any way
release O&Y 25 Realty Company, O&Y 25 Realty Company, L.P. or U.S. Holdings from
any Liabilities; provided, however, that the Reichmann Entities shall be
exculpated from all Liabilities arising from the status of one or more of the
Reichmann Entities as a direct or indirect partner of O&Y 25 Realty Company, O&Y
25 Realty Company, L.P. and U.S. Holdings, leaving the O&Y Affiliates and its
successors with recourse only to the assets of O&Y 25 Realty Company, O&Y 25
Realty Company, L.P. and U.S. Holdings. Notwithstanding the foregoing, the
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31 It should be noted that Coopers & Lybrand OYDL, Inc./Limited has asserted
that it owns the aforementioned Reichmann Bank Claims. The Debtors dispute
this assertion and believe that the order of the Bankruptcy Court, among
other things, demonstrates that the Debtors do, indeed, own these claims.
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release and exculpation provided for in section 4.7 of the Plan shall not
prohibit the use by one or more of the Debtors, the Debtors in Possession and
the O&Y Affiliates of the O&Y (U.S.)/Reichmann Claims as an affirmative defense
or a counterclaim; provided, however, that any such defense or counterclaim
shall be used for purposes of offset or recoupment only and shall not provide a
basis for any affirmative recovery against any Reichmann Entity.
If A.R.F. Corp. acquires title to the Reichmann Bank Claims from
Svenska Handelsbanken and Bank Leumi prior to the Effective Date, A.R.F. Corp.
shall subordinate the Reichmann Bank Claims to Allowed General Unsecured Claims
against Consolidated Devco and/or Consolidated Realty Corp., as the case may be
(with the effect that the Reichmann Bank Claims shall receive no distribution
under the Plan), or transfer the Reichmann Bank Claims as directed by one or
more of the Debtors, the Debtors in Possession and the O&Y Affiliates.
If A.R.F. Corp. does not acquire title to the Reichmann Bank Claims
prior to the Effective Date, the Svenska Claims will be reserved for in the
Class 8.6 Disputed Claims Equity Escrow and the Bank Leumi Claims will be
reserved for in the Subclass 7.11.1 Disputed Claims Debt/Equity Escrow. The
Disbursing Agent shall continue to maintain reserves on account of the Reichmann
Bank Claims until such time as Svenska Handelsbanken and Bank Leumi shall have
elected to either (a) receive the Old Bridge Lands in full satisfaction of their
respective interests in such Claims or (b) receive the respective distributions
reserved for on account of the Svenska Claims and the Bank Leumi Claims. Such
election shall determine title to the Svenska Claims and the Bank Leumi Claims.
In the event Svenska Handelsbanken and Bank Leumi elect to receive the
treatment provided in clause (a) of the preceding paragraph, Svenska
Handelsbanken and Bank Leumi shall transfer the Reichmann Bank Claims to A.R.F.
Corp. and A.R.F. Corp. shall subordinate such Claims to Allowed General
Unsecured Claims against Consolidated Devco and/or Consolidated Realty Corp., as
the case may be (with the effect that the Reichmann Bank Claims shall receive no
distribution under the Plan), or transfer the Reichmann Bank Claims as directed
by one or more of the Debtors, the Debtors in Possession and the O&Y Affiliates.
In this event, the reserves established on account of the Reichmann Bank Claims
will be released to the Co-Proponents.
In the event Svenska Handelsbanken and Bank Leumi elect to receive the
treatment provided in clause (b) of the second preceding paragraph, (a) Svenska
Handelsbanken will receive a distribution on account of the Svenska Claims from
the Class 8.6
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Disputed Claims Equity Escrow and (b) Bank Leumi will receive a distribution on
account of the Bank Leumi Claims from the Subclass 7.11.1 Disputed Claims
Debt/Equity Escrow. In consideration of such distributions, on the Effective
Date, Svenska Handelsbanken and Bank Leumi shall transfer their rights under the
mortgages relating to the Old Bridge Lands to A.R.F. Corp. and A.R.F. Corp.
shall transfer such mortgages to Newco LP or its designee. In the event of such
transfers, the Reichmann Entities agree to sell the Old Bridge Lands as directed
by Newco LP or its designee.
In addition to the foregoing:
(a) The Reichmann Entities shall provide to the Debtors a letter in
the form previously provided to the Debtors by counsel for the Reichmann
Entities describing the financial condition of MAT Investment, Inc.
(b) The Family Corps. shall provide to the Debtors their most recent
financial statements and journal entries reflecting significant transactions
subsequent to the date of such financial statements in the form actually
maintained by the Family Corps. in the operation of their respective businesses.
(c) The Reichmann Entities shall cooperate in all reasonable requests
made by the Debtors to assist them in prosecuting this Plan and any requests to
preserve and protect the assets of the Debtors, the Debtors in Possession and
the O&Y Affiliates; provided, however, that, in no event shall this agreement to
cooperate require any Reichmann Entity to take any action which could create,
impose or otherwise result in any liability to any Reichmann Entity. At the
request of one or more of the Debtors or their respective successors, such
cooperation shall include:
(i) Albert Reichmann shall provide testimony and
any existing and available documentary
evidence relating to the management and
control of OYREUSA, Baden and Realty Corp. in
connection with the substantive consolidation
of such Entities; and
(ii) Subject to any required consent of and
receipt of any required waivers by Coopers &
Lybrand OYDL, Inc./Limited for (or any other
person authorized to act on behalf of) OYDL,
OYDL's Canadian counsel shall provide
information concerning the tax history and
reporting provisions of Realty Corp., Devco
Canada, Equity Canada and SF Holdings,
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including the history of significant
transactions and assist in the defense of
any actions prosecuted or Claims asserted by
OYDL or Coopers & Lybrand OYDL, Inc./Limited
to establish or collect on Claims against SF
Holdings.
(d) If requested by one or more of the Debtors, the Debtors in
Possession, the O&Y Affiliates or Newco LP, the Reichmann Entities shall cause
the current owners of the capital stock of OYDL, if provided the opportunity at
no out-of-pocket cost to such owners and provided that there are no adverse tax
consequences to such owners, to receive and hold, directly or indirectly, the
capital stock of Realty Corp. in the same proportions as such owners currently
hold such stock. The Reichmann Entities shall, and shall cause the direct and
indirect beneficial owners of the stock of Realty Corp. (including, to the
extent the Reichmann Entities are able, OYDL) to, refrain from taking any action
that would result in an "ownership change" of Realty Corp. within the meaning of
section 382 of the IRC.(32)
(e) In the event that subsequent to the Effective Date, Coopers &
Lybrand OYDL, Inc./Limited or any other person claiming by, through, or under
OYDL or any successor holder of the 25 Realty Note, shall maintain any action or
proceeding challenging the enforceability or propriety of the transfer or
subordination of the Reichmann Bank Claims in accordance with this settlement,
or to impose any Liability on any Reichmann Entity as a result of such transfer
or subordination, Newco LP shall defend any such action and shall hold the
Family Corps. and each and every Reichmann Entity harmless from any and all
Claims, debts or Liabilities based upon, arising out of and related to such
transfer or subordination.
I. TIAA LITIGATIONS AND TIAA SETTLEMENT
The Debtors have been involved in several litigations commenced by
TIAA arising primarily out of allegedly breached loan commitments between
certain of the Debtors and TIAA. The Debtors and TIAA have been negotiating a
settlement of these litigations and, as a result of such negotiations a
consensual settlement of these litigations has been reached. The substance of
the litigations is described below and the settlement reached
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32 It is contemplated that the Debtors will only make a request pursuant to
this section of the Reichmann Settlement in the event that Coopers &
Lybrand OYDL, Inc./Limited does not object to such request.
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between the Debtors and TIAA, as embodied in the Plan, is also
discussed.
1. Tower A Related Litigation
a. The TIAA/Tower A Co. Litigation and the TIAA
Lift Stay Motion
In June 1984, TIAA commenced an action against Tower A Co. in the
Supreme Court of the State of New York (the "State Court") before the Honorable
Justice Herman Cahn, Justice of the State Court, entitled Teachers Ins. & Ann.
Ass'n. v. WFC Tower A Co. (formerly known as Olympia & York Battery Park
Company), O&Y Battery Park Corp. and O&Y (U.S.) Development Company, L.P., Index
No. 14617/86 (the "State Court Action"), alleging that Tower A Co. breached a
certain loan commitment agreement. The factual basis for such action follows. On
March 9, 1983, TIAA and Tower A Co. entered into a loan commitment agreement
(the "Loan Commitment") pursuant to which TIAA was to provide a $250 million
loan to Tower A Co. as permanent financing for Tower A. The loan was to be
secured by a first mortgage on Tower A. Subsequent to the execution of the Loan
Commitment, TIAA and Tower A Co. failed to close the transaction contemplated
therein.
Justice Cahn bifurcated the non-jury trial of the State Court Action
into one phase on liability and a second on damages. The liability phase of the
State Court Action commenced in May 1989 and concluded in September 1989. In
June 1992, the State Court held that the Defendants had breached the Loan
Commitment. The issue of damages was left to a separate trial. Thereafter, the
State Court held a second lengthy non-jury trial on the issue of damages. The
damages phase of the State Court Action commenced in November 1992, concluded in
June 1993, and was decided in favor of TIAA in February 1996 (see discussion
below).
On October 23, 1995, TIAA filed a motion in the Bankruptcy Court for
entry of an order pursuant to 11 U.S.C. ss. 362(d)(1) modifying the automatic
stay provided under 11 U.S.C. ss. 362(a)(1) for the single and limited purpose
of permitting Justice Cahn to render a decision and enter a judgment on damages
in the State Court Action. After a hearing to consider the relief requested, on
November 8, 1995, and pursuant to an agreement between Tower A Co. and TIAA, the
Bankruptcy Court modified the automatic stay to permit the State Court to issue
the decision and judgment, but further ordered that, inter alia, TIAA could take
no action to enforce such judgment and that entry of the judgment was without
prejudice to the rights of the Debtors to object to TIAA's claims arising
therefrom.
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On February 9, 1996, Justice Cahn issued a decision, which was entered
as a judgment on February 22, 1996, in which he found TIAA entitled to a
judgment in the amount of $41,160,779.00, plus prejudgment interest in the
amount of $38,536,638.38 and costs in the amount of $1,275.00 for a total award
of $79,698,692.38 (the "Judgment"). On April 3, 1996, the Bankruptcy Court
entered an order permitting TIAA to apply approximately $19 million in funds,
held by TIAA in an escrow established pursuant to the order of the State Court
as security for any recovery that TIAA might have in the State Court Action, in
partial satisfaction of the Judgment. TIAA has applied the funds in the manner
approved by the Bankruptcy Court's order and the unsatisfied portion of the
Judgment has been reduced to approximately $60 million.
Since the Judgment was entered by the State Court, a variety of
motions have been filed by both Tower A Co. and TIAA with respect to issues
relating to the treatment of TIAA's claim, based upon the Judgment, in Tower A
Co.'s chapter 11 case. First, TIAA has filed six proofs of claim in various of
the Debtors' cases claiming that such Debtors are liable to it on the Judgment.
The Debtors have filed an objection to such claims stating that all, or
substantially all, of TIAA's claim evidenced by the Judgment should be
disallowed pursuant to section 502(b)(2) of the Bankruptcy Code as a claim for
"unmatured interest". With the consent of the Debtors and the Bankruptcy Court,
TIAA has not yet responded to such objection.
Furthermore, in March 1996, the Debtors timely filed a notice of
appeal of Justice Cahn's decisions on liability and damages in the State Court
Action with the Appellate Division of the Supreme Court of the State of New
York, First Department. TIAA has filed a notice of cross-appeal with the same
court. No date for a hearing on such appeals has been set by the Appellate
Division. The claims described above have been settled by TIAA and the Debtors,
as discussed below.
b. Tower A Co.'s Motion for an
Injunction Preventing TIAA from
Commencing Postpetition Litigation
To Recover Interest on the Judgment
By complaint dated April 18, 1996, TIAA commenced an action (the
"Postpetition Litigation") in the Supreme Court of the State of New York, styled
Teachers Ins. & Ann. Ass'n of America v. Battery Park Holdings, Inc., O&Y Tower
A Holding Company, Tower A Limited Partnership and Tower A Associates, Index No.
602010/96 (the defendants in such action being referred to herein as the
"Nondebtor Defendants"), against the Nondebtor Defendants to enforce the alleged
liability of the Nondebtor
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Defendants, as general partners of Tower A Co., for the portion of the Judgment
that constitutes statutory prejudgment interest pursuant to sections 5001 and
5004 of the New York Civil Practice Law and Rules (the "CPLR"). TIAA further
demanded judgment against BPHI, Tower A Holding and TALP for post judgment
interest that has accrued and may continue to accrue from the entry of the
Judgment pursuant to section 5003 of the CPLR. All such amounts sought by TIAA
in the TIAA Postpetition Litigation are hereinafter referred to as the "Alleged
Claims". As of the date hereof, and with the consent of TIAA and the Bankruptcy
Court, none of the Nondebtor Defendants has filed an answer to TIAA's complaint
in the Postpetition Litigation. On May 15, 1996, BPHI filed a motion to dismiss
the Postpetition Litigation as against BPHI.
In response to the commencement of the Postpetition Litigation by
TIAA, on May 14, 1996, the Debtors commenced an adversary proceeding against
TIAA in the Bankruptcy Court seeking, among other things, a permanent injunction
against TIAA which would prevent it from pursuing the Postpetition Litigation.
In support of the request for a permanent injunction, the Debtors claimed that
the commencement of the Postpetition Litigation was nothing more than an effort
by TIAA to circumvent the protections of the Bankruptcy Code, and, in
particular, the automatic stay provisions under section 362(a) thereof.
Fundamentally, the Debtors claimed, certain of the Debtors are the real parties
in interest whose assets TIAA seeks to recover in the Postpetition Litigation.
In support of these arguments the Debtors claimed that there are
certain debtor obligees (the "Debtor Obligees") who would be liable to TIAA
should TIAA succeed in the Postpetition Litigation against the Nondebtor
Defendants, to wit:
(1) Tower A Holding became a general partner of Tower
A Co. on December 28, 1989. Devco holds a 49.65%
general partnership interest, Devco GP holds a
.25% general partnership interest, and Tower Corp.
holds a 1.146699% general partnership interest in
Tower A Holding. Additionally, Devco GP and Devco
Canada are general partners of Devco. Thus, each
of these entities, who are Debtors in these
chapter 11 cases, are potentially liable for any
adverse judgment against Tower A Holding.
(2) TALP became a general partner of Tower A Co. on
July 31, 1987. Until October 10, 1995, OYREUSA
held a 1% general partnership interest in TALP.
Since October 10, 1995, a wholly-owned subsidiary
of OYREUSA has owned this 1% general partnership
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interest. Thus, OYREUSA, which is a Debtor in these
chapter 11 cases, could be liable (or its estate
negatively impacted to the extent that its subsidiary
is liable) for any adverse judgment and is obligated
to defend the Postpetition Litigation.
(3) Tower A Associates became a general partner of
Tower A Co. on August 15, 1985 and remained a
general partner until July 31, 1987. During part
of the period for which TIAA seeks recovery
against Tower A Associates (from June 30, 1986 to
July 31, 1987), OYREUSA was a general partner of
Tower A Associates. Consequently, OYREUSA, which
is a Debtor in these chapter 11 cases, may be
liable for all or part of any judgment against
Tower A Associates and is obligated to defend the
Postpetition Litigation.
(4) BPHI became a general partner of Tower A Co. on
December 29, 1989. Pursuant to that certain
contract of sale, dated December 29, 1989, Devco
indemnified BPHI, inter alia, from any liability,
claim or damages in connection with the State
Court Action. Thus, Devco would be liable for any
judgment against BPHI for the Alleged Claims.
Also, BPHI is the beneficiary of certain releases
and injunctions contained in the Plan.
Furthermore, the Debtors alleged, the Debtor Obligees are general
partners of the Nondebtor Defendants other than BPHI, and Devco has indemnified
BPHI from the very claims being pursued by TIAA in the Postpetition Litigation.
TIAA apparently asserts that the Nondebtor Defendants are liable for the Alleged
Claims as general partners of Tower A Co. While the Debtors contest this
assertion, if TIAA is correct, then to the extent that any of the Nondebtor
Defendants has insufficient assets to satisfy its pro rata portion of the
Alleged Claims, some or all of the Debtor Obligees will be liable for the
Alleged Claims under applicable partnership law. The Debtor Obligees are
therefore real parties in interest in the Postpetition Litigation and the
Postpetition Litigation is, in effect, an effort by TIAA to fix liability as to
the Alleged Claims against the Debtor Obligees. Adverse judgment against the
Nondebtor Defendants will negatively impact the estates and creditors of the
Debtor Obligees.
Based upon the above factual predicate, the Debtors claimed that by
proceeding against the Nondebtor Defendants in State Court, TIAA is seeking to
achieve what it could not before this Court in the Debtors' chapter 11 cases.
TIAA's actions thus
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violate the spirit and intent of the automatic stay, and TIAA should not be
permitted an "end run" around the protections afforded by the automatic stay.
In addition to filing the Adversary Proceeding, the Debtors filed a
motion in the Bankruptcy Court seeking a temporary injunction, pending the
decision of the issues in the Adversary Proceeding, seeking similar relief to
that which was requested in the Adversary Proceeding. The above described claims
have been compromised and settled by TIAA and the Debtors in the manner
described below.
c. TIAA's Motion for Authorization to
Commence an Adversary Proceeding to
Recover Certain Alleged Fraudulent
Conveyances on Behalf of Tower A Co.
By virtue of its status as a judgment creditor of Tower A Co. (albeit
one holding a disputed claim based on a Judgment the validity and enforceability
of which the Debtors dispute (as discussed above)), TIAA has filed a motion
seeking authorization from the Bankruptcy Court to commence an adversary
proceeding on behalf of Tower A Co. against its general partners to recover
certain partnership distributions (the "Partnership Distributions") made to such
general partners as alleged fraudulent conveyances. TIAA has asserted that all
Partnership Distributions made by Tower A Co. during the six-year period prior
to the chapter 11 filing were fraudulent conveyances. TIAA claims that Tower A
Co.'s Partnership Distributions since October 1989 constitute fraudulent
conveyances, on the theories that each such Distribution was made without any
consideration and was made (i) during the pendency of the State Court Action,
(ii) at a time when Tower A Co. was insolvent, or was rendered insolvent, or was
left with unreasonably small capital, as a result thereof, and (iii) at a time
when Tower A Co. intended to incur debt beyond its ability to pay.
Under the Plan, Tower A Co. will release its right to pursue any
claims it might otherwise have to recover from its partners and other parties
distributions that were made by Tower A Co. prior to its chapter 11 filing to
(or for the account of) its partners.
The Debtors have consulted with their counsel, including their special
partnership counsel, Kaye, Scholer, Fierman, Hays & Handler LLP ("Kaye
Scholer"), regarding the potential fraudulent conveyance claims that TIAA has
sought authorization to assert, possible defenses that the potential defendants
could assert, and provisions of Tower A Co.'s partnership agreement and various
other agreements (including
<PAGE>
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agreements under which partnership interests in Tower A Co., TALP and Tower A
Holding were pledged to secure debt) that have governed the making of
Partnership Distributions and other payments to partners. After considering all
relevant factors, the Debtors have determined that the release of the potential
fraudulent conveyance claims is in the best interests of the Debtors' estates
and creditors. A summary of the most significant of these factors is set forth
below.
During the six-year period in question, disbursements of funds by
Tower A Co., to its partners took several forms, and any litigation to attempt
to recover partnership distributions from the general partners of Tower A Co.
would, in the first instance, involve a detailed inquiry into the true nature of
each of these disbursements to determine which of them were truly "partnership
distributions", and which, if any, of such distributions were made without
consideration. These disbursements fall into at least four distinct categories.
First, Tower A Co. made regular periodic Partnership Distributions of
excess Cash from operations. The partnership agreement of Tower A Co. provided
for this Cash to be distributed to the partners other than TALP (i.e., Devco,
Tower A Holding and BPHI) (the "Non-TALP Partners") up to a limited amount,
based on a differential between the actual interest rate on the Sanwa mortgage
loan (the "Sanwa Rate") and 13% ("Interest Savings Distributions"). On the
scheduled date of each of these Interest Savings Distributions, however, the
Non-TALP Partners were obligated (on a non-recourse basis) to make debt service
payments to Tower A Co. in respect of a loan payable to Tower A Co., which was
secured by a pledge of their partnership interests. Accordingly, instead of
making the Interest Savings Distributions in full, Tower A Co. offset against
them these debt service payments and distributed only the net amount. The
aggregate of this net amount that was distributed to the Non-TALP Partners since
October 1989 is $2,057,100. Devco's (and Devco GP's) share of this, prior to
adjustment, was 65%, and BPHI's share of this, prior to adjustment, was 35%.
However, these shares were adjusted, before any disbursement to BPHI, to account
for Devco's entitlement to receive, from what would otherwise be distributable
to BPHI, payments in respect of a differential between the Sanwa Rate and 9%,
and another differential between the actual management fees paid by Tower A Co.
and fees at a higher hypothetical rate. As a result of these adjustments, BPHI
did not in fact receive any of the Interest Savings Distributions, and actually
paid Devco a total of $775,079 (the "BPHI Adjustment"). It is open to question
as to whether or not BPHI would be treated as having first received a share of
the Interest Savings Distributions and then paid the BPHI Adjustment to Devco,
or whether the BPHI Adjustment would be treated as
<PAGE>
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having reduced to zero BPHI's entitlement to any Interest Savings Distributions
from Tower A Co.
After the distribution of the net amount of Interest Savings
Distributions, all remaining excess Tower A Co. Cash was distributed
semi-annually (with the last such distribution having been in January 1993) to
TALP, pursuant to a provision of the Tower A Co. Partnership Agreement that
entitled TALP to receive up to a specified amount per month on a cumulative
basis (the "TALP Priority Distributions"). Tower A Co. distributable Cash has
never been sufficient to pay TALP the full amount of this entitlement that has
accumulated since 1985. Since October 1989, $15,943,037 of TALP Priority
Distributions have been made to TALP.
The partners in TALP during this Period, Tower A Associates ("TAA")
and OYREUSA, had pledged their partnership interests to secure a series of
promissory notes of TAA (the "TAA Notes") that are held by U.S Finco, OYREUSA
and BPHI (the "TAA Noteholders"). Pursuant to this pledge agreement, all
distributions from Tower A to TALP (or from TALP to its partners) were paid over
to the TAA Noteholders on account of principal and accrued interest on the TAA
Notes. The TAA Notes were issued to the TAA Noteholders for fair consideration,
and the payments made to the TAA Noteholders from the Partnership Distributions
received by TALP were payments in respect of bona fide antecedent debt.
A third type of payment made by Tower A Co. to its partners during
this period was a disbursement of $12,904,445 of Cash in a reserve fund that had
been funded by Devco immediately prior to the sale to BPHI of its partnership
interests in Tower A Holding. The reserve fund had been used to purchase U.S.
Treasury obligations that produced a yield designed to supplement Tower A Co.'s
Cash flow in a manner that enabled Devco to receive a commensurately higher
price from BPHI. In September 1990, less than nine months after BPHI's purchase
of its partnership interests, Devco and BPHI mutually determined to eliminate
the reserve fund, and retroactively adjust the purchase price accordingly. The
balance in the reserve fund was paid $9,904,446 to TALP, $1,050,000 to BPHI and
$1,949,999 to Devco and Devco GP. TALP's share was remitted to the TAA
Noteholders on account of the TAA Notes. The treatment of BPHI's receipt of
these funds as a Partnership Distribution, rather than a purchase price
adjustment, is open to question.
The fourth type of disbursement from Tower A Co. to its partners was
in the nature of Partnership Distributions that were made for consideration
(refuting TIAA's unsupported assertion in its pleadings that Partnership
Distributions are necessarily
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always made without any consideration). These special distributions were made in
consideration of the assumption by the partners of a portion of the Sanwa
mortgage loan (which obligated them, on a non-recourse basis, to pay debt
service owing by Tower A Co. on such portion of the loan, thereby reducing the
debt service expense of Tower A Co.). Since October 1989, except for a
differential (the "Differential") of less than $140,000, all of these
distributions were used to pay (and indeed were disbursed by Tower A Co.
directly to Sanwa for application to) interest on the Sanwa loan. BPHI's and
TALP's shares of the Differential were approximately $56,000 each, and BPHI's
share was applied against the $775,079 BPHI Adjustment.
As the foregoing summary demonstrates, virtually all of the
Partnership Distributions paid by Tower A Co. since October 1989 have gone to
TALP. The Debtors have determined that neither TALP nor TAA, nor the general
partner of TAA, has any assets other than their respective interests in Tower A
Company. Accordingly, even if TIAA were to prevail under one of its theories --
that the Partnership Distributions to TALP were fraudulent conveyances -- Tower
A Co. would not recover anything.
Further, the Debtors do not believe that any recovery of the TALP
Distributions from the TAA Noteholders is likely. The TAA Noteholders consist of
U.S. Finco, OYREUSA and BPHI. U.S. Finco is one of the Debtors that will be
substantively consolidated with Devco, which is already liable for the TIAA
Judgment. OYREUSA did not receive any of the payments that were made on the TAA
Notes from the TALP Distributions because all such payments on account of the
TAA Notes held by OYREUSA were paid directly to U.S. Finco and retained by U.S.
Finco on account of intercompany indebtedness of OYREUSA. In the case of BPHI
(and, for that matter, U.S. Finco and OYREUSA), the Debtors believe, based upon
advice of Kaye Scholer, that defenses can be asserted to any potential
fraudulent conveyance claims that might be brought against the TAA Noteholders,
based on the theory that the money that they received was paid on account of
bona fide antecedent debt of TAA, rather than as Partnership Distributions to
them, and, accordingly, such payments were made for fair consideration. Although
TIAA could argue that the TAA Noteholders were not bona fide transferees of
these funds, or that the TAA Noteholders (and not TALP) should be viewed as the
real beneficial owner of TALP's partnership interest, the resolution of these
arguments depends on factual inquiries regarding such questions as good faith
and knowledge of the TAA Noteholders, the intentions and expectations of the
various parties and the economic realities of the transactions, as well as the
interpretation and application of unsettled case law. Consequently, the merit of
the TIAA claims against the TAA Noteholders, and the validity of their defenses,
is uncertain.
<PAGE>
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Even if Tower A Co. were to believe that it could prevail against BPHI
in pursuit of any of the TIAA claims, the pursuit itself would be a fatal
blunder for the Debtors and their estates and creditors. BPHI is one of the many
creditors of O&Y (U.S.) that is a key party to the various settlement agreements
that have now paved the way, after many years of contentious litigation and
difficult negotiations, for a successful long-term reorganization of O&Y (U.S.).
These settlements are supported by a large majority of the secured and unsecured
creditors of O&Y (U.S.). One of the many interdependent aspects of these multi-
party settlements, and a major part of the consideration for the benefits to be
conferred on O&Y (U.S.) by the settling creditors (including an infusion of
substantial new capital by an affiliate of BPHI and others), is the release by
the Debtors of claims against the settling creditors, including BPHI.
If Tower A Co. were to pursue BPHI for its share of the TIAA claims,
it is likely that the fragile settlement, and thus the prospects for an O&Y
(U.S.) reorganization, would unravel.
Finally, fraudulent conveyance litigation is, by its nature, highly
fact-intensive. As can be seen from the explication above of the history of
Tower A Co.'s payments to its partners, the facts in this case would be far from
simple. Litigation would involve detailed analyses and determinations regarding
the timing, amount and nature of fund transfers, the valuation of assets at
various points in time, a corresponding compilation of liabilities (which, in
the case of the TIAA Judgment, was contingent and unquantified at the time of
every relevant Partnership Distribution), and inquiries into the belief and
intent of Tower A Co.'s management at the time of each distribution.
Accordingly, for all of the foregoing reasons, the Debtors believe, in
their good faith business judgment, that the release of the potential fraudulent
conveyance claims which TIAA seeks to assert, on the whole, are the best course
of action, and a decision that is well within the range of reasonableness. In
any event, the above described claims have been compromised and settled by TIAA
and the Debtors in the manner described below.
d. TIAA's Motion to Prevent Tower A Co. from
Paying Property Management Fees Due to Devco
(1) History of Property and Asset
Management Fees Paid to O&Y (U.S.)
The properties for which O&Y (U.S.) is the operator/owner have varying
arrangements for the payment of property management fees. In most instances
where there is an
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outside partner they are set forth in written agreements. There was variance as
between the properties as to the amount, method of calculation and priority in
payment of property management fees as among the properties that are owned and
operated by O&Y (U.S.), with the two properties that are net leased on a long
term basis to Merrill Lynch, Towers B and D, at the very low end of the scale
(as they require significantly less service from a property manager than any
multi-tenanted buildings).
Property management fees, as distinct from asset management fees,
compensate O&Y (U.S.) as the operator of the property for services such as:
(i) collecting rents;
(ii) managing building operations;
(iii) performing purchasing and contracting
functions;
(iv) performing on property accounting;
(v) administering leases;
(vi) maintaining tenant relations;
(vii) providing administrative services in connection
with real estate tax protests; and (viii) providing
specialized in-house technical experts.
Asset management fees compensate O&Y (U.S.) as the owner of the
property for services such as:
(i) supervising property managers;
(ii) preparing annual asset plans;
(iii) providing accounting and monthly reports;
(iv) negotiating and approving leases;
(v) providing legal support;
(vi) maintaining partnership and owner relations;
(vii) conducting market research;
(viii) administering capital projects;
(ix) supervising major renovations;
(x) providing in-house staff for major renovations and
repairs and systems management and maintenance;
(xi) performing tenant improvements;
(xii) providing Cash management;
(xiii) performing partnership tax preparation;
(xiv) obtaining debt financing;
(xv) providing real estate tax supervision and
management;
(xvi) providing acquisition and disposition transaction
services; and
(xvii) leasing property.
In 1994, O&Y (U.S.) hired Kenneth Leventhal & Company to review O&Y
(U.S.)'s asset and property management fees and
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compare them to the real estate market at large (the "Leventhal Report"). The
primary findings of the Leventhal Report as to management fees were that:
(i) O&Y (U.S.)'s corporate overhead Cash requirements are
significantly lower than the average fees that the
market charges for asset and property management
services on a combined basis;
(ii) O&Y (U.S.) provides the advantage of vertical
integration of the property management and asset
management functions;
(iii) The services provided by O&Y (U.S.) to its
partnerships are more extensive than those included
in standard contracts for asset and property
management services (e.g., in-house technical
expertise, acquisition and disposition capabilities,
real estate taxes, legal support, tax and financial
reporting);
(iv) The size of the portfolio provides for the
achievement of considerable economies of scale (e.g.,
purchasing, contracting, leasing relationships); and
(v) O&Y (U.S.) provides a historical foundation for
the portfolio with its complex financing and
leasing transactions that no other manager could
provide.
The table that follows is from the Leventhal Report and is a
comparison of the overall market fees (property and asset management fees) and
O&Y (U.S)'s fees:
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<TABLE>
<CAPTION>
=============================================================================================================================
MARKET O&Y (U.S.)
- -----------------------------------------------------------------------------------------------------------------------------
SERVICE Minimum $ Equiv. Average $ Equiv. Maximum $ Equiv. Equiv. $ Equiv.
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Asset .25% $27.8 M .65% $72.3 M 1.25% $139.0 M .27% $30.0 M
Management ...NIV(1) NIV NIV NIV
- -----------------------------------------------------------------------------------------------------------------------------
Property $.30 $6.0 M $.30 $ 6.0 M 4% of $35.6 M $.50 $10.0 M
Management(2) psf psf revenues psf or
1.125%
of
revenue
- --------------------------------------------------------------------------------------------------------------------------
Combined $33.8 M $78.3 M $174.6 M $40.0 M
Services
==========================================================================================================================
</TABLE>
(1) NIV = Net Investment Value
(2) Without leasing
Historically, no asset management fees were charged, but prior to the
commencement of the restructuring in 1992, O&Y (U.S.) had access to Cash
generated in the buildings in excess of taxes, operating expenses and debt
service, subject to the limitations set forth in any of the partnership
agreements for such properties. From the first restructuring proposals and Cash
flows that were circulated to the creditors of O&Y (U.S.) in the fall of 1992,
there was a proposed system of uniform property and asset management fees to
compensate O&Y (U.S.) for providing services to its properties and thus to
fairly allocate the cost of such services between the properties which were the
prime beneficiaries and the general unsecured creditors of O&Y (U.S.) which were
bearing the cost of O&Y (U.S.), the ongoing owner/operator company.
This proposal was followed in 1994 by a second set of proposals and
business plans which again continued to propose the uniform property management
fee of 2% of gross rents and an asset management fee structure which would
compensate O&Y (U.S.) in an amount equal to 0.5% of gross asset value,
calculated using net operating income capitalized at 9%. This second proposal
also included a detailed schedule of projected fee income which was a
significant factor in the viability of O&Y (U.S.), as an ongoing owner/operator
of seven to ten major first class office buildings. The Newco Plan Proposal,
approved by the Board in September 1995, also included the fee structure as it
had been negotiated with a number of property-level lenders such that the
property management fee was set at 2% on existing leases and 1% on new leases,
and the asset management fee was 0.5% of gross asset value for the first two
years and thereafter reduced to 0.35%. That is the fee structure which is set
forth in the business plan and projections which were annexed to the Affidavits
of John E. Zuccotti and Joel M. Simon (as the case may
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be), pursuant to Rule 52 of the Local Bankruptcy Rules for the Southern District
of New York, which accompanied the chapter 11 petitions commencing the Debtors'
chapter 11 cases.
Furthermore, these negotiations also applied to the properties known
as 237 Park Avenue and 1290 Avenue of the Americas, which began paying property
and asset management fees with the inception of the Cash management systems
implemented at those properties as part of the restructuring effort, and only
ceased such payments concurrently with the January 12th Settlement Agreement and
the failure of such properties to pay debt service in 1996.
As detailed in the First Amended Financial Appendix, each of Tower A,
OLP and 245 Park Avenue, which are the major New York properties that have
multiple tenants, are to pay property management and asset management fees upon
consummation of the Plan. This fee structure is projected to realize critical
revenue for the viability of the reorganized company, generating in excess of
$27 million in annual revenues for the reorganized company. The schedule of
projected fee income detailed by source and amount for the period commencing
October 1, 1996 through December 31, 2006 is annexed as part of Exhibit B to
this Disclosure Statement.
(2) The TIAA Fee Motion
As outlined in detail above, Tower A is one of the properties which
has been managed by O&Y (U.S.). Tower A Co. is a party to a management contract
with Devco (as successor to O&Y (U.S.) Development Corp. ("Devcorp")) which was
entered into by Tower A Co. and Devcorp in 1986. It provides for the payment of
property management fees in respect of the services provided to Tower A Co. by
Devco in an amount equal to 1.75% of gross rents, as defined in the contract.
This fee has been payable by Tower A Co. since 1985, pursuant to section 8.7 of
the Partnership Agreement of Tower A Co., and was memorialized in a formal
written management agreement in 1986.
Subsequent to the commencement of its chapter 11 case, Tower A Co. has
continued to pay and Devco has continued to charge and collect this property
management fee. In addition, Devco has charged Tower A Co., and Tower A Co. has
paid to Devco, a monthly asset management fee of $233,000. The payment of both
these fees by Tower A Co. was described and approved as part of the Cash
Collateral Stipulation approved by the Bankruptcy Court on October 13, 1995, on
an interim basis, and thereafter on November 1, 1995 (the "First Stipulation and
Order"), as extended and modified on January 31, 1996 (the"Second Stipulation
and Order"), each of which authorized the use of Cash collateral for
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the purposes and in the amounts set forth in the Cash Management System, which
was annexed as an exhibit to the Stipulation and Order Authorizing the Use of
Cash Collateral (the "Cash Management System").
The Cash Management System is a detailed written description of all
uses of Cash which were authorized by the Stipulation and Order, which
incorporated as an exhibit an operating budget for the period covered by each
Stipulation and Order. The Cash Management System described the four permitted
uses of Cash: first, Payments in Lieu of Taxes and Ground Rent; second,
operating expenses of the property, excluding property management and asset
management fees, as detailed in the budget; third, property management and asset
management fees, and; fourth, payments to the holder of the first mortgage on
Tower A, Sanwa Bank, on account of interest, fees, expenses and amortization on
the mortgage loan on Tower A. In the Cash Management System, the amount, method
of calculation, priority in payment and conditions precedent to payment of both
the property management fees and the asset management fees was set forth in
detail. In addition, the budget which was annexed to each Stipulation and Order
had a line item for property management fees and a line item for asset
management fees. Each of Devco and Tower A Co. has operated as authorized and
budgeted.
It is noted that each Stipulation and Order, which included all of the
foregoing, was submitted to the Bankruptcy Court for approval following the
review of same by TIAA and execution by counsel for TIAA that TIAA had no
objection to entry of an order approving the Stipulation.
Notwithstanding the Cash Management System which was disclosed to TIAA
and not objected to by it, on May 3, 1996, TIAA filed a motion in the Bankruptcy
Court requesting that the Bankruptcy Court enter an order (a) halting further
transfers by Tower A Co. of property management fees and asset management fees
to Devco; (b) granting Tower A Co. an administrative expense claim against Devco
with respect to transfers of such Fees made since the filing of Tower A Co.'s
chapter 11 petition; and (c) authorizing the commencement of an adversary
proceeding on behalf of Tower A Co. for recovery of the transfers of such Fees
made prior to the filing of Tower A Co.'s chapter 11 petition.
Tower A Co. opposed this motion on the ground that TIAA lacks standing
to pursue this action. Furthermore, Tower A Co. asserted that (i) the property
management fees and asset management fees were, and continue to be, paid in the
ordinary course of business and are thus not recoverable by Tower A Co., and
(ii) even if Tower A Co. has valid intercompany claims against Devco as a result
of the payment of such Fees, each of
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these claims will be released pursuant to sections 4.1 and 24 of the Plan. In
any event, the above described claims have been compromised and settled by TIAA
and the Debtors in the manner described below.
2. 53 State Street Related Litigation
TIAA/State Street Litigation and the Debtors' Motion to
Estimate TIAA's
Claims Pursuant
to Section
502(c) of the
Bankruptcy Code
---------------
In 1982, TIAA and Olympia & York State Street Company ("State Street")
entered into a loan commitment dated October 28, 1982 under which TIAA agreed to
provide State Street with a $170 million, 35-year loan as permanent financing
for the property known as 53 State Street in Boston, Massachusetts (the "State
Street Loan Commitment"). As per the terms of the State Street Loan Commitment,
State Street provided to TIAA letters of credit in the total amount of
$4,500,000, which TIAA held in a segregated account (the "Segregated Funds").
The Segregated Funds were to be returned to State Street unless certain
conditions occurred. Such funds have not been returned to State Street as of the
present time and the total amount of Segregated Funds is presently
$9,316,202.76.
TIAA asserts that in or about December 1983, State Street breached the
State Street Loan Commitment and refused to go forward with the transaction.
Accordingly, by summons and complaint dated June 28, 1984, TIAA commenced an
action in the United States District Court for the Southern District of New York
entitled Teachers Ins. & Ann. Ass'n of America v. Olympia & York State Street
Co., et al., 84 Civ. 4611 (JES) (the "State Street Action"), against the
original defendants, namely State Street Company and its then general partners,
Olympia & York State Street Corp. and Olympia & York Congress Street Corp.
(collectively, the "Nondebtor Defendants").
The State Street Action seeks either specific performance of the State
Street Loan Commitment or damages in excess of $60 million. The defendants have
denied TIAA's allegations and counterclaimed for, inter alia, the return of the
Segregated Funds. By a stipulation and order filed April 1, 1993 and at the
request of TIAA, the parties stipulated to add Devco and Devco GP as defendants,
and Devco and Devco GP agreed that they would be fully liable for any judgment
entered in the State Street Action.
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By notice of motion dated April 24, 1995, TIAA moved for summary
judgment as to liability against the Nondebtor Defendants, Devco and Devco GP
(collectively, the "State Street Defendants") (the "Summary Judgment Motion").
The State Street Defendants filed their papers opposing the Summary Judgment
Motion on September 29, 1995.
Shortly after the filing of the chapter 11 petitions on October 11,
1995 by Devco and Devco GP, the Honorable John E. Sprizzo, United States
District Judge for the Southern District of New York, placed the State Street
Action on the suspense calendar. At that time, discovery on liability issues had
been largely completed but no further proceedings had taken place in the State
Street Action.
By letter-application dated February 2, 1996, TIAA sought to restore
the State Street Action to the District Court's trial calendar and to schedule
oral argument on the Summary Judgment Motion. In addition, TIAA indicated its
intention to seek to add an additional defendant, Olympia & York State Limited
Partnership ("State LP"). On or about April 8, 1996, TIAA served its motion to
add State LP as a defendant in the State Street Action.
The Debtors have moved before the Bankruptcy Court, pursuant to
sections 105 and 362 of the Bankruptcy Code, to enjoin TIAA both from proceeding
with the State Street Action and from proceeding with its motion to join State
LP as a defendant. In response to this motion, TIAA has cross-moved for an order
lifting the automatic stay imposed by section 362 of the Bankruptcy Code for the
purpose of allowing Judge Sprizzo to hear argument and render a decision on the
Summary Judgment Motion. On May 23, 1996, a hearing was held by the Bankruptcy
Court on the motion and the cross-motion, at which time the Bankruptcy Court
granted the cross-motion to permit Judge Sprizzo to hear oral argument and to
render a decision on the Summary Judgment Motion. The Bankruptcy Court further
adjourned the hearing on the motion until June 10, 1996.
In light of the ruling of the Bankruptcy Court, Judge Sprizzo
scheduled oral argument on the Summary Judgment Motion for June 7, 1996.
However, given the settlement between TIAA and the Debtors, Judge Sprizzo
further adjourned the hearing on the Summary Judgment Motion until
late-September, 1996, to allow TIAA and the Debtors sufficient time to finalize
their settlement agreement.
On or about April 8, 1996, TIAA filed three proofs of claims (the
"State Street Claims") in the Debtors' chapter 11 cases asserting that Devco,
Devco GP and Devco Canada are each
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liable "in whole or in part for damages to which TIAA may be entitled in the
State Street Action, including, without limitation, statutory pre- and
post-judgment interest." On May 10, 1996, the Debtors filed a motion pursuant to
section 502(c) of the Bankruptcy Code to estimate for voting and distribution
purposes the State Street Claims at $1 each (the "Estimation Motion"). Hearings
to consider the Estimation Motion as they relate to voting and distribution had
been scheduled for June 5, 1996 and July 9, 1996, respectively. However, in
light of the settlement of claims between TIAA and the Debtors, these hearings
have been adjourned until an indefinite date in the future.
3. Terms of the TIAA Settlement
In June 1996, the Debtors and TIAA reached a settlement agreement (the
"TIAA Settlement") compromising all of the aforementioned claims and litigations
between such parties. The TIAA Settlement provides for certain Cash payments to
TIAA, as well as granting TIAA a general unsecured claim against Devco which
will receive the treatment provided to Unaffiliated Unsecured Claims under the
Plan. As part of the TIAA Settlement, each of the Olympia & York entities which
are defendants in the TIAA/Tower A Co. Litigation and the TIAA/State Street
Litigation admit that the repudiations of the commitment agreements were
anticipatory breaches for which they are liable.
Each of TIAA, the Debtors, the O&Y Affiliates, BPHI and Carena (where
applicable) will withdraw, with prejudice, any and all pending motions arising
out of the TIAA/Tower A Co. Litigation, the TIAA/State Street Litigation and any
and all litigations commenced by TIAA in New York State Supreme Court against
any of the partners in Tower A Co., including, but not limited to, BPHI, Carena,
or any of the O&Y Affiliates. Furthermore, TIAA, the Debtors, the O&Y
Affiliates, BPHI or Carena will take all steps necessary to have any and all of
the above-listed litigations dismissed with prejudice and without an award of
costs to any of the parties thereto.
The terms of the TIAA Settlement are as follows:
On the Effective Date, the Claims of TIAA shall be accorded the
treatment in section 4.5 of the Plan in full satisfaction of (i) the TIAA
Judgment Claims, (ii) all Claims of TIAA against Tower A Co., 53 State Limited,
Devco, and all of the O&Y Affiliates, including, without limitation, any Claims
asserted in or otherwise arising out of the Tower A Action or the State Street
Action, and (iii) all Claims of TIAA against BPHI and Carena asserted in or
otherwise arising out of the Tower A Action or the State Street Action or
arising in connection with or relating to BPHI's investment in the World
Financial Center.
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Cash Payments on the
Effective Date: $6,500,000 Cash payment on the
Effective Date.
Deferred Cash Payments: $3,000,000, payable by a note
issued by New Tower A LP to TIAA
providing for aggregate payments of
$1,000,000 per year for the first
three years following the Effective
Date. In each of such first three
years following the Effective Date,
the obligations under such note
shall be paid quarterly in arrears
in four equal installments of
$250,000 from the asset management
fees payable to Newco LP as
provided in "Management Fees" in
section 13.2 of the Plan. Newco LP
will guarantee the obligations of
New Tower A LP to TIAA and shall
waive its rights of subrogation
relating to the same. Newco LP
will collaterally assign to TIAA
the asset management fees payable
to Newco LP as provided in
"Management Fees" in section 13.2
of the Plan to secure the
obligations under the note to TIAA.
New Tower A LP will not make any
distributions to Newco LP or any of
its Affiliates other than the fees
payable to Newco LP as provided in
"Management Fees" in section 13.2
of the Plan and all such fees shall
be subordinate to the obligations
under the note issued to TIAA and
payment may not be made upon an
event of default under such note.
TIAA Unaffiliated Unsecured
Claim Against Devco: TIAA shall have an Allowed
Unaffiliated Unsecured Claim
against Devco of $75,000,0000, on
account of which TIAA shall be
distributed Class A Interests
having a value equal to $1,714,286
and Convertible Note Interests
having a face amount equal to
$4,285,714.
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Release of
Segregated Funds: The 53 State Street Segregated
Funds shall be released to TIAA, and the
Debtors and the O&Y Affiliates shall
release all Claims that they have or may
have relating to the 53 State Street
Segregated Funds and the Tower A
Segregated Funds.
Release of Lis Pendens: TIAA shall release any and all
lis pendens relating to 53
State Street.
Mutual Releases: In addition to the releases
provided in section 24 of the Plan,
TIAA, BPHI, Carena and the O&Y
Affiliates (or their respective
successors) will execute and
deliver mutual releases consistent
with section 4.5 of the Plan.
J. TORONTO DOMINION SETTLEMENT
1. Background Relating to Toronto Dominion Claims
Toronto Dominion Bank ("TD") has asserted claims against Baden arising
out of a guarantee by Baden of a certain loan made by TD. Specifically, on
September 1, 1983, TD made a loan of $23,139,045.00 (the "Chase Note") to York
Chase Ronto Co. ("YCR"), the predecessor in interest to York Venture Co., which
was secured by a first mortgage on certain real property located in Independence
Bay, Florida (the "Independence Bay Property"). In connection with the Chase
Note, TD also issued certain letters of credit to YCR and reimbursement of any
draws on such letters of credit were secured by a second mortgage on the
Independence Bay Property. As the 100% shareholder in Olympia & York Florida
Equities Corp., one of the partners in YCR, Baden issued certain guarantees of
YCR's obligations to TD (the "Baden Guarantees").
The Baden Guarantees guaranteed repayment of the Chase Note, YCR's
reimbursement obligations with respect to the aforementioned letters of credit
and certain indemnity obligations of YCR relating to the environmental
liabilities associated with the Independence Bay Property. Furthermore, the
Baden Guarantees required that Baden pay all fees and expenses (including
attorneys' fees) which were incurred by TD in enforcing such guarantees.
On September 2, 1992, subsequent to certain events of default by YCR
on the Chase Note, TD demanded payment from Baden
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on the Baden Guarantees. When Baden failed to satisfy the Baden Guarantees, TD
commenced an action in the United States District Court for the Southern
District of New York (the "District Court") on September 15, 1993 seeking
recovery on the Baden Guarantees for: (a) $8,900,000.00 in unpaid principal on
the Chase Note; (b) $72,281.60 in unpaid accrued interest on the Chase Note as
of June 30, 1992; (c) interest accrued on the Chase Note from June 30, 1992; (d)
$1,702,544.75 representing amounts drawn by YCR on the letters of credit; (e)
$1,317.29 in fees referable to the letters of credit; and (f) all costs, fees
and attorneys' fees associated with TD's attempted enforcement of the Baden
Guarantees. On October 23, 1993, the District Court entered a judgment in favor
of TD on the above claims in the amount of $11,900,153.34 (the "TD Judgment")
which TD Judgment was to accrue interest at the statutory rate.
On April 30, 1994, YCR, Baden and TD entered into a settlement of the
TD Judgment, however, Baden's chapter 11 filing on October 11, 1995 effectively
terminated such settlement. The settlement provided for a forgiveness of a
portion of the TD Judgment by TD and a restructuring of the obligations of YCR
and Baden under such loan.
2. Terms of the Toronto Dominion Settlement
In June, 1996, TD and Baden reached a settlement agreement of all
claims between them, the terms of which are as follows:
On the Effective Date, in full satisfaction of the Toronto Dominion
Judgment Claims and all other Claims that Toronto Dominion may have against any
of Baden, York Venture Co. or all other O&Y Affiliates (including any Claims
under or related to the Toronto Dominion Letter of Credit), Toronto Dominion
shall be distributed (a) the Chase Note and any proceeds of the Chase Note
received after August 9, 1996 by the O&Y Affiliates prior to the Effective Date
and (b) a deed to the unsold property currently owned by York Venture Co.
located at Independence Bay; provided, however, that the transfer of such unsold
property shall remain subject to the rights and obligations set forth in the
Independence Bay Contracts. To the extent that such property, or any portion
thereof, is sold prior to the Effective Date pursuant to the Independence Bay
Contracts, the proceeds thereof (net of the costs of sale) shall be delivered to
Toronto Dominion upon the consummation of such sale. In the event that such
transactions are not consummated prior to the Effective Date, Toronto Dominion
shall assume and perform any and all obligations under the Independence Bay
Contracts from and after the Effective Date, and shall indemnify and hold
harmless York Venture Co., the Debtors, the Debtors in Possession, any and
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all other O&Y Affiliates and each of their respective successors in interest
from any and all Liabilities that may arise from the failure of Toronto Dominion
to specifically perform the Independence Bay Contracts from and after the
Effective Date.
K. OLYMPIA & YORK WFC RETAIL COMPANY RESTRUCTURING AND THE
AMERICAN EXPRESS SETTLEMENT AGREEMENT
1. General
Retailco is a New York general partnership consisting of Devco, Tower
Corp. and Devco GP, holding percentage interests in Retailco of 49.715385%,
49.9% and 0.384615%, respectively. Retailco leases the retail space of Towers B,
C and D of the World Financial Center; in the case of Tower B, from Tower B Co.,
pursuant to the Retailco B Lease; in the case of Tower C, from Amex, pursuant to
the Amex/Retailco Lease; and in the case of Tower D, from Tower D Co., pursuant
to the Retailco D Lease (collectively, the "Retailco Leases"). In each instance,
Retailco subleases such retail space to the retail tenants of Towers B, C and D
of the World Financial Center.
2. Lease Assignment
Each of the Retailco Leases, as modified by the terms set forth below,
will be assigned by Retailco to Newco LP.
3. The American Express Settlement
a.Background
Amex is the ground lessee of Tower C of the World Financial Center,
pursuant to a certain ground severance lease between the Battery Park City
Authority, as lessor, and Amex, as lessee. In addition to leasing the retail
space of Tower C to Retailco under the Amex/Retailco Lease, Amex is a party to
the Project Operating Agreement, which sets forth the relative rights and duties
of the parcel tenants at the World Financial Center with respect to the common
areas thereof. As more particularly set forth in this Disclosure Statement, by
assignment from Tower A Co., Devco acts as Operator under the Project Operating
Agreement. The terms of the Project Operating Agreement require that the parties
to it indemnify the Operator for all costs and expenses incurred by the Operator
in connection with its duties under the Project Operating Agreement. Merrill
Lynch successfully arbitrated a claim against the Operator for incorrectly
billing electricity usage in Merrill's premises, which, pursuant to the Plan,
O&Y (U.S.) has settled with Merrill Lynch (the "Electric Settlement").
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Further, Amex is also a party to the River Water ByPass Agreement (as
more specifically described in the Merrill Lynch Settlement section above under
which Amex's share of expenses for developing the River Water By-Pass project is
estimated to be $1,454,000.
b.Terms of Amex Settlement
O&Y (U.S.) and Amex have agreed to settle the issues and claims
between them (the "Amex Settlement"). The terms of the Amex Settlement are as
follows:
River Water
By-Pass Project: Amex shall cooperate in the construction
of the River Water By-Pass Project.
Electric
Arbitration: The O&Y Affiliates will bear the entire cost
of the Merrill Lynch Settlement relating to
the electric arbitration, including legal
fees.
Project Operating
Agreement: Tower A Co. will assume the WFC Operator
Component and will designate Newco LP or an
Affiliate thereof to perform the services
described in the Project Operating
Agreement.
Existing Claims: All existing claims between Amex and the
O&Y Affiliates with respect to the World
Financial Center will be released and
forever barred. Amex will have an
Allowed Unaffiliated Unsecured Claim
against Devco in the amount of $320,000
in complete settlement of all Claims
relating to the World Financial Center,
including, without limitation, Claims
relating to roof and window warranties,
and chilled water and other charges
under the Project Operating Agreement.
Amex/Retailco
Lease: Amex will have an Allowed Unaffiliated
Unsecured Claim against Devco in the amount
of $4,000,000, representing the maximum
damages that Amex would be allowed under the
Bankruptcy Code for unpaid rent and for
damages if the Amex/Retailco Lease had been
rejected.
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Retailco shall hold any amounts due Amex for
the existing base rent under the
Amex/Retailco Lease (approximately $50,000
per month) which have accrued or will accrue
for the period from June 1, 1996 through the
last day of the month prior to the month in
which the Confirmation Order becomes a Final
Order. On the date upon which the
Confirmation Order becomes a Final Order,
such amounts will be released and paid over
to Amex. Thereafter, for each whole month
beginning with the month during which the
Confirmation Order becomes a Final Order and
ending February 1997, Retailco shall pay to
Amex the amounts due Amex for the existing
base rent under the Amex/Retailco Lease
(approximately $50,000 per month).
Notwithstanding the terms of the immediately
preceding paragraph, in the event that the
Confirmation Order does not become a Final
Order on or prior to December 30, 1996,
then, on December 31, 1996, Retailco shall
release to Amex an amount equal to the
existing monthly base rent under the
Amex/Retailco Lease for the preceding seven
(7) months (approximately $350,000).
Thereafter, for each of January 1997 and
February 1997, Retailco shall pay to Amex
the amounts due Amex for the existing base
rent under the Amex/Retailco Lease
(approximately $50,000 per month).
In addition to the amounts to be paid to
Amex in the preceding two paragraphs, as of
the Effective Date, the Amex/Retailco Lease
will be restructured as follows:
The Amex/Retailco Lease will be modified to
reduce the base rent thereunder to $1 per
annum for the period commencing June 1, 1996
and ending on the Rent Abatement Termination
Date. After this initial period, there will
be fair market rent reviews at five (5) year
intervals. There will be no accrual of rent.
Fair market rent reviews will be based on
the actual net income which the tenant under
the Amex/Retailco Lease can reasonably be
anticipated to receive during the next five
(5) year period, taking into account
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continued use of space for current uses,
leases in place, anticipated renewals,
actual and anticipated expenses and capital
requirements, and leaseability of vacant
space as retail space. Rent reviews will be
upward or downward (but not less than $1).
The tenant will continue to be obligated to
pay PILOT (payment in lieu of taxes), other
ground rent obligations, directly metered
utilities and the tenant's share of actual
costs for shared expense areas, including
Winter Garden PILOT and insurance and
Central Plant PILOT and insurance, in each
case as per the existing Amex/Retailco
Lease, and other operating expenses at the
rate of $4.25 per usable square foot,
escalated annually by the percentage
increase in WFC Common Area Expenses,
exclusive of Major Repairs (as such terms
are defined in the Project Operating
Agreement).
If the fair market rent as determined in any
fair market rent review is less than 90% of
the base rent that would have been payable
under the existing Amex/Retailco Lease, Amex
will have the right to cancel the
Amex/Retailco Lease (unless the successor
tenant to the O&Y Affiliates agrees to pay
at least 90% of the existing base rent). If
Amex cancels the Amex/Retailco Lease, the
successor tenant to the O&Y Affiliates shall
have the right of first refusal to manage
the retail areas of Tower C.
The Amex/Retailco Lease, as modified, will
be assigned to Newco LP or an affiliate
thereof. The tenant's liability under the
Amex/Retailco Lease will be limited to its
interest in the leased premises. In the
event that an entity that elects to be
treated as a real estate investment trust
for federal income tax purposes is admitted
to Newco LP as a partner, Newco LP may
assign to such Entity its rights and
obligations under the Amex/Retailco Lease.
Mutual Releases: Subject to the other provisions of this
Amex Settlement, from and after the
Effective Date, (i) Amex and any
Entity related to Amex, and each of
their
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Affiliates, agents, officers,
directors, employees,
representatives, attorneys,
accountants, financial advisors,
investment bankers, appraisers,
advisors and engineers (each in
their capacity as such) shall be
released from all claims of the O&Y
Affiliates and the Debtors and (ii)
the O&Y Affiliates and the Debtors
and each of their Affiliates,
agents, officers, directors,
employees, representatives,
attorneys, accountants, financial
advisors, investment bankers,
appraisers, advisors and engineers
(each in their capacity as such)
shall be released from all claims of
Amex, any Entity related to Amex and
each of their Affiliates.
L. BANK OF NOVA SCOTIA SETTLEMENT
As discussed in detail above, the Bank of Nova Scotia has certain
claims arising out of its lending relationship with OYDL and related pledges of
notes owned by Baden (the "Baden Pledge") arising from the Miami Center Joint
Venture ("MCJV"). O&Y (U.S.) has reached a compromise with Bank of Nova Scotia
of all of its claims arising out of this relationship. The terms of the Bank of
Nova Scotia Settlement are as follows:
On the Effective Date, in full satisfaction of the Bank of Nova Scotia
Claims and the Baden Pledge, Bank of Nova Scotia will be delivered an instrument
entitling it to participate in any monetary recoveries from the sale of the MCJV
Lands, which instrument shall be secured by a pledge of the MCJV Pledged Notes
on the following basis:
Management: Newco LP will be solely responsible for:
(i) managing the MCJV Lands,
(ii) making all decisions with
respect to the conduct of
litigation (including
settlement thereof)
affecting the interest of
Newco LP in the MCJV Lands
(including any litigation
with respect to the MCJV
Notes), and
(iii) making all decisions with respect
to all matters pertaining to the
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maintenance, management, marketing
and sale of the MCJV Lands.
Budgets: Newco LP will provide Bank of Nova
Scotia with annual budgets with respect
to the MCJV Lands and the interest of
Newco LP therein, including anticipated
litigation costs. Budgets, and any
amendments thereto, will be subject to
the review and approval of Bank of Nova
Scotia. Newco LP shall not make any
payments to enhance the value of the
MCJV Lands not in compliance with the
approved budget without the consent of
Bank of Nova Scotia. Newco LP shall be
entitled to make any payment and incur
any cost that it reasonably determines
to be necessary to preserve the value of
the MCJV Lands or to protect the
interest of Newco LP therein. Other
than with respect to the consent rights
described in this paragraph, Newco LP
shall consult with Bank of Nova Scotia
prior to making any payment not in
compliance with the approved Budget.
Newco LP will advise Bank of Nova Scotia
of any material developments relating to
the maintenance, management, marketing
and sale of the MCJV Lands.
Funding Commitment: Subject to the preceding paragraph,
Newco LP will pay up to $4,500,000 of
the costs incurred with respect to the
preservation, maintenance, management,
marketing and sale of the MCJV Lands
(including all unpaid real estate taxes
relating to the MCJV Lands), the
enhancement of the value of the MCJV
Lands, and the conduct of any litigation
affecting the interest of Newco LP in
the MCJV Lands (the "Costs"). "Costs,"
as defined, shall not include any Costs
pertaining to the construction of a
building on the MCJV Lands. All Costs
shall be paid in a timely manner,
provided that real estate taxes may be
deferred until such time as the MCJV
Lands may be subjected to a tax sale.
Subject to the preceding paragraph, in
addition to the commitment to fund up to
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$4,500,000 of Costs, Newco LP shall
be entitled, in its sole discretion
(but not obligated), to fund any
other Costs in excess of $4,500,000
All Costs paid by Newco LP with
respect to this section (whether
under the $4,500,000 commitment or
the discretionary authority of Newco
LP) shall be entitled to a priority
recovery (the "Cost Recovery
Priority") from any sales proceeds
of the MCJV Lands (and/or Newco LP's
interest therein) as specified
below. Solely to the extent Newco LP
shall fail to pay any Costs required
to preserve the value of the MCJV
Lands when due and payable, the Bank
of Nova Scotia shall have the right
to pay such Costs and shall be
entitled to reimbursement thereof
together with interest as specified
below as a Cost Recovery Priority.
All income generated by the MCJV and
distributed to Newco LP and and O&Y
Affiliates shall be first applied to
the payment of Costs.
Allocation of Sale
Proceeds: Upon a sale or sales of all or a portion
of the MCJV Lands, the proceeds thereof
shall be allocated and paid (subject to
any applicable withholding tax
requirements) as follows:
The first $15,000,000 in gross sales
proceeds from the sale of all or a
portion of the MCJV Lands will be
used first to (a) pay any then
outstanding real estate taxes
(unless assumed by the purchaser),
(b) pay all outstanding costs of the
sale or any prior sale that have not
yet been reimbursed pursuant to this
section, and (c) repay any
outstanding Cost Recovery Priority,
together with interest accrued
thereon at 10% per annum, calculated
and compounded annually (which
repayment obligation shall be
evidenced by the issuance and
delivery from the entity at the time
owning the MCJV Lands of a
nonrecourse promissory note made
payable to Newco LP). The balance of
the first
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$15,000,000 in gross sales proceeds
shall be distributed 50% to Newco LP
and 50% to Bank of Nova Scotia. The
gross sales proceeds in excess of
$15,000,000 shall be distributed 75%
to Newco LP and 25% to Bank of Nova
Scotia.
Pledge Agreement: The instrument issued to Bank of Nova
Scotia shall be secured by a pledge of
Newco LP's interest in the MCJV Pledged
Notes, which pledge shall either be the
Baden Pledge, as modified, or a new
pledge of the MCJV Pledged Notes.
M. DRAGON SETTLEMENT
1. Background
Dragon filed four (4) proofs of claim, each in the amount of
$126,367,792.54, against Equityco, Equity GP, Equity Canada and Realty Corp.
(collectively, the "Dragon Claims"). The Dragon Claims relate to the real
property and the building thereon located at 60 Broad Street, New York, New York
(the "60 Broad Property"). An affiliate of Dragon, Concord U.S. Property (No. 1)
L.P., a Delaware limited partnership ("Concord"), holds a 49.9% interest in O&Y
Concord 60 Broad Street Company, a New York general partnership ("60 Broad
Co."), the entity which owns the 60 Broad Property. The other partners in 60
Broad Co. are Equityco, which holds a 49.85% interest, and Equity GP, which
holds a 0.25% interest.
Specifically, the various amounts which comprise the Dragon Claims are
as follows:
(i) $50,000,000.00 for principal due on the 60 Broad
Mortgage Note (as defined below);
(ii) $4,837,462.47 for advances to 60 Broad Co. by
Concord for taxes and operating expenses
(collectively, the "Advances");
(iii) $20,446,749.82 for interest on the 60 Broad
Mortgage Note and the Advances through April 8,
1996;
(iv) $50,000,000.00 for amounts due under a Guaranteed
Leasing Program (as defined below); and
(v) $1,083,580 for transaction costs.
<PAGE>
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2. Mortgage Note and Related Loan Documents
Pursuant to that certain Loan Agreement between 60 Broad Co., as
borrower, and Dragon, as lender, dated as of October 15, 1991 (the "Loan
Agreement"), Dragon acquired, amended and restated a first mortgage loan
assigned by California Federal Savings and Loan Association and reduced such
loan to the principal amount of $57,500,000 (the "60 Broad Loan"). 60 Broad
Co.'s obligations under the Loan Agreement are also evidenced by that certain
Amended and Restated Note, dated October 15, 1991, between 60 Broad Co., as
maker, and Dragon, as payee, in the principal amount of $57,500,000 (the "60
Broad Mortgage Note"). 60 Broad Co., as mortgagor, and Dragon, as mortgagee,
executed that certain Amended and Restated Mortgage and Security Agreement,
dated as of October 15, 1991 (the "60 Broad Mortgage"), which consolidated,
modified and extended the existing mortgages on the 60 Broad Property as of such
date and secured the payment of the principal sum of the 60 Broad Loan and
interest thereon, and the payment and performance of any and all other
obligations and liabilities under the 60 Broad Mortgage and all other related
loan documents. Among other things, pursuant to the 60 Broad Mortgage, 60 Broad
Co. assigned its interests in leases and rents in respect of the 60 Broad
Property to Dragon as collateral for its obligations under the 60 Broad Mortgage
and the 60 Broad Mortgage Note.
Pursuant to that certain Continuing Guaranty between Equityco and U.S.
Holdings, as guarantors, and Dragon, as Lender, dated as of October 15, 1991
(the "U.S. Guaranty"), Equityco and U.S. Holdings jointly and severally
unconditionally and irrevocably guaranteed full and prompt performance and full
payment when due of all of 60 Broad Co.'s obligations under the 60 Broad
Mortgage Note, the 60 Broad Mortgage and all other loan documents (collectively,
the "60 Broad Obligations"). Additionally, pursuant to that certain Continuing
Guaranty of even date between OYDL, as guarantor, and Dragon, as Lender (the
"OYDL Guaranty"; collectively with the U.S. Guaranty, the "Guaranties"), OYDL
similarly guaranteed all of 60 Broad Co.'s 60 Broad Obligations to Dragon.
To further secure the full and punctual payment and performance of all
of the 60 Broad Co. Obligations, pursuant to that certain Partnership Interest
Pledge and Security Agreement between Equityco, as pledgor, and Dragon, as
pledgee, dated as of October 15, 1991 (the "60 Broad Pledge Agreement"),
Equityco granted and pledged to Dragon a continuing lien on and security
interest in, and transferred and assigned to Dragon as security, all of
Equityco's right, title and interest, whether then owned or thereafter acquired,
in 60 Broad Street Co. and any successor thereof.
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Similarly, pursuant to that certain Partnership Interest Pledge and
Security Agreement between Equity GP, as pledgor, and Dragon, as pledgee, dated
as of October 15, 1991 (the "Equity GP Pledge Agreement," and collectively with
the 60 Broad Pledge Agreement, the "60 Broad Pledge Agreements"), Equity GP also
granted and pledged to Dragon a continuing lien on and security interest in, and
transferred and assigned to Dragon as security, all of Equity GP's right, title
and interest, whether then owned or thereafter acquired, in 60 Broad Street Co.
and any successor thereof.
3. Partnership Advances
Under the 60 Broad Co. partnership agreement, Equityco was obligated
to fund, among other things, all of the operating expenses and taxes of 60 Broad
Co. Beginning in 1992, Equityco was unable to fund, among other things, the
operating expenses and taxes incurred in the operation of the 60 Broad Property
and Dragon or one of its Affiliates began, and has continued, to fund such
costs.
4. The Guaranteed Leasing Program
In the 60 Broad Co. partnership agreement, O&Y (U.S.) guaranteed to
expend a minimum amount of capital improvement monies for the leasing program at
the 60 Broad Property (the "Guaranteed Leasing Program"). Due to, among other
things, the bankruptcy of Drexel Burnham Lambert Group ("Drexel") in 1991, whose
headquarters had occupied the building, the occupancy rate for the 60 Broad
Property has fallen to approximately 4%.(33) As a result of Drexel's bankruptcy
and O&Y (U.S.)'s liquidity crisis, O&Y (U.S.) was unable to satisfy the
requirements of the Guaranteed Leasing Program and became indebted to Dragon for
an amount that Dragon Claims is $50,000,000.
5. Terms of the Dragon Settlement
To satisfy the obligations of O&Y (U.S.) (other than 60 Broad Co.) to
Dragon under, among other things, the 60 Broad Mortgage Note, the Advances, the
Guaranteed Leasing Program and the related Guaranties, the Debtors and Dragon
have negotiated the following settlement:
In full satisfaction of any and all Claims of Dragon against
the Debtors, the Debtors in Possession and the O&Y Affiliates
(other than 60 Broad Co.), the Dragon Unsecured Claim shall be
Allowed in the amount of
- --------
33 As of July 1, 1996.
<PAGE>
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$60,000,000 and shall be provided the treatment accorded to
Allowed Co-Proponent Unsecured Claims set forth in section
7.11.2 of the Plan. Nothing herein or in the Plan will
prejudice or in any way release the Liens and Claims of Dragon
against 60 Broad Co. In consideration of the treatment
provided to Dragon in section 4.10 of the Plan, Dragon shall
release and waive all other Claims that it has or may have
against the Debtors, the Debtors in Possession and the O&Y
Affiliates (other than 60 Broad Co.) with the effect that
Dragon shall only have recourse to the assets of 60 Broad Co.
(and not those of the general partners of such Entity).
N. OPPENHEIMER INDIRECT CAPITAL CONTRIBUTION AND TREATMENT OF
THE OPPENHEIMER CLAIM
As discussed above, Oppenheimer is a partner with certain of the O&Y
Affiliates in Tower A Co. For a complete description of the nature of the
relationship between the O&Y Affiliates and Oppenheimer, see "Settlements and
Agreements Implemented by the Plan -- Oppenheimer Settlement" and "Background
History of Olympia & York -- Business of the U.S. Operations -- Core Properties
- -- One World Financial Center".
The Debtors and Oppenheimer have reached a settlement of any and all
claims between them on the following terms:
On the Effective Date, (a) in order to assist Tower A Co. in its
settlement with TIAA and subject to a resolution of the partnership issues
relating to Tower A as set forth below, Oppenheimer shall contribute to the
capital of Tower A Associates the sum of $6,000,000 which will ultimately be
used by Tower A Co. to fund $6,000,000 of the Cash payments required to me made
to TIAA in accordance with section 4.5 of the Plan and (b) in full satisfaction
and settlement of all Claims that Oppenheimer has filed or could have filed
against any of the Debtors, the Debtors in Possession and the O&Y Affiliates
(other than Oppenheimer's Claim against Devco relating to commercial rent taxes
and any claims arising in connection with Oppenheimer's lease of space at Tower
A) and all Claims arising in connection with Oppenheimer's indirect Equity
Interest in Tower A Co., Oppenheimer shall have an Allowed Unaffiliated
Unsecured Claim against Devco arising out of the partnership agreement for Tower
A Co. in an agreed amount equal to $60,000,000, which Claim shall receive the
treatment described in section 7.11.1 of the Plan.
Oppenheimer and the Debtors have agreed that the Tower A Co.
Partnership Agreement shall be amended in the following manner:
<PAGE>
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The Tower A Co. Partnership Agreement will be amended to include a
provision that specially allocates a portion of the federal income tax deduction
attributable to the TIAA Settlement to TALP in an amount equal to the
Oppenheimer contribution. Tower A Co. will report the TIAA Settlement as a
deductible payment for federal income tax purposes.
The receivable due to Tower A Co. from BPHI, Devco and Tower A Holding
(the "Tower A Partner Receivable") will be amended to accrue interest at 10.5%
per annum, compounded semi-annually. Such interest will be due and payable upon
a repayment of the Tower A Partner Receivable. Tower A Co.'s tax reporting for
interest accruals on the Tower A Partner Receivable will conform to the
obligor's reporting of such interest accruals.
All existing preferences in the Tower A Co. Partnership Agreement will
be deleted.
The Tower A Co. Partnership Agreement will be amended to explicitly
acknowledge that the Restructuring Transactions involving Tower A Co. will not
increase the amount of gain allocable to TALP under section 704(c) of the IRC or
increase TALP's share of "partnership minimum gain" (as such term is defined in
Treasury Regulation ss. 1.704-2(c)) as described in Treasury Regulation ss.
1.704-2(g)(1) and that the aggregate book value of the assets of Tower A Co.
will be unchanged as a result of the Restructuring Transactions.
Section 7.1(c) of the Tower A Co. Partnership Agreement will be
amended to provide that if the 1987 assumptions of portions of the Sanwa
indebtedness made by the partners of Tower A Co. result in an Adjusted Capital
Deficit (as defined in the Tower A Co. Partnership Agreement) for TALP, unless
otherwise required by explicit authority to the contrary, items of Tower A Co.
income and gain shall first be specially allocated to all partners of Tower A
Co. other than TALP until the Adjusted Capital Deficits of such other partners
have been eliminated before any income or gain is allocated to TALP pursuant to
such section 7.1(c).
As of the closing of the Restructuring Transactions, all provisions of
the Tower A Co. Partnership Agreement requiring one party to indemnify the other
with respect to tax terminations will be deleted (including the Target
Allocations, as defined in the Tower A Co. Partnership Agreement). All partners
will waive any claims against the Debtors, with respect to tax terminations in
connection with or prior to the Restructuring Transactions will be waived
provided that Oppenheimer receives an Allowed Unaffiliated Unsecured Claim in
the amount of $60,000,000.
<PAGE>
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Any other amendment to the Tower A Co. Partnership Agreement, or any
tax reporting by Tower A Co. that is inconsistent with the tax reporting
contemplated by this section 4.11 or otherwise adversely affect Oppenheimer,
shall require the consent of Oppenheimer, which consent shall not be
unreasonably withheld.
O. SETTLEMENT OF INTERCOMPANY CLAIMS
The Plan provides for a settlement of all claims held by the Debtors
and/or any Wholly-Owned Affiliate and/or Controlled Affiliate against any other
Debtor and/or Wholly-Owned Affiliate and/or Controlled Affiliate. The facts set
forth herein demonstrate that such settlement is appropriate and in the best
interests of the estate.
It is not clear that intercompany transfers as reflected in the books
and records of the various Debtors and other O&Y Affiliates as of the applicable
Petition Date are the result of transfers for value. In many instances the
creation, elimination, consolidation, reduction and set-off of such intercompany
accounts were driven by administrative convenience (i.e., reduction of the
number of intercompany accounts) benefitting OYDL and/or the U.S. operations of
OYDL. Moreover, many intercompany accounts were contributed to capital within
the periods immediately preceding the filing of the Canadian Debtors' cases and
thereafter.
Cash was moved between and among the Consolidated Devco Entities as it
was needed. Realty Corp. was the significant taxpayer/reporter for Consolidated
Devco due to the predominance of the partnership structure in the commercial
office building enterprise operated by Olympia & York in the United States.
Thus, Consolidated Devco was responsible for the reporting and tax obligations
applicable to Realty Corp. under Canadian tax law, U.S. tax law and various
state taxing authorities. Hence, intercompany transactions within Consolidated
Devco had an impact upon the tax position of Realty Corp. as well. These
transactions were managed carefully. Most movement between Entities occurred
through U.S. Finco by creating accounts owed by and to U.S. Finco. These
accounts were increased, decreased and/or eliminated as appropriate to reflect
the assumption of debt, the transfer of property or intangibles, the
consolidation of Cash into a centralized Cash management system operated through
U.S. Finco, the delivery of services and similar internal transactions.
There is a relationship between the intercompany transactions within
Consolidated Realty and Realty Corp.'s status as the primary taxpayer for the
commercial office building
<PAGE>
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enterprise of the U.S. Operations. Realty Corp. was also the controlling parent
of the other real estate business being maintained or wound down in the U.S.
Operations. OYREUSA/Baden was its subsidiary engaged in winding down the
residential and other non-commercial office building ventures owned and/or
controlled by the U.S. Operations. Due to transnational tax limitations on
consolidated reporting, Baden and OYREUSA were consolidated for tax purposes and
Realty Corp., including Consolidated Devco, was a separate taxpayer. Management
of much of Consolidated Realty was directed, and the books and records
pertaining to many of Consolidated Realty's assets were maintained, by the
management of Realty Corp. in Toronto.
Over time, significant funds were loaned and advanced into
OYREUSA/Baden because it had significant losses and no profits or capital.
Substantially all of its assets were being liquidated at tremendous losses. The
losses, including the costs of the wind-down, were borne by Realty Corp. and
Consolidated Devco. The transfers between Realty Corp. and OYREUSA/Baden
involved many intercompany loans which later were converted into capital, so as
to eliminate interest income to Realty Corp. The loans and advances made to this
subsidiary through Consolidated Devco were made through U.S. Finco and remained
intercompany accounts between the two different business groups. The size of
these accounts and the resulting interest income was managed annually through a
series of assumption and set-off transactions designed to minimize the
intercompany accounts between this subsidiary as a group and Consolidated Devco.
Similarly, cash and intercompany transactions occurred from time to
time between Consolidated Devco and Consolidated Realty for funding operations
or meeting the transnational tax concerns constantly confronting OYDL and the
Canadian Debtors. From time to time, certain large intercompany transactions
were reflected through a series of notes originating with Realty Corp. and/or
OYDL and moving through Consolidated Devco into the OYREUSA/Baden subsidiary and
returning to Realty Corp. and/or OYDL or another entity at their direction. The
transactions also moved in the reverse order. As explained below, the
intercompany accounts at all levels represent open accounts, and it is difficult
to ascertain whether, how, or to what extent, if at all, they represent
transactions for value or a compound history of multiple transactions,
assumptions and setoffs. It is practically impossible to trace the history of
all of them and virtually impossible to determine whether outside creditors were
aware and understood the magnitude and impact upon them of these frequent and
sometimes massive intercompany transactions. It is the view of the Debtors that
the majority of these transactions were intended and executed to be transparent
and irrelevant to the outside creditors of the U.S. Operations. They appeared as
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one or two lines, as a netted amount in most financial reports provided to
outside creditors. Moreover, transactions which were initiated and "cleaned up"
within a tax year would not have been reflected at year-end. Recognition or
enforcement of these intercompany transactions based upon the varying mid-year
positions would invariably hurt or help creditor groups without independent
rationalization or support.
At this time there are two secured intercompany notes. One involves
the mortgage notes which were purchased by U.S. Finco from the mortgagee on One
Liberty Plaza which were pledged as collateral to CIBC to secure the CIBC/OLP
Loan. These notes are not going to be enforced under the Plan, except to the
extent of the "roll-up" by CIBC of the CIBC/OLP Loan pursuant to section 6.4 of
the Plan; the remainder of the U.S. Finco/OLP notes and mortgages are being
returned to the issuer's successor, Consolidated OLP.
The second intercompany note being treated under the Plan is a note
issued by OYREUSA to U.S. Finco in September 1992, secured by the stock of
Baden. On or about September 1992, in response to the concern that Cash would
escape to Canada via OYREUSA/Baden before an examination of the appropriate
claims against the value of that subsidiary or the satisfaction of such claims,
the then-existing open account between OYREUSA/Baden and U.S. Finco was
memorialized and converted into a secured note. That note did not represent a
new transaction. Instead it represented a consolidated view of the standing open
intercompany accounts as between the OYREUSA/Baden taxpayer and Consolidated
Devco as such accounts stood at that time in mid-year.
Immediately following the memorialization of that open account into a
note, a new open intercompany account was put into operation between Baden and
U.S. Finco. The Debtors do not believe that the OYREUSA/U.S. Finco note is any
different from the other intercompany claims that are not being enforced and
recognized under the Plan. The Debtors, rather then equitably subordinating the
claim (as the Debtors believe would be appropriate), have obtained the binding
agreement of the most significant creditors that would benefit if U.S. Finco
were to seek to enforce this note -- CIBC and Citibank, the only substantial
creditors with third-party claims against U.S. Finco, holding claims in excess
of $50 million -- to reinvest into Newco LP substantially all of the proceeds
received from OYREUSA/Baden. This contribution of proceeds will strengthen the
feasibility and enhance the value of the Newco equity distributed to creditors
pursuant to the Plan.
<PAGE>
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For the reasons set forth above, the Debtors have determined to enter
into the Intercompany Settlement, as described below:
On the Effective Date, all claims held by a Debtor, a Wholly-Owned
Affiliate or a Controlled Affiliate against a Debtor, a Wholly-Owned Affiliate
or a Controlled Affiliate shall be released and cancelled in accordance with the
Restructuring Transactions and, to the extent not so released and cancelled,
released and cancelled in consideration for the mutual release and cancellation
of any and all claims held by a Debtor, a Wholly-Owned Affiliate or a Controlled
Affiliate against such Debtor, Wholly-Owned Affiliate or such Controlled
Affiliate; provided, however, that this settlement shall not release and
eliminate the claims of Tower B Co. against WFC Fincorp, the claims of Olympia &
York Maiden Lane Company against Olympia & York Maiden Lane Finance Corp. or the
U.S. Finco/OLP claims not contributed to OLP under the Restructuring
Transactions and the claims of Tower A Co. against Tower A Holding and Devco
remaining outstanding under the Restructuring Transactions. Notwithstanding the
foregoing, all postpetition claims held by a Debtor, a Wholly-Owned Affiliate or
a Controlled Affiliate against a Debtor, a Wholly-Owned Affiliate or a
Controlled Affiliate that arise by reason of (a) the guarantee by a Debtor of
the payment of postpetition professional fees and expenses of another Debtor in
accordance with the DIP Order, (b) any Cash assets required to be advanced to
Devco and deposited in accordance with the DIP Loan and the DIP Order, including
the proceeds of any postpetition asset sale occurring prior to the Effective
Date required to be repaid under the DIP Loan and DIP Order, (c) the Services
Agreements approved by the Bankruptcy Court by order dated October 11, 1995, (d)
the Restructuring Transactions, and (e) the terms of the January 12th Settlement
Agreement, shall not be released and cancelled. To the extent the postpetition
claims described in clauses (a), (b), (c) and (e) above are claims against one
or more the Debtors, such Claims shall be treated as Administrative Expense
Claims under the Plan.
P. BAR DATE MOTION
By order dated February 28, 1996, the Bankruptcy Court approved the
motion of the Debtors to fix April 8, 1996 as the bar date (the "Bar Date") in
their chapter 11 cases (the "Bar Order"). By Order dated March 26, 1996, the
Bankruptcy Court fixed (i) April 29, 1996 as the supplemental bar date for (a)
all entities not wholly-owned, directly or indirectly, by one or more of Devco
GP, Equity GP, OYREUSA, Baden, Realty Corp., SF Holdings, Devco Canada and
Equity Canada (for purposes of this section, such entities are defined as the
"Protocol Entities"), but which may be otherwise affiliated or associated with
the
<PAGE>
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international group of companies commonly referred to as Olympia & York
(including, without limitation, OYDL, Coopers & Lybrand OYDL, Inc./Limited,
608863 Ontario Inc., O&Y DMML Limited, O&Y 25 Realty Company, 25 Realty LP, O&Y
January Corp., ABC Dynamic Corp., R. Investments Corp., A.R.F. Corp., P.R.F.
Corp., R.R.F. Corp., Broad Street Holding Company, L.P., Reichmann family-
owned/controlled entities, 245 Park Co., TALP, Tower A Co., New Tower B Holding
LP, Tower D Holding I, Tower D Co., 53 State Limited, 1999 Bryan Street Ltd.,
Chicago-Superior Associates, 11601 Wilshire Associates, Olympia & York
Development (Seattle) Company, Olympia & York Water Street Company, O&Y 55 WS
Lease Co., L.P., 1290 Associates LLC, 237 Park Avenue Associates LLC, Olympia &
York 320 G.O.T. Company, Olympia & York Properties (Portland) Co., Miami Center
Joint Venture and 125 Broad Street Company), or (b) all partners (and affiliates
thereof) of Protocol Entities which themselves are not Protocol Entities
(including, without limitation, JMB Realty Corporation, Battery Park Holdings,
Inc., Merrill Lynch & Co., Inc., San Vicente Associates, Chase Family Limited
Partnership, Oppenheimer & Company, Concord (U.S.) Property No. 1, L.P., Nomura
Babcock & Brown Co., Ltd., NBB-53 State Street Associates, Shearson Lehman
Brothers, Fireman's Fund Insurance Company, North Michigan Avenue Associates,
Ron Equity (Seattle) Corp., Partners' Asset Fund, Ron Cascades Corp., Theodore
Gould and HQ North Company, Inc.); and (ii) the later of April 18, 1996 or 180
days after the date that each of the respective Debtors filed a chapter 11
petition (the "Governmental Unit Bar Date") for all governmental units (as
defined in section 101(27) of the Bankruptcy Code). A listing of the
Governmental Unit Bar Date for each Debtor follows:
<PAGE>
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Governmental Unit
Debtor's Name Case No. Bar Date
- ------------- ------- -----------------
O&Y (U.S.) Development 95 B 44486 (JLG) April 18, 1996
Company, L.P.
O&Y (U.S.) Development 95 B 44487 (JLG) April 18, 1996
General Partner Corp.
O&Y Equity Company, L.P. 95 B 44488 (JLG) April 18, 1996
O&Y Equity General 95 B 44489 (JLG) April 18, 1996
Partner Corp.
Olympia & York Real 95 B 44490 (JLG) April 18, 1996
Estate (U.S.A.) Inc.
Baden Real Estate Corp. 95 B 44491 (JLG) April 18, 1996
O&Y (U.S.) Financial Company 95 B 44492 (JLG) April 18, 1996
O&Y WFC Tower Corp. 95 B 44493 (JLG) April 18, 1996
WFC Tower A Company 95 B 44494 (JLG) April 18, 1996
O&Y 245 Corp. 95 B 44495 (JLG) April 18, 1996
Olympia & York 245 Park 95 B 44496 (JLG) April 18, 1996
Avenue Holding Company L.P.
Olympia & York Realty Corp. 92 B 42698 (JLG) April 18, 1996
Olympia & York SF Holdings 92 B 42702 (JLG) April 18, 1996
Corporation
O&Y (U.S.) Development 92 B 42699 (JLG) April 18, 1996
Canada Ltd.
O&Y Equity (Canada) Ltd. 92 B 42700 (JLG) April 18, 1996
Chicago-Superior Associates 95 B 45101 (JLG) April 29, 1996
Devco-11601-A, L.P. 95 B 45282 (JLG) May 7, 1996
Devco-11601-B, L.P. 95 B 45283 (JLG) May 7, 1996
Olympia & York Tower B 96 B 40107 (JLG) July 7, 1996
Lease Company
O&Y Financial Company 96 B 42173 (JLG) October 21, 1996
Olympia & York 245 Park 96 B 42176 (JLG) October 21, 1996
Avenue Company
Trinity Place Company 96 B 42174 (JLG) October 21, 1996
Olympia & York OLP 96 B 42172 (JLG) October 21, 1996
Company
O&Y Liberty Plaza Company 96 B 42175 (JLG) October 21, 1996
<PAGE>
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Notice of the Bar Date and supplemental bar dates was provided to (a)
the United States Trustee's Office, (b) each member of the Creditors' Committee
and the attorneys for the Creditors' Committee, (c) all persons or entities that
have filed a notice of appearance in the Debtors' chapter 11 cases pursuant to
Bankruptcy Rule 2002 as of the date of entry of the Bar Date Order, (d) all
persons or entities listed on the Schedules of Liabilities of the respective
Debtors, and (e) all other known holders of Claims, if any, as of the date of
the Bar Date Order via first class mail and by publication in The Wall Street
Journal and The New York Times, The Los Angeles Times, The Chicago Tribune and
the Toronto Globe and Mail.
Q. MOTION TO APPROVE DEBTOR IN POSSESSION FINANCING FACILITY
Carena, CIBC and Citicorp Real Estate, Inc. ("CREI") (collectively,
the "DIP Lenders") have agreed to make a revolving loan (the "DIP Financing") to
certain of the Debtors, WFC Fincorp and Tower B Co. (collectively, the "DIP
Borrowers" or the "Borrowers") in an amount not to exceed $18 million in
accordance with and on the terms and conditions set forth in the Postpetition
Revolving Credit Agreement (as has been amended or hereafter may be amended, the
"DIP Credit Agreement").
On April 25, 1996, the Borrowers filed a motion (the "DIP Motion")
requesting entry of an order authorizing, among other things, the Borrowers to
obtain DIP Financing pursuant to section 364(c) of the Bankruptcy Code and
Bankruptcy Rule 4001(c) in accordance with and on the terms and conditions of
the DIP Credit Agreement. Objections to the relief requested in the DIP Motion
were received from TIAA, SVA, the Tower B Noteholders and Coopers & Lybrand
OYDL, Inc./Limited. The DIP Motion was originally scheduled to be heard on May
13, 1996, which hearing was continued on June 17, 1996.
On June 17, 1996, the Bankruptcy Court entered an order granting the
DIP Motion, permitting the Borrowers to consummate the DIP Financing and
approving in substantial form the DIP Credit Agreement. The funds to be obtained
through the DIP Financing will be used to pay for critically needed services,
including, operating expenses incurred in the ordinary course of the Borrowers'
businesses and administrative costs incurred in respect of the chapter 11 cases
of the DIP Borrowers. The principal terms and conditions of the DIP Credit
Agreement are as follows:
Borrowers: Devco, Devco GP, Equityco, Equity GP, OYREUSA,
U.S. Finco, Realty Corp., Devco Canada, Equity
Canada, Baden, WFC Fincorp and Tower B Co.
<PAGE>
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Lenders: CREI, CIBC and Carena
Agent: CREI
Maximum
Commitment: Not to exceed $18 million.
Term: The DIP Lenders will make revolving credit
advances to the DIP Borrowers, subject to certain
conditions set forth in the DIP Credit Agreement,
during the period from the date of entry of the
Final Order of the Bankruptcy Court approving the
DIP Borrowers' performing under the DIP Credit
Agreement until the earliest of (a) August 30,
1996, or if the Plan is confirmed by August 30,
1996 and certain conditions are satisfied, then
September 30, 1996, (b) the date of substantial
consummation of a Plan for the DIP Borrowers, or
(c) the date on which a notice of acceleration is
given by the Lenders (the "DIP Termination Date").
Interest Rate: The DIP Borrowers will pay interest monthly in
arrears at a rate per annum equal to Citibank's Base
Rate plus 2%. The DIP Borrowers may fund interest
payments by drawing on the credit facility.
Default
Interest Rate: Upon the occurrence and during the continuance of
an event of default, interest will accrue at a
rate per annum equal to Citibank's Base Rate plus
4%.
Commitment
Fee : On the later of one (1) business day of entry of
the Final Order and (ii) one Business Day after
the parties execute the Credit Agreement(34), the
DIP Borrowers will pay to the agent, for the
account of the DIP Lenders, a commitment fee equal
to 3.5% of the maximum commitment ($630,000). The
Borrowers may fund such payment by drawing on the
credit facility.
- --------
34 The Lenders waived this requirement until the
Initial Borrowing under the DIP Credit Agreement,
which is expected to occur on July 31, 1996.
<PAGE>
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Unused
Commitment
Fee: The Borrowers will pay to the agent, for the
ratable account of the Lenders, an unused
commitment fee equal to 0.75% per annum of the
average daily unused balance of the credit
facility, payable monthly in arrears. The
Borrowers may fund such payment by drawing on the
credit facility.
Agent's Fee: The Borrowers will pay to the agent for its own
account a monthly fee of $7,500 to cover costs of
administering the DIP Credit Agreement. The
Agent's fee is to paid in arrears on the first
business day of each month.
Use of
Proceeds: The Borrowers may use the proceeds from advances
for payment of projected expenses of the Borrowers
set forth in the budget, including, without
limitation, (i) operating expenses incurred in the
ordinary course of the Borrowers' businesses, (ii)
the fees and expenses of professionals, (iii) the
payment of interest and fees to the Lenders, and
(iv) the fees of the Clerk of the Bankruptcy Court
and the United States Trustee and other Bankruptcy
Court-related costs. Notwithstanding the
foregoing, Tower B Co. and WFC Fincorp will use
the proceeds from Advances solely for payment of
reasonable legal and related fees and expenses as
set forth in the budget and Bankruptcy Court-
related fees and costs and with respect to WFC
Finance, postpetition franchise taxes.
Conditions
Precedent
To Borrowing: The obligation of any DIP Lender to make an
advance is subject to the condition that, among
other things, after giving effect to the proposed
borrowing, the outstanding advances do not exceed
the relevant amounts set forth in section 2.01(c)
of the DIP Credit Agreement as of the end of such
month. In addition, the obligation of the Lenders
to make advances beyond August 30th(35), 1996 is
- --------
35 Under the DIP Amendment (as defined below) all
references in this section to "August 30, 1996" has
been changed to "September 30, 1996."
<PAGE>
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subject to the satisfaction of certain conditions
precedent, including, among other things:
(1) the Plan having been approved by the Confirmation
Order, reaffirming all obligations of the Borrowers
under the DIP Credit Agreement and related Loan
Documents as a post-Confirmation credit facility;
(2) no impairment of the Lenders' rights in any
Collateral or to liquidate the Collateral under
the Plan; and
(3) the delivery to the Lenders of a report setting
forth the amount and timing of reductions in
Borrowers' general and administrative expenses for
the period after August 30, 1996 and a revised Budget
incorporating such reductions.
Collateral/
Security: The obligations of the Borrowers (other than Tower
B Co. and WFC Fincorp) secured by (i) a valid and
perfected Lien on all property of the Borrowers'
estates that is not otherwise subject to a valid
and perfected Lien, and (ii) a valid and perfected
junior Lien on property of the Borrowers' estates
that is otherwise subject to a valid and perfected
Lien. The obligations of Tower B Co. and WFC
Fincorp are unsecured.
Priority: Pursuant to section 364(c)(1) of the Bankruptcy
Code, all obligations of the Borrowers under the
DIP Credit Agreement will constitute Allowed
Administrative Expense Claims in the Borrowers'
chapter 11 cases, having priority over any and all
administrative expenses of the kind specified in
sections 503(b) and 507(b) of the Bankruptcy Code,
except for severance obligations of the Borrowers
up to $3.5 million as provided in Section 6.02(f)
of the DIP Credit Agreement and Claims for Accrued
Expenses (as such term is defined in the DIP
Credit Agreement).
Remedies: Upon the occurrence of an Event of Default, the
Lenders may (i) terminate making Advances, (ii)
declare the notes, all interest thereon and all
other obligations of the Borrowers to the Lenders
under the DIP Credit Agreement be due and payable,
(iii) liquidate the Collateral in accordance with
the terms of Section 6.02 of the DIP Credit
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Agreement, and (iv) exercise any and all rights and
remedies under the DIP Credit Agreement and the other
Loan Documents, and all other rights and remedies
provided under the Bankruptcy Code and other
applicable law.
Several and
Joint and
Several
Liability : The Borrowers, except the Canadian Borrowers,
Tower B Co., and WFC Fincorp., will be jointly and
severally liable for the payment of the
Obligations under the DIP Credit Agreement, the
Notes and the other Loan Documents. Each of the
Canadian Borrowers, Tower B Co., and WFC Fincorp.
will be severally liable for all Obligations
incurred by or attributed to such Borrower,
including such Borrower's pro rata share of all
fees, costs and expenses incurred by the Borrowers
under the Loan Documents.
In addition to the approval of the DIP Loan, the Bankruptcy Court
granted the relief requested in the DIP Motion which sought a guarantee by Devco
of the professional fees and expenses of four of the Debtors' professionals: (i)
McCarthy Tetrault, Canadian counsel to the Debtors; (ii) Togut, Segal & Segal,
counsel to Tower B Co.; (iii) Weil, Gotshal & Manges LLP, counsel to the Debtors
(but only to the extent of fees for services rendered to Realty Corp., Devco
Canada and Equity Canada); and (iv) O'Sullivan, Graev & Karabell, counsel to WFC
Fincorp, but only to the extent such fees and expenses are not paid from
proceeds of the DIP Loan or from cash of the respective Borrower which is
available to pay such fees and expenses. The guarantee of Devco will terminate
following the 30th day after the date on which notice that either (i) an order
denying confirmation of the Plan has been entered or (ii) the Creditors'
Committee has provided notice to the Co-Proponents that it no longer supports
the Plan and in seeking an alternative is received by such law firm from counsel
to the Creditors' Committee. The giving of any such notice by counsel to the
Creditors' Committee to any of such law firms is without prejudice to the
Debtors' right to seek an order from the Bankruptcy Court authorizing the
continuation or reinstatement of the guaranties.
In addition, each of the Canadian Borrowers is authorized to guaranty
the payment of any administrative claim approved by the Bankruptcy Court against
Devco for reasonable fees and expenses of professionals that are retained by or
obligated to be paid by Devco's estate, provided that the
<PAGE>
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guarantee of the Canadian Borrowers shall not exceed certain limitations
specified in the order approving the DIP Motion.
On July 18, 1996, the Debtors filed a motion (the "Supplemental DIP
Motion") with the Bankruptcy Court requesting, among other things, entry of an
order pursuant to section 364(c) of the Bankruptcy Code approving an amendment
to the DIP Credit Agreement to fund the fees and expenses of Merrill, Lynch,
Pierce, Fenner & Smith Incorporated, as a lender and a placement agent, under
certain commitment letters (the "Merrill Commitment Letters"), and of Standard &
Poor's, as a rating agent, under a certain engagement letter (the "S&P
Engagement Agent"), in connection with the refinancing of Tower B (the "DIP
Amendment"). The DIP Amendment provides, among other things, for an additional
facility in the amount of $8,000,000 to be referred to as the "Tranche C
Facility", the proceeds of which will be available for the sole purpose of
funding the payments required to be made by the Debtors under the Merrill
Commitment Letters and the S&P Engagement Letter, including the Commitment Fee,
the Initial Advance Fee, the Monthly Advance Fee, Rental Shortfall Adjustment,
the Termination Fee (if any), the Expenses and the Legal Expense Deposit (as
such terms are defined in the Merrill Commitment Letters), together with the
periodic replenishment thereof, and other fees and expenses of counsel to
Merrill Lynch and to S&P incurred in connection with the Refinancing and the
Phase I and II Fees (as described in the S&P Engagement Letter) (collectively,
the "Merrill Lynch Expenses"). The DIP Amendment further provides that until the
DIP Termination Date, all Advances under the Tranche C Facility will be made to
a segregated account referred to as the "Merrill Lynch Expense Account" for the
benefit of Merrill and S&P without regard to whether an event of default under
the DIP Credit Agreement has occurred. In the event that the Borrowers have not
satisfied or been relieved from their obligations to pay the Merrill Lynch
Expenses as of the DIP Termination Date, then on the DIP Termination Date, each
DIP Lender will make the remaining Tranche C Advances to an escrow account for
the benefit of Merrill and S&P. Under the DIP Amendment, neither Tower B Co. nor
WFC Fincorp will have any liability with respect to any obligations related to
the Tranche C Facility. On August 7, 1996, the Bankruptcy Court entered an order
granting the Supplemental DIP Motion (as described above) (the "DIP Amendment
Order"). A copy of the DIP Amendment Order, along with exhibits attached (which
include the Merrill Commitment Letters and the S&P Engagement Letter), is
included in the Exhibit Volume to this Disclosure Statement as Exhibit O.
In addition, the DIP Amendment provides for the extension of the DIP
Termination Date Loan from September 30, 1996 to October 31, 1996, provided that
the Plan is confirmed by
<PAGE>
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the earlier date. The Debtors and the DIP Lenders are currently reviewing the
cash needs of the Debtors through the new DIP Termination Date and are
considering whether an increase in the DIP Commitment for budgeted expenses and
administrative costs will be required. A motion by the Debtors requesting such
relief, if necessary, will be filed subsequent hereto.
In addition, the DIP Amendment provides for the payment of certain
fees consisting of (i) an amendment fee of $50,000, and (ii) a commitment fee
equal to 3.5% of the Tranche C Facility.
<PAGE>
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VI. BUSINESS AND GOVERNANCE OF NEWCO LP AND LIQUIDATING CORP.
A. BUSINESS OF NEWCO LP
Newco LP will own and manage, directly and indirectly, Class A office
buildings in the Northeastern United States, and may engage in other real estate
ownership, development and management activities in the future. Through the
ownership and management of Class A office buildings, Newco LP will seek to
create increased value and liquidity for its equity owners over time.
Specifically, management of Newco LP is expected to work to:
o maximize the potential of Newco LP's core real estate
holdings;
o establish a strong financial structure geared to the
cash flows of the company;
o establish sound financial policies to insulate Newco LP
from fluctuations in interest rates and foreign
currency exposures;
o re-establish relationships with banks and other
financial institutions; and
o provide for growth opportunities.
Newco LP's payroll and overhead costs are expected to be materially less than
those of the Debtors inasmuch as reductions in administrative staff are
anticipated to comport with the reduced scope of Newco LP's property holdings
and operations in comparison to the collective property holdings and operations
of the Debtors and their affiliates.
B. MANAGEMENT OF NEWCO LP AND LIQUIDATING CORP.
1. Management of Newco LP
The business and affairs of Newco LP will be managed by its sole
general partner, Managing GP, through the management of Managing GP acting under
the direction of its Board of Directors. Pursuant to the Plan, the Co-Proponents
(or in each case a designated affiliate of a Co-Proponent) will become the
stockholders of Managing GP on the Effective Date. At such time, they will enter
into a stockholders' agreement setting forth, among other things, the rights of
such parties with respect to the nomination and election of directors of
Managing GP See "Governance of Newco LP and Managing GP" below.
<PAGE>
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The Co-Proponents have informed the Debtors that the Co-Proponents are
working to assemble a management team for Managing GP and Newco LP, which the
Co-Proponents expect will be drawn primarily from O&Y (U.S.)'s existing
management. The Co- Proponents have commenced discussions with the Debtors'
Chief Executive Officer and certain other members of the Debtors' management
regarding their possible retention as members of management of Managing GP
and/or Newco LP. In such discussions the Debtors' Chief Executive Officer
advised the Co-Proponents that he is not interested in serving as chief
executive officer on a permanent basis but would be willing to do so on an
interim basis following the Consummation Date while a transition to a new chief
executive is made and, thereafter, to serve on a part-time basis as a
non-executive chairman of the board of directors of Managing GP An understanding
has been reached on the participation in the management of Managing GP/Newco LP
by the Debtors' Chief Executive Officer on this basis, subject to finalizing the
compensation and incentive terms of employment. Certain other members of the
Debtors' management have reached an understanding regarding their participation
in the management of Managing GP/Newco LP, including the individuals who are to
serve as the heads of finance, accounting, leasing and property management and
in certain subordinate management positions, in each case subject to finalizing
the compensation and incentive terms of their employment. The Co-Proponents are
continuing their discussions with other members of the Debtors' management
regarding their participation in the management of Managing GP/Newco LP.
The Co-Proponents have further advised the Debtors that they are
seeking to retain an appropriate individual as chief executive of Managing
GP/Newco LP and to develop an appropriate compensation and incentive program for
the management thereof. The Co-Proponents have retained a consulting firm to
assist them in such effort. It is anticipated that this compensation and
incentive program will involve the grant to senior managers of options to buy
equity interests in Newco LP or similar equity incentive arrangements.
The Debtors and Co-Proponents intend to disclose at the Confirmation
Hearing any material arrangements that have been agreed upon at such time
regarding future employment of members of the Debtors' management by Managing
GP/Newco LP or by the Co- Proponents.
<PAGE>
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2. Management and Governance of
Liquidating Corp.
Liquidating Corp.'s business and affairs will be managed under the
direction of its board of directors, which will be elected annually by its
shareholders. The anticipated directors of Liquidating Corp. to be in office on
the Effective Date will be named by the Debtors at or before the Confirmation
Hearing. The identity of the senior management, or outside contract manager, for
Liquidating Corp. will also be disclosed at or before the Confirmation Hearing.
The Debtors and the Co- Proponents currently anticipate that Managing GP/Newco
LP will provide management to Liquidating Corp. on a contract basis and that the
operations of Liquidating Corp. and the properties which it directly and/or
indirectly owns or controls will be managed on a centralized basis by such
management team.
3. Employee Matters
Employee obligations of Devco GP, Devco and Tower A Co., including
(without limitation) unpaid wages, accrued vacation pay and sick pay, severance
payments, health, disability and life insurance payments, and any payments
required to be made by the Debtors under both the 401(k) Plan and the Employee
Savings Plan, to the extent such employee obligations are entitled to
Administrative Expense priority without further order of the Bankruptcy Court,
either will be (i) assumed by Newco LP and satisfied in the ordinary course of
its business or (ii) paid on the Effective Date as an Administrative Expense
Claim of Devco GP, Devco, Consolidated OLP, 245 Park Co. or Tower A Co., as
applicable.
The cash flow projections for Newco LP indicate substantially reduced
general and administrative costs in 1997 in comparison to those of the Debtors,
which reduced costs are expected to result primarily from a significant
downsizing in the work force in comparison to the Debtors' current work force,
relocation of corporate offices to smaller and less expensive space, and
completion during 1997 of any reorganization activities that continue after the
Effective Date. The cash flow projections for Newco LP assume payment of
severance and other costs associated with such downsizing principally as
restructuring expenses that are incurred in connection with consummation of the
Plan.
4. Pension Plan Matters
Certain of the Debtors, including Devco, 245 Park Co. and Tower A Co.,
are contributing sponsors to the Olympia & York (U.S.) Development Company, L.P.
Retirement Plan ("Pension
<PAGE>
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Plan"). The Pension Plan is a multiple employer pension plan covered by Title IV
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Newco LP will assume the Pension Plan and administer the Pension Plan in
accordance with Title IV of ERISA, 29 U.S.C. ss. 1001 et seq. Newco LP will
comply with all funding and other requirements of ERISA. Newco LP will be
responsible for any liability resulting from the termination of the Pension
Plan. If the Pension Plan has not been terminated prior to the Confirmation
Date, any claims by the Pension Plan or the Pension Benefit Guaranty Corporation
will be treated as arising after the Confirmation Date as obligations of Newco
LP. If the Pension Plan terminates after the Confirmation Date, Newco LP will be
responsible for all Liabilities under 29 U.S.C. ss. 1362 (b) and (c).
C. GOVERNANCE OF NEWCO LP AND MANAGING GP
1. General
As discussed above, Newco LP will be governed by Managing GP, which
will hold a 1% general partner interest in Newco LP. The business and affairs of
Managing GP will be managed by and under the direction of its board of
directors, which will have ten (10) members. The Chief Executive Officer of
Managing GP will be a member of this board. The certificate of incorporation of
Managing GP will provide for cumulative voting in any election of directors. In
addition, the Co-Proponents (or affiliates designated by them) will become
stockholders of Managing GP on the Effective Date and will enter into a
stockholders' agreement setting forth, among other things, the rights of such
parties with respect to the nomination and election of directors of Managing GP.
The stockholders agreement among the Co-Proponents (or designated
affiliates), described above, will affect certain other aspects of the
governance of Newco LP, including the permitted uses of the portion of the
Co-Proponents' Capital Infusion remaining after application to all cash uses
required under the Plan.
2. Voting Rights for Action
By the Boards of Directors
The aforementioned stockholders agreement will generally provide that
action may be taken by the Board of Directors of Managing GP upon vote of a
majority of the members of the board. However, actions by Newco LP in respect of
the following matters will require approval by a supermajority vote of the Board
of Directors of Managing GP:
<PAGE>
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(i) a significant acquisition or business combination, or
disposition of any Core Property;
(ii) any issuance or purchase by any Entity controlled by
Managing GP of any capital stock or any other Equity Interests (including any
significant long-term debt refinancing involving the issuance of any capital
stock or any other Equity Interests), except an issuance made in exchange for
debt upon an actual or anticipated default on such debt where no other available
alternative is acceptable to the creditor;
(iii) any transaction between any Entity controlled by Managing
GP and any related party (other than ordinary course transactions);
(iv) the initial selection, and any removal or replacement, of
Managing GP's Chief Executive Officer during the three-year period following the
Effective Date; and
(v) any amendment of the organizational documents of Managing GP
or any Entity owned or controlled by Managing GP that affect cumulative voting
in any election of directors of Managing GP or affecting any of the matters
referred to in clauses (i) through (iv) above.
D. REFINANCING OF THE INDEBTEDNESS ON CERTAIN
OF THE CORE PROPERTIES
In an attempt to improve the capital structure and viability of Newco
LP, the Debtors and the Co-Proponents have been negotiating with various lenders
to refinance the existing debt of certain of the Core Properties. An integral
part of the Plan is to create a strong, viable Newco LP through the deleveraging
of an overleveraged asset, 245 Park. However, instead of just refinancing 245
Park, which would be very expensive and would likely destabilize Newco LP, the
Debtors and the Co-Proponents have chosen to increase the debt encumbering Tower
D and decrease the debt encumbering 245 Park. The benefit of those transactions
will be to eliminate more expensive debt on 245 Park and replace it with
additional, less expensive, debt on Tower D.
Specifically, as a result of the A+ credit of Merrill Lynch, the
Debtors have been able to finance Tower D on a long-term basis at 9.05% per
annum. The Sumitomo Bank/Tower D Mortgage Loan does not mature until 2003. By
comparison, the Aetna Mortgage Loan on 245 Park has been matured for over two
and one-half years and has a contractual rate of interest of 12% and a default
interest rate claimed by Aetna of 18%. Also, the DKB Mortgage Loan has been
matured for over one and one-half years
<PAGE>
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and has a contractual rate of interest that ranges between LIBOR + .8125% to
9.275% and a default rate of interest claimed by DKB of LIBOR + 3%. In addition,
while the only lease at Tower D, Merrill Lynch, does not expire until 2013, the
major lease at 245 Park, Bear Stearns, expires in 2002.
By entering into the refinancing with Merrill Lynch and/or Chase on
the terms set forth in the section captioned "The Current Status of O&Y (U.S.)
in 1996 -- Core Properties -- Tower D -- Proposed Debt Structure," the Debtors
will create a stronger and more viable Newco. Although the proposed Tower D
refinancing will further encumber Tower D, the benefit to Newco through its
ability to refinance 245 Park with the excess Tower D refinancing proceeds is
highly significant. In addition, as a result of the proposed Tower D refinancing
and the repayment of the Sumitomo Bank/Tower D Pledge Loan, the only remaining
unsecured obligation of Newco will be the Convertible Note Interests issued for
the benefit of the Unaffiliated Unsecured Creditors.
Furthermore, the proposed refinancing of Tower D will create the
following benefits to the debt structure of 245 Park:
1. Principal: Reduce the aggregate mortgage debt on
245 Park Avenue from approximately $383 million to
$275 million;
2. Interest Rate: Lower the effective rate of
interest on the Aetna Mortgage Loan from 12% per
annum to 10-year Treasury Note rate plus 200 basis
points (approximately 8.75% per annum currently).
Lower the effective rate of interest on the DKB
Mortgage Loan from between LIBOR + .8125% to
9.275% per annum to DKB's cost of funds plus 175
basis points (approximately 8.50% per annum
currently);
3. Maturity: The maturity of the Restructured Aetna
Mortgage Loan would be in 2006. Importantly, that
would allow a stabilization of the building during
the roll-over in 2002 of the Bear Stearns lease.
The maturity of the Restructured DKB Mortgage Loan
would be December 31, 2002. However, as discussed
below, the Restructured DKB Mortgage Loan would be
fully self-amortizing.
4. Amortization: The Restructured DKB Mortgage Loan
will be fully self-amortizing over a five-year
period in years 2-6 of the loan.
<PAGE>
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E. NEWCO LP FINANCIAL INFORMATION
See "First Amended Financial Appendix", annexed hereto as Exhibit B,
for various financial statements of Newco LP. The financial statements included
in the First Amended Financial Appendix are as follows:
1. Pro Forma Balance Sheets
a. Newco Limited Partnership Pro Forma
Balance Sheet as of September 30, 1996
b. Newco Limited Partnership Notes to Pro Forma
Balance Sheet Projected as of September 30, 1996
c. U.S. Operations of Olympia & York Roll Forward of
December 31, 1995 Combining Financial Statements
to Newco Limited Partnership and Liquidating
Companies as of September 30, 1996
d. Newco Limited Partnership Pro Forma Combining
Balance Sheet
2. Projected Cash Flows
a. Newco Limited Partnership Corporate Cash Flow
Summary
b. Cash Flow Projections for the Core Properties
Furthermore, to the extent that such statements are available, copies
of the most recent available audited financial statements of the individual
Debtors will be made available to Creditors upon written request to:
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Attn.: Michael I. Schor, Esq.
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VII. SUMMARY OF THE SECOND AMENDED
PLAN OF REORGANIZATION FOR THE DEBTORS
A. GENERAL
This section of the Disclosure Statement summarizes the Plan, which is
set forth in its entirety as Exhibit A hereto. This summary is qualified in its
entirety by reference thereto. YOU SHOULD READ THE PLAN IN ITS ENTIRETY, AND
DISCUSS THE DISTRIBUTIONS AND RIGHTS TO WHICH YOU ARE ENTITLED THEREUNDER WITH
YOUR ADVISORS.
In general, a chapter 11 plan of reorganization (i) divides claims and
equity interests into separate classes, (ii) specifies the property that each
class is to receive under the plan, and (iii) contains other provisions
necessary to the reorganization of the debtor. Under the Bankruptcy Code,
"claims" and "equity interests" are classified rather than "creditors" and
"shareholders" because such entities may hold claims or equity interests in more
than one class. For purposes of this Disclosure Statement, the terms "Creditor"
and "Equity Holder" refer to the holder of a "Claim" or "Equity Interest",
respectively, in a particular Class under the Plan. The term "Impaired Creditor"
refers to the Creditors to whom this Disclosure Statement (and the related
Ballots and other materials delivered together herewith) are being furnished and
who are entitled to vote to accept or reject the Plan. Each of Consolidated
Devco Classes 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11, Consolidated Realty Corp.
Classes 2, 3, 4, 5 and 6, SF Holdings Classes 2 and 3, Devco Canada Classes 2
and 3, Equity Canada Classes 2 and 3, Consolidated OLP Classes 2, 3, 4, 5 and 6,
Tower A Co. Classes 2, 3, 4, 5 and 6, Tower Corp. Classes 2 and 3, Consolidated
245 Classes 2, 3, 4, 5, 6, 7 and 8, and Tower B Leaseco Classes 2, 3 and 4 are
impaired under the Plan, and the holders of Claims or Equity Interests in such
Classes are entitled to vote to accept or reject the Plan.
A chapter 11 plan may specify that certain classes of Claims or equity
interests are to have their Claims or equity interests remain unaltered by the
reorganization effectuated by the plan. Such classes are referred to as
"unimpaired" and, because of such favorable treatment, are conclusively deemed
to accept the plan. Accordingly, under section 1126(f) of the Bankruptcy Code it
is not necessary to solicit acceptances from the holders of Claims or equity
interests in such classes. The Claims and Equity Interests in each of
Consolidated Devco Class 1, Consolidated Realty Corp. Class 1, SF Holdings Class
1, Devco Canada Class 1, Equity Canada Class 1, Consolidated OLP Class 1, Tower
A Co. Class 1, Tower Corp. Class 1, Consolidated 245 Class 1 and Tower B Leaseco
Class 1 are not impaired under the Plan,
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and each such Class is, therefore, conclusively deemed to have
accepted the Plan.
A chapter 11 plan also may specify that certain classes will not
receive any distribution of property under the Plan. Under section 1126(g) of
the Bankruptcy Code, such classes are conclusively deemed to reject the plan
and, therefore, need not be solicited to vote to accept or reject the plan. The
holders of Claims or Equity Interests in each of Consolidated Devco Class 12,
Consolidated Realty Corp. Class 7, Devco Canada Class 4, Equity Canada Class 4,
Tower Corp. Classes 4 and 5 and Tower B Leaseco Class 5 will not receive or
retain any property under the Plan on account of such Claims and Interests, and
each such Class is, therefore, conclusively deemed to have rejected the Plan.
The "Effective Date" means the date upon which each of the conditions
precedent to the occurrence of the Effective Date of the Plan specified in
section 22.2 of the Plan will have been satisfied or waived in accordance with
section 22.3 of the Plan.
B. DESCRIPTION OF INDIVIDUAL CLASSES AND
THE TREATMENT OF EACH CLASS UNDER THE PLAN
1. Administrative, Priority Tax and Convenience Claims
a. Administrative Expense Claims
Creditors holding Administrative Claims are those entities holding
Claims against the Debtors entitled to priority under section 503(b) of the
Bankruptcy Code, including all actual and necessary costs and expenses of
preserving the estates of the Debtors, and indebtedness or obligations incurred
by the Debtors in connection with the conduct of their businesses, any allowance
for employee compensation, and fees and charges assessed against the Debtors'
estates under chapter 123, title 28, United States Code.
Except as provided in section 26.5.1 of the Plan, on the Effective
Date, each holder of an Administrative Expense Claim will be distributed on
account of such Administrative Expense Claim an amount in Cash equal to the
amount of such Administrative Expense Claim allowed by the Bankruptcy Court,
except to the extent that any Entity entitled to payment of any Administrative
Expense Claim agrees to a different treatment of such Administrative Expense
Claim. Each holder of an Administrative Expense Claim against a Debtor or a
substantively consolidated group of Debtors will be paid by such Debtor or
substantively consolidated group of Debtors, or the successor(s) in interest
thereto, (a) upon the later of (i) the Effective Date and (ii) the date that is
ten (10) Business Days after an order
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of the Bankruptcy Court with respect to any such Administrative Expense Claim
becomes a Final Order or (b) upon such other terms as may be mutually agreed
upon between such holder of an Administrative Expense Claim and any of the
Debtors.
b. Priority Tax Claims
Creditors holding Priority Tax Claims are those holding Claims against
the Debtors entitled to priority under section 507(a)(8) of the Bankruptcy Code.
Except as provided in section 26.5.1 of the Plan, on the Effective
Date, with respect to each Debtor or substantively consolidated group of Debtors
(other than Tower B Leaseco), each holder of an Allowed Priority Tax Claim will
be distributed on account of such Allowed Priority Tax Claim a Tax Note from
such Debtor or substantively consolidated group of Debtors, or the successor(s)
in interest thereto, that complies with the requirements of section
1129(a)(9)(C) of the Bankruptcy Code or such other, more favorable treatment, as
the Debtors in their sole discretion shall elect. On the Effective Date, each
holder of an Allowed Priority Tax Claim against Tower B Leaseco will receive a
payment in Cash equal to the amount of such Allowed Priority Tax Claim.
c. Consolidated Devco Convenience Claims
Holders of Consolidated Devco Convenience Claims are creditors holding
(a) Allowed Unsecured Claims against Consolidated Devco equal, in the aggregate,
to $5,000 or less or which, pursuant to the election made pursuant to the Plan,
has been reduced by the holder thereof to $5,000, or (b) a Disputed Unsecured
Claim against Consolidated Devco which became an Allowed Unsecured Claim against
Consolidated Devco of $5,000 or less with the consent of and in the amount
agreed to by a Debtor. However, the Claim of a holder of more than one Unsecured
Claim against any of the Debtors may not be a Consolidated Devco Convenience
Claim, unless the holder has irrevocably elected on the Ballot soliciting votes
on the Plan to withdraw, consolidate, amend and reduce all Unsecured Claims held
by it to one Consolidated Devco Unsecured Claim in the amount of $5,000 or less.
Each holder of an Allowed Consolidated Devco Convenience Claim will be
paid in full the Allowed amount of such Consolidated Devco Convenience Claim, in
Cash, on the Effective Date, subject to satisfaction of the Withholding
Requirement for Consolidated Devco Convenience Claims that are Compensation
Claims.
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2. Consolidated Devco
a. Priority Non-Tax Claims Against
Consolidated Devco (Consolidated Devco Class 1)
Holders of Consolidated Devco Class 1 Claims are those holding Claims
against Consolidated Devco, other than Administrative Expense Claims and
Priority Tax Claims, which are entitled to priority under section 507(a) of the
Bankruptcy Code.
The estimated range of Allowed Claims in Consolidated Devco Class 1 is
$200,000 to $400,000.
On the Effective Date, in full satisfaction of the Allowed Priority
Non-Tax Claims against the Consolidated Devco Entities, each holder of an
Allowed Priority Non-Tax Claim against the Consolidated Devco Entities will be
distributed on account of such Allowed Priority Non-Tax Claim a payment in Cash
equal to the amount of such holder's Allowed Priority Non-Tax Claim.
Consolidated Devco Class 1 is not impaired.
b. Secured Club Loan Claims Against Devco,
Devco GP, Equityco, Equity GP and
U.S. Finco (Consolidated Devco Class 2)
Holders of Consolidated Devco Class 2 Claims are the holders of
interests in the Club Loan.
The estimated Allowed amount of the Claims in Consolidated Devco Class
2 is $165,508,335.43 as of October 11, 1995, plus costs, fees and interest
payable thereon in accordance with the applicable agreements.
On the Effective Date and in accordance with the Restructuring
Transactions, the New Club Loan Disbursing Agent shall be distributed, on
account of the Allowed Secured Club Loan Claims against Devco, Devco GP,
Equityco, Equity GP and U.S. Finco, Class A Interests having a value equal to
the lesser of (a) the Allowed Club Loan Claims and (b) the value on the
Confirmation Date of the Collateral securing the Allowed Club Loan Claims
pledged by Devco, Devco GP, Equityco, Equity GP and U.S. Finco. In accordance
with sections 7.2, 8.2, 14.2 and 15.2 of the Plan and without duplication, the
New Club Loan Disbursing Agent shall be distributed, in the aggregate and in
full satisfaction of the Allowed Club Loan Claims, Class A Interests having a
value equal to the lesser of (a) the Allowed Club Loan Claims and (b) the value
on the Confirmation Date of the
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Collateral securing the Allowed Club Loan Claims pledged by any Debtor under the
Plan.
Consolidated Devco Class 2 Claims are impaired.
c. Secured CIBC/OLP Claims Against Devco, Devco GP
and U.S. Finco (Consolidated Devco Class 3)
The holder of the Consolidated Devco Class 3 Claims is CIBC, on
account of its Allowed Secured Claims arising out of the CIBC/OLP Loan.
The estimated Allowed Secured Claims in Consolidated Devco Class 3 is
$75,658,000 as of June 30, 1996, plus interest accruing from June 30, 1996
through the Effective Date, plus fees and expenses payable in accordance with
the governing loan documents and applicable law.
On the Effective Date, the CIBC/OLP Claims shall be an Allowed Claim
in the amount of $75,658,000 plus interest accruing from and after June 30, 1996
through the Effective Date and any unpaid attorneys' fees and expenses incurred
through the Effective Date that are payable under the agreements evidencing the
CIBC/OLP Claims. On the Effective Date, in full satisfaction of the Allowed
CIBC/OLP Claims, CIBC or its designee shall be distributed, in accordance with
the Restructuring Transactions, that number of Class A Interests having a value
equal to the lesser of (a) the amount of the Allowed CIBC/OLP Claims on the
Effective Date and (b) the value, as of the Confirmation Date, of the Collateral
securing the Allowed CIBC/OLP Claims. CIBC, as holder of the Allowed CIBC/OLP
Claims, shall not be entitled to any additional distribution by reason of any
Allowed CIBC/OLP Claims filed against other Debtors for the same loss or damage.
Consolidated Devco Class 3 is impaired.
d. Secured Sumitomo Bank/Tower D Pledge
Loan Claims Against Devco and
Devco GP (Consolidated Devco Class 4)
The holder of the Consolidated Devco Class 4 Claims is Sumitomo Bank,
on account of the Sumitomo Bank/Tower D Pledge Loan, made in the original
principal amount of $74,750,000, which is secured by, among other things, a
pledge of Devco's and Devco GP's indirect partner interests in Tower D Co.
The estimated Allowed Secured Claims in Consolidated Devco Class 4 is
$74,750,000 as of the Petition Date.
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On the Effective Date, in full satisfaction of the Allowed Sumitomo
Bank/Tower D Pledge Loan Claims, Sumitomo Bank will be distributed a payment in
Cash of $74,750,000, plus any unpaid and accrued interest at the rate of LIBOR
plus 100 basis points accrued on the Sumitomo Bank/Tower D Pledge Loan together
with any costs and expenses payable under the Sumitomo Bank/Tower D Pledge Loan
Claims through the Effective Date. On the Effective Date, the Sumitomo
Bank/Tower D Pledge Loan and any Claims otherwise arising under, or related to,
the Sumitomo/Tower D Pledge Loan will be released and cancelled in consideration
of the Sumitomo Bank/Tower D Restructured Pledge Loan.
Consolidated Devco Class 4 is impaired.
e. Secured Citibank Letter of Credit Claims
Against Equityco (Consolidated Devco Class 5)
The holder of the Consolidated Devco Class 5 Claim is Citibank on
account of an irrevocable standby letter of credit issued by Citibank to
Park-Lex Co. in the outstanding principal amount of $15,632,752, which is
secured by certain securities owned by Equityco.(36)
The estimated Allowed Claim in Consolidated Devco Class 5 is
$15,632,752.00 as of the Petition Date.
On the Effective Date, in full satisfaction of the Allowed Citibank
Letter of Credit Claims against Equityco, Citibank will be distributed the
Collateral that secures the reimbursement obligation under the Citibank Letter
of Credit.
Consolidated Devco Class 5 is impaired.
f. Secured Citibank Swap Claims Against
Devco (Consolidated Devco Class 6)
The holder of the Consolidated Devco Class 6 Claims is Citibank.
- --------
36 Park-Lex Co. has and is expected to continue to draw on the Citibank Letter
of Credit through the expiration of such letter of credit in the year 2012.
The arithmetic sum of these draws will be approximately $15 million as of
the expiration date of the Citibank Letter of Credit. The Claims of
Citibank under the Citibank Letter of Credit exceed the value of the
collateral owned by Equityco which collateral secures the obligations of
Equityco to Citibank.
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On the Effective Date, in full satisfaction of the Citibank Swap
Claim, Citibank will be distributed the Collateral (a certain Cash account which
held $443,507.31 as of March 31, 1996) that secures the Citibank Swap Claim to
the extent such Claim is an Allowed Secured Claim. The Deficiency Claim on the
Allowed Citibank Swap Claim will receive the treatment accorded to Co-Proponent
Unsecured Claims set forth in section 7.11.2 of the Plan.
Consolidated Devco Class 6 is impaired.
g. Secured Sterling National Letter of Credit Claims
Against Devco GP (Consolidated Devco Class 7)
The holder of the Consolidated Devco Class 7 Claims is Sterling
National on account of its Secured Claims arising from two letters of credit
issued by Sterling National in favor of certain officers of the debtors, which
are secured by Cash collateral deposits in the amounts of $2,000,000 and
$666,666, respectively.
On the Effective Date, in full satisfaction of the Allowed Sterling
National Letter of Credit Claims against Devco GP, Sterling National will be
distributed the Sterling National Amended and Restated Reimbursement Agreement,
pursuant to which Newco LP will be substituted for Devco GP as the obligor on
such reimbursement agreement.
The Sterling National Amended and Restated Reimbursement Agreement
will be secured by the Collateral that secures the reimbursement obligation
under the Sterling National Letter of Credit.
Consolidated Devco Class 7 is impaired.
h. Secured 245 Park Co. Partnership Claims
Against Devco (Consolidated Devco Class 8)
The holder of the Consolidated Devco Class 8 Claim is 245 Park Co. on
account of its Secured Claim arising from Devco's obligations under a certain
First Amended and Restated Agreement of General Partnership of 245 Park Avenue
Co. dated December 29, 1983, which obligations are secured by a pledge of
Devco's partner interest in 245 Park Co.
The estimated amount of Claims in Consolidated Devco Class 8 is $0.
On the Effective Date, in full satisfaction of the Allowed 245 Park
Co. Partnership Claims against Devco, the
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holders of Allowed 245 Park Co. Partnership Claims against Devco will
receive the distributions provided to the holders of Allowed Equity Interests in
245 Park Co. in section 15.8 of the Plan.
Consolidated Devco Class 8 is impaired.
i. CIBC/Lost Note Indemnity Claims
against O&Y Finco, Equityco and
Equity GP (Consolidated Devco Class 9)
The holder of Consolidated Devco Class 9 Claims is CIBC on account of
its Claims arising under that certain Lost Note Indemnity dated January 6, 1995,
made by O&Y Finco, Equityco and Equity GP.
On the Effective Date, in full satisfaction of the Allowed CIBC/Lost
Note Indemnity Claims against O&Y Finco, Equityco and Equity GP, CIBC will be
distributed the CIBC Amended and Restated Lost Note Indemnity Agreement,
pursuant to which Newco LP will be substituted for O&Y Finco, Equityco and
Equity GP as the obligor on such indemnity agreement.
Consolidated Devco Class 9 is impaired.
j. Insured Claims Against
Consolidated Devco Entities
(Consolidated Devco Class 10)
Holders of Consolidated Devco Class 10 Claims are holders of claims
against any of the Consolidated Devco Entities, whether liquidated,
unliquidated, contingent, disputed or undisputed, the payment of which are
insured, in whole or part, by insurance policy coverage against the loss or
damage giving rise to such claims. The Debtors believe that they have sufficient
general liability and/or umbrella liability coverage to pay all judgments and/or
settlements obtained by holders of claims in this class.
On the Effective Date, each holder of an Insured Claim shall only be
entitled to maintain actions against and obtain payment solely from an insurance
company under an insurance policy or policies issued by such company to, or for
the benefit of, any of the Consolidated Devco Entities.
Consolidated Devco Class 10 is impaired.
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k. General Unsecured Claims Against
Consolidated Devco (Consolidated Devco Class 11)
Consolidated Devco Class 11 consists of all General Unsecured Claims
against any of the Consolidated Devco Entities, including all Unaffiliated
Unsecured Claims against any of the Consolidated Devco Entities and all
Co-Proponent Unsecured Claims. Consolidated Devco Class 11 constitutes one class
for voting purposes.
(i) Treatment of Unaffiliated Unsecured Claims
Holders of Consolidated Devco Class 11 Claims of this type are holders
of Allowed General Unsecured Claims, individually or collectively, against any
of the Consolidated Devco Entities: Devco GP, Equity GP, Devco, Equityco, U.S.
Finco and O&Y Finco.
Unaffiliated Unsecured Claims are General Unsecured Claims against
Consolidated Devco Entities held by Unsecured Creditors other than
Co-Proponents.
The estimated range of the Allowed Unaffiliated Unsecured Claims in
Consolidated Devco Class 11 is $353 million to $500 million as of the Petition
Date.
On the Effective Date and in accordance with the Restructuring
Transactions, each holder of an Allowed Unaffiliated Unsecured Claim against the
Consolidated Devco Entities shall be distributed consideration having a value
equal to 8% of the amount of such Allowed Unaffiliated Unsecured Claim. Such
consideration shall be comprised of (a) Class A Interests having a value on the
Confirmation Date equal to 2.29% of such holder's Allowed Unaffiliated Unsecured
Claim, and (b) a Convertible Note Interest having a value equal to 5.71% of such
Allowed Unaffiliated Unsecured Claim. See "Settlements and Agreements
Implemented by the Plan -- Unsecured Creditors' Agreement".
(ii) Treatment of Co-Proponent Unsecured Claims
The Co-Proponent Unsecured Claims are the General Unsecured Claims
against the Consolidated Devco Entities held by the Co-Proponents. The estimated
Allowed Co-Proponent Unsecured Claims in Consolidated Devco Class 11 is $305-310
million as of the Petition Date, including the Allowed General Unsecured Claims
in favor of Apollo in the face amount of approximately $91 million which are to
be transferred to the Co-Proponents pursuant to the January 12th Settlement
Agreement.
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On the Effective Date, each Co-Proponent agrees to subordinate the
Allowed Co-Proponent Unsecured Claims held by such Co-Proponent to enable the
holders of Allowed Unaffiliated Unsecured Claims to receive the distributions
under section 7.11.1 of the Plan. After all distributions required by section
7.11.1 of the Plan have been made, the Residual Newco Equity will be distributed
to the Co-Proponents on account of the Co- Proponents' Capital Infusion and on
account of the Allowed Co- Proponent Unsecured Claims. In addition, in partial
consideration of the Co-Proponents' Capital Infusion and the Allowed
Co-Proponent Unsecured Claims, the Newco LP Partnership Agreement will designate
Managing GP as the sole general partner of Newco LP in accordance with section 3
of the Plan.
Consolidated Devco Class 11 is impaired.
l. Equity Interests in Consolidated Devco
Entities (Consolidated Devco Class 12)
Holders of Equity Interests in Consolidated Devco Class 12 are holders
of Equity Interests, individually or collectively, in any of the following
Consolidated Devco Entities: Devco GP, Equity GP, Devco, Equityco, U.S. Finco
and O&Y Finco.
Each holder of an Allowed Equity Interest in any of the Consolidated
Devco Entities will receive no distribution and retain no value on account of
such holder's Allowed Equity Interest.
Consolidated Devco Class 12 is impaired.
3. Consolidated Realty Corp.
a. Priority Non-Tax Claims Against
Realty Corp., Baden and OYREUSA
(Consolidated Realty Corp. Class 1)
Holders of Consolidated Realty Corp. Class 1 Claims are those entities
holding Claims against Realty Corp., Baden and/or OYREUSA, other than
Administrative Expense Claims and Priority Tax Claims, which are entitled to
priority under section 507(a) of the Bankruptcy Code.
The estimated amount of Allowed Claims in Consolidated Realty Corp.
Class 1 is $0.
On the Effective Date, in full satisfaction of each such holder's
Allowed Priority Non-Tax Claim against Realty Corp., Baden or OYREUSA, each
holder of an Allowed Priority Non- Tax Claim against Realty Corp., Baden or
OYREUSA will be
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distributed on account of such Allowed Priority Non-Tax Claim a payment in Cash
equal to the amount of its Allowed Priority Non- Tax Claim.
Consolidated Realty Corp. Class 1 is not impaired.
b. Secured Club Loan Claims Against
OYREUSA (Consolidated Realty Corp. Class 2)
Holders of Consolidated Realty Corp. Class 2 Claims are holders of
interests in the Club Loan with secured Claims against OYREUSA arising
thereunder.
The estimated amount of Allowed Secured Claims in Consolidated Realty
Corp. Class 2, after giving effect to the January 12th Settlement Agreement, is
$165,508,335.43 as of October 11, 1995, plus costs, fees and interest payable
thereon in accordance with the applicable agreements.
On the Effective Date and in accordance with the Restructuring
Transactions, the New Club Loan Disbursing Agent shall be distributed, on
account of the Allowed Secured Club Loan Claims against OYREUSA, Class A
Interests having a value equal to the lesser of (a) the Allowed Club Loan Claims
and (b) the value on the Confirmation Date of the Collateral securing the
Allowed Club Loan Claims pledged by OYREUSA, after taking into account the
treatment of the OpCo Notes set forth in the Restructuring Transactions. In
accordance with sections 7.2, 8.2, 14.2 and 15.2 of the Plan and without
duplication, the New Club Loan Disbursing Agent shall be distributed, in the
aggregate and in full satisfaction of the Allowed Club Loan Claims, Class A
Interests having a value equal to the lesser of (a) the Allowed Club Loan Claims
and (b) the value on the Confirmation Date of the Collateral securing the
Allowed Club Loan Claims pledged by any Debtor under the Plan.
Consolidated Realty Corp. Class 2 is impaired.
c. Toronto Dominion Judgment Claims Against
Baden (Consolidated Realty Corp. Class 3)
The holder of the Consolidated Realty Corp. Class 3 Claim is Toronto
Dominion.
The estimated amount of the Consolidated Realty Corp. Class 3 Claim is
$10.4 million as of the Petition Date.
On the Effective Date, and in full satisfaction of the Allowed Toronto
Dominion Judgment Claims, Toronto Dominion will
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receive the consideration provided in the Toronto Dominion Settlement described
in section 4.6 of the Plan.
Consolidated Realty Corp. Class 3 is impaired.
d. Bank of Nova Scotia Claims Against Baden
(Consolidated Realty Corp. Class 4)
The holder of the Bank of Nova Scotia Claims against Baden is the Bank
of Nova Scotia.
The estimated amount of the Bank of Nova Scotia Claims against Baden
is approximately $38 million as of the Petition Date.
On the Effective Date, in full satisfaction of the Bank of Nova Scotia
Claims, Bank of Nova Scotia will receive the consideration provided in the Bank
of Nova Scotia Settlement described in section 4.9 of the Plan.
Consolidated Realty Corp. Class 4 is impaired.
e. Insured Claims Against
Realty Corp., OYREUSA and Baden
(Consolidated Realty Corp. Class 5)
Holders of Consolidated Realty Corp. Class 5 Claims are holders of
claims against any of the Consolidated Realty Corp. Entities, whether
liquidated, unliquidated, contingent, disputed or undisputed, the payment of
which are insured, in whole or part, by insurance policy coverage against the
loss or damage giving rise to such claims. The Debtors believe that they have
sufficient general liability and/or umbrella liability coverage to pay all
judgments and/or settlements obtained by holders of claims in this class.
On the Effective Date, each holder of an Insured Claim shall only be
entitled to maintain actions against and obtain payment solely from an insurance
company under an insurance policy or policies issued by such company to, or for
the benefit of, any of Realty Corp., OYREUSA and/or Baden.
Consolidated Realty Corp. Class 5 is impaired.
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f. General Unsecured Claims Against
Realty Corp., OYREUSA and Baden
(Consolidated Realty Corp. Class 6)
Holders of Consolidated Realty Corp. Class 6 Claims are holders of
Allowed General Unsecured Claims against Realty Corp., Baden or OYREUSA,
individually or collectively.
The estimated range of Claims in Consolidated Realty Corp. Class 5 is
$375 million to $450 million as of the Petition Date.
On the Effective Date, each holder of an Allowed General Unsecured
Claim against any of Realty Corp., OYREUSA and/or Baden will be distributed,
based upon an election to be made upon each such holder's Ballot, either of the
following alternative distributions:
(a) In accordance with the Restructuring Transactions, each holder of
an Allowed General Unsecured Claim, including any Co-Proponent, against any of
Realty Corp., OYREUSA and/or Baden that so elects shall be distributed such
holder's Ratable Proportion of (x) that number of Class A Interests having a
value as of the Confirmation Date equal to the value of the Undisputed Realty
Corp. Assets and (y) 98.8% of the outstanding Class B Interests; provided,
however, that the aggregate percentage of Class B Interests that is to be
distributed to one or more of the Co-Proponents under section 8.6(a) of the Plan
shall be reduced by the percentage, if any, required to be distributed to JMB in
accordance with section 15.8.1 of the Plan.
-- or --
(b) Each holder of an Allowed General Unsecured Claim against any of
Realty Corp., OYREUSA and Baden that qualifies as, and elects to be treated as,
a Realty Corp. Cash-Out Claim shall be distributed a payment in Cash equal to
such holder's Realty Corp. Cash-Out Claim; provided, however, that in the event
it is determined, based on the Ballots received by Realty Corp., OYREUSA and
Baden, that the aggregate amount of Cash to be distributed on account of the
Realty Corp. Cash-Out Claims pursuant to section 8.6(b) of the Plan exceeds
$500,000 (except to the extent such amount is increased by the Debtors and the
Co- Proponents in their sole discretion), then the above-described election
shall be eliminated and each holder of a Realty Corp. Cash-Out Claim shall
receive the treatment provided in subsection (a) above without regard to any
election to be treated as a Realty Corp. Cash-Out Claim.
Consolidated Realty Corp. Class 6 is impaired.
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g. Equity Interests in Realty Corp.
(Consolidated Realty Corp. Class 7)
The holder of the Equity Interest in Consolidated Realty Corp. Class 6
is OYDL.
OYDL will receive no distribution on account of its Equity Interest in
Consolidated Realty Corp.
Consolidated Realty Corp. Class 7 is impaired.
4. SF Holdings
a. Priority Non-Tax Claims Against
SF Holdings (SF Holdings Class 1)
Holders of SF Holdings Class 1 Claims are those holding Claims against
SF Holdings, other than Administrative Expense Claims and Priority Tax Claims,
which are entitled to priority under section 507(a) of the Bankruptcy Code.
The estimated amount of Allowed Claims in SF Holdings Class 1 is $0.
On the Effective Date, each holder of an Allowed Priority Non-Tax
Claim against SF Holdings will be distributed a payment in Cash equal to the
Allowed amount of such holder's Claim.
SF Holdings Class 1 is not impaired.
b. General Unsecured Claims Against
SF Holdings (SF Holdings Class 2)
Holders of SF Holdings Class 2 Claims are those holding Allowed
General Unsecured Claims against SF Holdings.
The estimated amount of Allowed Claims in SF Holdings Class 2 is $0 as
of the Petition Date.
On the Effective Date, after giving effect to the distributions
required by section 9.1 of the Plan and the payment of Administrative Expense
Claims against SF Holdings, in full satisfaction of the Allowed General
Unsecured Claims against SF Holdings, each holder of an Allowed General
Unsecured Claim against SF Holdings shall be distributed the lesser of (a) a
payment in Cash equal to the amount of such holder's Allowed General Unsecured
Claim against SF Holdings, if the Available Cash of SF Holdings at the time is
sufficient to fund such payment of all Allowed General Unsecured Claims against
SF
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Holdings, and (b) a payment in Cash equal to such holder's Ratable
Proportion of the Available Cash of SF Holdings on the Effective Date. From and
after the Effective Date, in the event the holders of Allowed General Unsecured
Claims against SF Holdings are provided the distribution provided in clause (b)
of the immediately preceding sentence, if any non-Cash assets of SF Holdings are
converted to Cash, each holder of an Allowed General Unsecured Claim against SF
Holdings shall receive a semi-annual distribution equal to such holder's Ratable
Proportion of the Cash realized from such conversion of the non-Cash assets in
the immediately preceding six-month period plus any additional Cash payment
required by section 20.5 of the Plan.
SF Holdings Class 2 is impaired.
c. Equity Interest in SF
Holdings (SF Holdings Class 3)
The holder of the Equity Interest in SF Holdings Class 3 is Realty
Corp.
On the Effective Date, the capital stock of SF Holdings will be
transferred to Newco LP.
SF Holdings Class 3 is impaired.
5. Devco Canada
a. Priority Non-Tax Claims Against
Devco Canada (Devco Canada Class 1)
Holders of Devco Canada Class 1 Claims are those holding Claims
against Devco Canada, other than Administrative Expense Claims and Priority Tax
Claims, which are entitled to priority under section 507(a) of the Bankruptcy
Code.
The estimated amount of Allowed Claims in Devco Canada Class 1 is $0.
On the Effective Date, each holder of an Allowed Priority Non-Tax
Claim against Devco Canada will be distributed on account of such Claim a
payment in Cash equal to such holder's Allowed Priority Non-Tax Claim.
Devco Canada Class 1 is not impaired.
b. Insured Claims Against
Devco Canada (Devco Canada Class 2)
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Holders of Devco Canada Class 2 Claims are holders of claims against
Devco Canada, whether liquidated, unliquidated, contingent, disputed or
undisputed, the payment of which are insured, in whole or part, by insurance
policy coverage against the loss or damage giving rise to such claims. The
Debtors believe that they have sufficient general liability and/or umbrella
liability coverage to pay all judgments and/or settlements obtained by holders
of claims in this class.
On the Effective Date, each holder of an Insured Claim against Devco
Canada shall have an Allowed Claim to the extent that such Claim is covered by
an insurance policy or policies for, covering, or issued to or on behalf of,
Devco Canada. On the Effective Date, each holder of an Insured Claim shall be
entitled to maintain actions against and obtain payment solely from an insurance
company under an insurance policy issued by such company to, or for the benefit
of, Devco Canada.
Devco Canada Class 2 Claims are impaired.
c. General Unsecured Claims Against
Devco Canada (Devco Canada Class 3)
Holders of Devco Canada Class 3 Claims are holders of Allowed General
Unsecured Claims against Devco Canada.
The estimated amount of Allowed Claims in Devco Canada Class 3 is $50
million as of the Petition Date.
On the Effective Date, after giving effect to the distributions
required by section 10.1 of the Plan and the payment of Allowed Administrative
Expense Claims against Devco Canada, in full satisfaction of the Allowed General
Unsecured Claims against Devco Canada, each holder of an Allowed General
Unsecured Claim against Devco Canada will be distributed the lesser of (a) a
payment in Cash equal to the amount of such holder's Allowed General Unsecured
Claim against Devco Canada, if the Available Cash of Devco Canada at the time is
sufficient to fund such payment of all Allowed General Unsecured Claims against
Devco Canada, and (b) a payment in Cash equal to such holder's Ratable
Proportion of the Available Cash of Devco Canada on the Effective Date. From and
after the Effective Date, in the event the holders of Allowed General Unsecured
Claims against Devco Canada are provided the distribution provided in clause (b)
above, if any non-Cash assets of Devco Canada are converted to Cash, each holder
of an Allowed General Unsecured Claim against Devco Canada will receive a
semi-annual distribution equal to such holder's Ratable Proportion of the Cash
realized from such conversion of the non-Cash assets in the immediately
preceding
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six-month period plus any additional Cash payment required by section 20.5 of
the Plan.
Devco Canada Class 3 is impaired.
d. Equity Interests in Devco
Canada (Devco Canada Class 4)
The holder of the Equity Interest in Devco Canada Class 4 is OYDL.
OYDL will receive no distribution on account of its Equity Interest in
Devco Canada.
Devco Canada Class 4 is impaired.
6. Equity Canada
a. Priority Non-Tax Claims Against
Equity Canada (Equity Canada Class 1)
Holders of Equity Canada Class 1 Claims are those holding Claims
against Equity Canada, other than Administrative Expense Claims and Priority Tax
Claims, which are entitled to priority under section 507(a) of the Bankruptcy
Code.
The estimated amount of Allowed Claims in Equity Canada Class 1 is $0.
On the Effective Date, each holder of an Allowed Priority Non-Tax
Claim against Equity Canada will be distributed on account of such Allowed
Claims a payment in Cash equal to the amount of such holder's Allowed Priority
Non-Tax Claim.
Equity Canada Class 1 is not impaired.
b. Insured Claims Against
Equity Canada (Equity Canada Class 2)
Holders of Equity Canada Class 2 Claims are holders of claims against
Equity Canada, whether liquidated, unliquidated, contingent, disputed or
undisputed, the payment of which are insured, in whole or part, by insurance
policy coverage against the loss or damage giving rise to such claims. The
Debtors believe that they have sufficient general liability and/or umbrella
liability coverage to pay all judgments and/or settlements obtained by holders
of claims in this class.
On the Effective Date, each holder of an Insured Claim shall only be
entitled to maintain actions against and obtain
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payment solely from an insurance company under an insurance policy or policies
issued by such company to, or for the benefit of, Equity Canada.
Equity Canada Class 2 is impaired.
c. General Unsecured Claims Against
Equity Canada (Equity Canada Class 3)
Holders of Equity Canada Class 3 Claims are holders of Allowed General
Unsecured Claims against Equity Canada.
The estimated amount of Allowed Claims in Equity Canada Class 3 is $45
million as of the Petition Date.
On the Effective Date, after giving effect to the distributions
required by section 11.1 of the Plan and the payment of Administrative Expense
Claims against Equity Canada, in full satisfaction of the Allowed General
Unsecured Claims against Equity Canada, each holder of an Allowed General
Unsecured Claim against Equity Canada shall be distributed the lesser of (a) a
payment in Cash equal to the amount of such holder's Allowed General Unsecured
Claim against Equity Canada, if the Available Cash of Equity Canada at the time
is sufficient to fund such payment of all Allowed General Unsecured Claims
against Equity Canada, and (b) a payment in Cash equal to such holder's Ratable
Proportion of the Available Cash of Equity Canada on the Effective Date. From
and after the Effective Date, in the event the holders of Allowed General
Unsecured Claims against Equity Canada are provided the distribution provided in
clause (b) of the immediately preceding sentence, if any non-Cash assets of
Equity Canada are converted to Cash, each holder of an Allowed General Unsecured
Claim against Equity Canada shall receive a semi-annual distribution equal to
such holder's Ratable Proportion of the Cash realized from such conversion of
the non- Cash assets in the immediately preceding six-month period plus any
additional Cash payment required by section 20.5 of the Plan.
Equity Canada Class 3 is impaired.
d. Equity Interest in Equity
Canada (Equity Canada Class 4)
The holder of the Equity Interest in Equity Canada Class 4 is OYDL.
OYDL will receive no distribution on account of its Equity Interest in
Equity Canada.
Equity Canada Class 4 is impaired.
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7. Consolidated OLP
a. Priority Non-Tax Claims Against
Liberty Plaza Co., OLP Co. and Trinity
Place Co. (Consolidated OLP Class 1)
Holders of Consolidated OLP Class 1 Claims are those holding Claims
against Liberty Plaza Co., OLP Co. and/or Trinity Place Co., other than
Administrative Expense Claims and Priority Tax Claims, which are entitled to
priority under section 507(a) of the Bankruptcy Code.
The estimated range of Allowed Claims in Consolidated OLP Class 1 is
from $50,000 to $100,000.
On the Effective Date, each holder of an Allowed Priority Non-Tax
Claims against any of Liberty Plaza Co., OLP Co. and/or Trinity Place Co. will
be distributed on account of such Claim a payment in Cash equal to the amount of
its Allowed Priority Non-Tax Claim.
Consolidated OLP Class 1 is not impaired.
b. Secured Sanwa/OLP Claims Against
Liberty Plaza Co., OLP Co. and Trinity
Place Co. (Consolidated OLP Class 2)
The holder of Consolidated OLP Class 2 Claims is Sanwa on account of
its Claims in respect of the Sanwa/OLP Mortgage Loan which is secured by the
Sanwa/OLP Mortgages.
The estimated Allowed Secured Claims in Consolidated OLP Class 2 are
$294,500,000 as of the Petition Date.
On the Effective Date, Sanwa will be distributed the Sanwa/OLP
Restructured Mortgage Loan. For the terms of the Sanwa/OLP Restructured Mortgage
Loan, see "Background History of Olympia & York -- Business of the U.S.
Operations -- Current Status of O&Y (U.S.) in 1996 -- Core Properties".
On the Effective Date, the Sanwa/OLP Mortgage Loan and the Liens on
the 53 State Street Collateral (excluding the pledge of O&Y 25 Realty Co.'s
interest in 53 State Limited) and any Allowed Claims otherwise arising under or
related to the Sanwa/OLP Loan or any of the guarantees, mortgages or security
interests issued in connection therewith will be released and cancelled in
consideration of the Sanwa/OLP Restructured Mortgage Loan. Sanwa, as the holder
of the Allowed Sanwa/OLP Allowed Claims, will not be entitled to any additional
distribution by reason of an Allowed Sanwa/OLP Claim filed against other Debtors
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for the same loss or damage or otherwise arising under or related to the
Sanwa/OLP Mortgage Loan or any of the guarantees, mortgages or security
interests granted in connection therewith.
Consolidated OLP Class 2 is impaired.
c. Secured U.S. Finco/OLP Claims Against
Liberty Plaza Co., OLP Co. and
Trinity Place Co. (Consolidated OLP Class 3)
The holder of the Consolidated OLP Class 3 Claims is CIBC, as
collateral assignee of U.S. Finco, on account of its Claims against Liberty
Plaza Co., OLP Co. and Trinity Place Co. arising out of or relating to the U.S.
Finco Mortgages.
The estimated Claim in Consolidated OLP Class 3 is $205,000,000 plus
accrued and unpaid interest as of the Petition Date.
After giving effect to the distribution to CIBC in accordance with
section 7.3 of the Plan in respect of the CIBC/OLP Loan, CIBC, as the collateral
assignee of the U.S. Finco Mortgages, will elect, on behalf of U.S. Finco, to
contribute the Allowed U.S. Finco/OLP Claims to the capital of New Liberty Plaza
LP to the extent provided in the Restructuring Transactions.
Consolidated OLP Class 3 is impaired.
d. Insured Claims Against Liberty
Plaza Co., OLP Co. and Trinity Place Co.
(Consolidated OLP Class 4 ).
Holders of Consolidated OLP Class 4 Claims are holders of claims
against any of the Consolidated OLP Entities, whether liquidated, unliquidated,
contingent, disputed or undisputed, the payment of which are insured, in whole
or part, by insurance policy coverage against the loss or damage giving rise to
such claims. The Debtors believe that they have sufficient general liability
and/or umbrella liability coverage to pay all judgments and/or settlements
obtained by holders of claims in this class.
On the Effective Date, each holder of an Insured Claim shall only be
entitled to maintain actions against and obtain payment solely from an insurance
company under an insurance policy or policies issued by such company to, or for
the benefit of, any of Liberty Plaza Co., OLP Co. and Trinity Place Co.
Consolidated OLP Class 4 is impaired.
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e. General Unsecured Claims Against
Liberty Plaza Co., OLP Co. and Trinity
Place Co. (Consolidated OLP Class 5)
Holders of Consolidated OLP Class 5 Claims are holders of Allowed
General Unsecured Claims against Liberty Plaza Co., OLP Co. and/or Trinity Place
Co., individually or collectively.
The estimated range of Claims in Consolidated OLP Class 4 is from
$200,000 to $500,000 as of the Petition Date.
On the Effective Date, each holder of an Allowed General Unsecured
Claim against Liberty Plaza Co., OLP Co., and/or Trinity Place Co. will be
distributed a payment in Cash from Available Cash equal to the amount of such
Allowed General Unsecured Claim.
Consolidated OLP Class 5 is impaired.
f. Equity Interests in Liberty Plaza Co., OLP Co.,
and Trinity Place Co. (Consolidated OLP Class 6)
The holders of Consolidated OLP Class 6 Equity Interests are Devco and
Devco GP on account of their Equity Interests in Liberty Plaza Co., OLP Co.
and/or Trinity Place Co.
On the Effective Date and in accordance with the Restructuring
Transactions, Devco and Devco GP will be distributed on account of their Allowed
Equity Interests in Liberty Plaza Co., OLP Co. and/or Trinity Place Co., Equity
Interests in New Liberty Plaza LP, the reorganized successor to Liberty Plaza
Co., OLP Co. and/or Trinity Place Co. pursuant to section 18.5 of the Plan.
Consolidated OLP Class 6 Equity Interests are impaired.
8. Tower A Co.
a. Priority Non-Tax Claims Against
Tower A Co. (Tower A Co. Class 1)
Holders of Tower A Co. Class 1 Claims are those holding Claims against
Tower A Co., other than Administrative Expense Claims and Priority Tax Claims,
which are entitled to priority under section 507(a) of the Bankruptcy Code.
The estimated range of Allowed Claims in Tower A Co. Class 1 is from
$50,000 to $100,000.
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On the Effective Date, each holder of an Allowed Priority Non-Tax
Claim against Tower A Co. will be distributed a payment in Cash from Available
Cash equal to the amount of such holder's Allowed Priority Non-Tax Claim against
Tower A Co.
Tower A Co. Class 1 is not impaired.
b. Secured Sanwa/Tower A Claims Against
Tower A Co. (Tower A Co. Class 2)
The holder of the Tower A Co. Class 2 Claim is Sanwa on account of its
Secured Claims under or relating to the Sanwa/Tower A Mortgage Loan.
On the Effective Date, in full satisfaction of the Allowed Secured
Sanwa/Tower A Claims against Tower A Co., Sanwa will be distributed the
Sanwa/Tower A Restructured Mortgage Loan.
For a description of the treatment of the Secured Sanwa/Tower A
Claims, see "Background History of Olympia & York - - Business of the U.S.
Operations -- Current Status of O&Y (U.S.) in 1996 -- Core Properties".
On the Effective Date, the Sanwa/Tower A Mortgage Loan and any Allowed
Claims otherwise arising under or related to the Sanwa/Tower A Loan or any of
the guarantees, mortgages or security interests issued in connection therewith,
will be released and cancelled in consideration of the Sanwa/Tower A
Restructured Mortgage Loan.
Tower A Co. Class 2 is impaired.
c. TIAA Judgment Claims Against
Tower A Co. (Tower A Co. Class 3)
The holder of the Tower A Co. Class 3 Claim is TIAA on account of a
judgment it received against Tower A Co. in the amount of $79,698,692.38.
The estimated amount of Claims in Tower A Co. Class 3 is
$60,698,692.38.
On the Effective Date, and in full satisfaction of the Claims in Tower
A Co. Class 3, TIAA will receive the treatment provided in the TIAA Settlement
described in section 4.5 of the Plan.
Tower A Co. Class 3 is impaired.
d. Insured Claims Against
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Tower A Co. (Tower A Co. Class 4)
Holders of Tower A Co. Class 4 Claims are holders of claims against
Tower A Co., whether liquidated, unliquidated, contingent, disputed or
undisputed, the payment of which are insured, in whole or part, by insurance
policy coverage against the loss or damage giving rise to such claims. The
Debtors believe that they have sufficient general liability and/or umbrella
liability coverage to pay all judgments and/or settlements obtained by holders
of claims in this class.
On the Effective Date, each holder of an Insured Claim shall only be
entitled to maintain actions against and obtain payment solely from an insurance
company under an insurance policy or policies issued by such company to, or for
the benefit of, Tower A Co.
Tower A Co. Class 4 is impaired.
e. General Unsecured Claims Against
Tower A Co. (Tower A Co. Class 5)
Holders of Tower A Co. Class 5 Claims are holders of General Unsecured
Claims against Tower A Co.
The estimated range of Allowed Claims in Tower A Co. Class 4 is
$400,000 to $1 million as of the Petition Date.
On the Effective Date, each holder of an Allowed General Unsecured
Claim against Tower A Co. will be distributed, in full satisfaction of its
Allowed General Unsecured Claim against Tower A Co., such holder's Ratable
Proportion of $100,000, payable from the Available Cash of Tower A Co.
Tower A Co. Class 5 is impaired.
f. Equity Interests in
Tower A Co. (Tower A Co. Class 6)
The holders of Tower A Co. Class 6 Equity Interests are Devco, BPHI,
TALP and Tower A Holding.
On the Effective Date and in accordance with the Restructuring
Transactions, each holder of an Allowed Equity Interest in Tower A Co. shall
have an Allowed Equity Interest and will retain such Allowed Equity Interest in
Tower A Co.
Tower A Co. Class 6 is impaired.
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9. Tower Corp.
a. Priority Non-Tax Claims Against
Tower Corp. (Tower Corp. Class 1)
Holders of Tower Corp. Class 1 Claims are those holding Claims against
Tower Corp., other than Administrative Expense Claims and Priority Tax Claims,
which are entitled to priority under section 507(a) of the Bankruptcy Code.
The estimated amount of Allowed Claims in Tower Corp. Class 1 is $0.
On the Effective Date, each holder of an Allowed Priority Non-Tax
Claim against Tower Corp. will be distributed on account of such Claim a payment
in Cash equal to such holder's Allowed Non-Tax Priority Claim against Tower
Corp.
Tower Corp. Class 1 is not impaired.
b. Secured Club Loan Claims Against
Tower Corp. (Tower Corp. Class 2)
The holders of Tower Corp. Class 2 Claims are holders of interests in
the Club Loan with Secured Claims against Tower Corp. arising thereunder.
The estimated Allowed Claims in Tower Corp. Class 2 are
$165,508,335.43 million as of October 11, 1995, plus costs, fees and interest
payable thereon in accordance with the applicable agreements.
On the Effective Date and in accordance with the Restructuring
Transactions, the New Club Loan Disbursing Agent shall be distributed, on
account of the Allowed Secured Club Loan Claims against Tower Corp., Class A
Interests having a value equal to the lesser of (a) the Allowed Club Loan Claims
and (b) the value on the Confirmation Date of the Collateral securing the
Allowed Club Loan Claims pledged by Tower Corp. In accordance with sections 7.2,
8.2, 14.2 and 15.2 of the Plan and without duplication, the New Club Loan
Disbursing Agent shall be distributed, in the aggregate and in full satisfaction
of the Allowed Club Loan Claims, Class A Interests having a value equal to the
lesser of (a) the Allowed Club Loan Claims and (b) the value on the Confirmation
Date of the Collateral securing the Allowed Club Loan Claims pledged by any
Debtor under the Plan.
Tower Corp. Class 2 is impaired.
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c. Insured Claims Against
Tower Corp. (Tower Corp. Class 3)
Holders of Tower Corp. Class 3 Claims are holders of claims against
Tower Corp., whether liquidated, unliquidated, contingent, disputed or
undisputed, the payment of which are insured, in whole or part, by insurance
policy coverage against the loss or damage giving rise to such claims. The
Debtors believe that they have sufficient general liability and/or umbrella
liability coverage to pay all judgments and/or settlements obtained by holders
of claims in this class.
On the Effective Date, each holder of an Insured Claim shall only be
entitled to maintain actions against and obtain payment solely from an insurance
company under an insurance policy or policies issued by such company to, or for
the benefit of, Tower Corp.
Tower Corp. Class 3 is impaired.
d. General Unsecured Claims Against
Tower Corp. (Tower Corp. Class 4)
Holders of Tower Corp. Class 4 Claims are holders of General Unsecured
Claims against Tower Corp.
The estimated amount of Allowed Claims in Tower Corp. Class 3 is $0 as
of the Petition Date.
Holders of a General Unsecured Claim against Tower Corp. will receive
no distribution on account of their General Unsecured Claim against Tower Corp.
Tower Corp. Class 4 is impaired.
e. Equity Interests in Tower
Corp. (Tower Corp. Class 5)
The holder of the Tower Corp. Class 5 Equity Interest is O&Y
Development Holding Corp.
The holder of the Equity Interest in Tower Corp. will receive no
distribution on account of its Equity Interest.
Tower Corp. Class 5 is impaired.
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10. Consolidated 245
a. Priority Non-Tax Claims Against
245 Park Co., 245 Holding LP and
245 Corp. (Consolidated 245 Class 1)
Holders of Consolidated 245 Class 1 Claims are those holding Claims
against 245 Park Co., 245 Holding LP and/or 245 Corp. other than Administrative
Expense Claims and Priority Tax Claims, which are entitled to priority under
section 507(a) of the Bankruptcy Code.
The estimated range of Allowed Claims in Consolidated 245 Class 1 is
from $10,000 to $30,000.
On the Effective Date, each holder of an Allowed Priority Non-Tax
Claim against 245 Park Co., 245 Holding LP and/or 245 Corp. will be distributed
on account of such Claim a payment in Cash from Available Cash equal to the
amount of its Allowed Priority Non-Tax Claim.
Consolidated 245 Class 1 is not impaired.
b. Secured Club Loan Claims Against 245 Holding LP
and 245 Corp. (Consolidated 245 Class 2)
Holders of Consolidated 245 Class 2 Claims are holders of interests in
the Club Loan with secured Claims against 245 Holding LP and 245 Corp.,
individually or collectively, arising thereunder.
The estimated Allowed Secured Claim in Consolidated 245 Class 2 is
$165,508,335.43 as of October 11, 1995, plus costs, fees and interest payable
thereon in accordance with the applicable agreements.
On the Effective Date and in accordance with the Restructuring
Transactions, the New Club Loan Disbursing Agent shall be distributed, on
account of the Allowed Secured Club Loan Claims against 245 Holding LP and 245
Corp., Class A Interests having a value equal to the lesser of (a) the Allowed
Club Loan Claims and (b) the value on the Confirmation Date of the Collateral
securing the Allowed Club Loan Claims pledged by 245 Holding LP and 245 Corp. In
accordance with sections 7.2, 8.2, 14.2 and 15.2 of the Plan and without
duplication, the Disbursing Agent shall be distributed, in the aggregate and in
full satisfaction of the Allowed Club Loan Claims, Class A Interests having a
value equal to the lesser of (a) the Allowed Club Loan Claims and (b) the value
on the Confirmation Date of the
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Collateral securing the Allowed Club Loan Claims pledged by any Debtor under the
Plan.
Consolidated 245 Class 2 is impaired.
c. Secured Aetna Mortgage Loan Claims
Against 245 Park Co. (Consolidated 245 Class 3)
The holder of Consolidated 245 Class 3 Claims is Aetna on account of
its Secured Claims arising under or relating to the Aetna Mortgage Loan.
The estimated Allowed Secured Claims in Consolidated 245 Class 3 are
$191,410,761 as of the Petition Date.
On the Effective Date, in full satisfaction of the Allowed Aetna
Mortgage Loan Claims, the Aetna Restructured Mortgage Loan Documents shall be
executed and delivered to Aetna.
Consolidated 245 Class 3 is impaired.
d. Secured DKB Mortgage Loan Claims
Against 245 Park Co. (Consolidated 245 Class 4)
The holder of Consolidated 245 Class 4 Claims is DKB on account of its
Secured Claims arising under or relating to the DKB Mortgage Loan.
The estimated Allowed Secured Claims in Consolidated 245 Class 4 are
$192,500,000 as of the Petition Date.
On the Effective Date, in full satisfaction of the Allowed DKB
Mortgage Loan Claims, the DKB Restructured Mortgage Loan Documents shall be
executed and delivered to DKB.
Consolidated 245 Class 4 is impaired.
e. Club Loan/245 Park Deficiency Claims
Against 245 Holding LP and 245 Corp. (Consolidated
245 Class 5)
Holders of Consolidated 245 Class 5 Claims are holders of Allowed
Unsecured Club Loan Claims against 245 Holding LP and/or 245 Corp., if any,
which may arise as a result of the value of the Collateral for the Club Loan
being determined to be less than the Allowed amount of the Club Loan Claims.
The estimated amount of Allowed Claims in Consolidated 245 Class 5 is
$0 as of the Petition Date.
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On the Effective Date, in full satisfaction of the Allowed Deficiency
Claims of the holders of the Allowed Club Loan Claims against 245 Holding LP and
245 Corp., the New Club Loan Disbursing Agent will receive the distributions
provided to the New Club Loan Disbursing Agent (for the benefit of the Co-
Proponents for which it is agent) in accordance with sections 7.2, 8.2, 14.2 and
15.2 of the Plan.
Consolidated 245 Class 5 is impaired.
f. Insured Claims Against
245 Park Co., 245 Holding LP and
245 Corp. (Consolidated 245 Class 6)
Holders of Consolidated 245 Class 6 Claims are holders of claims
against any of 245 Park Co., 245 Holding LP and 245 Corp., whether liquidated,
unliquidated, contingent, disputed or undisputed, the payment of which are
insured, in whole or part, by insurance policy coverage against the loss or
damage giving rise to such claims. The Debtors believe that they have sufficient
general liability and/or umbrella liability coverage to pay all judgments and/or
settlements obtained by holders of claims in this class.
On the Effective Date, each holder of an Insured Claim against any of
245 Park Co., 245 Holding LP and 245 Corp., shall only be entitled to maintain
actions against and obtain payment solely from an insurance company under an
insurance policy or policies issued by such company to, or for the benefit of,
any of 245 Park Co., 245 Holding LP and 245 Corp.
Consolidated 245 Class 6 is impaired.
g. General Unsecured Claims Against 245
Park Co., 245 Holding LP and 245 Corp. (Consolidated
245 Class 7)
Holders of Consolidated 245 Class 7 Claims are holders of General
Unsecured Claims against 245 Park Co., 245 Holding LP and/or 245 Corp., other
than those Unsecured deficiency Claims treated as Consolidated 245 Class 5
Claims.
The estimated range of Allowed Claims in Consolidated 245 Class 6 is
from $100,000 to $500,000 as of the Petition Date.
On the Effective Date, in full satisfaction of the Allowed General
Unsecured Claims against 245 Park Co., each holder of an Allowed General
Unsecured Claim against 245 Park Co., 245 Holding LP and 245 Corp. will be
distributed a Cash
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payment equal to the amount of such Allowed General Unsecured Claim against 245
Park Co., 245 Holding LP and 245 Corp.
Consolidated 245 Class 7 is impaired.
h. Equity Interests in 245 Park Co., 245 Holding LP
Co. and 245 Corp. (Consolidated 245 Class 8)
The holders of Consolidated 245 Class 7 Equity Interests are JMB,
Equityco, Equity GP, 245 Corp. and 245 Holding LP on account of their Equity
Interests in 245 Park Co.
(1) Equity Interests of JMB in 245 Park Co.
On the Effective Date, in accordance with the JMB Restructuring
Documents and the Restructuring Transactions, JMB will be distributed the
treatment described in section 15.8.1 of the Plan. See "Significant Developments
in the Debtors' Chapter 11 Cases -- JMB Agreement".
The distributions on account of the Equity Interest of JMB in 245 Park
Avenue provided in section 15.8.1 of the Plan will be made in accordance with
section 18.6 of the Plan.
(2) Equity Interests of Equityco,
Equity GP, 245 Holding LP and
245 Corp. in 245 Park Co.
On the Effective Date and in accordance with the Restructuring
Transactions, each holder of an Allowed Equity Interest in 245 Park Co., 245
Holding LP and 245 Corp., other than JMB, will be distributed on account of such
holder's Allowed Equity Interest, an Equity Interest in New 245 Park LP, subject
to the rights of JMB to retain its partner interest in 245 Park Co., in certain
instances, in accordance with section 15.8.1 of the Plan.
Consolidated 245 Class 8 is impaired.
11. Tower B Leaseco
a. Priority Non-Tax Claims Against
Tower B Leaseco (Tower B Leaseco Class 1)
Holders of Tower B Leaseco Class 1 Claims are those holding Claims
against Tower B Leaseco, other than Administrative Expense Claims and Priority
Tax Claims, which are entitled to priority under section 507(a) of the
Bankruptcy Code.
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The estimated amount of Claims in Tower B Leaseco Class 1 is $0 as of
the Petition Date.
On the Effective Date, in full satisfaction of the Allowed Priority
Non-Tax Claims against Tower B Leaseco, each holder of an Allowed Priority
Non-Tax Claim against Tower B Leaseco shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
Tower B Leaseco Class 1 is not impaired.
b. Merrill Lynch/Tower B Leaseco
Secured Claim (Tower B Leaseco Class 2)
The holder of the claim in Tower B Leaseco Class 2 is Merrill Lynch.
On the Effective Date, in full satisfaction of the Allowed Merrill
Lynch/Tower B Leaseco Secured Claim, Merrill Lynch shall be distributed a
payment in Cash of $502,000.
Tower B Leaseco Class 2 is impaired.
c. Insured Claims Against
Tower B Leaseco (Tower B Leaseco Class 3)
Holders of Tower B Leaseco Class 3 Claims are holders of claims
against Tower B Leaseco, whether liquidated, unliquidated, contingent, disputed
or undisputed, the payment of which are insured, in whole or part, by insurance
policy coverage against the loss or damage giving rise to such claims. The
Debtors believe that they have sufficient general liability and/or umbrella
liability coverage to pay all judgments and/or settlements obtained by holders
of claims in this class.
On the Effective Date, each holder of an Insured Claim shall only be
entitled to maintain actions against and obtain payment solely from an insurance
company under an insurance policy or policies issued by such company to, or for
the benefit of, Tower B Leaseco.
Tower B Leaseco Class 3 is impaired.
d. General Unsecured Claims Against
Tower B Leaseco (Tower B Leaseco Class 4)
Holders of Tower B Leaseco Class 4 Claims are holders of General
Unsecured Claims against Tower B Leaseco.
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The estimated Allowed Claims in Tower B Leaseco Class 4 is
approximately $96 million as of the Petition Date.
On the Effective Date, after giving effect to the payment of
Administrative Expense Claims against Tower B Leaseco and the distributions
required by section 16.1 of the Plan and the distribution to the Merrill Lynch
Capital Fund in accordance with sections 4.4(b) and 16.2 of the Plan, and in
full satisfaction of each such holder's Allowed General Unsecured Claim against
Tower B Leaseco, each holder of an Allowed General Unsecured Claim against Tower
B Leaseco will be distributed the lesser of (a) a payment in Cash equal to the
amount of such holder's Allowed General Unsecured Claim against Tower B Leaseco,
if the Available Cash of Tower B Leaseco at the time is sufficient to fund such
payment of all Allowed General Unsecured Claims against Tower B Leaseco and (b)
a payment in Cash equal to such holder's Ratable Proportion of the Available
Cash of Tower B Leaseco on the Effective Date.
Tower B Leaseco Class 4 is impaired.
e. Equity Interests in Tower B
Leaseco (Tower B Leaseco Class 5)
The holders of the Tower B Leaseco Class 5 Equity Interests are Devco,
Devco GP and Tower Corp. on account of their Equity Interests in Tower B
Leaseco.
In accordance with the Restructuring Transactions, each holder of an
Allowed Equity Interest in Tower B Leaseco will receive no distribution on
account of such Equity Interest in Tower B Leaseco.
Tower B Leaseco Class 5 is impaired.
C. DESCRIPTION OF SUBSTANTIVE CONSOLIDATIONS
1. General
Substantive consolidation of the estates of different debtors in
bankruptcy effects the combination of the assets and liabilities of distinct
bankruptcy entities and treats them as if they belonged to a single entity.
Substantive consolidation is an equitable remedy available to bankruptcy courts
through the equitable powers granted in section 105(a) of the Bankruptcy Code
and as recognized under applicable case law.
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2. Legal Standards
The United States Court of Appeals for the Second Circuit (the "Second
Circuit") has set forth two alternative standards for determining whether
substantive consolidation of affiliated entities under a plan of reorganization
is appropriate:
o whether creditors dealt with the entities to be
substantively consolidated as a single economic unit
and did not rely on their separate identity in
extending credit; or
o whether the affairs of the entities to be
substantively consolidated are so entangled that
consolidation will benefit all creditors.
In explaining the first alternative in the test, the Second Circuit
has stated that:
[C]reditors who make loans on the basis of the financial
status of a separate entity expect to be able to look to the
assets of their particular borrower for satisfaction of that
loan. Such lenders structure their loans according to their
expectations regarding that borrower and do not anticipate
either having the assets of a more sound company available in
the case of insolvency or having the creditors of a less sound
debtor compete for the borrower's assets. Such expectations
create significant equities. Moreover, lenders' expectations
are central to the calculation of interest rates and other
terms of loans, and fulfilling those expectations is therefore
important to the efficiency of credit markets. Such efficiency
will be undermined by imposing substantive consolidation in
circumstances in which creditors believed they were dealing
with separate entities.
As to the second alternative standard, the Second Circuit has stated:
The second factor, entanglement of the debtors' affairs,
involves cases in which there has been a commingling of two
firms' assets and business functions. Resort to consolidation
in such circumstances, however,
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should not be Pavlovian. Rather, substantive consolidation
should be used only after it has been determined that all
creditors will benefit because untangling is either impossible
or so costly as to consume the assets.
In addition to these two alternative tests, bankruptcy courts have set
forth seven factors that are pertinent to analyzing whether substantive
consolidation of affiliated entities under a plan of reorganization is
appropriate:
o the degree of difficulty in segregating and
ascertaining the individual assets and liabilities
of the different entities to be consolidated;
o the presence or absence of consolidated financial
statements among the different entities to be
consolidated;
o the likelihood that consolidation of the different
entities into one entity at a single physical
location would prove profitable to the debtor;
o the commingling of assets and business functions
among the entities to be consolidated;
o the unity of interests and ownership among the
various entities;
o the existence of parent and intercorporate
guarantees on loans to the various entities; and
o the transfer of assets to and from the various
entities without formal observance of corporate
formalities.
3. Factual Basis for and Result of a Substantive Consolidation of the
Consolidated Devco Entities
The following characteristics of Devco, Devco GP, Equityco, Equity GP,
U.S. Finco and O&Y Finco support a finding that substantive consolidation of
such Entities is proper:
Common Management. Historically, the corporate general
partners of Devco, Equityco, U.S. Finco and O&Y Finco have
shared a common board of directors and executive officers.
Moreover, the day-to-day decision-making responsibilities of
these entities have been centralized in one management team.
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Common Employees. In addition to common management, all the
employees retained by O&Y (U.S.), with the exception of
certain building-level employees, are employees of Devco or
Devco GP. Moreover, each of the Consolidated Devco Entities
use common professionals. There is a single in-house counsel
for these entities. Additionally, each of the Consolidated
Devco Entities have used the same accounting firm, the same
law firms, the same appraiser for current value financial
statements, the same budgeting system, and the same marketing
force.
Common Business. Both Devco and Equityco share a common
business: owning, operating and leasing large, first-class,
commercial office buildings that are substantially leveraged
and have outside partners. Originally, only Devco was in the
development business. Equityco, however, became a critical
component of that development business. Additionally, Devco
and Equityco have followed common strategies in terms of
leasing space and financing projects. Both Devco and Equityco
have common directors of leasing, property management and
financial reporting.
Cash Management System. Except for property-owning
partnerships that had unaffiliated partners, Cash was
historically centralized and consolidated within Devco,
Equityco, U.S. Finco and O&Y Finco. The primary device for
moving Cash among the various entities was U.S. Finco (and for
certain Equityco entities, O&Y Finco). Cash distributed out of
the property-owning partnerships to Equityco or Devco, or
coming from other borrowers to Equityco or Devco or to the
partners of Equityco or Devco, generally was moved into and
through U.S. Finco (and O&Y Finco) to meet the Cash
requirements of the O&Y (U.S.) enterprise as a whole.
Intercompany Indebtedness. As a result of the consolidated
Cash management system described above, loans were made from
the property-owning partnerships to U.S. Finco or O&Y Finco in
the ordinary course of business. Once funds were in U.S. Finco
or O&Y Finco, monies were moved where necessary -- including
repaying a loan incurred by a different O&Y (U.S.) entity.
Books and Records. Given the multiple relationships of
all O&Y (U.S.) affiliates and U.S. Finco and O&Y Finco,
the intercompany balances, particularly within O&Y
(U.S.), were periodically set off to keep them down to
a manageable level. This set off was driven by many
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considerations and, prior to 1992, generally occurred every
fiscal year. Such transactions were routine, and there is no
cumulative record which would establish the history of all
such intercompany transactions. Such a record cannot be
re-created.
Common Ownership and Enterprise Control. In many instances,
decisions regarding which O&Y (U.S.) entities were
property-owning partnerships and which O&Y (U.S.) entities
pledged collateral to secure the obligations of the entities
owning such properties were driven by the financing demands
regarding the project. For example, with respect to 1999 Bryan
Street, a property in Texas, Devco owned the partner interest
in such property but Equityco was obligated on a master lease
for the entire building. Similarly, with respect to the Club
Loan, Devco, Equityco, U.S. Finco and OYREUSA all pledged
collateral to support the loan. Thus, O&Y (U.S.) operated as a
single economic entity without regard to which legal entity
owned a particular interest in property.
These facts illustrate that a strong interrelationship exists among
the O&Y (U.S.) entities and lend support to the conclusion that substantive
consolidation of the Consolidated Devco Entities is proper.
All assets and Liabilities of each of the Consolidated Devco Entities
will be substantively consolidated. On the Effective Date, (a) each Intercompany
Claim held by any other Consolidated Devco Entity against a Consolidated Devco
Entity will be eliminated in accordance with the Restructuring Transactions or
otherwise cancelled, (b) all assets and Liabilities of each of the Consolidated
Devco Entities (other than Devco) will be treated as though they were merged
with the assets and Liabilities of Devco, (c) each guarantee of a Consolidated
Devco Entity of an obligation of any other Consolidated Devco Entity will be
eliminated so that any claim against a Consolidated Devco Entity and any
guarantee thereof by a Consolidated Devco Entity and any joint or several
liability of two or more of the Consolidated Devco Entities will be deemed to be
one obligation of Consolidated Devco, and (d) each claim filed or to be filed in
the Reorganization Cases of the Consolidated Devco Entities will be deemed filed
against Consolidated Devco and will be deemed one claim against and obligation
of Consolidated Devco.
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4. Factual Basis for and Result of a Substantive
Consolidation of Realty Corp., OYREUSA and Baden
History of Realty, OYREUSA and Baden. Each of Baden and OYREUSA was
created in June 1984 as a subsidiary of Realty Corp. (which at that time was
known as OYDL) in connection with a major internal reorganization of the U.S.
Operations of Olympia & York. OYREUSA and Baden were created to hold and
liquidate, or otherwise dispose of, various ventures, assets, properties and
interests that were not part of, or related to, the large commercial office
building business ("Other O&Y (U.S.) Assets") of the U.S. Operations and return
the recoverable investment capital to Realty Corp.(37)
There was a substantial overlap of the officers as among Realty Corp.,
OYREUSA and Baden, including Paul and Albert Reichmann, Michael Dennis, Keith
Roberts, Gordon Hendry and, on a special venture basis, Gary Goodman and others.
Each of these individuals operated primarily from the Realty Corp. (then known
as OYDL) offices in Toronto.
OYREUSA was capitalized by a $69 million Cash contribution from Realty
Corp. and bank loans of $200 million that were provided by CIBC ($80 million),
Bank of Nova Scotia ($60 million) and BMo ($60 million), in arrangements made by
the Canadian-based officers of Realty Corp. through their contacts with these
Canadian lenders. In addition, Realty Corp. provided letters of comfort or
"keep-wells" to such banks regarding the repayment of this loan by OYREUSA. In
turn, OYREUSA capitalized Baden with $270 million in Cash which was used to
purchase the Other O&Y (U.S.) Assets for their book value of approximately $300
million, leaving Equityco with a contribution of $30 million for the purchase of
the Other O&Y (U.S.) Assets, which it deemed made by its parent, the
predecessor-in-interest to O&Y (U.S.) Holdings Company. As conceived, the
intention of this transaction was to provide for the resolution or liquidation
of the Other O&Y (U.S.) Assets to generate sufficient Cash to enable OYREUSA to
repay its loans from the Canadian banks and return the recoverable investment
capital to Realty Corp. in a tax-efficient manner.
Baden, as created concurrently with OYREUSA based upon the strength of
Realty Corp.'s credit, had a matrix of assets that generated virtually no
operating income, leaving Baden unable to sustain debt on its balance sheet.
Similarly, OYREUSA could not sustain debt on its balance sheet independent from
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37 At that time the predecessor-in-interest to Equityco owned
the Other O&Y (U.S.) Assets.
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Realty Corp. Because the tax laws applicable in Canada and the United States
made any kind of cross-border affiliate loans uneconomical, the loans had to be
direct loans to a U.S. entity by an unaffiliated lender. Thus, the process of
severing, separating and supporting the orderly recovery of investment capital
from the Other O&Y (U.S.) Assets was directed and controlled by, and was
financially dependent upon, Realty Corp. acting through its subsidiaries,
OYREUSA and Baden.(38)
Baden performed substantially below its initial expectations and was
unable to return any Cash to OYREUSA or Realty Corp. and instead was a consumer
of Cash and revenues to sustain its own operations. These developments required
Realty Corp. to repay the Canadian bank loans and continue to support the cost
of maintaining the Baden capital recovery program through continuing support to
OYREUSA for Baden's expenses.
The Other O&Y (U.S.) Assets. The Other O&Y (U.S.) Assets were located
throughout the U.S., ranging from residential developments in Wood Ranch and
Chino Hills, California, to oil and gas ventures in Texas, to condominium
developments in Houston and Massachusetts. Throughout their post-1984 history,
Realty Corp. and later OYDL and Baden/OYREUSA had as their auditors Price
Waterhouse, while the auditors for the remainder of the U.S. Operations (except
for certain public debt issues) was Margolin, Winer & Evens.
Most of these ventures involved investment by the U.S. Operations with
co-venturers that were identified by and/or known personally to the Reichmann
Family. For example, Amland was a venture with Oskar Brecher who was from Canada
and had been an executive in a substantial Canadian real estate company,
Cadillac Fairview. York Venture Co. provides another example. Originally, this
venture involved Olympia & York, which did not
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38 The strong ties of Realty Corp. to the resolution of the Olympia &
York investment in the Other O&Y (U.S.) Assets was further underscored in
the 1987 internal reorganization of the U.S. Operations, when all of the
Canadian and other non-U.S. investments held by Realty Corp. were
transferred to a new holding company, leaving Realty Corp. as the
Canadian-O&Y related entity that held substantially all of the U.S.
investments and operations of Olympia & York through two lines of companies
-- OYREUSA, for the entities that generated no operating income and were
expected to provide a return of the recoverable investment capital, and
U.S. Holdings, for the commercial office building business which did have
operations generating substantial revenues.
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directly manage assets in Florida, and David Chase, as the manager, but when
David Chase failed in this venture, Albert Reichmann located another
Toronto-based co-venturer, Ronto Development, which was a well known
Toronto-based residential developer. By maintaining these strong management,
personal and financial ties with Realty Corp., some asset-based financing was
obtained by Ken Leung, who was the chief financial officer of Olympia & York in
Toronto. Through his and other strong Olympia & York contacts with Canadian
banks in Toronto, such borrowings were arranged by Realty Corp. An example of
this interdependence was the loan by Toronto Dominion Bank to the York Venture
Co. project. Typically, these borrowings were supported by keep-well and other
financial accommodations by Realty Corp.
Other OYREUSA/Realty Connections. Baden has been a net consumer of
capital from the U.S. Operations throughout its history, dedicated to the
resolution of the investment in the Other O&Y (U.S.) Assets. Baden was and to
this day remains the primary focus of OYREUSA. From time to time, OYREUSA
performed other functions for Realty Corp. To assist Realty Corp.'s other
subsidiaries in realizing the profit on its sale of an interest in Tower A to an
affiliate of Oppenheimer, it was necessary for a portion of the interest of O&Y
in the Tower A sale to Oppenheimer to be purchased by an entity that was not
consolidated with the commercial office building business of Devco/Equity/Finco.
Hence, certain interests in Tower A are held by OYREUSA. Nevertheless,
throughout its life, OYREUSA has not had operating income, it has had the
interest in the Other O&Y (U.S.) Assets and a series of intercompany
transactions that were consistent with its non-earning profile. Finally, OYREUSA
provided a structure for Realty Corp. that enabled Realty Corp. to achieve
favorable Canadian/U.S. tax results by entering into transactions with OYREUSA.
For example, when Realty Corp. came into ownership of convertible debentures of
SF Holdings, Realty Corp. could not hold those investments in a tax efficient
manner so it transferred those assets to one of the Other O&Y (U.S.) Asset
ventures indirectly held by OYREUSA/Baden until the debenture was convertible
into equity, at which time the investment was transferred to Realty Corp. and
invested in SF Holdings.
Net Assets of Baden, OYREUSA and Realty Corp. Today. As of this date,
the assets of OYREUSA consist of: the Tower A equity interests and related notes
of Tower A Associates which are valued by the Debtors at zero, and the remaining
Other O&Y (U.S.) Assets that are held in Baden. The assets of Realty Corp.
consist of its interest in SF Holdings which, in turn, holds approximately $21
million in Cash, subject to a lawsuit brought by Coopers & Lybrand OYDL,
Inc./Limited which claims 100% of the value of SF Holdings; its interest in the
Other O&Y (U.S.) Assets held in Baden; and its interest in U.S. Holdings which
Realty
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Corp. is abandoning as worthless under the Plan.(39) To date, exclusive of what
appear to be duplicate claims, over 130 claims have been filed against
Consolidated Realty (62), OYREUSA (30) and Baden (39), the overwhelming majority
of which -- particularly as against OYREUSA and Baden -- were filed as
undetermined and appear to arise from contingencies or litigation having little
or no connection to the creditworthiness of either or both of OYREUSA or Baden.
These characteristics -- to wit, the common management of these
Entities, the common business of these Entities, the intercompany indebtedness
existing among these Entities and the common ownership and enterprise control
among these Entities, illustrate that a strong interrelationship exists among
Realty Corp., OYREUSA and Baden and lend support to the conclusion that
substantive consolidation of Realty Corp., Baden and OYREUSA into Consolidated
Realty is proper.
Under the Plan, all assets and Liabilities of Realty Corp., OYREUSA
and Baden will be substantively consolidated. On the Effective Date, (a) each
Intercompany Claim held by Realty Corp., OYREUSA or Baden against Realty Corp.,
OYREUSA or Baden will be eliminated in accordance with the Restructuring
Transactions or otherwise cancelled, (b) all assets and Liabilities of OYREUSA
and Baden will be treated as though they were merged with the assets and
Liabilities of Consolidated Realty Corp., (c) each guarantee of Realty Corp.,
OYREUSA or Baden of an obligation of Realty Corp., OYREUSA or Baden will be
eliminated so that any Claim against Realty Corp., OYREUSA or Baden and any
guarantee thereof by Realty Corp., OYREUSA or Baden and any joint or several
liability of two or more of Realty Corp., OYREUSA or Baden will be deemed to be
one obligation of Consolidated Realty Corp., and (d) each Claim filed or to be
filed in the Reorganization Cases of Realty Corp., OYREUSA or Baden will be
deemed filed against Consolidated Realty Corp. and will be deemed one Claim
against and obligation of Consolidated Realty Corp.
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39 The Debtors are transferring 100% of the assets of Baden to OYREUSA as part
of an overall settlement of the intercompany claims relating to the O&Y
Affiliates and U.S. Holdings. The books and records of O&Y (U.S.) reflect
that U.S. Holdings owes the Consolidated Devco Entities in excess of $400
million. As a result, U.S. Holdings is hopelessly insolvent and any value
from the ten percent (10%) interest in U.S. Holdings owned by Baden should
appropriately inure to the benefit of the Debtors and their estates as a
result of the intercompany settlement described herein.
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5. Substantive Consolidation of OLP Co.,
Liberty Plaza Co. and Trinity Place Co.
All assets and Liabilities of Liberty Plaza Co., OLP Co. and Trinity
Place Co. will be substantively consolidated. On the Effective Date, (a) each
Intercompany Claim by Liberty Plaza Co., OLP Co. or Trinity Place Co. against
Liberty Plaza Co., OLP Co. or Trinity Place Co. will be eliminated in accordance
with the Restructuring Transactions or otherwise cancelled, (b) all assets and
Liabilities of OLP Co. and Trinity Place Co. will be treated as though they were
merged with the assets and Liabilities of Liberty Plaza Co., (c) each guarantee
of Liberty Plaza Co., OLP Co. and Trinity Place Co. of an obligation of Liberty
Plaza Co., OLP Co. or Trinity Place Co. will be eliminated so that any Claim
against any of Liberty Plaza Co., OLP Co. or Trinity Place Co. and any guarantee
thereof by Liberty Plaza Co., OLP Co. and Trinity Place Co. and any joint or
several liability of two or more of Liberty Plaza Co., OLP Co. or Trinity Place
Co. will be deemed to be one obligation of Consolidated OLP and (d) each Claim
filed or to be filed in the Reorganization Cases of Liberty Plaza Co., OLP Co.
and Trinity Place Co. will be deemed filed against Consolidated OLP and will be
deemed one Claim against and obligation of Consolidated OLP.
6. Substantive Consolidation of
245 Park Co., 245 Holding LP and 245 Corp.
a. Factual Basis for a Substantive Consolidation of
245 Co., 245 Corp. and 245 Holding LP
The following characteristics of 245 Co., 245 Holding LP and 245 Corp.
support a finding that substantive consolidation of such Entities is proper:
Common Structure. Historically, Equityco was the only
O&Y (U.S.) partner in 245 Park Co. (JMB/245 was the
other partner). Equityco was also the managing general
partner. Due to an internal restructuring of various
O&Y (U.S.) Entities in connection with the inception of
the Club Loan, 245 Holding LP and 245 Corp. were
created. 245 Holding LP was formed by Equityco and
Equity GP, through the assignment of a portion of
Equityco's and Equity GP's general partnership
interests in 245 Co. 245 Corp. is a subsidiary of 245
Holding LP, and was capitalized by 245 Holding LP with
a portion of the interests in 245 Co. that 245 Holding
LP had received from Equityco and Equity GP. Neither
245 Holding LP nor 245 Corp. conducts any day-to-day
business. They are merely passive holding companies
created to allow Equityco and Equity GP to pledge
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certain interests in 245 Co. in a tax-efficient manner.
245 Co., 245 Holding LP and 245 Corp. are treated as
one Entity by O&Y (U.S.).
Creditor Reliance. Since neither 245 Holding LP nor 245 Corp.
conducts any day-to-day business, it is highly unlikely that
creditors, other than the holders of the Club Loan, Aetna and
DKB, are aware of their existence. The Debtors do not believe
that it is likely that creditors relied on their separate
credit. The holders of the Club Loan, Aetna and DKB were all
given notice of the creation of 245 Holding LP and 245 Corp.
and the transfers of interests in 245 Co. to such Entities.
The loan documents with Aetna and DKB contained provisions
which allowed O&Y (U.S.) to transfer interests in 245 Park Co.
to other "Permitted Transferees", which term included other
Entities owned by O&Y (U.S.). The inclusion of the "Permitted
Transfers" provision of the Aetna and DKB loan documents
supports the Debtors contention that Aetna and DKB did not
rely on the separate credit of either 245 Holding LP or 245
Corp., but rather were relying on the group of Entities that
comprised O&Y (U.S.).
Common Management. The corporate direct and indirect
general partner of both Equityco and 245 Holding LP is
Equity GP. Equity GP and 245 Corp. have shared a
common board of directors and executive officers.
Employees. Only 245 Park Co. has employees; neither
245 Holding LP nor 245 Corp. has any employees.
Moreover, there is a single in-house counsel for those
three entities and they use the same law firms.
Financial Statements. 245 Co. issued consolidated
financial statements for all three of the Consolidated
245 Entities. 245 Holding LP and 245 Corp. have never
issued separate financial statements.
These facts illustrate that a strong inter-relationship exists among
245 Park Co., 245 Holding LP and 245 Corp. and lend support to the conclusion
that substantive consolidation of 245 Park Co., 245 Holding LP and 245 Corp. is
proper.
b. Effect of Substantive Consolidation
All assets and Liabilities of 245 Park Co., 245 Holding LP and 245
Corp. will be substantively consolidated. On the Effective Date, (a) each
Intercompany Claim held by 245 Park Co., 245 Holding LP or 245 Corp. against 245
Park Co., 245 Holding LP
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or 245 Corp. will be eliminated in accordance with the Restructuring
Transactions or otherwise cancelled, (b) all assets and Liabilities of 245
Holding LP and 245 Corp. will be treated as though they were merged with the
assets and Liabilities of 245 Park Co., (c) each guarantee of 245 Park Co., 245
Holding LP or 245 Corp. of an obligation of 245 Park Co., 245 Holding LP or 245
Corp. will be eliminated so that any Claim against 245 Park Co., 245 Holding LP
or 245 Corp. and any guarantee thereof by 245 Park Co., 245 Holding LP or 245
Corp. and any joint or several liability of any two or more of 245 Park Co., 245
Park Holding Co. or 245 Corp. will be deemed to be one obligation of
Consolidated 245, and (d) each and every Claim filed or to be filed in the
Reorganization Cases of 245 Park Co., 245 Park Holding Co. and/or 245 Corp. will
be deemed filed against Consolidated 245 and will be deemed one Claim against
and obligation of Consolidated 245.
D. REVIEW OF SETTLEMENTS AND AGREEMENTS IMPLEMENTED BY THE PLAN
The following settlements and agreements will be implemented by the
Plan:
1. The January 12th Settlement Agreement
For a detailed discussion of the January 12th Settlement Agreement,
see "Significant Developments in the Debtors' Chapter 11 Cases -- The
Exclusivity Litigation and the January 12th Settlement Agreement".
2. Unsecured Creditors' Agreement
For a detailed discussion of the Unsecured Creditors' Agreement, see
"Significant Developments in the Debtors' Chapter 11 Cases -- Unsecured
Creditors' Agreement".
3. Merrill Lynch Settlement
For a detailed discussion of the Merrill Lynch Settlement Agreement,
see "Significant Developments in the Debtors' Chapter 11 Cases -- Merrill Lynch
Settlement Agreement".
4. BPHI Settlement
For a detailed discussion of the issues between O&Y (U.S.) and
BPHI and the settlement thereof, see "Significant Developments in the Debtors'
Chapter 11 Cases -- BPHI Settlement" and "Overview of the Debtors Plan of
Reorganization -- Settlements and Agreements to be Implemented Under the Plan --
BPHI Settlement".
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5. Bank of Nova Scotia Settlement
For a detailed discussion of the Bank of Nova Scotia Settlement, see
"Significant Developments in the Debtors' Chapter 11 Cases -- Bank of Nova
Scotia Settlement".
6. Toronto Dominion Settlement
For a detailed discussion of the Toronto Dominion Settlement, see
"Significant Developments in the Debtors' Chapter 11 Cases -- Toronto Dominion
Settlement".
7. TIAA Settlement
For a detailed discussion of the TIAA Settlement, see "Significant
Developments in the Debtors' Chapter 11 Cases -- TIAA Settlement".
8. Settlement of Intercompany Claims
For a detailed description of the Settlement of Intercompany Claims,
see "Significant Developments in the Debtors' Chapter 11 Cases -- Intercompany
Settlement".
9. Reichmann Settlement
For a detailed discussion of the Reichmann Settlement, see
"Significant Developments in the Debtors' Chapter 11 Cases -- Reichmann
Settlement".
10. Dragon Settlement
For a detailed discussion of the Dragon Settlement, see "Significant
Developments in the Debtors' Chapter 11 Cases -- Dragon Settlement".
11. Oppenheimer Indirect Capital Contribution and Treatment of
Oppenheimer Claim
For a detailed discussion of the Oppenheimer Settlement, see
"Significant Developments in the Debtors' Chapter 11 Cases -- Oppenheimer
Indirect Capital Contribution and Treatment of Oppenheimer Claim".
E. DESCRIPTION OF RESERVES
1. Disputed Claims Cash Reserve
On the Effective Date, the Disbursing Agent shall deposit in one or
more segregated accounts as the Disputed Claims
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Cash Reserve an amount of Cash required to pay in full all Disputed
Administrative Expense Claims and Disputed Priority Non- Tax Claims. With
respect to Disputed Claims in SF Holdings Class 2, Devco Canada Class 3, Equity
Canada Class 3, Consolidated OLP Class 5, Tower A Co. Class 5, Consolidated 245
Class 7 and Tower B Leaseco Class 3, the Disbursing Agent shall reserve, on
account of the Disputed Claims in such Classes, that amount of Cash required to
provide distributions on account of such Disputed Claims as if such Disputed
Claims were Allowed Claims on the Effective Date. The Cash held in the Disputed
Claims Cash Reserve, together with any net earnings thereon, shall be held in
trust for the benefit of holders of such Disputed Claims pending determination
of their entitlement thereto. The Disbursing Agent will establish a reserve for
Disputed Priority Tax Claims only if directed by order of the Bankruptcy Court.
2. Subclass 7.11.1 Disputed Claims Debt/Equity Escrow.
On the Effective Date, the Disbursing Agent shall transfer to the
Subclass 7.11.1 Disputed Claims Debt/Equity Escrow an amount of Class A
Interests that would be distributable on account of the aggregate amount of
Disputed Claims in section 7.11.1 as if they were Allowed Unaffiliated Unsecured
Claims in their respective Maximum Allowable Amounts on the Effective Date. In
addition, on the Effective Date, the Disbursing Agent shall transfer to the
Subclass 7.11.1 Disputed Claims Debt/Equity Escrow the Disputed Claims
Convertible Note Interests, which will constitute that number of the Convertible
Note Interests which is equal to the amount that would be distributable on
account of the aggregate amount of Disputed Claims in section 7.11.1 as if they
were Allowed Unaffiliated Unsecured Claims in their respective Maximum Allowable
Amounts on the Effective Date. The Disbursing Agent shall serve as the escrow
agent for the Subclass 7.11.1 Disputed Claims Debt/Equity Escrow. Dividends,
distributions, interest payments and other payments payable on such Class A
Interests and the Disputed Claims Convertible Note Interests shall be paid into
the Subclass 7.11.1 Disputed Claims Debt/Equity Escrow. The Class A Interests
and the Disputed Claims Convertible Note Interests (and any proceeds or net
earnings thereon) held in the Subclass 7.11.1 Disputed Claims Debt/Equity Escrow
shall be held in trust for the holders of Disputed Claims as of the Effective
Date in section 7.11.1 pending determination of their entitlement thereto. Each
holder of a Disputed Claim as of the Effective Date in section 7.11.1 of the
Plan entitled to be distributed Class A Interests and/or Convertible Note
Interests shall not have the rights of holders (including voting rights) with
respect to such interests until such time, if any, that such interests are
released to such holder in accordance with section 20.4. of the Plan.
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For all purposes, but subject to the remainder of this paragraph, the
Disbursing Agent, as escrow agent, shall be deemed the holder of all Cash,
securities and other interests held in the Subclass 7.11.1 Disputed Claims
Debt/Equity Escrow pending their release therefrom; provided, however, that (a)
the Disbursing Agent shall abstain from exercising any and all voting rights in
respect of the interests held in the Subclass 7.11.1 Disputed Claims Debt/Equity
Escrow unless otherwise ordered by the Bankruptcy Court on motion of a holder of
a Disputed Claim as of the Effective Date that, if Allowed, would receive
distributions as a Claim in Consolidated Devco Class 7.11 and (b) with respect
to each opportunity to exercise any right regarding the Convertible Note
Interests, the Disbursing Agent shall be deemed to have exercised all such
rights regarding the Convertible Note Interests held in the Subclass 7.11.1
Disputed Claims Debt/Equity Escrow (including, without limitation, with respect
to amendments, waivers, enforcement of remedies, acceptances of non-mandatory
pre-payments and conversions in response to mandatory or non-mandatory notices
of pre-payments, but solely to the extent of same) in the same manner and
proportion as the acceptances, enforcement and/or conversions (as applicable)
made by the actual holders of the Convertible Note Interests entitled to
exercise such right (notwithstanding that the Convertible Note Interests are
exercisable in whole but not in part); provided further that, unless otherwise
ordered by the Bankruptcy Court upon motion of a holder of a Disputed Claim as
of the Effective Date in subclass 7.11.1, the Disbursing Agent shall not
exercise any conversion rights relating to the Convertible Note Interests other
than as specifically described above in response to and to the extent of
mandatory or non- mandatory notices of pre-payments.
3. Class 8.6 Disputed Claims Equity Escrow.
On the Effective Date, the Disbursing Agent shall transfer to the
Class 8.6 Disputed Claims Equity Escrow an amount of Class A Interests and Class
B Interests that would be distributable in accordance with the Restructuring
Transactions and section 8.6 of the Plan on account of the aggregate amount of
Disputed Claims in Consolidated Realty Corp. Class 6 as if they were Allowed
Claims in their respective Maximum Allowable Amounts on the Effective Date. The
Disbursing Agent shall serve as the escrow agent for the Class 8.6 Disputed
Claims Equity Escrow. Dividends, distributions and other payments payable on
such Class A Interests and Class B Interests shall be paid into the Class 8.6
Disputed Claims Equity Escrow. The Class A Interests and the Class B Interests
(and any proceeds or net earnings thereon) held in the Class 8.6 Disputed Claims
Equity Escrow shall be held in trust for the holders of Disputed Claims in
Consolidated Realty Corp. Class 6 pending determination of their entitlement
thereto
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and all holders of previously Allowed Claims in Consolidated Realty Corp. Class
6. Each holder of a Disputed Claim in Consolidated Realty Corp. Class 6 entitled
to be distributed Class A Interests and Class B Interests shall not have the
rights of holders (including voting rights) with respect to such shares and
interests until such time, if any, that such shares and interests are released
to such holder in accordance with section 20.4 of the Plan.
For all purposes, but subject to the remainder of this paragraph, the
Disbursing Agent, as escrow agent, shall be deemed the holder of all Cash,
securities and other interests held in the Class 8.6 Disputed Claims Equity
Escrow pending their release therefrom; provided, however, that the Disbursing
Agent shall abstain from exercising any and all voting rights in respect of the
interests held in the Class 8.6 Disputed Claims Equity Escrow unless otherwise
ordered by the Bankruptcy Court on motion of a holder of a Disputed Claim that,
if Allowed, would receive distributions as a Claim in Consolidated Realty Corp.
Class 6.
4. Funding of Costs of the Claims Reserves.
The Disbursing Agent shall maintain a reserve within the Disputed
Claims Cash Reserve, the Subclass 7.11.1 Disputed Claims Debt/Equity Escrow and
the Class 8.6 Disputed Claims Equity Escrow to fund the payment of all taxes
payable by such reserves and escrow accounts in respect of earnings chargeable
to the relevant reserve or escrow and all reasonable and customary out-of-pocket
costs and expenses of maintaining the reserves and escrows; provided, however,
that the reserves shall not be charged for attorneys' fees and other similar
costs associated with prosecuting Disputed Claims. The Disbursing Agent shall
pay, or cause to be paid, out of the funds held in such reserve and escrow
accounts, any such taxes. The Disbursing Agent shall also file or cause to be
filed any tax or information returns related to the Disputed Claims Cash
Reserve, the Subclass 7.11.1 Disputed Claims Debt/Equity Escrow and the Class
8.6 Disputed Claims Equity Escrow that are required by any governmental unit. In
the event a reserve established pursuant to section 20 of the Plan does not have
sufficient Cash to make the required tax payments described in the first
sentence of section 20.3.4 of the Plan, Newco LP shall provide such reserve with
a Tax Advance. If and when a claimant (whether by reason of a Disputed Claim
becoming an Allowed Claim or by reason of a Catch-Up Cash Distribution) becomes
entitled to a distribution in Cash from a reserve, the holder of such Allowed
Claim shall be charged such holder's pro rata portion of the Tax Advance and the
Disbursing Agent shall be entitled to withhold from such holder's distribution
the amount required to pay such pro rata portion of the Tax Advance. If and when
a claimant (whether by reason of a
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Disputed Claim becoming an Allowed Claim or by reason of a Catch- Up Equity
Distribution) becomes entitled to a distribution of an interest or share from a
reserve, the holder of such Allowed Claim shall have thirty (30) Business Days
in which to pay in Cash such holder's pro rata portion of the Tax Advance. If a
payment in full in Cash is not received in such thirty (30) day period, Newco LP
shall be entitled to reduce and permanently adjust the partner interests
otherwise distributable to such holder, accordingly.
F. EXECUTORY CONTRACTS AND UNEXPIRED LEASES UNDER THE PLAN
The Plan constitutes a motion by the Debtors (dated as of the date the
Debtors file Schedule 21.1 to the Plan with the Bankruptcy Court) to reject, as
of the Confirmation Date, all executory contracts and unexpired leases to which
the any of the Debtors is a party, except for an executory contract or unexpired
lease that (a) has been assumed pursuant to Final Order prior to the
Confirmation Date (including the ground leases between Tower A Co. and Battery
Park City Authority and Tower B Co. and Battery Park City Authority), (b) is
specifically listed on Schedule 21.1 to the Plan (which Schedule 21.1 will be
filed with the Bankruptcy Court two weeks prior to the Confirmation Hearing) or
(c) is the subject of a separate motion filed under section 365 of the
Bankruptcy Code by any of the Debtors and pending on the Confirmation Date or
(d) has Merrill Lynch as a party, with respect to which Merrill Lynch has not
consented to rejection or has consented to assumption, pursuant to section 4.4
of the Plan. For purposes of the Plan and subject to the terms of section 4.4 of
the Plan, each executory contract and unexpired lease listed on Schedule 21.1 of
the Plan that relates to the use or occupancy of real property will include
modifications, amendments, supplements, restatements, or other agreements made
directly or indirectly by any agreement, instrument, or other document that in
any manner affects such executory contract or unexpired lease, without regard to
whether such agreement, instrument or other document is listed on Schedule 21.1
of the Plan, unless any of the foregoing agreements is rejected.
Subject to section 4.4 of the Plan, the Debtors will assume and, as
applicable, assign each of the executory contracts and unexpired leases listed
on Schedule 21.1 to the Plan; provided, however, that, the Debtors may at any
time on or before the Confirmation Date, with the consent of the Co-Proponents
(which consent will not be unreasonably withheld), amend Schedule 21.1 to the
Plan to delete therefrom or add thereto any executory contract or unexpired
lease, in which event such executory contract or unexpired lease will be deemed
to be rejected or assumed, respectively, as of the Confirmation Date. The
Debtors will provide notice of any amendments to Schedule 21.1 to the
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Plan to the parties to the executory contracts or unexpired leases affected
thereby and to parties on the primary service list or master service list, as
applicable. The fact that any contract or lease is scheduled on Schedule 21.1 to
the Plan will not constitute or be construed to constitute an admission that
such contract or lease is an executory contract or unexpired lease within the
meaning of section 365 of the Bankruptcy Code or any Debtor or any successor in
interest of any Debtor has any liability thereunder. With respect to assumption
of any executory contract or unexpired lease listed on Schedule 21.1 to the
Plan, the payment of the cure amount listed on such Schedule with respect to
such executory contract or unexpired lease will be deemed a cure of any and all
defaults relating to such executory contract or unexpired lease; provided,
however, that the foregoing shall not apply to executory contracts and unexpired
leases to which Merrill Lynch is a party.
If the rejection of an executory contract or unexpired lease by the
Debtors results in damages to the other party or parties to such contract or
lease, a Claim for such damages, if not heretofore evidenced by a filed proof of
Claim, will be forever barred and will not be enforceable against the Debtors,
or their properties or their interests in property or agents, successors, or
assigns, unless a proof of Claim is filed with the Bankruptcy Court and served
upon counsel for the Debtors on or before thirty (30) days after the earlier to
occur of (a) the Confirmation Date and (b) the entry of an order by the
Bankruptcy Court authorizing rejection of a particular executory contract or
lease.
G. CONDITIONS PRECEDENT TO THE CONFIRMATION DATE AND THE
EFFECTIVE DATE OF THE PLAN
1. Conditions Precedent to Confirmation of the Plan
a. The January 12th Settlement Agreement: If the January 12th
Settlement Agreement has been approved by order of the Bankruptcy Court prior to
the Confirmation Hearing, the Clerk of the Bankruptcy Court shall have entered
the January 12th Settlement Agreement Order and the January 12th Settlement
Agreement Order will have become a Final Order. However, if the January 12th
Settlement Agreement has not been approved by a Final Order prior to the
commencement of the Confirmation Hearing, then the Plan will constitute a motion
for approval of the January 12th Settlement Agreement, and the Confirmation
Order will approve the January 12th Settlement Agreement and each of the terms
thereof in all respects.
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b. Confirmation Order: The Clerk of the Bankruptcy Court shall have
entered the Confirmation Order, which will, among other things:
(1) decree that the transfers contemplated hereunder will be free
and clear of all Claims, Liens and encumbrances, except as expressly provided
herein;
(2) decree that the Confirmation Order will supersede any
Bankruptcy Court orders issued prior to the Confirmation Date that may be
inconsistent with the Confirmation Order;
(3) authorize the implementation of the Plan in accordance with
its terms;
(4) provide that any transfers effected or to be effected under
the Plan will be and are exempt from New York State and New York City transfer
taxes, mortgage recording taxes and any other stamp or similar tax under section
1146(c) of the Bankruptcy Code;
(5) approve the BPHI Settlement and each of the terms thereof in
all respects (as provided in section 4.3 of the Plan);
(6) approve the Merrill Lynch Settlement and each of the terms
thereof in all respects (as provided in section 4.4 of the Plan);
(7) if the January 12th Settlement Agreement has not been
approved by a Final Order prior to the commencement of the Confirmation Hearing,
approve the January 12th Settlement Agreement pursuant to decretal provisions
reasonably satisfactory in form and substance to the Club Loan Transferors and
the additional relief requested in section 4.2 of the Plan in all respects;
provided, however, that the transfer of the O&Y Affiliates' ownership interests
in 11601 Wilshire may be approved by a separate order of the Bankruptcy Court
entered on, or after, the Confirmation Date;
(8) approve the other settlements, transactions and agreements to
be effected pursuant to the Plan in all respects;
(9) approve the indemnification of the Reichmann Entities from
any Claims or Liabilities arising out of the transfer or subordination of the
Reichmann Bank Claims in accordance with section 4.7 of the Plan; and
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(10) provide that if the Plan is not consummated, the
Confirmation Order and all findings of fact and conclusions of law relating
thereto shall be null and void and the Debtors, the Co-Proponents, the
Creditors' Committee and other holders of Claims and Equity Interests, in
relation to one another, shall stand in the same position as if this Plan had
never been filed; provided, however, that each and every provision of the
January 12th Settlement Agreement Order (irrespective of whether such order is
part of the Confirmation Order) shall remain in full force and effect even if
the Plan is not consummated.
c. BPHI Ownership: Carena and certain of its Affiliates will own of
record and beneficially 100% of BPHI, and evidence thereof reasonably
satisfactory to the Debtors will have been presented to the Debtors.
d. DIP Loan: A default under the DIP Loan will not have occurred and
be continuing.
e. Entry of an Order Confirming the 970 Plan. The Clerk of the
Bankruptcy Court shall have entered an order confirming the 970 Plan.
f. Entry of an Order Confirming the Tower B Co. Plan. The Clerk of the
Bankruptcy Court shall have entered an order confirming the Tower B Co. Plan.
g. Entry of Order Relating to Tower B Equity Interests. The Bankruptcy
Court shall have entered an order providing that the direct and indirect Equity
Interests of Devco, Devco GP, BPHI and Tower B Holding in Tower B Co. are free
of all Liens, Claims and encumbrances and such order shall have become a Final
Order.
h. Material Adverse Change. There shall not have been a change in
circumstances after the date of approval of the Disclosure Statement by the
Bankruptcy Court that shall have caused a material adverse change in the
business, assets or financial position of the Debtors on a collective basis that
would, upon consummation of the Plan, also be materially adverse to the
business, assets or liquidity of Newco LP in comparison to (a) that projected in
the pro forma balance sheet or cash flow projection of Newco LP included in the
Disclosure Statement as approved by the Bankruptcy Court or (b) that known by
the Co- Proponents as of the date of approval of the Disclosure Statement by
reason of (i) being disclosed to the Co-Proponents in writing by the Debtors or
to the Bankruptcy Court, upon notice to the Co- Proponents, or (ii) being public
information relating to market conditions that is readily available to the
Co-Proponents.
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2. Conditions Precedent to the Effective Date of the Plan
The occurrence of the Effective Date of the Plan is subject to
satisfaction of the following conditions precedent:
a. Ceiling on Administrative Claims and Extraordinary Expenses. The
aggregate amount of Administrative Expense Claims for (a) substantial
contribution claims under section 503(b) of the Bankruptcy Code, (b) bonuses,
success fees, other benefits or payments to any employee of any Debtor,
including officers, if payment thereof requires further application to or
approval by the Bankruptcy Court, and (c) similar extraordinary expenses that
require specific approval or authorization by the Bankruptcy Court shall not,
without the approval of the Co-Proponents, have exceeded $8,800,000. Any
Administrative Expense Claims of any of the Debtors which constitute ordinary
course of business corporate-level obligations (including, without limitation,
accrued but unpaid salaries, wages and other employee-related costs) as of the
Effective Date and which are not claims included in the first sentence of this
paragraph shall be current (i.e., paid within thirty (30) days after accrual
thereof) and shall be consistent with the aggregate historical level of such
corporate- level obligations.
b. Tower D Financing Condition. The Debtors and the Co-Proponents
shall have received the financing required to refinance the Tower D Mortgage
Debt existing as of the Effective Date.
c. Tower B Effective Date. The Closing Date (as defined in the Tower B
Co. Plan) of the Tower B Co. Plan shall have occurred or shall occur
concurrently with the Effective Date of the Plan.
d. Finality of the Confirmation Order. The Clerk of the Bankruptcy
Court will have entered the Confirmation Order and the Confirmation Order will
have become a Final Order.
e. Material Adverse Change. There shall not have been a change in
circumstances after the date of approval of the Disclosure Statement by the
Bankruptcy Court that shall have caused a material adverse change in the
business, assets or financial position of the Debtors on a collective basis that
would, upon consummation of the Plan, also be materially adverse to the
business, assets or liquidity of Newco LP in comparison to (a) that projected in
the pro forma balance sheet or cash flow projection of Newco LP included in the
Disclosure Statement as approved by the Bankruptcy Court or (b) that known by
the Co- Proponents as of the Confirmation Date by reason of (i) being disclosed
to the Co-Proponents in writing by the Debtors or to
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the Bankruptcy Court upon notice to the Co-Proponents, or (ii) being public
information relating to market conditions that is readily available to the
Co-Proponents.
f. Co-Proponents' Capital Infusion. The Co- Proponents will have
provided the Co-Proponents' Capital Infusion in accordance with section 18.12 of
the Plan.
g. Consummation of the January 12th Settlement Agreement. The January
12th Settlement Agreement shall have been fully consummated on or prior to the
Effective Date.
h. Consummation of the Merrill Lynch Settlement. The Merrill Lynch
Settlement shall have been fully consummated on or prior to the Effective Date;
provided, however, that the Merrill Lynch Escrow may have been released prior to
the Effective Date.
i. Finality of 970 Confirmation Order. The order confirming the 970
Plan shall have become a Final Order.
j. Execution of Documents. All actions and documents necessary to
implement the provisions of the Plan to be effectuated on or prior to the
Effective Date shall be reasonably satisfactory to the Debtors and the
Co-Proponents and such actions and documents shall have been effected or
executed and delivered.
k. Effective Date. The Effective Date must occur no later than
December 31, 1996.
H. WAIVER OF CONDITIONS PRECEDENT
Each of the conditions precedent in sections 22.1 and 22.2 of the Plan
may be waived, in whole or in part, or modified by written agreement among the
Debtors and the Co-Proponents to the extent that such waiver is permitted under
the January 12th Settlement Agreement. Any such waiver or modification of a
condition precedent in sections 22.1 and 22.2 of the Plan may be effected at any
time, without notice, without leave or order of the Bankruptcy Court and without
any formal action, provided, however, that the condition set forth in section
22.1.2(x) of the Plan may only be waived or modified by the Debtors and the Co-
Proponents with written notice to and the consent of the Creditors' Committee.
The condition precedent set forth in section 22.2.3 of the Plan may only be
waived or modified by the Debtors and the Co-Proponents with written notice to
and the consent of JMB. The condition precedent set forth in section 22.2.8 of
the Plan may only be waived with the consent of Merrill Lynch. Unless a
Noteholder (as defined in the Tower B Co. Plan) objects to confirmation of the
Tower B Co. Plan or the Plan, the
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condition precedent set forth in section 22.1.6 of the Plan may
only be waived or modified with written notice to and the written
consent of the Noteholders' Representative (as defined in the
Tower B Co. Plan).
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VIII. MEANS OF IMPLEMENTATION/FLOW OF ASSETS
Each of the transactions required to implement the Plan will be
implemented in accordance with section 18 of the Plan, the Restructuring
Transactions described in Schedule 18.1 thereto and the Restructuring Documents.
The descriptions in this section of the organizational and ownership structures,
governance, and assets and liabilities of the Entities to be organized or
reorganized under the Plan assume that the transactions required to implement
the Plan have been completed. All numbers and percentages used in this section
are estimates subject to adjustment by the Debtors prior to the Effective Date.
A. NEWCO LP
1. Organization, Capitalization
and Ownership of Newco LP
By the Effective Date, Newco LP will be organized as a Delaware
limited partnership by the filing of a certificate of limited partnership with
the Delaware Secretary of State. After taking into account the distributions to
be made under the Plan, Managing GP will hold the General Partner Interest and a
1% Class B Interest in, and will be the sole general partner of, Newco LP; 245
Holding LP will hold a 5.4949% Class A Interest in Newco LP; and the remaining
limited partner interests in Newco LP will be held, directly or indirectly, by
the Co-Proponents, the holders of Allowed Unaffiliated Unsecured Claims, and the
holders of Allowed General Unsecured Claims against Consolidated Realty Corp. In
addition, the holders of Convertible Note Interests will have the right to
convert such interests into Class A Interests, as described in section 7.11.1 of
the Plan pursuant to the Conversion Right. Each holder of a Class B Interest
will have such interest automatically exchanged or converted for or into a Class
A Interest as provided below. Until such time as a Class B Interest is so
exchanged or converted, the holders thereof will not be entitled to any interest
in respect of the assets of Newco LP other than those assets that relate to the
Disputed SF Cash and/or the Disputed MCJV Recovery, as provided below.
If and when Newco LP's ownership interest in the Disputed SF Cash
ceases to be disputed by reason of the entry of an order of the Bankruptcy Court
or another court of competent jurisdiction either (a) confirming Newco LP's
ownership interest in the Disputed SF Cash or (b) approving an executed and
delivered settlement agreement with Coopers & Lybrand OYDL, Inc./Limited, or any
successor in interest to Coopers & Lybrand OYDL, Inc./Limited, Newco LP shall
determine the amount of SF Cash remaining after deducting litigation costs
and/or settlement
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amounts (the "Net SF Cash"). Within thirty (30) Business Days after the date of
entry of such court order (the "SF Deadline"), each then outstanding Class B
Interest shall automatically be exchanged or converted in a manner or mechanic
set forth in the Newco LP Partnership Agreement for or into that percentage of
Class A Interests determined by dividing (a) the Net SF Cash, by (b) the sum of
(x) the Newco LP Reorganization Value plus (y) the Net SF Cash plus (z) the
aggregate value of all capital contributions and issuances of Class A Interests
after the Effective Date (whether occurring pursuant to an exchange or
conversion of Class B Interests or a conversion of Convertible Note Interests).
If, on the SF Deadline, an exchange or conversion of Class B Interests for or
into Class A Interests has not already occurred by reason of a sale of the MCJV
Lands as described in the next paragraph, the holders of Class B Interests shall
continue to be entitled to participate in the value of the Disputed MCJV
Recovery.
If and when the Disputed MCJV Recovery ceases to be disputed and Newco
LP executes and delivers a contract of sale of the MCJV Lands, Newco LP shall
determine the amount of the net Cash proceeds of such sale, after deducting any
litigation costs, settlement amounts and the amount required to be distributed
to Bank of Nova Scotia in accordance with the Bank of Nova Scotia Settlement
(the "Net MCJV Proceeds"). Within thirty (30) Business Days after the date of
entry of an order of the Bankruptcy Court approving such sale (the "MCJV
Deadline"), each then outstanding Class B Interest shall automatically be
exchanged or converted in a manner or mechanic set forth in the Newco LP
Partnership Agreement for or into that percentage of Class A Interests
determined by dividing (a) the Net MCJV Proceeds, by (b) the sum of (x) the
Newco LP Reorganization Value plus (y) the Net MCJV Proceeds plus (z) the
aggregate value of all capital contributions and issuances of Class A Interests
after the Effective Date (whether occurring pursuant to an exchange or
conversion of Class B Interests or a conversion of Convertible Note Interests).
If, on the MCJV Deadline, an exchange or conversion of Class B Interests for or
into Class A Interests has not already occurred by reason of a resolution of the
Disputed SF Cash as described in the immediately preceding paragraph, the
holders of Class B Interests shall continue to be entitled to participate in the
value of the Disputed SF Cash.
Notwithstanding the foregoing, if, on the SF Deadline, an exchange or
conversion of Class B Interests for or into Class A Interests has not already
occurred by reason of a sale of the MCJV Lands, Newco LP shall deduct from the
amount of Net SF Cash used in the formula described in the second preceding
paragraph above (a) the litigation costs and other expenses of Newco LP expended
in attempting to settle or litigate Claims relating to
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the Disputed MCJV Recovery and (b) the amount required to be deposited in a
reserve to fund litigation costs and other expenses of Newco LP estimated to be
expended by Newco LP in attempting to settle or litigate Claims relating to the
Disputed MCJV Recovery. Any amounts to be reserved pursuant to clause (b) of the
preceding sentence shall by subject to the approval of the Bankruptcy Court in
connection with any order of the Bankruptcy Court confirming Newco LP's
ownership interest in the Disputed SF Cash or approving an executed and
delivered settlement agreement with Coopers & Lybrand OYDL, Inc./Limited.
If, on the MCJV Deadline, an exchange or conversion of Class B
Interests for or into Class A Interests has not already occurred by reason of
the resolution of the dispute relating to the Disputed SF Cash, Newco LP shall
deduct from the amount of Net MCJV Proceeds used in the formula described in the
second preceding paragraph above (a) the litigation costs and other expenses of
Newco LP expended in attempting to settle or litigate Claims relating to the
Disputed SF Cash and (b) the amount required to be deposited in a reserve to
fund litigation costs and other expenses of Newco LP estimated to be expended by
Newco LP in attempting to settle or litigate Claims relating to the Disputed SF
Cash. Any amounts to be reserved pursuant to clause (b) of the preceding
sentence shall by subject to the approval of the Bankruptcy Court in connection
with any order of the Bankruptcy Court approving the sale of the MCJV Lands.
On the Effective Date, Realty Corp. will transfer 100% of the
outstanding stock of SF Holdings to Newco LP. On the Effective Date, indirectly
through its wholly owned subsidiary, Florida Equity Corp., a Florida
corporation, will hold a 50% joint venture interest in MCJV.
2. Assets and Liabilities of Newco LP
On the Effective Date, Newco LP will own, among other things, the
following assets, free and clear of all Liens, Claims and encumbrances, subject
to potential adjustments described in sections 18.8 and 18.9 of the Plan:
100% of the outstanding stock of Devco GP
99% limited partner interest in New 245 Park LP
70.6666667% partner interest in New Tower A LP
98% limited partner interest and 1% general
partner interest in WFC Tower B Holding Co. LP
99% limited partner interest in New Tower D
Holding I LP
49.25% limited partner interest in Tower D Holding
II LP
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99% general partner interest in 53 Holding
Company LP
99% limited partner interest in New Liberty Plaza
LP
100% of the fixed loan from New 245 Park LP
99% limite partner interest in Pennland LP
100% of the outstanding stock
of SF Holdings
99% limited partner interest in WFC Retailco LP
100% of the outstanding stock of WFC Tower D GP Corp.
100% of the outstanding stock of Florida Equity Corp.
On the Effective Date, Newco LP shall be a borrower or an obligor, as
the case may be, under the Convertible Note, the deferred Cash payments to be
provided to TIAA in accordance with the TIAA Settlement, the guarantee of the
DKB Restructured Mortgage Loan and certain of the Tax Notes to be issued under
the Plan.
3. Repayment of Withholding Advances
If a Withholding Advance on behalf of a partner or its assignee is
made by Newco LP, such partner or assignee shall have thirty (30) Business Days
within which to repay such advance in full in Cash. If such repayment is not
timely made, Newco LP shall be entitled to deduct such amount and permanently
adjust the interest of such partner or assignee accordingly. If Newco LP
determines that it would have insufficient funds to make a Withholding Advance,
Newco LP shall be entitled to require the partner for which the withholding
requirement applies to pay the amount of such withholding requirement
sufficiently in advance of the payment date to permit Newco LP to timely satisfy
its withholding tax liability.
4. Governance of Newco LP
The business and affairs of Newco LP will be managed by its sole
general partner, Managing GP, acting by majority vote through its Board of
Directors; provided, however, that action by Newco LP in respect of the
following matters will require a supermajority vote (the percentage constituting
such supermajority shall be agreed to by the Co-Proponents) of the Board of
Directors of Managing GP:
(i) a significant acquisition or business combination, or
disposition of any Core Property;
(ii) any issuance or purchase by any Entity controlled by
Managing GP of any capital stock or any other Equity Interests (including any
significant long-term debt refinancing involving the issuance of any capital
stock or any
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other Equity Interests), except an issuance made in exchange for debt upon an
actual or anticipated default on such debt where no other available alternative
is acceptable to the creditor;
(iii) any transaction between any Entity controlled by Managing
GP and any related party (other than ordinary course transactions);
(iv) the initial selection, and any removal or replacement, of
Managing GP's Chief Executive Officer during the three-year period following the
Effective Date; and
(v) any amendment of the organizational documents of any Entity
owned or controlled by Managing GP affecting cumulative voting in any election
of directors or affecting any of the matters referred to in clauses (i) through
(iv) above.
The Co-Proponents will enter into a stockholders' agreement with
respect to their ownership in and the governance of Managing GP, including,
without limitation, an agreement with respect to the nomination and election of
directors of Managing GP.
Managing GP will have the exclusive power and authority to reorganize
or restructure the ownership interests of Newco LP to permit an Entity
qualifying as a real estate investment trust for federal income tax purposes to
become a partner of Newco LP, including, in connection therewith, the power and
authority to distribute such ownership interests and any associated contractual
or other obligations or held by Newco LP to Newco LP's partners.
B. OWNERSHIP OF MANAGING GP
On the Effective Date, the Co-Proponents will own 100% of the issued
and outstanding capital stock of Managing GP which, in turn, will own the
General Partner Interest and 1% of the Class B Interests in Newco LP. The
General Partner Interest of Managing GP in Newco LP will be issued by Newco LP
in partial consideration of the Co-Proponents' Capital Infusion and the Allowed
Co-Proponent Unsecured Claims.
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C. ORGANIZATION OF DEVCO GP
1. Organization and Ownership of Devco GP
On the Effective Date, Equity GP will be merged with and into Devco
GP, with Devco GP as the surviving corporation. On the Effective Date, Newco LP
will own 100% of the outstanding common stock of Devco GP.
2. Assets and Liabilities of Devco GP
On the Effective Date, Devco GP will own the following assets, free
and clear of all Liens, Claims and encumbrances, subject to the potential
adjustments described in sections 18.8 and 18.9 of the Plan:
100% of the outstanding stock of WFC Tower B
Finance Corp.
15% of the outstanding stock of Brunswash
Development Corp.
100% of the New OLP Corp. Class A Stock and New
OLP Corp. Class B Stock
100% of the New Tower A Corp. Class A Stock and
New Tower A Corp. Class B Stock
.9% general partner interest in 245 Holding LP
1% general partner interest in WFC Tower B Holding
Co. LP
100% of the 245 Corp. Class A Stock and the
245 Corp. Class B Stock
100% of the outstanding stock of Tower D Holding I
Corp.
50.75% general partner interest in New Tower D
Holding II LP
1% limited partner interest in 53 Holding Company
LP
100% of the outstanding stock of WFC Retailco
Holding Corp.
100% of the outstanding stock of Pennland GP
Corp.
33% joint venture interest in Federal Center Associates
On the Effective Date, Devco GP will have no material indebtedness.
3. Capital Stock of Devco GP
On the Effective Date, the authorized capital stock of Devco GP shall
consist only of common stock, in such amount and having the par value and other
rights, privileges, limitations
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and restrictions as will be set forth in Devco GP's certificate
of incorporation.
4. Governance of Devco GP
On the Effective Date, the business and affairs of Devco GP will be
managed by and under the direction of a board of directors elected by Newco LP,
Devco GP's sole stockholder.
D. ORGANIZATION OF LIQUIDATING CORP.
By the Effective Date, Liquidating Corp. will be organized, for and on
behalf of certain creditors, as a Delaware corporation by the filing of a
certificate of incorporation with the Delaware Secretary of State. The
Co-Proponents will own 100% of the issued and outstanding Liquidating Corp.
Shares.
1. Assets and Liabilities of Liquidating Corp.
On the Effective Date, Liquidating Corp. will own, among other things,
the Equity Interests in the companies listed below, free and clear of all Liens,
Claims and encumbrances unless, with respect to the assets listed below that are
Entities, such Entities have been dissolved or otherwise eliminated prior to the
Effective Date.
Amland Properties Corp.
Forum Properties Corp.
Hartford Park Associates
Izzard Corp.
Olympia (U.S.) Development Subsidiary Corp.
Olympia Center Holding Company, L.P.
Olympia & York Bryan Holding Company
Olympia & York Colorado Development Corp.
Olympia & York Communications, Inc.
Olympia & York Cypress Corp.
Olympia & York Denver Properties Corp.
Olympia & York Development Seattle Company
Olympia & York Fountain Plaza Company
Olympia & York Grampian Corp.
Olympia & York Homes Corp.
Olympia & York Jefferson Street Company
Olympia & York KOIN Center Company
Olympia & York Maiden Lane Company
Olympia & York Maiden Lane Finance Corp.
Olympia & York Mass Investment Corp.
Olympia & York Properties (Portland) Company
Olympia & York Southeast Equity Corp.
Olympia & York State Street Company
Olympia & York Tower B Lease Company
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Olympia & York Water Street Company
Olympia & York & O&Y FEC Corp Joint Venture
Olympia & York 245 Lease Company
Olympia & York 320 G.O.T. Company
Olympia & York 320 Park Company
Orion Limited Partnership
OYCI Video, Inc.
O&Y Concord 60 Broad Street Company
O&Y Construction Corp.
O&Y Cypress Florida Inc.
O&Y Dalland Corp.
O&Y FEC Corp.
O&Y Hope Street, Inc.
O&Y I/S Guide Inc.
O&Y NY Building Corp.
O&Y Plaza Corp.
O&Y REUSA TALP Subsidiary Corp.
O&Y WFC Maintenance Corp.
O&Y-YBG Corp.
O&Y-YBG L.P.
O&Y 7 Hanover Leasing Company, L.P.
O&Y 55 WS Lease Co., L.P.
O&Y 233 Park South Company, L.P.
O&Y 320 Park Corp.
Senior Associates
SYR Mall Corp.
Tremont Park Associates
WFC Tower Corp.
West 31st Street Associates
2 Broadway Associates
2 Broadway Associates L.P.
2 Broadway Land Company
60 Broad Street Management Corp.
125 Broad Street Company
11601 Holding Corp.
11601 Holdings, L.P.
Notwithstanding anything in section 18.4.1 of the Plan, the transfer
of the Equity Interests in O&Y Concord 60 Broad Street Company to Liquidating
Corp. shall not in any way affect the Liens of Dragon relating to such Equity
Interests; provided, however, that any Liabilities of the partners on O&Y
Concord 60 Broad Street Company shall be released in accordance with the Plan.
2. Governance of Liquidating Corp.
From and after the Effective Date, the business and affairs of
Liquidating Corp. will be managed by and under the direction of a board of
directors, initially designated by the
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Co-Proponents. Thereafter, the composition of the board of
directors of Liquidating Corp. will be determined in accordance
with the articles of incorporation of Liquidating Corp.
3. Funding of Liquidation Costs
From and after the Effective Date, Newco LP shall provide Liquidating
Corp. with the Liquidation Funding Advance, which shall be a credit facility in
a maximum amount of $1,000,000, which credit facility may drawn upon from time
to time by Liquidating Corp., shall mature three years from the Effective Date,
shall accrue interest at 15% per annum, and shall be recourse to Liquidating
Corp.
E. OLP TRANSACTIONS
1. Reorganization of OLP Entities
By the Effective Date, New OLP Corp. will be organized as a Delaware
corporation by the filing of a certificate of incorporation with the Delaware
Secretary of State. The board of directors of New OLP Corp. will have at least
five (5) directors. By the Effective Date, Devco GP and Devco will transfer
their respective partnership interests in OLP Co. and Trinity Place Co. to
Liberty Plaza Co., with OLP Co. and Trinity Place Co. being dissolved by reason
of such transfers. Immediately thereafter, on the Effective Date, Liberty Plaza
Co., as successor to the respective assets and Liabilities of OLP Co. and
Trinity Place Co., will be reorganized as New Liberty Plaza LP, with New OLP
Corp. as a 1% sole general partner and Newco LP as a 99% limited partner. Such
partners shall be restricted from transferring or pledging their respective
interests in New Liberty Plaza LP pursuant to a partnership agreement of New
Liberty Plaza LP to be entered into by such partners as of the Effective Date.
2. Execution of Sanwa/OLP
Restructured Mortgage Loan Documents
On the Effective Date, Sanwa and New OLP Corp. and New Liberty Plaza
LP will execute and deliver the Sanwa/OLP Restructured Mortgage Loan Documents.
3. Bankruptcy Remote Structure
On the Effective Date and in accordance with section 12.2 of the Plan,
New OLP Corp. will have two classes of stock, the New OLP Corp. Class A Stock
and the New OLP Corp. Class B Stock, all of which will be held by Devco GP on
the Effective Date. All of the shares of New OLP Corp. Class B Stock shall be
pledged by Devco GP to Sanwa to further secure the Sanwa/OLP
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Restructured Mortgage Loan. The New OLP Corp. Class B Stock pledged to Sanwa
shall be entitled to elect one director of New OLP Corp., and Sanwa, as pledgee,
shall be entitled to vote such shares. New OLP Corp. shall not be authorized
under its certificate of incorporation to (a) commence a chapter 11 case or
undertake other insolvency or reorganization proceedings, or cause New Liberty
Plaza LP to do so, or (b) dissolve, in each case without the approval of Sanwa's
director for so long as the Sanwa/OLP Restructured Mortgage Loan shall be
outstanding. Sanwa's director shall not vote on any other issues. New Liberty
Plaza LP and New OLP Corp. will agree not to file a bankruptcy petition if Sanwa
declares a default or commences a foreclosure proceeding following a default,
without the vote of the director elected by Sanwa, and such director shall have
the sole right to authorize the filing of a plan of reorganization for New
Liberty Plaza LP and New OLP Corp. in any bankruptcy proceeding that may be
filed by New Liberty Plaza LP. If a bankruptcy petition is filed by or against
New Liberty Plaza LP or New OLP Corp. at any time after the Effective Date, New
Liberty Plaza LP and New OLP Corp. will be contractually obligated (a) to agree
to a modification of the automatic stay to permit, at Sanwa's option, Sanwa to
exercise its foreclosure and related rights, and (b) to enter into a cash
collateral stipulation providing for the application of revenues in accordance
with the cash management system at all times during the pendency of any
bankruptcy proceeding, except that property management fees will be reduced by
50% and no asset management fees will be paid. In the event Sanwa files a motion
for a modification of the automatic stay in accordance with the preceding
sentence and such motion is denied by the Bankruptcy Court, neither New Liberty
Plaza LP nor New OLP Corp. shall have any right to seek any extension of
exclusivity in any such bankruptcy proceeding without the prior approval of
Sanwa.
F. 245 PARK AVENUE TRANSACTIONS
1. Organization and Ownership of 245 Holding LP
On the Effective Date, 245 Holding LP will be reconstituted as a
Delaware limited partnership. If JMB does not elect the JMB/245 Park Member
Option in accordance with section 15.8.1 of the Plan, JMB will a hold 99%
limited partner interest and Devco GP will hold a 1% general partner interest in
245 Holding LP. On the Effective Date, 245 Holding LP will hold a 5.4949% Class
A Interest in Newco LP.
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2. Organization and Reorganization
of Other 245 Park Avenue Entities
By the Effective Date, New 245 Park LP will be organized as a Delaware
limited partnership by the filing of a certificate of limited partnership with
the Delaware Secretary of State. Newco LP will hold a 99% limited partner
interest and 245 Corp. will hold a 1% sole general partner interest in New 245
Park LP. Such partners will be restricted from transferring or pledging their
respective interests in New 245 Park LP pursuant to a partnership agreement of
New 245 Park LP to be entered into by such partners as of the Effective Date.
3. Bankruptcy Remote Structure
On the Effective Date and in accordance with section 15.3 of the Plan,
245 Corp. will have two classes of stock, the 245 Corp. Class A Stock and the
245 Corp. Class B Stock, all of which will be held by Devco GP on the Effective
Date. All of the shares of 245 Corp. Class B Stock shall be pledged by Devco GP
to Aetna to further secure the Aetna Restructured Mortgage Loan. The 245 Corp.
Class B Stock pledged to Aetna shall be entitled to elect one director of 245
Corp., and Aetna, as pledgee, shall be entitled to vote such shares. The board
of directors of 245 Corp. will have at least five (5) directors. 245 Corp. will
not be authorized under its certificate of incorporation to (a) commence a
chapter 11 case or undertake other insolvency or reorganization proceedings, or
cause New 245 Park LP to do so, or (b) dissolve, in each case without the
approval of Aetna's director for so long as the Aetna Restructured Mortgage Loan
remains outstanding. Aetna's director shall not vote on any other issues. New
245 Park LP and 245 Corp. will agree not to file a bankruptcy petition if Aetna
declares a default or commences a foreclosure proceeding following a default,
without the vote of the director elected by Aetna and such director shall have
the sole right to authorize the filing of a plan of reorganization for New 245
Park LP and 245 Corp. in any bankruptcy proceeding that may be filed by New 245
Park LP and 245 Corp. If a bankruptcy petition is filed by or against New 245
Park LP or 245 Corp. at any time after the Effective Date, New 245 Park LP and
245 Corp. will be contractually obligated (a) to agree to a modification of the
automatic stay to permit, at Aetna's option, Aetna to exercise its foreclosure
and related rights, and (b) to enter into a cash collateral stipulation
providing for the application of revenues in accordance with the cash management
system at all times during the pendency of any bankruptcy proceeding, except
that property management fees will be reduced by 50% and no asset management
fees will be paid. In the event Aetna files a motion for a modification of the
automatic stay in accordance with the preceding sentence and such
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motion is denied by the Bankruptcy Court, neither New 245 Park LP nor 245 Corp.
shall have the right to seek any extension of exclusivity in any such bankruptcy
proceeding without the prior approval of Aetna.
4. Execution of Aetna Restructured
Mortgage Loan Documents
On the Effective Date, Aetna and New 245 Park LP will execute and
deliver the Aetna Restructured Mortgage Loan Documents.
5. Execution of DKB Restructured
Mortgage Loan Documents
On the Effective Date, DKB and New 245 Park LP will execute and
deliver the DKB Restructured Mortgage Loan Documents.
6. Execution of JMB
Restructuring Documents
On the Effective Date, the JMB Restructuring Documents will be
executed and delivered.
G. TOWER A TRANSACTIONS
1. Organization of Tower A Entities.
By the Effective Date, New Tower A Corp. will be organized as a
Delaware corporation by the filing of a certificate of incorporation with the
Delaware Secretary of State. The board of directors of New Tower A Corp. will
have at least five (5) directors. By the Effective Date, New Tower A LP will be
organized as a Delaware limited partnership by the filing of a certificate of
limited partnership with the Delaware Secretary of State. New Tower A LP will
have TALP as a 26.2626263% limited partner, Newco LP as a 70.6666667% limited
partner and New Tower A Corp. as a 3.070707% sole general partner. Such partners
will be restricted from transferring or pledging their respective interests in
New Tower A LP pursuant to a partnership agreement of New Tower A LP to be
entered into by such partners as of the Effective Date.
2. Execution of Sanwa/Tower A
Restructured Mortgage Loan Documents.
On the Effective Date, Sanwa and New Tower A LP will execute and
deliver the Sanwa/Tower A Restructured Mortgage Loan Documents.
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3. Bankruptcy Remote Structure.
On the Effective Date and in accordance with section 13.2 of the Plan,
New Tower A Corp. will have two classes of stock, the New Tower A Corp. Class A
Stock and the New Tower A Corp. Class B Stock, all of which will be held by
Devco GP on the Effective Date. All of the shares of New Tower A Corp. Class B
Stock shall be pledged by Devco GP to Sanwa to further secure the Sanwa/Tower A
Restructured Mortgage Loan. The New Tower A Corp. Class B Stock pledged to Sanwa
shall be entitled to elect one director of New Tower A Corp., and Sanwa, as
pledgee, shall be entitled to vote such shares. New Tower A Corp. shall not be
authorized under its certificate of incorporation to (a) commence a chapter 11
case or undertake other insolvency or reorganization proceedings, or cause New
Tower A LP to do so, or (b) dissolve, in each case without the approval of
Sanwa's director for so long as the Sanwa/Tower A Restructured Mortgage Loan
remains outstanding. Sanwa's director shall not vote on any other issues. New
Tower A LP will agree not to file a bankruptcy petition if Sanwa declares a
default or commences a foreclosure proceeding following a default, without the
vote of the director elected by Sanwa, and such director shall have the sole
right to authorize the filing of a plan of reorganization for New Tower A LP and
New Tower A Corp. in any bankruptcy proceeding that may be filed by New Tower A
LP or New Tower A Corp. If a bankruptcy petition is filed by or against New
Tower A LP and new Tower A Corp. at any time after the Effective Date, New Tower
A LP or New Tower A Corp. will be contractually obligated (a) to agree to a
modification of the automatic stay to permit, at Sanwa's option, Sanwa to
exercise its foreclosure and related rights, and (b) to enter into a cash
collateral stipulation providing for the application of revenues in accordance
with the cash management system at all times during the pendency of any
bankruptcy proceeding, except that property management fees will be reduced by
50% and no asset management fees will be paid. In the event Sanwa files a motion
for a modification of the automatic stay in accordance with the preceding
sentence and such motion is denied by the Bankruptcy Court, neither New Tower A
LP nor New Tower A Corp. shall have any right to seek any extension of
exclusivity in any such bankruptcy proceeding without the prior approval of
Sanwa.
H. TOWER B TRANSACTIONS
On the Effective Date, Tower B Co. and Tower B Holding I will be
dissolved and reconstituted as New York general partnerships and will bear the
same names. Pursuant to the Restructuring Transactions, BPHI will own indirectly
(through Tower B Co. and Tower B Holding I) a portion of the Class A Interests.
On the Effective Date, WFC Tower B Co. LP, a Delaware
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limited partnership, will be formed by the filing of a certificate of limited
partnership with the Delaware Secretary of State. In accordance with the
Restructuring Transactions, WFC Tower B Co. LP will own Tower B. Newco LP will
own indirectly (through WFC Tower B Holding Co. LP) a 99% limited partner
interest in WFC Tower B Co. LP. The 1% general partner interest in WFC Tower B
Co. LP will be owned by WFC Tower B GP Corp., a subsidiary owned by one or more
of the Co-Proponents. The partners in WFC Tower B Co. LP shall be restricted
from transferring or pledging their respective interests in WFC Tower B Co. LP
pursuant to a partnership agreement of WFC Tower B Co. LP to be entered into by
such partners as of the Effective Date. The board of directors of Tower B
Holding Corp. will have at least five (5) directors. The partnership agreement
for WFC Tower B Co. LP and WFC Tower B Holding Co. LP will be in scope and
substance necessary to effect the ML Lease Securitization (as defined in the
Tower B Co. Plan). Notwithstanding the foregoing, to the extent required to
effect the ML Lease Securitization (as defined in the Tower B Co. Plan), Tower B
Co. and Tower B Holding I may be reorganized as limited liability companies, not
limited partnerships, having the same ownership structure as set forth in
section 18.8.1 of the Plan and/or the ownership structure of Tower B Co. and its
direct and indirect partners may be revised.
I. TOWER D TRANSACTIONS
1. Ownership of Tower D
On the Effective Date, Tower D Co. and Tower D Holding I will each be
reconstituted as Delaware limited partnerships named WFC Tower D Co. LP and New
Tower D Holding I LP, respectively, by the filing of certificates of limited
partnership with the Delaware Secretary of State. Tower D Holding II will be
reconstituted as a Delaware limited partnership named New Tower D Holding II LP.
By the Effective Date, WFC Tower D GP Corp. will be organized as a Delaware
corporation by the filing of a certificate of incorporation with the Delaware
Secretary of State. The board of directors of WFC Tower D GP Corp. will have at
least five (5) directors. Newco LP will own all of the outstanding stock of WFC
Tower D GP Corp. WFC Tower D Co. LP will own Tower D. New Tower D Holding I LP
will hold a 48% limited partner interest, New Tower D Holding II LP will hold a
2% limited partner interest, WFC Tower D GP Corp. will hold a 1% general partner
interest, Merrill Lynch Tower D Partner will hold a 48.1% limited partner
interest and an affiliate of Merrill Lynch Tower D Partner will hold a .9%
general partner interest in WFC Tower D Co. LP. Newco LP will hold a 99% limited
partner interest and Tower D Holding I Corp. will hold a 1% sole general partner
interest in New Tower D Holding I LP. Such partners shall be restricted from
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transferring or pledging their respective partner interests in New Tower D
Holding I LP pursuant to a partnership agreement of New Tower D Holding I LP to
be entered into by such partners as of the Effective Date. Newco LP will hold a
49.25% limited partner interest and Devco GP will hold a 50.75% sole general
partner interest in New Tower D Holding II LP. The board of directors of Tower D
Holding I Corp. will have at least five (5) directors. Notwithstanding the
foregoing, to the extent required to effect the refinancing of Tower D, Tower D
Co. and Tower D Holding I may be reorganized as limited liability companies, not
limited partnerships, having the same ownership structure as set forth in
section 18.9.1 of the Plan and/or the ownership structure of Tower D Co. and its
direct and indirect partners may be revised.
2. Tower D Refinancing
On the Effective Date, the Tower D Financing Documents shall be
executed and delivered.
3. WFC Retailco Holding Corp. and WFC Retailco LP
By the Effective Date, WFC Retailco Holding Corp. will be organized as
a Delaware corporation by the filing of a certificate of incorporation with the
Delaware Secretary of State. Devco GP will hold 100% of the outstanding stock of
WFC Retailco Holding Corp. The board of directors of WFC Retailco Holding Corp.
will have at least five (5) directors. By the Effective Date, WFC Retailco LP
will be organized as a Delaware limited partnership by the filing of a
certificate of limited partnership with the Delaware Secretary of State. Newco
LP will hold a 99% limited partner interest and WFC Retailco Holding Corp. will
hold a 1% general partner interest in WFC Retailco LP. Such partners will be
restricted from transferring or pledging their respective interests in WFC
Retailco LP pursuant to a partnership agreement of WFC Retailco LP to be entered
into by such partners as of the Effective Date.
J. TRANSACTIONS IN FURTHERANCE OF THE PLAN
Prior to the proposal of, and in furtherance of, the Plan, the
Non-Core Properties listed below were either returned to lenders in exchange for
debt forgiveness or sold to third parties:
One Corporate Center
One Financial Plaza
Wood Ranch
1999 Bryan Street
Cypress Creek
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KOIN Center
320 Park Avenue
Winter Park Plaza
Olympia Place
Chino Hills
400 South Hope Street
La Santa Maria
1250 Broadway
K. CO-PROPONENTS' CAPITAL INFUSION
On the Effective Date, subject to the satisfaction or waiver of the
conditions precedent set forth in section 22.2 of the Plan, the Co-Proponents
shall contribute to the capital of Newco LP $75,000,000 in Cash. Notwithstanding
the foregoing, the Co-Proponents' Capital Infusion is subject to the internal
approvals (to the extent required) of the Co-Proponents, confirmation of receipt
of which is to be provided by the Co- Proponents to the Debtors at or prior to
the hearing to approve the Disclosure Statement.
L. RESTRICTIONS ON TRANSFERABILITY AND ASSIGNABILITY
OF CLASS A INTERESTS AND CLASS B INTERESTS AND ON THE
ADMISSION OF SUBSTITUTE PARTNERS; TAG-ALONG RIGHTS
The Newco LP Partnership Agreement will prohibit a partner of Newco LP
from assigning its partner interest in Newco LP to an assignee that is not a
"United States person" (within the meaning of section 7701(a)(30) of the IRC),
without the prior written consent of Managing GP, which consent shall be granted
unless Managing GP determines that the withholding obligations to which Newco LP
reasonably may be expected to be subject as a result of the ownership of such
partner interest by such assignee, when taken together with such withholding
obligations with respect to all other Newco LP partner interests held by
nonUnited States persons, would have a material adverse effect on the ability of
Newco LP and its Affiliates to satisfy their debt service requirements and other
contractual obligations and operational requirements.
Notwithstanding any other provision of the Plan, the Newco LP
Partnership Agreement will prohibit any direct or indirect transfer of any
partner interest that would result in a "termination" of Newco LP under section
708 of the IRC, without the prior written consent of Managing GP.
The Newco LP Partnership Agreement will require that Managing GP (and
any successor general partner) maintain at least a 1% general partner interest
in the capital of, and in all items of income, gain, loss, deduction and credit
of, Newco LP.
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The Newco LP Partnership Agreement will prohibit Managing GP's
withdrawal from Newco LP in certain circumstances and also will prohibit the
admission of an assignee of a partner interest in Newco LP (including a
permitted assignee who is a non-United States person) as a substitute partner of
Newco LP without the consent of a majority in interest of the non- transferring
partners (after taking into account the exercise of tag-along rights. Pending
the assignee's admission as a substitute partner of Newco LP, and upon receipt
of written notice by Managing GP of the transfer, the assignee shall be entitled
to share in all allocations and distributions of Newco LP (including liquidating
distributions) on the same basis as a partner. Unless and until the assignee is
admitted as a substitute partner of Newco LP, the assignee shall not be entitled
to exercise any other rights of a partner of Newco LP, including the right to
vote on any matter submitted to the partners for approval, and the assignor
shall retain the right to vote the partner interests so assigned; provided,
however, that such restriction on substitution will not apply with respect to
any permitted assignee of a Class A Interest distributed to holders of
Unaffiliated Unsecured Claims or JMB pursuant to the Plan or upon conversion of
the Convertible Note Interests, unless prior to the Effective Date the
Co-Proponents, on the one hand, and the Creditors' Committee or JMB, on the
other hand (as the case may be), reasonably determine that such restriction is
necessary to permit Newco LP to lack free transferability of interests for
purposes of being classified as a partnership for federal income tax purposes;
and, provided, further, that the Newco LP Partnership Agreement will provide for
the elimination of such restriction on substitution with respect to all
permitted assignees in the event that Treasury Regulations are adopted to
replace or supplement, with an elective regime, the existing Treasury
Regulations for classifying certain business organizations, and such elimination
or supplementation does not adversely affect the partnership status of Newco LP
from its inception.
In addition, the Newco LP Partnership Agreement will provide for
tag-along rights as follows. If any holder of Equity Interests in Newco LP
(alone or together with any other such holder) proposes to sell (in such
capacity, the "Selling Holder") a Controlling Interest in Newco LP to a third
party investor pursuant to a bona fide offer, the Selling Holder will give each
other holder of Equity Interests in Newco LP written notice of such proposed
sale (the "Tag-Along Notice"), and each such other holder will have the right
(subject to the restrictions on transfer and the provisions on assignees' rights
in the first four paragraphs above) to participate in such proposed sale on the
same terms and conditions offered by such investor. The Tag- Along Notice will
be required to set forth (i) the identity of
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the third party investor, (ii) the total percentage of Equity Interests in Newco
LP proposed to be sold by the Selling Holder to such investor, (iii) the
purchase price for such interests (which may only be paid in cash) and (iv) the
other material terms of such proposed sale. Such right to participate in the
proposed sale will be exercisable by written notice to the Selling Holder given
not later than ten (10) days after receipt of a Tag-Along Notice, which written
notice must set forth the percentage of Equity Interests in Newco LP proposed to
be sold by the holder exercising such right (the "Exercising Tag-Along Holder").
The percentage of Equity Interests in Newco LP to be sold in such proposed sale
by any participating holder of Equity Interests in Newco LP (including the
Selling Holder) will be determined by multiplying the total percentage of Equity
Interests in Newco LP originally proposed to be sold by the Selling Holder
(which total percentage of Equity Interests in Newco LP may be increased, in the
third party investor's discretion, so as to allow the sale of the total
percentage of Equity Interests in Newco LP originally proposed to be sold by the
Selling Holder together with the total percentage of Equity Interests in Newco
LP proposed to be sold by all of the Exercising Tag-Along Holders as set forth
in their exercise notices) by a fraction, the numerator of which will be the
percentage of Equity Interests in Newco LP proposed to be sold by such
participating holder and the denominator of which will be the total percentage
of Equity Interests in Newco LP originally proposed to be sold by the Selling
Holder together with the total percentage of Equity Interests in Newco LP
proposed to be sold by all of the Exercising Tag-Along Holders as set forth in
their exercise notices. In the event a holder of Equity Interests in Newco LP
entitled to tag-along rights in accordance with section 18.13 of the Plan
exercises such rights and the purchaser purchases a portion, but not all, of
such holder's Equity Interests in Newco LP pursuant to section 18.13 of the
Plan, such holder shall thereafter continue to be entitled to tag-along rights
to sell its remaining Equity Interest in Newco LP in connection with a sale of
less than a Controlling Interest but at least 35% of the total Equity Interests
in Newco LP notwithstanding that, at the time of such sale, such holder holds
less that 4% of the total Equity Interests of Newco LP.
If the Selling Holder proposes to sell less than a Controlling
Interest but at least 35% of the total Equity Interests in Newco LP to a third
party investor pursuant to a bona fide offer, the Selling Holder will give each
other holder of at least 4% of the total Equity Interests a Tag-Along Notice,
and each such other holder will have the right (subject to the restrictions on
transfer and the provisions on assignees' rights in the first four paragraphs
above) to participate in such proposed sale on the same terms and conditions
offered by such
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investor. Such right will be exercisable in the same manner and within the same
period as described in the immediately preceding paragraph. In addition, the
percentage of Equity Interests in Newco LP to be sold by any participating
holder (including the Selling Holder) will be determined in the same manner as
described in the immediately preceding paragraph.
In connection with the foregoing rights, notwithstanding the terms of
the fourth paragraph of section 18.13 of the Plan, JMB will be provided with an
opportunity to exchange its Equity Interests in 245 Holding LP for Class A
Interests to allow it to participate in any proposed sale by a Selling Holder
giving rise to such rights (on the same terms and subject to the same conditions
applicable to the other holders of Class A Interests (including the 4% minimum
percentage ownership requirement described in the immediately preceding
paragraph)), provided that any tax or other cost of doing so will be borne by
JMB. If JMB does not make any such exchange, it still may exercise the foregoing
rights (subject to the restrictions on transfer and the provisions on assignees'
rights in the first three paragraphs of this section 18.13) and participate in
any such proposed sale (on the same terms and subject to the same conditions as
if it were a direct holder of Class A Interests) if and only to the extent that
the third party investor agrees to purchase JMB's Equity Interests in 245
Holding LP (the percentage of such Equity Interests and the 4% minimum
percentage ownership requirement to be determined as if such interests had been
exchanged for Class A Interests). If, after the Effective Date, 245 Holding LP's
ownership interest in Newco LP falls below 4% solely by reason of a subsequent
issuance of equity or securities exchangeable for or convertible into equity of
Newco LP, JMB shall be entitled to tag-along rights notwithstanding the 4%
minimum percentage ownership requirement.
M. LETTER OF CREDIT TRANSACTIONS
On the Effective Date, Newco LP and Sterling National will execute and
deliver the Sterling National Amended and Restated Reimbursement Agreement.
N. EXECUTION OF CIBC AMENDED AND
RESTATED LOST NOTE INDEMNITY AGREEMENT
On the Effective Date, Newco LP and CIBC will execute and deliver the
CIBC Amended and Restated Lost Note Indemnity Agreement.
O. ABANDONMENT OF INTEREST IN OLYMPIA & YORK (U.S.) HOLDINGS
COMPANY, L.P.
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By the Effective Date, Realty Corp., as a Debtor and a Debtor in
Possession, shall abandon its Equity Interest in U.S. Holdings to U.S. Holdings.
P. DISTRIBUTIONS UNDER THE PLAN
Except as provided herein and in the January 12th Settlement
Agreement, on the Effective Date, the Disbursing Agent shall make, or shall make
adequate reserve for, the distributions required to be made under the Plan.
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IX. EFFECTS OF CONFIRMATION OF THE PLAN
A. DISCHARGE OF DEBTORS
The rights afforded by the Plan and the treatment therein of Claims or
Equity Interests against a Debtor will be in exchange for and in complete
satisfaction, discharge and release of all Claims or Equity Interests against a
Debtor of any nature whatsoever, including any interest accrued or expenses
incurred against such Debtor in respect thereof from and after the Petition Date
of such Debtor, and its estate, properties and interests in property. Except as
otherwise provided herein, on the Effective Date, all Claims against and Equity
Interests in the Debtors will be satisfied, discharged and released in full
exchange for the consideration provided hereunder. All Entities will be
precluded from asserting against any Debtor, such Debtor's successor(s), assets,
properties or interests in property any other Claims based upon any act or
omission, transaction or other activity of any kind or nature that occurred
prior to the Effective Date.
B. RELEASE FROM CLAIMS AND LIABILITIES
1. Release of the O&Y Releasees
The Plan contains provisions under which the O&Y Releasees and the
Plan Releasees will be released from certain liabilities as set forth in more
detail below.
a. Release of Debtors and Debtors in
Possession
Without limiting the provisions of section 23.3 of the Plan, from and
after the Effective Date, the Debtors and Debtors in Possession will be released
from all Liabilities from the beginning of time.
b. Limited Release of O&Y Releasees
Without limiting the release provided in section 24.1 of the Plan,
from and after the Effective Date, the O&Y Releasees are released from all
Liabilities in any way relating to, but solely to the extent relating to, the
Debtors, the Debtors in Possession, the Reorganization Cases, the O&Y
Affiliates, the conduct of the business and affairs of any of the Debtors, the
Debtors in Possession or the O&Y Affiliates, the Plan, the Tower B Co. Plan, or
the properties or other assets of any of the Debtors, the Debtors in Possession
or the O&Y Affiliates; provided, however, that nothing contained in section 24.2
of the Plan shall release (a) any non-Debtor O&Y Affiliate (except Tower
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B Co., Tower B Holding and WFC Fincorp, each of which shall be released of the
aforesaid) from any Liability arising out of the ownership, management or
operation of the properties or other assets of such non-Debtor O&Y Affiliate or
out of any other aspect of the conduct by such non-Debtor O&Y Affiliate of its
business, including any Liability arising under any notes, mortgages and other
loan documents relating to any financing of any property owned by any such
non-Debtor O&Y Affiliate (but any secondary Liability of any other O&Y Releasee,
by reason of being a partner of such O&Y Affiliate or any guarantee of any
obligation of such O&Y Affiliate or other undertaking or relationship with
respect to such O&Y Affiliate, shall be released hereby) or (b) any current or
former director, officer or employee of any Debtor, Debtor in Possession or O&Y
Affiliate from any Liability arising primarily from his or her Willful
Misconduct (as hereinafter defined) or (c) any current or former director,
officer or employee of any Debtor, Debtor in Possession or O&Y Affiliate from
any Liability for repayment of any loan (both unpaid principal and any accrued
interest and charges) made to such director, officer or employee by a Debtor,
Debtor in Possession or O&Y Affiliate prior to the Effective Date and recorded
in the ordinary course of business on the books and records of such Debtor,
Debtor in Possession or O&Y Affiliate and that remains outstanding on the
Effective Date. The release of the O&Y Releasees provided in section 24.2 of the
Plan includes, without limitation, a release from all Liabilities from the
beginning of time relating to:
(i) the involvement of any of the O&Y Releasees in or in connection
with the negotiation, formulation, documentation, approval and implementation of
the Plan or the Tower B Co. Plan or the transactions required to implement the
Plan or the Tower B Co. Plan as required by section 18 of the Plan, including
(without limitation) any approval of the Plan or the Tower B Co. Plan or the
transactions contemplated thereby (but in the case of an O&Y Affiliate subject
to clause (a), and in the case of a current or former director, officer or
employee of a Debtor, Debtor in Possession or O&Y Affiliate, subject to clause
(b), of the proviso to the immediately preceding sentence);
(ii) the ownership, management or operation of the properties or other
assets of the Debtors, the Debtors in Possession or the O&Y Affiliates by any of
the O&Y Releasees (but in the case of an O&Y Affiliate subject to clause (a),
and in the case of a current or former director, officer or employee of any
Debtor, Debtor in Possession or O&Y Affiliate, subject to clauses (b) and (c),
of the proviso to the immediately preceding sentence);
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(iii) the preparation by any of the O&Y Releasees of financial
statements in respect of the Debtors, the Debtors in Possession and the O&Y
Affiliates (but in the case of a current or former director, officer or employee
of a Debtor, Debtor in Possession or O&Y Affiliate, subject to clause (b) of the
immediately preceding sentence); and
(iv) the return, disgorgement, rescission or repayment, in any form, of
any payment (including any loan or advance) to any current or former director,
officer or employee of any Debtor that was (A) made prior to the Effective Date,
(B) made by any Debtor, Debtor in Possession or O&Y Affiliate or any person who
was a stockholder or an Affiliate of a Debtor or an O&Y Affiliate at the time
when such payment was made or any earlier time, and (C) made either (1) as
compensation for, or on account of or relating to or in connection with, any
services provided prior to the Effective Date to any of the Debtors, the Debtors
in Possession, the O&Y Affiliates or any person who was a stockholder or an
Affiliate of a Debtor or an O&Y Affiliate at the time when such payment was made
or any earlier time or (2) on account of or relating to or in connection with
any full or partial satisfaction or settlement of any claim for compensation for
such services (but shall not include a release of any Liability to repay a loan
described in clause (c) of the proviso to the immediately preceding sentence or
any Liability for the return, disgorgement, rescission or repayment of any such
payment that was the product of Willful Misconduct by such director, officer or
employee).
2. Limited Release of the Plan Releasees
From and after the Effective Date, the Plan Releasees are released
from all Liabilities in any way relating to, but solely to the extent relating
to, the Debtors, the Debtors in Possession, the O&Y Affiliates, the conduct of
the business and affairs of any of the Debtors, the Debtors in Possession and
the O&Y Affiliates, the Reorganization Cases, the Plan or the properties or
other assets of the Debtors, the Debtors in Possession or the O&Y Affiliates.
The release of the Plan Releasees provided in section 24.2 of the Plan includes,
without limitation, a release from Liabilities from the beginning of time
relating to:
(i) the involvement of any of the Plan Releasees in or with the
Plan, the Tower B Co. Plan or the transactions required to implement
the Plan or the Tower B Co. Plan as required by section 18 of the
Plan, including (without limitation) any approval of the Plan or the
Tower B Co. Plan or the transactions contemplated hereby; and
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(ii) any and all acts and/or omissions relating to the
acquisition of Claims against the Debtors, the Debtors in Possession
and the O&Y Affiliates.
In addition, as a Plan Releasee, BPHI will be released in accordance
with the BPHI Settlement as set forth in section 4.3 of the Plan.
Nothing in section 24 of the Plan shall be construed to release the
O&Y Releasees or any other Entity from the Liabilities or obligations expressly
contemplated by this Plan, or created pursuant to any of the documents to be
executed in connection with the transactions under this Plan, including
Liabilities and obligations relating to the Project Operating Agreement, the
Merrill Lynch Tower B Lease, the Zero Coupon Note and the Zero Coupon Mortgage
(each as defined in the Tower B Co. Plan), the Tower B Financing Documents and
any executory contracts and unexpired leases to be assumed pursuant to section
21.1 of the Plan, to which Merrill Lynch is a party.
C. INJUNCTION
General Injunction. The Confirmation Order will include an injunction
to permanently enjoin and restrain all Entities from asserting against the
Debtors, the Debtors in Possession, the O&Y Releasees and/or the Plan Releasees,
or their respective assets, any Liabilities that the Debtors, the Debtors in
Possession, the O&Y Releasees and/or the Plan Releasees are released from
pursuant to sections 24.1, 24.2 and 24.3 of the Plan, or from taking any of the
following actions against such Entities in respect of any Claim respecting any
Liability so released:
(i) the commencement or continuation of any action or proceeding;
(ii) the enforcement, attachment, collection or recovery by any
manner or means of any judgment, award, decree or order;
(iii) the creation, perfection or enforcement of any encumbrance
of any kind; and/or
(iv) the assertion of any right of setoff, subrogation or
recoupment of any kind against any obligation due from any such
Entity.
Injunction Relating to Reichmann Settlement. The Confirmation Order
will also include an injunction against all
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actions inconsistent with the releases provided in section 4.7 of
the Plan.
D. AVOIDANCE AND RECOVERY ACTIONS
As of the Effective Date, the Debtors waive the right to prosecute and
release, on behalf of themselves and their respective estates, any avoidance or
recovery actions under sections 542, 544, 545, 547, 548, 549, 550, 551 and 553
of the Bankruptcy Code or any other Causes of Action, or rights to payment of
Claims, that belong to or could have been raised by or on behalf of the Debtors
or Debtors in Possession or their respective estates, other than or in
connection with any such actions that were commenced on or before the Effective
Date. Newco LP, as a successor of the Debtors, will retain and may prosecute any
such actions that may be pending on the Effective Date. Nothing in section 24.5
of the Plan will be deemed to waive any right of any Debtor or Debtor in
Possession to assert avoidance or recovery actions under sections 542, 544, 545,
547, 548, 549, 550, 551 and 553 of the Bankruptcy Code or any other Causes of
Action defensively, including by way of setoff, recoupment or counterclaim.
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X. CERTAIN RISK FACTORS RELATING TO THE PLAN
A. INTRODUCTION
IN ADDITION TO THE RISKS CUSTOMARILY INVOLVED IN SECURITIES ISSUED
PURSUANT TO A PLAN OF REORGANIZATION, THE SECURITIES TO BE DISTRIBUTED UNDER THE
PLAN INVOLVE VARIOUS SPECIAL RISKS, WHICH ARE SET FORTH BELOW. CREDITORS AND
EQUITY INTEREST HOLDERS WHO WOULD RECEIVE SUCH SECURITIES IN RESPECT OF THEIR
CLAIMS OR EQUITY INTERESTS SHOULD CONSIDER THE FOLLOWING FACTORS BEFORE VOTING
ON THE PLAN.
B. LIMITED MARKET FOR SECURITIES ISSUED UNDER THE PLAN
All securities issued under the Plan will be issued pursuant to
section 1145 of the Bankruptcy Code, which generally provides that such
securities are freely transferable by parties other than "underwriters" as such
term is defined in section 1145(b). Nonetheless, there is no established trading
market for any of these securities. In addition, certain provisions of the Plan
provide that the securities issued pursuant to the Plan may not be transferred
under certain circumstances. Furthermore, the securities of companies issued
pursuant to plans of reorganization typically evidence volatility in price in
what market exists, at least initially. Thus, if a market does develop for the
securities to be issued under the Plan, it may be limited and volatile.
C. CONCENTRATION OF ASSETS
On a pro forma basis as of September 30, 1996, assets representing
slightly less than one hundred percent (100%) of Newco LP's total annualized
revenues are located in the State of New York and in the New York metropolitan
area. Due to this geographic concentration, in the event that economic
conditions in New York or in the New York area were to deteriorate, the effect
on the financial condition and results of operations of Newco LP and on funds
available for distribution to stockholders could be substantial.
D. NATURE OF THE ASSETS
Newco LP will hold interests in partnerships and limited liability
companies. In most instances, these partner or member interests are not freely
transferable or have no current trading market. Consequently, these partner
interests may be difficult for Newco LP to sell. In addition, while certain of
these Entities in the past have made distributions to their partners, no
assurance can be given that such practice will continue.
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In addition, the values and Cash flows of the real estate and the
management assets indirectly owned by Newco LP as set forth in the First Amended
Financial Appendix hereto are based on the assumptions set forth therein. To the
extent such assumptions prove not to be true, the values and Cash flows set
forth in the First Amended Financial Appendix may change.
E. FAILURE OF CONDITIONS PRECEDENT TO THE CONFIRMATION DATE AND
THE EFFECTIVE DATE OF THE PLAN
As discussed in section VII.G above, and in the Plan, certain
conditions must be satisfied in order for the Plan to become effective and for
the transactions contemplated therein to be consummated. Unless such conditions
are fully satisfied, or waived in accordance with the applicable provisions of
the Plan and in compliance with the Bankruptcy Code, the Plan will not become
effective and the transactions contemplated therein will not be consummated.
Although the Debtors believe that each such condition is capable of
being satisfied, the ability to satisfy certain of the conditions is dependent
on rulings by the Bankruptcy Court which are favorable to the Debtors.
Furthermore, while the Debtors have well supported arguments for their positions
with respect to the issues to be decided by the Bankruptcy Court and believe in
good faith that they can prevail with respect to the requested rulings, it is
difficult to predict the outcome of any particular ruling with absolute
certainty.
F. FAILURE OF THE BANKRUPTCY COURT TO APPROVE CERTAIN
SUBSTANTIVE CONSOLIDATIONS
The Plan contemplates the substantive consolidation of certain of the
individual Debtors into several consolidated Entities which will form the basis
for the reorganized company. Substantive consolidation is an equitable remedy
which may be applied by the Bankruptcy Court where creditors have dealt with the
entities to be substantively consolidated as a single economic unit and where
such entities' financial affairs are intertwined. The Debtors believe that there
is a well founded basis in law and fact to support the substantive consolidation
of those Debtors which is contemplated by the Plan.
However, while the Debtors believe in good faith that they can prevail
with respect to the requested rulings on substantive consolidation, it is
difficult to predict the outcome of any particular ruling with absolute
certainty. The inquiry to be conducted by the Bankruptcy Court regarding
substantive consolidation is a fact-intensive one and one which is subject to
different potential outcomes. The failure of the Bankruptcy
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Court to approve the substantive consolidations contemplated by the Plan will
result in the Plan not being confirmed and/or not becoming effective, and the
transactions contemplated therein not being consummated.
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XI. CERTAIN U.S. TAX CONSEQUENCES OF THE PLAN
A. GENERAL
The following discussion summarizes certain material U.S. Federal
income tax consequences of the implementation of the Plan to the Debtors, to
Creditors, and to direct or indirect partners of the Debtors or their affiliates
("Non-Debtor Partners"). This summary does not address the tax consequences of
the Plan to the Co-Proponents, the 970 Noteholders, JMB Oppenheimer, Merrill
Lynch or any of their respective affiliates, although in many instances the tax
consequences to such persons may be similar to those described herein. The
following summary is based on the IRC, Treasury Department regulations
promulgated and proposed thereunder (the "Regulations"), judicial decisions and
published administrative rules and pronouncements of the Internal Revenue
Service (the "IRS") as in effect on the date hereof. Changes in such rules or
new interpretations thereof may have retroactive effect and could significantly
affect the tax consequences described below.
Due to the complexity of the transactions described herein and in the
Plan, the lack of applicable legal precedent, differences in the nature of the
Claims, differences in the Creditors' methods of accounting (including Creditors
within the same Class), and the potential for disputes as to legal and factual
matters, the tax consequences described herein are subject to significant
uncertainties. No rulings on the tax consequences of any of the transactions are
being sought from the IRS. In addition, this summary does not address all
aspects of Federal income taxation that may be relevant to particular Creditors,
such as foreign taxpayers, in light of such Creditors' individual circumstances,
and to certain other types of Creditors subject to special treatment under the
Federal income tax laws (for example, banks, financial institutions, insurance
companies, pass-through entities, tax-exempt organizations, broker-dealers in
securities, mutual funds, small business investment companies and regulated
investment companies). This summary also does not address state, local, or
foreign tax considerations which may be applicable, except with respect to New
York State and City Transfer Taxes.
ACCORDINGLY, THE FOLLOWING SUMMARY IS NOT A SUBSTITUTE FOR CAREFUL TAX
PLANNING AND ADVICE BASED UPON A CREDITOR'S OR NON-DEBTOR PARTNER'S INDIVIDUAL
CIRCUMSTANCES. EACH CREDITOR AND NON-DEBTOR PARTNER IS URGED TO CONSULT ITS OWN
TAX ADVISOR AS TO THE CONSEQUENCES OF THE PLAN TO IT AND THE DEBTORS UNDER
FEDERAL AND APPLICABLE STATE, LOCAL, AND FOREIGN TAX LAWS.
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B. FEDERAL INCOME TAX CONSEQUENCES TO THE DEBTORS
1. General
Upon implementation of the Plan, certain of the Debtors, including
Equityco and Devco, will realize both capital gains and cancellation of
indebtedness income. To the extent realized by partnerships (such as Equityco
and Devco), all items of income, gain, loss, and deduction will be allocated to
their direct and indirect partners, including Realty Corp., Equity GP, Devco GP
(collectively, the "Corporate Debtors"), and 25 Realty LP.
For U.S. Federal income tax purposes, Realty Corp. (a Canadian
corporation) expects to report approximately $980,500,000 of net operating loss
("NOL") carryovers and approximately $1,021,000,000 of suspended passive losses
on its Federal income tax return for the taxable year ended December 31, 1995.
Devco GP expects to report approximately $32,900,000 of NOL carryovers and
approximately $64,800,000 of suspended passive losses on its Federal income tax
return for the taxable year ended December 31, 1995. Equity GP expects to report
approximately $28,100,000 of NOL carryovers and approximately $29,100,000 of
suspended passive losses on its Federal income tax return for the taxable year
ended December 31, 1995. The NOL carryovers and suspended passive losses remain
subject to examination by the IRS and, thus, are subject to possible reduction
or limitation. Moreover, as described below, the amount of such NOL carryovers
and suspended passive losses may be reduced in connection with the
implementation of the Plan due to the discharge of debt and may be subject to
certain significant limitations in future years (see discussion below). In
addition, the Corporate Debtors' tax bases in their property may be reduced.
2. Cancellation of Debt
Upon implementation of the Plan, the amount of the Debtors' aggregate
outstanding indebtedness will be substantially reduced. A portion of the
reduction will be treated as income from the discharge of indebtedness (also
known as "cancellation of debt" or "COD"), i.e., the amount by which the debt
discharged exceeds any consideration paid in exchange therefor. In general, the
IRC provides that a corporate or individual debtor in a case under the
Bankruptcy Code must reduce its tax attributes by any COD, including such
debtor's distributive share of any COD of a partnership in which such debtor is
a partner. As a result, the Corporate Debtors, as partners, will suffer
attribute reduction. The consequences to the partners of 25 Realty LP are not
described in this summary.
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For this purpose, a debtor's tax attributes include: NOLs for the
taxable year of the discharge and NOL carryovers to such taxable year, credits,
capital loss carryovers, basis, and passive activity losses and credits. Since
any attribute reduction will be applied only after the determination of the tax
liability of the Corporate Debtors for the taxable year of the discharge, any
reduction in their attributes will not affect the utilization of such attributes
against any income or gain recognized upon implementation of the Plan; however,
NOL carryovers and suspended passive losses that otherwise might be available to
the Corporate Debtors in subsequent taxable years will be substantially reduced,
if not eliminated.
In the event that the amount of COD allocable to a Corporate Debtor
exceeds all of that Corporate Debtor's tax attributes, no income will be
realized by such Corporate Debtor as long as the cancellation occurs in
connection with the Corporate Debtor's Chapter 11 proceeding.
3. Limitation on NOL Carryovers
and Other Tax Attributes
Under IRC Section 382, if a loss corporation undergoes an ownership
change, the amount of its pre-change losses that may be utilized to offset
future taxable income generally will be subject to an "annual limitation." Such
limitation may also apply to subsequently recognized "built-in" losses, i.e.,
losses economically accrued but unrecognized as of the date of the ownership
change. For this purpose, there is some uncertainty as to whether IRC Section
382 applies to passive activity losses, although based on the legislative
history of IRC section 382, it should be assumed that the IRS would assert that
such rules do apply. In general, the annual limitation would be equal to the
product of (i) the value of the loss corporation's outstanding stock immediately
before the ownership change (with certain adjustments) and (ii) the "long-term
tax-exempt rate" in effect for the month in which the ownership change occurs
(historically ranging between 5% and 7%). Any unused portion of the annual
limitation would be available in subsequent years.
In general, an ownership change occurs if the percentage of the value
of the loss corporation's stock owned by one or more direct or indirect 5%
shareholders (as specially defined for purposes of IRC Section 382) has
increased by more than 50 percentage points over the lowest percentage of that
value owned by such 5% shareholders at any time during a three-year testing
period. Under the Regulations, the IRS, in certain circumstances, may treat
certain nonstock interests in a corporation (including debt) as stock for IRC
Section 382
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purposes if such interests offer a potential significant
participation in the growth of the corporation.
The Corporate Debtors have taken the position that they have not
undergone an ownership change to date. There is a distinct possibility, however,
that the IRS might argue that the consummation of the CCAA Case in 1993, as well
as events leading up to such case, caused an ownership change of the Corporate
Debtors. If such an ownership change occurred in 1993 with respect to the
Corporate Debtors, a significant limitation would apply to the use against
post-change income of (i) NOLs and NOL carryovers available at the time of such
change and (ii) any built-in losses that are recognized within 5 years of such
change (since the Corporate Debtors were in a substantial net built-in loss
position at the time). However, the Corporate Debtors believe that, even if such
ownership change is deemed to have occurred in 1993, they have enough
post-change losses not limited by IRC Section 382 to offset any amounts of
taxable income generated by the Plan. See "Alternative Minimum Tax", regarding
the availability of losses for alternative minimum tax purposes.
The Corporate Debtors' tax attributes (including NOL carryovers) will
not be available to Newco LP. Moreover, upon the implementation of the Plan,
Devco GP will undergo an ownership change and the future use of its tax
attributes will be limited significantly by the application of IRC Section 382.
4. Alternative Minimum Tax
In general, an alternative minimum tax ("AMT") is imposed to the
extent that 20% of a corporation's alternative minimum taxable income exceed the
corporation's regular Federal income tax. For purposes of computing taxable
income for AMT purposes, certain tax deductions and other beneficial allowances
are modified or eliminated. In particular, even though a corporation might
otherwise be able to offset all of its taxable income for regular income tax
purposes by available NOL carryovers, only 90% of the corporation's taxable
income for AMT purposes may be offset by available NOL carryovers (as recomputed
for AMT purposes). However, the Corporate Debtors' suspended passive losses, to
the extent otherwise available, will not be limited by this rule for purposes of
calculating AMT taxable income. In addition, if a corporation undergoes an
ownership change within the meaning of Section 382, and is in a net built-in
loss position on the change date (as determined for AMT purposes), the
corporation's aggregate tax basis in its assets would be reduced for certain AMT
purposes to the fair market value of such assets as of the change date.
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The Corporate Debtors believe that they will not incur any AMT
liability as a result of the Restructuring Transactions.
5. Disposition of Assets
Pursuant to the Plan, the Debtors will dispose of various assets in
taxable transactions and recognize substantial gains and losses (which losses
may be subject to the limitations described above).
In connection with each taxable disposition pursuant to the Plan, gain
or loss will be measured by the difference between the Debtor's basis for the
asset transferred and the amount realized.
As discussed above, the Debtors believe that all Debtors that are
corporations will have sufficient losses available to offset any gains generated
by taxable transactions, subject, however, to limitations in connection with the
AMT. See "Alternative Minimum Tax", above.
Equityco Canada and Devco Canada will realize losses as a result of
the disposition of their interests pursuant to the Plan.
To the extent that a foreign Debtor will be transferring a "U.S. real
property interest" within the meaning of the IRC, the Foreign Investment in Real
Property Tax Act of 1980 ("FIRPTA") may require withholding of 10% of the amount
realized; however, such withholding may be reduced or eliminated by obtaining a
withholding certificate from the IRS.
C. FEDERAL INCOME TAX CONSEQUENCES TO CREDITORS
1. Creditors Receiving Class A Interests
in Exchange for Claims
Under the Plan, in accordance with the Restructuring Transactions,
certain Creditors will transfer Claims to Equityco and Devco (such entities,
merged as part of the Restructuring Transactions, are hereinafter referred to as
"New Equityco/Devco") in exchange for certain assets of New Equityco/Devco. Such
Creditors will then contribute such assets to Newco LP in exchange for Class A
Interests.
The transfers by such Creditors of Claims in exchange for certain
assets of New Equityco/Devco will be taxable transactions. Generally, each such
Creditor will recognize gain or loss equal to the difference (if any) between
(i) the fair market value, at the time of transfer, of the Equityco/Devco
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assets received in exchange for the Claim it transferred and (ii) the Creditor's
tax basis in such Claim at the time of transfer. (As to the timing of gain or
loss, see "Distributions from Disputed Claims Reserves", below.) No gain or loss
should be recognized by such Creditors upon the subsequent contribution of such
assets to Newco LP.
A Creditor's aggregate tax basis in any Class A Interests received in
respect of its Claim will equal the fair market value of such Equityco/Devco
assets received in exchange for the Creditor's Claim; the holding period for
such Class A Interests will generally begin on the day following the issuance of
such Class A Interests.
For a further discussion of the Federal income tax consequences of the
Plan to Creditors in Consolidated Realty Corp. Class 6 and Consolidated Devco
Class 11, see the separate discussions below.
2. Creditors Receiving New Debt in Exchange For Claims
Under the Plan, certain Creditors will exchange all or a portion of
their Claims for debt instruments. Such Creditors may be treated as having
disposed of such Claims in a taxable transaction; accordingly, gain or loss may
be recognized by such Creditors.
Under recently promulgated Regulations, the amount realized for
purposes of computing such gain or loss will be the "issue price" of the debt
instrument received (as computed in accordance with the next paragraph). Each
Creditor should have a tax basis in the debt instrument received equal to such
issue price, and the Creditor's holding period for such debt instrument should
begin on the day following the issuance of such debt instrument. See also
"Distribution in Discharge of Accrued Interest," below. Under certain
circumstances, gain may be reportable under the installment method. However, if
gain is reported under the installment method, the Creditor may be subject to an
interest charge under IRC Section 453A. Accordingly, Creditors should consider
electing out of installment sale treatment and are advised to contact their own
tax advisors in connection therewith.
Subject to the discussion below (see "Certain Consequences to
Creditors Who Will Be Distributed Zero Coupon Notes"), the issue price of each
debt instrument will equal the face amount thereof, unless (i) the debt
instrument bears interest at a rate less than the applicable Federal rate (a
rate published monthly by the Internal Revenue Service, in which event, the
issue price would be the present value of all payments
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due under the debt instrument using the applicable Federal rate), or (ii) within
30 days after its issuance, such debt instrument is traded on an "established
securities market," in which event the issue price would be the initial trading
price of the debt instrument. In the event of (i) or (ii), the debt instrument
could be issued with original issue discount ("OID") which would be amortized
and includable in the Creditors' gross income, under the constant interest
method, over a term determined under the OID provisions of the IRC. Pursuant to
the Regulations, an "established securities market" for these purposes includes
a system of general circulation (including a computer listing disseminated to
subscribing brokers, dealers, or traders) that provides a reasonable basis to
determine fair market value by disseminating either recent price quotations or
actual price quotations or actual prices of recent sales transactions.
For a further discussion of the U.S. Federal income tax consequences
of the Plan to Creditors in Consolidated Devco Class 11, see the separate
discussion below.
3. Creditors in Consolidated Realty Corp. Class 6
In accordance with the Restructuring Transactions, Creditors in
Consolidated Realty Corp. Class 6 (other than those electing treatment of their
Claims as Realty Corp. Cash-Out Claims) will be transferring Claims to Realty
Corp. in exchange for certain assets of Realty Corp. Such Creditors will then be
contributing such assets to Newco LP in exchange for Class A Interests and Class
B Interests.
The Federal income tax consequences of the exchange by Creditors in
Consolidated Realty Corp. Class 6 of Claims for assets and the contribution of
such assets to Newco LP for Class A Interests and Class B Interests will be
substantially the same as those discussed above under the caption "Creditors
Receiving Class A Interests in Exchange for Claims."
The Class B Interests received by Creditors in Consolidated Realty
Corp. Class 6 will not be entitled to any distributions. At such time as some or
all of the Disputed Realty Corp. Assets are liquidated and/or the dispute
regarding the assets of SF Holdings is resolved, the Class B Interests will be
automatically converted into Class A Interests. The holders of Class B Interests
may be allocated income at the time of such conversion.
4. Creditors in Consolidated Devco Class 11
Certain Creditors in Consolidated Devco Class 11 will be transferring
their Claims to New Equityco/Devco in exchange
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for certain assets of New Equityco/Devco and then contributing such assets to
Newco LP in exchange for (i) Class A Interests and (ii) Convertible Note
Interests.
The portion of the tax basis of such assets allocable to the
Convertible Note will equal a fraction, the numerator of which is the issue
price of the Convertible Note, and the denominator of which is the fair market
value of the assets. The remainder of the tax basis of such assets will be
allocable to the Class A Interests.
For a discussion of the Federal income tax consequences of the
contribution of assets to Newco LP in exchange for Class A Interests, see
"Creditors Receiving Class A Interests in Exchange for Claims," above.
The issue price of the Convertible Note will equal the face amount
thereof, unless within 30 days after its issuance the Convertible Note Interests
are traded on an "established securities market", in which event the issue price
would be the initial trading price of the Convertible Note Interests. In the
latter event, depending on the trading price, the Convertible Note Interests
could be issued with OID, which would be amortized and includable in the
holders' gross income, under the constant interest method, over a term
determined under the OID provisions of the IRC. Pursuant to the Regulations, an
"established securities market" for these purposes includes a system of general
circulation (including a computer listing disseminated to subscribing brokers,
dealers, or traders) that provides a reasonable basis to determine fair market
value by disseminating either recent price quotations or actual price quotations
or actual prices of recent sales transactions.
In the event that the Convertible Note Interests are converted into
Class A Interests, all or a portion of such exchange may qualify for
nonrecognition treatment (assuming that the Convertible Note is not an
installment obligation under IRC Section 453). To the extent that such exchange
qualifies for nonrecognition treatment, each Creditor's tax basis in the Class A
Interest received will be equal to its basis in its Convertible Note Interest
exchanged therefor, and the Creditor's holding period in the Class A Interest
received will begin on the day following the issuance of the Convertible Note.
Since under certain circumstances the Convertible Note may be treated
as an installment obligation, Creditors receiving Convertible Note Interests
should consider electing out of installment sale treatment and are advised to
consult their own tax advisors in connection therewith.
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Although it is believed that withholding will not be required upon
conversion of the Convertible Note Interests held by Non-United States persons,
the issue is not free from doubt. If Newco LP determines that withholding would
be required, the Exercising Holder will be required to fund such withholding as
a condition to the exercise of its Conversion Right.
5. Character of Gain or Loss In Respect of Claim
The treatment of any gain or loss recognized by a Creditor in respect
of its Claim as long-term or short-term capital gain or loss or as ordinary
income or loss will be determined by a number of factors including (i) the tax
status of the Creditor, (ii) whether the obligation from which a Claim arose
constitutes a capital asset in the hands of the Creditor, (iii) whether the
obligation form which a Claim arose has been held for more than one year or was
purchased at a discount, and (iv) whether and to what extent the Creditor has
previously claimed a bad debt deduction.
6. Distribution in Discharge of Accrued Interest
To the extent any amount received by a Creditor (whether in the form
of a partnership interest, Cash, debt, shares of stock, or other property) is
received in return for a claim for interest accrued during its holding period,
such amount may be taxable to the Creditor as interest income (if not previously
included in the Creditor's gross income). Conversely, a Creditor may recognize a
deductible loss (or, possibly, a write-off against a reserve for bad debts) to
the extent any accrued interest on a Claim was previously included in its gross
income and is not paid in full.
7. Distributions From Disputed Claims Reserves
The Disputed Claims Cash Reserve, the Subclass 7.11.1 Disputed Claims
Debt/Equity Escrow, and the Class 8.6 Disputed Claims Equity Escrow
(collectively, the "Disputed Claims Reserves") will be created for a number of
Classes of Claims. Under the Plan, certain Creditors may receive an initial
distribution when the Claim is allowed, and may receive subsequent distributions
as other Claims in the Class are disallowed. Thus, a Creditor may receive a
series of distributions over a period of time, possibly years, and the amount of
such distributions cannot be predicted, since it will depend in part on the
extent to which other Claims in the Class are disallowed. Such distributions,
when received, may be subject to the imputed interest or OID rules of the IRC.
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Recipients entitled to future distributions from the Disputed Claims
Reserves may be able to defer taxation of any gain attributable to such
distributions until they are received.
In the case of Creditors seeking to deduct a loss, the IRS may take
the position that Creditors who have allowed Claims cannot claim an otherwise
allowable loss in the year in which their Claims are allowed because such
Creditors could receive further distributions from a Disputed Claims Reserve. If
the IRS were to take this position, a Creditor could be prevented from
recognizing a loss until the time, potentially years from the Consummation Date,
when all Claims in such Creditor's Class have been liquidated. If a Creditor is
permitted to recognize a loss in the year of the Consummation Date without
disposing of its Claim (by treating the transaction as "closed" for Federal
income tax purposes at the Consummation Date), such Creditor may recognize
income on any subsequent distribution from the Disputed Claims Reserve.
Alternatively, a Creditor may choose to accelerate recognition of its loss by
disposing of its Claim.
The Federal income tax treatment of arrangements such as the Disputed
Claims Reserves is unclear. Although various treatments of the Disputed Claims
Reserves are possible (such as taxing either the respective Debtor or the
Creditors on any income of the Disputed Claims Reserves), it is intended that,
pending further guidance, the Disputed Claims Reserves will be treated as
"complex trusts" for Federal income tax purposes. As such, each Disputed Claims
Reserve would be a separate taxpayer that would be subject to tax on its own
undistributed income.
Some of the Disputed Claims Reserves will be holding Class A Interests
and Class B Interests. It is possible that these Disputed Claims Reserves could
have taxable income without sufficient Cash to pay their tax. In such case, the
taxes will be funded by a Tax Advance. Each Tax Advance will be repaid out of
cash or property in the Disputed Claims Reserve in question before any
distributions are made form such Disputed Claims Reserve.
If and when a Disputed Claim becomes an Allowed Claim entitled to a
distribution of an interest or share from a Disputed Claims Reserve, the holder
of such Allowed Claim will have thirty (30) Business Days in which to pay in
Cash such holder's pro rata portion of the Tax Advance. If a payment in full in
Cash is not received in such thirty (30) day period, Newco LP will reduce the
number of Liquidating Corp. Shares otherwise distributable to such holder and/or
reduce and permanently adjust the partnership interests otherwise distributable
to such holder accordingly.
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8. Backup Withholding
Under the backup withholding rules, Creditors may be subject to backup
withholding at the rate of 31% with respect to the value received under the Plan
(which may result in a withholding of property) unless the Creditor (a) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact, or (b) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. A
Creditor that does not provide its correct taxpayer identification number may
also be subject to penalties imposed by the IRS. Any amount paid as backup
withholding will be creditable against the Creditor's income tax liability. See
"Newco LP: Federal Income Tax Consequences -- Taxation of Foreign Shareholders",
below.
9. Liquidating Corp. Shares
Certain Creditors will be contributing a nominal portion of their
Claims to Liquidating Corp. in exchange for Liquidating Corp. Shares. Ordinarily
this would require an allocation of Claims and basis between such Liquidating
Corp. Shares and other assets received in exchange for Claims; however, since
the Plan assigns a nominal value to the Liquidating Corp. Shares, nominal
allocation should be made to such shares.
D. FEDERAL INCOME TAX CONSEQUENCES TO THE NON-DEBTOR PARTNERS
As a result of the transactions contemplated by the Plan, the
Non-Debtor Partners may be allocated taxable income or COD, which could be
taxable to the Non-Debtor Partner, depending on the partner's financial status
and ability to qualify for an exception to taxation of COD. Moreover, if a
Non-Debtor Partner's partnership interest is extinguished, such Non-Debtor
Partner may suffer adverse tax consequences. EACH NON-DEBTOR PARTNER IS URGED TO
CONSULT ITS TAX ADVISOR.
E. NEWCO LP: FEDERAL INCOME TAX CONSEQUENCES
1. Tax Status of Newco LP
Under existing regulations pursuant to Section 7701 of the Code, a
partnership will be treated as a partnership for tax purposes if it lacks at
least two of the following characteristics: limited liability, centralization of
management, continuity of life, and free transferability of interests. Based on
the terms of the Newco LP Partnership Agreement as they are intended to be in
effect on the Effective
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Date, Newco LP will lack the characteristics of continuity of life and free
transferability of interests.
In the event that Treasury Regulations are adopted to replace, with an
elective regime, these existing Treasury Regulations for classifying certain
business organizations, Newco LP intends to elect partnership status.
Section 7704 of the Code, added by the Revenue Act of 1987, provides
that a "publicly traded partnership" will be treated as a corporation for
Federal tax purposes, rather than as a partnership, unless a certain percentage
of its income consists of "qualifying income" under that section. Based on the
anticipated nature of Newco LP's income, the Debtors believe that, were Newco LP
to be a publicly traded partnership, Newco LP would not be treated as a
corporation pursuant to this rule. The eligibility of Newco LP for an exception
based on the level of its qualifying income will be based on events to occur in
each taxable year subsequent to the Effective Date; accordingly, there can be no
assurance that Newco LP would continue to qualify for such an exception were
Newco LP to be treated as a publicly traded partnership.
A publicly traded partnership is subject to certain special rules,
even if it is treated as a partnership for Federal income tax purposes. In
particular, if Newco LP were a publicly traded partnership, but not treated as a
corporation for Federal tax purposes, a partner who is subject to the passive
loss rules of IRC Section 469 may be unable to use passive losses from other
passive activities to offset his allocable share of Newco LP gain and income.
Moreover, any losses allocable to a partner of Newco LP may be permitted to
offset only such partner's allocable share of Newco LP income and gains, and not
income and gains from other passive activities.
A "publicly traded partnership" is any partnership the interests in
which are (i) traded on an established securities market or (ii) readily
tradable on a "secondary market (or the substantial equivalent thereof)."
Treasury Regulations promulgated under Section 7704 define the phrase
"established securities market" to include national securities exchanges,
foreign securities exchanges which are governed by regulations similar to those
imposed on domestic exchanges by the Securities and Exchange Commission,
domestic regional and local exchanges, and interdealer quotations systems which
regularly disseminate firm quotes by identifiable brokers and dealers.
The Treasury Regulations define "secondary market" to include
situations where partners are "easily able to buy, sell, or exchange their
partnership interests in a manner that is
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comparable, economically, to trading on an established securities market." The
Treasury Regulations contain certain "safe harbors" under which interests in a
partnership will not be considered readily tradable on a "secondary market (or
the substantial equivalent thereof)."
Newco LP will not necessarily qualify for any of these "safe harbors"
and accordingly no assurance can be given that Newco LP will not be considered a
publicly-traded partnership.
The entire discussion of the Federal tax consequences of the Plan is
based on the assumption that Newco LP will be classified as a partnership for
Federal income tax purposes. If Newco LP were instead taxable as a corporation,
most, if not all, of the tax consequences described herein would not be
applicable to the Creditors and future distributions to the Creditors could be
materially reduced.
2. Impact of Foreign Ownership of Newco LP
Interests and Convertible Note Interests
To the extent that Newco LP Interests or Convertible Note Interests
are owned by Non-United States Persons, withholding or reporting requirements
may be imposed on Newco LP under Chapter 3 of the IRC. Any such Non-United
States person may be subject to United States taxation and reporting or
withholding requirements and is encouraged to consult its tax advisor.
The IRC may impose requirements on Newco LP to withhold when it does
not have sufficient cash to do so.
If a Withholding Advance is made on a partners' behalf, such partner
will have 30 days to repay such advance in full, in cash. If such Withholding
Advance has not been repaid at the end of thirty days, Newco LP shall be
entitled to reduce the interest of such partner accordingly.
3. Tax Treatment of Partners
An entity classified as a partnership for Federal income tax purposes
generally is not a taxable entity and incurs no Federal income tax liability.
Each partner is required to take into account in computing his Federal income
tax liability his allocable share of income, gains, losses, deductions, and
credits of the partnership, regardless of whether cash distributions are made by
the partnership to the partner. Distributions of money by a partnership to a
partner are generally not taxable unless the amount of the distribution is in
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excess of the partner's adjusted basis in his partnership
interest.
A partner's initial basis in his partnership interest will generally
be increased by (a) such partner's share of partnership taxable income and (b)
his share of increases in liabilities incurred by the partnership, if any.
Generally, a partner's basis in his partnership interest will be decreased (but
not below zero) by (i) his share of partnership distributions, (ii) his share of
decreases in liabilities of the partnership, (iii) his share of losses of the
partnership, and (iv) his share of nondeductible expenditures of the partnership
that are not chargeable to capital.
It is intended that income, gains, losses, deductions and credits will
be allocated pursuant to IRC Section 704(b) in accordance with the economic
interests of partners. Due to restrictions on distributions imposed by Newco
LP's direct and indirect creditors it is possible that partners in Newco LP will
be allocated taxable income without receiving any distribution of cash.
F. NEW YORK TRANSFER TAX CONSEQUENCES TO THE DEBTORS
New York State imposes a special tax on a transfer of an interest in
real property located in New York State: the New York State Real Estate Transfer
Tax ("NYS Transfer Tax"), which is a 0.4% tax on the gross consideration
received. In addition, New York City imposes a special tax on a transfer of an
interest in real property located in New York City: The New York City Real
Property Transfer Tax ("NYC Transfer Tax" and collectively with the NYS Transfer
Tax, the "Transfer Taxes"), which is 2.625% tax on the gross consideration
received. For purposes of these taxes, liabilities assumed by the transferee or
to which the real property interest is subject are treated as additional
consideration. In the first instance, the transferor is liable for each of the
Transfer Taxes, but the transferee generally is made liable for any unpaid tax.
Each of the Transfer Taxes also applies to a transfer or acquisition
of a "controlling interest" in an entity owning a real property interest in New
York State or City, as the case may be. In such case, the tax is applicable to
the portion of the total consideration allocable to the underlying real property
interest. In the case of an entity other than a corporation, "controlling
interest" is defined as 50% or more of the capital, profits, or beneficial
interest in the entity. In the case of a corporation, alternative tests are
provided: a "controlling interest" is either 50% or more of the total combined
voting power of all classes of stock, or (i) in the case of the NYS
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Transfer Tax, 50% of the capital, profits, or beneficial interest in the voting
stock, and (ii) in the case of the NYC Transfer Tax, 50% of the value of all
stock, whether or not voting stock.
A transfer is exempt from the Transfer Taxes to the extent it
constitutes a "mere change of identity or form of ownership." The NYC Transfer
Tax (by regulation) expressly exempts transfers pursuant to a confirmed plan of
reorganization under Chapter 11 of the Bankruptcy Code. An exemption for
transfers pursuant to the Bankruptcy Code is also available under the NYS
Transfer Tax (by statute). Similarly, Section 1146(c) of the Bankruptcy Code
provides an exemption from the Transfer Taxes.
Since the Debtors' transactions contemplated by the Plan will be made
pursuant to a confirmed Chapter 11 plan, they are exempt from the Transfer
Taxes.
It is possible that transfers made within three years of transfers
made pursuant to the Plan may be aggregated with the transfers effectuated
pursuant to the Plan to find a transfer of a controlling interest. In such a
case, it is also possible that the subsequent transfer would be taxable (no
matter how small a percentage is transferred). At the present time, there is no
basis upon which to form a conclusion as to whether, for purposes of either of
the Transfer Taxes, the transactions pursuant to the Plan would be aggregated
with any such future transfers.
G. IMPORTANCE OF OBTAINING PROFESSIONAL TAX ASSISTANCE
This discussion is intended only as a summary of certain Federal, New
York State, and New York City tax consequences of the Plan and is not a
substitute for careful tax planning with a tax professional. The tax
consequences are in many cases uncertain and may vary depending on a Creditor's
or Non-Debtor Partner's individual circumstances. Accordingly, Creditors and
Non-Debtor Partners are urged to consult with their own tax advisors regarding
the Federal, state, local, and foreign tax consequences of the Plan.
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XII. CANADIAN INCOME TAX CONSEQUENCES FOR CANADIAN DEBTORS
The Canadian income tax consequences of the Plan for Debtors who are
residents of Canada are complex. No opinions have been requested from counsel
nor have any advance income tax rulings been requested from any Canadian tax
authority with respect to such consequences. The commentary on such consequences
that follows is of a general nature only and it is not intended to be, nor
should it be construed as, legal or tax advice to any person as to such
consequences. EACH CREDITOR AND DIRECT OR INDIRECT PARTNER OF ANY OF THE DEBTORS
OR ANY OF THEIR AFFILIATES SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO SUCH
CONSEQUENCES.
Upon implementation of the Plan, Canadian resident Debtors may realize
substantial income or gains on dispositions of property by them or by
partnerships in which they have a direct or indirect interest. In addition, as a
result of the cancellation of indebtedness owed by Canadian resident Debtors or
partnerships in which they have a direct or indirect interest, there will be a
reduction of certain tax bases of property and tax losses. To the extent that
any forgiveness of indebtedness exceeds such reduction of tax bases or tax
losses, Canadian resident Debtors will have an income inclusion for Canadian
income tax purposes. The Canadian resident Debtors believe that their tax bases
and tax losses will be sufficient to offset or avoid such income inclusion and
gains.
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XIII. VOTING AND CONFIRMATION OF THE PLAN
In order for the Plan to be confirmed, various statutory conditions
prescribed by the Bankruptcy Code must be satisfied, including (i) acceptance of
the Plan by at least one impaired class entitled to vote on the Plan, (ii)
provision for payment or distribution under the Plan to each Claimant of money
and/or other property equal in value to what the Claimant would have received in
a liquidation of the Debtors, (iii) a finding by the Bankruptcy Court that the
Plan is feasible and (iv) with respect to each class, either acceptance by that
class or a finding by the Bankruptcy Court that the Plan is "fair and equitable"
and does not "discriminate unfairly" against that class.
This Disclosure Statement has been approved by order of the Bankruptcy
Court, dated August 9, 1996, as containing information of a kind and in
sufficient detail that will enable Creditors and Equity Interests Holders to
make an informed decision about the Plan. Accordingly, this Disclosure Statement
is being used in connection with the solicitation of acceptances of the Plan
from those classes entitled to vote on the Plan.
A. WHO MAY VOTE
Only classes that are impaired under the Plan and that are not deemed
to have rejected the Plan are entitled to vote on acceptance or rejection of the
Plan. Generally, section 1124 of the Bankruptcy Code provides that a class of
Claims or interests is considered impaired unless the plan does not alter the
legal, equitable and contractual rights of the holder of the Claim or interest.
In addition, these classes are impaired unless all outstanding defaults, other
than purely technical defaults or defaults relating to the solvency or financial
condition of the debtor or the commencement of the chapter 11 case, have been
cured and the holders of Claims or interests in these classes have been
compensated for any damages incurred as a result of any reasonable reliance on
any contractual provisions or applicable law to demand accelerated payment.
Each of the Claims and Equity Interests in each of Consolidated Devco
Class 1, Consolidated Realty Corp. Class 1, SF Holdings Class 1, Devco Canada
Class 1, Equity Canada Class 1, Consolidated OLP Class 1, Tower A Co. Class 1,
Tower Corp. Class 1, Consolidated 245 Class 1 and Tower B Leaseco Class 1 is
unimpaired, and each such Class is conclusively deemed to have accepted the Plan
under section 1126(f) of the Bankruptcy Code and will not be entitled to vote on
the Plan.
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The holders of Claims or Equity Interests in each of Consolidated
Devco Class 12, Consolidated Realty Corp. Class 7, Devco Canada Class 4, Equity
Canada Class 4, Tower Corp. Classes 4 and 5 and Tower B Leaseco Class 5 will not
receive or retain any property under the Plan on account of such Claims and
Equity Interests and are conclusively deemed to have rejected the Plan pursuant
to section 1126(g) of the Bankruptcy Code.
The Claims in each of Consolidated Devco Classes 2, 3, 4, 5, 6, 7, 8,
9, 10 and 11, Consolidated Realty Corp. Classes 2, 3, 4, 5 and 6, SF Holdings
Classes 2 and 3, Devco Canada Classes 2 and 3, Equity Canada Classes 2 and 3,
Consolidated OLP Classes 2, 3, 4, 5 and 6, Tower A Co. Classes 2, 3, 4, 5 and 6,
Tower Corp. Classes 2 and 3, Consolidated 245 Classes 2, 3, 4, 5, 6, 7 and 8,
and Tower B Leaseco Classes 2, 3 and 4, and the holders of Claims or Equity
Interests in such Classes are entitled to vote to accept or reject the Plan.
A Creditor or Equity Interest Holder is entitled to vote only if
either (i) its Claim or Equity Interest has been scheduled by the Debtors as not
disputed, contingent or unliquidated, or (ii) it has filed a proof of Claim or
interest on or before the applicable Bar Date.
Any Claim or Equity Interest to which an objection is pending is not
entitled to vote unless the Creditor or Equity Interest Holder has obtained an
order of the Bankruptcy Court temporarily allowing the Claim or Equity Interest
for the purpose of voting on the Plan. If a Creditor has filed an unliquidated
or contingent proof of Claim, i.e., the Creditor failed to specify the dollar
amount in the proof of Claim, then pursuant to section 502(c) of the Bankruptcy
Code, a dollar value for each such Claim may be estimated and allowed by the
Bankruptcy Court solely for voting purposes. A Creditor's or Equity Interest
Holder's vote may be disregarded if the Bankruptcy Court determines that such
acceptance or rejection was not solicited or procured in accordance with the
provision of the Bankruptcy Code.
B. APOLLO/CO-PROPONENTS' VOTING COOPERATION
With respect to the Co-Proponents' 970 Bonds to be transferred by the
Co-Proponents to Apollo and the holders of the Club Loan and with respect to the
Club Loan and the Transferred Unsecured Claims to be transferred by Apollo to
the Co- Proponents, Apollo and the other holders of the Club Loan, on the one
hand, and the Co-Proponents, on the other hand, have agreed in principal as
follows:
[F]or purposes of voting to approve or reject
the Plan (including all ancillary documents
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and as subsequently amended, modified or supplemented from
time to time), the holders of the Club Loan will vote their
interests in the Club Loan and Apollo will vote its interest
in the Transferred Unsecured Claims as directed in writing by
the Co-Proponents (such direction referred to as a "Co-
Proponents Direction"), and for purposes of voting to approve
or reject the 970 Plan, the Co-Proponents will vote their
interests in the Co-Proponents' 970 Bonds as directed in
writing by Apollo, as agent for the holders of the Club Loan
(such written direction being referred to as a "Club Loan
Agent Direction"); provided, however, that if no such written
direction is given by the close of business on the day before
the last day for voting on such plan, the holders of the Club
Loan or the Co-Proponents, as the case may be, may vote on the
Plan or the 970 Plan (as applicable) as they so choose.
C. VOTING PROCEDURES
Each Creditor entitled to vote may do so by personally signing and
returning all Ballots sent to such Creditor with this Disclosure Statement.
1. Solicitation Period
In order to be counted, a Ballot must be RECEIVED at the following
address no later than 5:00 p.m., Eastern Daylight Time on September 4, 1996.
Georgeson & Company, Inc.
Wall Street Plaza
New York, New York 10005
Telephone: (212) 440-9820 or (800) 223-2064
Fax Number: (212) 440-9009
Attention: Mr. John C. Stephenson
2. Ballots
A Ballot is enclosed herewith for each holder of a Claim or Equity
Interest eligible to vote on the Plan, which will serve as the Ballot for
indicating acceptance or rejection of the Plan pursuant to the requirements of
sections 1125 and 1126 of the Bankruptcy Code and Bankruptcy Rule 3018(c). Each
Ballot has been coded with respect to each Class of Claims or Equity
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Interests. Various classes of Creditors will be required to make certain
elections on the Ballot in addition to voting on the Plan. See "Summary of the
Plan of Reorganization for the Debtors". Accordingly, in voting for or against
the Plan, a Creditor or an Equity Interest Holder must use only the Ballot sent
with this Disclosure Statement.
Holders of Claims and/or Equity Interests in more than one class under
the Plan will receive multiple Ballots. IF YOU RECEIVE MORE THAN ONE BALLOT, YOU
SHOULD ASSUME THAT EACH BALLOT IS FOR A SEPARATE CLAIM OR EQUITY INTEREST AND
SHOULD COMPLETE AND RETURN ALL OF THEM. IF A BALLOT IS DAMAGED OR LOST, OR IF
YOU HAVE ANY QUESTIONS REGARDING THE VOTING PROCEDURES, CALL (212) 440-9820 OR
(800) 223-2064 (TOLL FREE).
YOU SHOULD COMPLETE AND SIGN EACH ENCLOSED BALLOT AND RETURN IT IN THE
ENCLOSED ENVELOPE TO:
Georgeson & Company, Inc.
Wall Street Plaza
New York, New York 10005
Telephone: (212) 440-9820 or (800) 223-2064
Fax Number: (212) 440-9009
Attention: Mr. John C. Stephenson
IN ORDER TO BE COUNTED, BALLOTS MUST BE RECEIVED BY SEPTEMBER 4,
1996 AT 5:00 P.M. EASTERN DAYLIGHT TIME.
In order for a Class to accept the Plan and thereafter confirmed by
the Bankruptcy Court, at least two-thirds (2/3) in dollar amount and more than
one-half (1/2) in number of the Claims allowed for voting purposes of each
impaired class of Claims that are actually voted, and at least two-thirds (2/3)
of Allowed Equity Interests of each impaired class of Equity Interests that are
actually voted, must be cast for acceptance of the Plan. Thus, only the
Creditors and Equity Interest Holders who actually vote on the Plan are counted
in determining whether the Plan has been accepted or rejected.
On the Effective Date, Devco GP, Equityco, Equity GP, U.S. Finco and
O&Y Finco will be substantively consolidated with and merged into (or otherwise
combined with) Devco; Baden and OYREUSA will be substantively consolidated with
and merged into (or otherwise combined with) Realty Corp.; Trinity Place Co. and
OLP Co. will be substantively consolidated with and merged into (or otherwise
combined with) Liberty Plaza Co.; and 245 Corp. and 245 Holding LP will be
substantively consolidated with and merged into (or otherwise combined with) 245
Park Co. As a result, Creditors will vote on the Plan as Creditors of the Entity
into which the Entity against which they hold Claims will be
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consolidated. Holders of Equity Interests will, in all cases, vote as holders of
Equity Interests in Consolidated Devco, Consolidated Realty Corp., Consolidated
OLP or Consolidated 245, as the case may be.
Further information with respect to the Plan, the Disclosure
Statement, the voting process or other aspect of these Chapter 11 proceedings,
may be obtained by contacting:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Attention: Corinne Ball, Esq.
Paul D. Leake, Esq.
D. CONFIRMATION OF THE PLAN
Under the Bankruptcy Code, the following steps must be taken to
confirm the Plan:
1. Confirmation Hearing
Section 1129(a) of the Bankruptcy Code requires the Bankruptcy Court,
after notice, to hold a hearing on confirmation of the Plan. The Bankruptcy
Court has scheduled the confirmation hearing for September 11, 1996, at 2:00
p.m. in Courtroom 610-2 located on the Sixth Floor of the United States
Bankruptcy Court, Alexander Hamilton Customs House, One Bowling Green, New York,
New York 10004.
2. Objections to Confirmation of the Plan
Section 1128(b) of the Bankruptcy Code provides that any party in
interest may object to confirmation of the Plan, regardless of whether it is
entitled to vote.
The Bankruptcy Court has directed that, on or before August 28, 1996
at 5:00 p.m., any written objections to the Plan must be filed with the
Bankruptcy Court and a copy served upon counsel for the Debtors and other
parties in interest. The Bankruptcy Court will schedule a hearing to consider
objections to confirmation of the Plan. The hearing may be adjourned from time
to time by the Bankruptcy Court without further notice except for an
announcement made at the hearing or any adjourned hearing. While the Debtors
anticipate that any hearing to consider objections to the confirmation of the
Plan will be held in conjunction with the Confirmation Hearing, there can be no
assurance that such will be the case.
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Objections to confirmation of the Plan are governed by Bankruptcy Rule
9014. UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY FILED AND SERVED IT MAY NOT
BE CONSIDERED BY THE BANKRUPTCY COURT.
3. Requirements for Confirmation of the Plan
At the Confirmation Hearing, the Bankruptcy Court will determine
whether the requirements of sections 1129(a) and/or (b) of the Bankruptcy Code
have been satisfied, in which event the Bankruptcy Court will enter an order
confirming the Plan. These requirements are as follows:
(i) "Best Interests Test" - Confirmation of the Plan requires
that, with respect to each impaired class of Creditors, each
holder of an Allowed Claim in the class has either accepted
the Plan or will be distributed under the Plan property of a
value, as of the Confirmation Date, that is not less than the
amount the holder would receive or retain if the Debtors were
liquidated under chapter 7 of the Bankruptcy Code.
(ii) Feasibility of the Plan - In order for the Plan to be
confirmed, the Bankruptcy Court must determine that it is
feasible; that is, as a practical matter, the Debtors have
sufficient resources to meet their obligations under the Plan
on a timely basis according to its terms. The Debtors believe
the Plan is feasible. See "First Amended Financial Appendix"
attached hereto as Exhibit B for pro forma Cash flow
projections which demonstrate the ability of the entities
created or reorganized under the Plan to fund their
obligations thereunder.
(iii) Acceptance by Impaired Classes - Section 1129(a)(8) of
the Bankruptcy Code generally requires that each impaired
class must accept the Plan by the requisite votes for
confirmation to occur. A class of impaired Claims will have
accepted the Plan if at least two-thirds in dollar amount and
more than one-half in number of Allowed Claims actually voting
in the class have voted in favor of the Plan. A class of
Equity Interests will have accepted the Plan if the holders of
at least two-thirds in amount of such Equity Interests have
voted in favor of the Plan. In the event any class of Claims
or Equity Interests that is impaired under the Plan fails to
accept the Plan by the minimum percentage of votes, the
Debtors may seek to modify the Plan or seek confirmation
pursuant to the so-called
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"cramdown" provisions of section 1129(b) of the
Bankruptcy Code.
It should be noted that Coopers & Lybrand OYDL, Inc./Limited, which
holds unsecured Claims against the Debtors, has expressed their unwillingness to
support the Plan. Notwithstanding the lack of support from this Creditor, whose
Claims are subject to dispute and reduction by a resolution favorable to the
Debtors of pending or anticipated future litigations relating to such Claims,
the Debtors believe that the Plan is manifestly confirmable given its widespread
support from, among others, the Co-Proponents, Apollo, the Creditors' Committee,
the Tower B Noteholders, JMB, Sumitomo, Merrill Lynch, TIAA, Toronto Dominion,
Oppenheimer and Bank of Nova Scotia. Those Creditors who have committed to
support the Plan and vote in favor of its confirmation hold Claims which, both
in terms of number and dollar amount, far exceed those of the creditor who does
not support the Plan. The Debtors believe that, if necessary, the Plan can be
confirmed in its present form over the objection of the aforementioned
non-supporting creditor.
4. Non-Consensual Confirmation
of the Plan - "Cramdown"
In the event that any impaired class of Claims or Equity Interests
fails to accept the Plan, any one or more of the Debtors may request the
Bankruptcy Court to confirm the Plan in accordance with section 1129(b) of the
U.S. Bankruptcy Code. To do so, the Bankruptcy Court must determine at the
Confirmation Hearing whether the Plan is "fair and equitable" and does not
"discriminate unfairly" against any impaired dissenting Class of Claims or
Equity Interests.
The Plan will not discriminate unfairly if no Class receives more than
it is legally entitled to receive on account its Claims.
5. "Fair and Equitable" Test
"Fair and Equitable" has different meanings for Secured Claims,
Unsecured Claims and Equity Interests:
(i) With respect to a Secured Claim, "fair and equitable"
means either (A) the impaired secured creditor retains its
liens to the extent of its allowed secured Claim and receives
deferred Cash payments at least equal to the allowed amount of
its Claim with a present value as of the consummation date of
the plan at least equal to the value of its interest in the
property securing its liens, (B) if property subject to
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the lien of the impaired secured creditor is sold free and
clear of its lien, the impaired secured creditor receives a
lien attaching to the proceeds of the sale, or (C) the
impaired secured creditor realizes the "indubitable
equivalent" of its Claim under the Plan.
(ii) With respect to an Unsecured Claim, "fair and equitable"
means either (A) the impaired unsecured creditor receives
property of a value, as of the Confirmation Date, equal to the
amount of its allowed Claim or (B) the holders of all Claims
and interests that are junior to the Claims of the dissenting
class will not receive or retain any property under the plan.
(iii) With respect to a class of Equity Interests, "fair and
equitable" means either (A) each holder of an interest in such
class receives or retains on account of such interest property
of a value equal to the greater of the allowed amount of any
fixed liquidation preference to which such holder is entitled,
any fixed redemption price to which such holder is entitled or
the value of such interest; or (B) the holder of any interest
that is junior to the interest of such class will not receive
or retain any property on account of such junior interest.
In the event that one or more classes of impaired Claims fails to
accept the Plan, the Debtors and the Co- Proponents reserve the right to seek to
confirm the Plan pursuant to section 1129(b) of the Bankruptcy Code.
E. ALTERNATIVES TO CONFIRMATION OF THE PLAN
1. Alternative Plan of Reorganization
The Debtors believe that the Plan, as developed and negotiated by the
Plan Proponents, is the best available option for a plan of reorganization. It
is likely that, if the agreements and settlements embodied in the Plan are not
accomplished, the conversion of the Debtors' chapter 11 reorganization cases to
chapter 7 liquidation will occur.
2. Liquidation Analysis
As discussed above in the section entitled "Voting and Confirmation of
the Plan", notwithstanding acceptance of the Plan by each impaired Class of a
particular Debtor, to confirm the Plan as to such Debtor the Bankruptcy Court
must determine that the Plan is in the "best interests" of each holder of a
Claim or Equity Interest in any such impaired Class who has not voted to
<PAGE>
-354-
accept the Plan. Accordingly, if an impaired Class does not unanimously accept
the Plan, the "best interests" test requires that the Bankruptcy Court find that
the Plan provides to each dissenting member of such impaired Class a recovery on
account of the member's Claim or Equity Interest that has a value, as of the
Confirmation Date, at least equal to the value of the distribution that each
such member would receive if the applicable Debtor were liquidated under chapter
7 of the Bankruptcy Code on such date.
To estimate what the members of each impaired Class of Claims or
Equity Interests would receive if the Debtors were liquidated under chapter 7 of
the Bankruptcy Code, the Bankruptcy Court must first determine the aggregate
dollar amount that would be available if the Reorganization Cases were converted
to cases under chapter 7 of the Bankruptcy Code and the Debtors' assets were
liquidated by a chapter 7 trustee (the "Liquidation Value"). The Liquidation
Value of the Debtors would consist of the net proceeds from the disposition of
the assets of the Debtors, augmented by any Cash held by the Debtors.
The Liquidation Value available to creditors holding general Unsecured
Claims would be reduced by, among other things: (i) the Claims of secured
creditors, to the extent of the value of their collateral; (ii) the assertion of
rights by outside partners to purchase the Debtors' partner interests and/or
assume their management rights with respect to such partner interests; (iii) the
costs, fees, and expenses of the liquidation, as well as other Administrative
Claims incurred in connection with the Debtors' chapter 7 cases, including tax
liabilities in respect of any gain arising from the disposition of assets in the
liquidation; (iv) unpaid Administrative Claims incurred in the Reorganization
Cases prior to conversion to chapter 7; and (v) Priority Claims, including
Priority Tax Claims. The Debtors' costs of liquidation in chapter 7 cases thus
would include the compensation of trustees, counsel, and other professionals
retained by such trustees, asset disposition expenses, applicable taxes,
litigation costs, Claims arising from the operation of the Debtors during the
pendency of the chapter 7 cases, and all unpaid Administrative Claims incurred
by the Debtors during the Reorganization Cases. In addition, the liquidation
itself would trigger certain Administrative Claims, Priority Claims, and other
Claims, such as Claims for severance pay and damages Claims in respect of
executory contracts or unexpired leases entered into or assumed in the
Reorganization Cases, and would likely accelerate the payment of other Priority
Claims, such as certain deferred income tax obligations, that would otherwise be
payable in the ordinary course of business or on a deferred basis under the
Plan. These Claims are required to be paid in full out of the net liquidation
proceeds, after payment of Secured Claims,
<PAGE>
-355-
before any balance would be made available to pay general Unsecured Claims or to
make any distribution in respect of Equity Interests. The Debtors believe that
liquidation would also generate a significant increase in Unsecured Claims, such
as executory contract and unexpired lease rejection damages Claims and tax and
other governmental Claims, on an accelerated basis.
A consolidated hypothetical liquidation analysis of the Debtors is set
forth in Exhibit H. The liquidation analysis is based on a number of estimates
and assumptions that are subject to significant uncertainties. Although the
Debtors believe that these estimates and assumptions are reasonable for the
purpose of preparing a hypothetical chapter 7 liquidation analysis, there can be
no assurance that such estimates and assumptions would be valid if the Debtors
were in fact liquidated. Moreover, the Debtors believe that a chapter 7
liquidation could result in substantial intercompany and other litigation that
could delay the distribution of liquidation proceeds beyond the periods assumed
in Exhibit H. This delay could materially reduce the amount determined on a
present value basis as of the proposed Effective Date to be available for
distribution to creditors in such liquidations. Further, the Debtors believe
that such litigation and attendant delay could adversely affect the values
realizable in sales of the Debtors' assets to an extent that cannot be estimated
at this time.
The consolidated hypothetical liquidation analysis indicates that the
aggregate proceeds of liquidation of the Debtors in cases under chapter 7 of the
Bankruptcy Code would be less than the distributions to be made to the holders
of Unsecured Claims under the Plan. See "Summary of the Plan of Reorganization
for the Debtors -- Description of Individual Classes and the Treatment of Each
Class Under the Plan". The Debtors therefore believe that the Plan provides for
recoveries equal to or greater than those that would be realized in a chapter 7
liquidation of the Debtors, and that the Plan thus satisfies the "best
interests" test embodied in section 1129(a)(7) of the Bankruptcy Code as to all
Classes of Claims and Equity Interests.
<PAGE>
-356-
XIV. CONCLUSION
The Debtors urge all Creditors and Equity Security Holders entitled to
vote on the Plan to vote to accept the Plan and to evidence such acceptance by
returning their Ballots so that they will be received on or before 5:00 p.m.
Eastern Daylight Time on September 4, 1996.
Dated: New York, New York
August 9, 1996
OLYMPIA & YORK REALTY CORP., et al.
(for itself and on behalf of each
of the other Debtors)
By: /s/ Joel M. Simon
--------------------------------
Name: Joel M. Simon
Title: Executive Vice-President
and Chief Operating
Officer
COUNSEL:
Corinne Ball, Esq. Richard Seltzer, Esq.
Paul D. Leake, Esq. Andrew P. Kress, Esq.
WEIL, GOTSHAL & MANGES LLP KAYE, SCHOLER, FIERMAN,
767 Fifth Avenue HAYS & HANDLER LLP
New York, New York 10153 425 Park Avenue
(212) 310-8000 New York, New York 10022
(212) 836-8000
Attorneys for the Debtors and Attorneys for Olympia
Debtors in Possession & York Tower B Lease
(other than Olympia & York Company
Tower B Lease Company)
<PAGE>
SCHEDULE 1
Other O&Y (U.S.) Entities
Participating in the Plan of Reorganization
1. O&Y (U.S.) Financial Company
2. O&Y WFC Tower A Company
3. O&Y WFC Tower Corp.
4. O&Y 245 Corp.
5. Olympia & York 245 Park Avenue Holding Company,
L.P.
6. 245 Park Avenue Company
7. O&Y Financial Company
8. Olympia & York OLP Company
9. O&Y Liberty Plaza Company
10. Trinity Place Company
11. Olympia & York Tower B Lease Company
<PAGE>
EXHIBIT A
Plan of Reorganization
<PAGE>
EXHIBIT B
First Amended Financial Appendix of Newco LP
<PAGE>
EXHIBIT C
Description of Asset Dispositions
The major asset divestitures that have occurred in the Devco chain are as
follows:
Yerba Buena Gardens, San Francisco -- although not an asset
sale, O&Y (U.S.) was unable to meet its financial obligations
and in the summer of 1992 lost its development rights to the
Yerba Buena Gardens development.
One Corporate Center, Hartford -- the property was transferred
back to O&Y (U.S.)'s partner and the lender on December 10,
1993, in exchange for a forgiveness of the indebtedness.
110-120 Tremont Street, Boston -- the property was sold to an
unrelated third party on December 30, 1993 in exchange for
approximately $6.4 million. The net proceeds of the sale were
applied by Sanwa to reduce outstanding indebtedness owed to
such lender at One Liberty Plaza, New York.
1999 Bryan Street, Dallas -- the property was consensually
foreclosed on by the lender on November 2, 1993. The lender
bid in its mortgage debt at the foreclosure sale and
eliminated the mortgage indebtedness. The lender and O&Y
(U.S.) have agreed to a settlement of other property related
Claims. The settlement disposes of all outstanding property
related Claims in exchange for a $6 million unsecured Claim
against Devco and Equityco.
KOIN Center, Portland -- the property and related properties
were sold to an unrelated third party on December 31, 1993 for
approximately $40.5 million. After the mortgages were
satisfied, O&Y (U.S.) received approximately $15.7 million
from the sale.
Cypress Creek, Florida -- 24.6 acres of undeveloped land
located in Fort Lauderdale was sold on June 1, 1994 to an
unrelated third party for approximately $3.6 million.
Olympia Place, Orlando -- property sold to an unrelated third
party on March 1, 1994, for approximately $55.6 million. After
satisfaction of the existing financing, O&Y (U.S.) received
approximately $0.5 million.
Winter Park, Florida -- property sold to an unrelated third
party on March 7, 1995 for approximately $7.3
<PAGE>
-2-
million. After satisfaction of the first mortgage on
the property, O&Y (U.S.) received approximately $4.0
million.
400 South Hope Street, Los Angeles -- O&Y (U.S.) was unable to
meet certain of its loan obligations to the partnership that
owns the property. As a result, the remaining partners elected
to exercise their right to control the general partner
interest of O&Y (U.S.). As discussed further in the Discussion
of the Settlement Agreement Section, the right to O&Y (U.S.)'s
partner interest will be transferred to Apollo & Tishman
Speyer under the Settlement Agreement.
One Financial Plaza, Springfield -- the property was
transferred back to the lender on October 6, 1995 in exchange
for a forgiveness of the indebtedness.
The major asset divestitures that have occurred in the Equityco chain are as
follows:
320 Park Avenue, New York -- the property was sold on October
15, 1992 to an unrelated third party. The proceeds of the sale
were used to paydown the existing first and second mortgages.
However, the lenders were also given an approximately $24
million unsecured demand note against Devco for the deficiency
amount of the lenders' mortgages. That demand note is
currently owned by Apollo and Banco Di Roma.
55 Water Street, New York -- the property was sold to an
unrelated third party on October 5, 1993 through a prearranged
chapter 11 plan of reorganization. Other than a reimbursement
Claim against Devco with respect to a letter of credit, all
obligations related to this property have been satisfied.
125 Broad Street/7 Hanover Square/1250 Broadway, New York --
Pursuant to a Plan of Reorganization confirmed on December 30,
1994, the 125 Broad Street property was transferred to an
affiliate of CIBC, Johnson & Higgins and Sullivan & Cromwell
and O&Y (U.S.)'s interest in the 1250 Broadway property was
transferred to an affiliate of CIBC. The takeover lease
related to 7 Hanover Square was also transferred pursuant to
the plan of reorganization. As a result of the transfers, O&Y
(U.S.) was released from its mortgage obligations and its
obligations under the takeover agreement. CIBC was also given
a $26.2 million unsecured deficiency Claim against Devco and
<PAGE>
-3-
Equityco, which Co-Proponent Unsecured Claim is being treated
as described in section 7.11.2 of the Plan. In addition, JMB
and Coopers & Lybrand OYDL, Inc./Limited, on behalf of 25
Realty LP, were given a $5 million and $6.75 million
Unaffiliated Unsecured Claim against Devco and Equityco,
respectively, which Claims are being treated as described in
section 7.11 of the Plan.
2 Broadway, New York -- the property was sold to an unrelated
third party on September 18, 1995 through a prenegotiated
chapter 11 plan of reorganization. Under the plan and pursuant
to the 970's Indenture, approximately $16.1 million in
proceeds from the sale were transferred to 1290 Associates,
LLC and 237 Park Avenue Associates, LLC to fund future leasing
costs in the two buildings owned by those entities.
The major asset divestitures that have occurred in the Baden chain are as
follows:
La Santa Maria, Florida -- the 6.4 acre site was sold on
October 14, 1993 to an unrelated third party for approximately
$11.4 million, which generated proceeds of $5 million to
Baden, less certain closing costs.
Royal Lane/Ferrel Drive, Dallas -- an acre piece of vacant
land was sold on September 21, 1994, for approximately
$100,000.
Wood Ranch, California -- the Wood Ranch property was
transferred to the lender on January 4, 1994, in full
satisfaction of the $21.3 million mortgage debt on the
property and a $6.2 million recourse obligation to the local
school district.
Chino Hills, California - the Chino Hills properties were sold
in stages in July, 1994 and April, 1995, for a total of
approximately $14.5 million.
Two Clinton Square, Syracuse -- the property was sold on April
12, 1993 to an unrelated third party for approximately $4.6
million.
Cherry Creek, Colorado - sold right to purchase further lands
in Cherry Creek, Colorado on January 14, 1994 for $250,000. In
addition, 193,502 square feet of undeveloped land was sold
July 14, 1994, to an unrelated third party for $726,000.
<PAGE>
-4-
American Landmark Properties - O&Y (U.S.)'s interest in
various joint ventures which own cooperative and condominium
units in New York, New York and Arlington, Virginia were sold
to an unrelated third party on June 14, 1993, for $1 million
in Cash and an $8.3 million note.
See "Significant Developments in the Debtors' Chapter 11 Cases -- The
Exclusivity Litigation and the January 12th Settlement Agreement", for details
of transfers of 237 Park Avenue, New York, New York, 1290 Avenue of the
Americas, New York, New York, 11601 Wilshire Blvd., Los Angeles, California,
West 31st Street, New York, New York and 400 South Hope Street, Los Angeles,
California.
<PAGE>
EXHIBIT I
Chronology of the Creditor Proposals
By the spring of 1995, management of O&Y (U.S.) was prepared to
proceed with its recommendations to the Independent Board regarding an overall
restructuring plan based on the Newco Plan Outline, with modifications.
By late spring 1995, O&Y (U.S.) was advised that BPHI, CIBC and Dragon
had formed a group (collectively, the "BPHI Group") for purposes of proposing a
Newco plan to management. Prior to the April 25, 1995 meeting of the Independent
Board, O&Y (U.S.) received a communication from BPHI, speaking for itself, CIBC
and Dragon, requesting that management and the Independent Board defer making a
recommendation and permit that group to pursue its negotiations to reach a
consensus on an overall restructuring plan with other key parties in interest.
O&Y (U.S.) received similar, separate written communications from Citibank and
Apollo. All of these significant constituents requested that management of O&Y
(U.S.) not proceed with its recommendations but, rather, permit discussions
among the constituents to continue. Such constituents informed O&Y (U.S.) that
they believed there were substantial prospects for reaching an understanding to
accommodate their varying interests in an overall restructuring of the U.S.
Operations, which management should consider prior to making recommendations on
an overall restructuring to the Independent Board.
In June 1995, in response to the April 6 letter, the constituents
commenced submitting plan proposals. The BPHI Group submitted a written
restructuring plan proposal on June 21, 1995, which was subsequently amended on
July 22, 1995 and again on August 29, 1995 to reflect the involvement of
Whitehall Limited Partnership V ("Whitehall"), a holder of $134 million in notes
secured by two of the core properties (the "BPHI Group Proposal").
On July 13, 1995, Apollo, an affiliate of Tishman Speyer Properties,
L.P. and Coopers & Lybrand OYDL, Inc./Limited (collectively, the "A/T/S Group")
submitted a written restructuring plan proposal, which was revised on August 18,
1995, and again on September 17, 1995 (the "A/T/S Group Proposal").
On July 25, 1995, representatives of each of the A/T/S Group, the BPHI
Group and Citibank met separately with the Independent Board. The BPHI Group
presented its plan proposal; the A/T/S Group presented its plan proposal; and
Citibank informed the Independent Board of the role it foresaw itself playing in
the restructuring of the U.S. Operations and that it was carefully considering
the various plan proposals with a view
<PAGE>
-2-
to negotiating a position of support for one or the other
proposal, with modifications.
<PAGE>
EXHIBIT J
Schedule of O&Y Affiliates
O&Y Affiliates means the following Entities and any other Entity that
controls, is controlled by or is under common control with such Entities:
1. Amland Properties Corp.
2. Olympia & York and Andrews Associates Venture
3. Baden Real Estate Corp.
4. Brunswash Development Corporation
5. Olympia & York Bryan Holding Company
6. Cabot Estate Development Company
7. Olympia & York Cherry Creek Company
8. Chicago-Superior Associates
9. Olympia & York Co., Inc.
10. Olympia & York Colorado Development Corp.
11. Olympia & York Communications, Inc.
12. O&Y Concord 60 Broad Street Company
13. O&Y Construction Corp.
14. Olympia & York Cypress Corp.
15. O&Y Cypress Florida Inc.
16. O&Y Dalland Corp.
17. Olympia & York Denver Properties Corp.
18. Devco-11601-A, L.P
19. Devco-11601-B, L.P
20. O&Y Devcon, Inc.
21. O&Y Development Holding Corp.
22. Olympia & York Development (Seattle) Company
23. O&Y Equity Company, L.P
24. O&Y Equity General Partner Corp.
25. Olympia & York FCA Inc.
26. O&Y FEC Corp.
27. O&Y FEC Corp. Venture
28. Federal Center Associates
29. O&Y Financial Company
30. Financial Plaza Trust
31. O&Y Fiscal Corporation
32. Olympia & York Florida Equity Corp.
33. Forum Properties Corp.
34. Olympia & York Fountain Plaza Company
35. Olympia & York Grampian Corp.
36. Hartford Park Associates
37. Olympia & York Homes Corporation
38. O&Y Hope Street, Inc.
39. O&Y I/S Guide Inc.
40. Izzard Corp.
41. Olympia & York Jefferson Street Company
42. Olympia & York KOIN Center Company
43. O&Y Liberty Plaza Company
44. Olympia & York Maiden Lane Company
45. Olympia & York Maiden Lane Finance Corp.
<PAGE>
-2-
46. O&Y Maintenance Corp.
47. O&Y Management Corp.
48. Olympia & York Mass. Investment Corp.
49. Olympia & York Massachusetts Financial Company
50. Miami Center Joint Venture
51. NH Corp.
52. O&Y NY Building Corp.
53. O&Y OCP Corp.
54. Olympia & York OLP Company
55. Olympia/Roberts Company
56. One Commercial Plaza (Unnamed Co-Tenancy)
57. One Financial Plaza (Unnamed Joint Venture)
58. Orion Limited Partnership
59. OYCI Video, Inc.
60. Pennland Properties Corp.
61. Perkins Realty Trust
62. O&Y Plaza Corp.
63. Olympia & York Properties (Portland) Company
64. Olympia & York Real Estate (USA) Inc.
65. Olympia & York Realty Corp.
66. Olympia & York Residential Corp.
67. Senior Associates
68. South Brunswick Industrial Properties Limited
Partnership and Brunswash Development Corporation
69. South Brunswick Industrial Properties Limited
Partnership and Pennland Properties Corp.
70. Olympia & York Southeast Equity Corp.
71. Olympia & York State Limited Partnership
72. Olympia & York State Street Company
73. SYR Mall Corp.
74. O&Y Tower A Holding Company
75. O&Y Tower A Limited Partnership
76. Olympia & York Tower B Company
77. O&Y Tower B Holding Company I
78. Olympia & York Tower B Lease Company
79. O&Y Tower D Holding Company I
80. O&Y Tower D Holding Company II
81. Trinity Place Company
82. O&Y (U.S.) Development Company, L.P.
83. O&Y (U.S.) Development General Partner Corp.
84. O&Y (U.S.) Financial Company
85. Olympia & York (U.S.) Holdings Company
86. O&Y Venture Corp.
87. Olympia & York Water Street Company
88. West 31st Street Associates
89. O&Y WFC Maintenance Corp.
90. Olympia & York WFC Retail Company
91. WFC Tower A Company
92. O&Y WFC Tower Corp.
93. WFC Tower D Company
<PAGE>
-3-
94. Olympia & York World Financial Center Finance Corp.
95. O&Y YBG Corp.
96. O&Y YBG L.P.
97. Yerba Buena Gardens, L.P.
98. York Venture Co.
99. 2 Broadway Associates
100. 2 Broadway Land Company
101. O&Y 7 Hanover Leasing Company, L.P.
102. O&Y 53 Finance Corp.
103. O&Y 55 WS Lease Co., L.P.
104. 60 Broad Street Management Corp.
105. 125 Broad Street Company
106. O&Y 233 Park South Company, L.P.
107. 237 Park Avenue Associates
108. O&Y 245 Corp.
109. Olympia & York 245 Lease Company
110. 245 Park Avenue Company
111. Olympia & York 245 Park Avenue Holding Company, L.P.
112. Olympia & York 320 G.O.T. Company
113. Olympia & York 320 Park Company
114. O&Y 320 Park Corp.
115. 1290 Associates
116. 1999 Bryan Street Ltd.
117. 11601 Wilshire Associates
Exhibit T3E.2
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- -------------------------------x
In re : Chapter 11 Case Nos.
92 B 42698 (JLG)
OLYMPIA & YORK : (Jointly Administered)
REALTY CORP., et al.,
:
:
Debtors.
:
- -------------------------------x
THIRD AMENDED JOINT PLAN OF REORGANIZATION
Dated: New York, New York
September 12, 1996
WEIL, GOTSHAL & MANGES LLP PROSKAUER ROSE GOETZ &
Attorneys for Debtors in MENDELSOHN LLP
Possession (Other than Attorneys for Battery Park
Olympia & York Tower B Lease Holdings Inc. and Carena
Company) Bancorp US, Inc.
767 Fifth Avenue 1585 Broadway
New York, New York 10153 New York, New York 10036
(212) 310-8000 (212) 969-3000
SIDLEY & AUSTIN COUDERT BROTHERS
Attorneys for Canadian Imperial Attorneys for Dragon
Bank of Commerce Holdings Limited
875 Third Avenue 1114 Avenue of the Americas
New York, New York 10022 New York, New York 10036
(212) 906-2000 (212) 626-4400
SHEARMAN & STERLING KAYE, SCHOLER, FIERMAN, HAYS
Attorneys for Citibank, N.A. & HANDLER LLP
153 East 53rd Street Attorneys for Olympia & York
New York, New York 10022 Tower B Lease Company, as
(212) 848-4000 Debtor and Debtor in
Possession
425 Park Avenue
New York, New York 10022
(212) 836-8000
<PAGE>
-1-
JOINT PLAN OF REORGANIZATION
Olympia & York Realty Corp., et al., the Debtors in the
above-captioned chapter 11 cases, and the Co- Proponents hereby propose the
following joint chapter 11 plans of reorganization for the Debtors:
SECTION 1. DEFINITIONS AND INTERPRETATION.
A. Definitions.
The following terms used herein and in the Disclosure Statement shall
have the respective meanings defined below:
1.1. Additional Payments has the meaning assigned to such term in
section 15.3 hereof.
1.2. Administrative Expense Claim means any right to payment
constituting a cost or expense of administration of the Reorganization Cases
allowed under sections 503(b) and 507(a)(1) of the Bankruptcy Code, including
(a) any actual and necessary costs and expenses of preserving the estates of the
Debtors, (b) any actual and necessary costs and expenses of operating the
businesses of the Debtors, (c) any indebtedness or obligations incurred or
assumed by the Debtors in Possession in connection with the conduct of their
business or for the acquisition or lease of their properties, (d) any allowances
of compensation and reimbursement of expenses to the extent allowed by Final
Order under section 330 or 503 of the Bankruptcy Code, whether fixed before or
after the Effective Date, (e) any fees or charges assessed against the estate of
the Debtors under section 1930, chapter 123, title 28, United States Code,
including any post-Confirmation Date and post- Effective Date fees and charges,
and (f) any Claims treated as Administrative Expense Claims in accordance with
section 4.1 hereof.
1.3. Aetna means the Aetna Life Insurance Company.
1.4. Aetna Mortgage Loan means that certain mortgage loan in the
original principal amount of $220,000,000 made in accordance with that certain
Consolidation and Extension Agreement dated as of September 28, 1983 among
Aetna, 245 Park Co. and Equityco, which loan
<PAGE>
-2-
is secured by a first mortgage on and an assignment of
leases relating to 245 Park Avenue.
1.5. Aetna Mortgage Loan Claims means any Claim under or relating to
the Aetna Mortgage Loan.
1.6. Aetna Restructured Mortgage Loan means the Aetna Mortgage Loan,
as amended and modified in accordance with section 15.3(a) hereof and the Aetna
Restructured Mortgage Loan Documents.
1.7. Aetna Restructured Mortgage Loan Documents means the documents
required to execute and deliver the Aetna Restructured Mortgage Loan, forms of
which are annexed to the Plan as Exhibit A.
1.8. Affiliate means, with reference to any Entity, any other Entity
that, within the meaning of Rule 12b-2 promulgated under the Securities Exchange
Act of 1934, as amended, "controls," is "controlled by" or is under "common
control with" such Entity.
1.9. Aggregate Disallowed Amount means, for each class and/or subclass
and at any time, the difference between (a) the value as of the Confirmation
Date of the Equity Interests in Newco LP, Convertible Note Interests, and the
Cash in a reserve or escrow established in accordance with this Plan, minus (b)
the value, as of the Confirmation Date, of the Equity Interests in Newco LP,
Convertible Note Interests, and the Cash in such reserve or escrow account
needed to fund distributions as if each remaining Disputed Claim were an Allowed
Claim in its Maximum Allowable Amount, taking into account any rights of the
Disbursing Agent to deduct or withhold distributions pursuant to section 20.3.4
hereof.
1.10. Allowed means, with reference to any Claim or Equity Interest,
(a) any Claim against or Equity Interest in any of the Debtors, proof of which
was filed within the applicable period of limitation fixed by the Bankruptcy
Court in accordance with Rule 3003(c)(3) of the Bankruptcy Rules as to which (i)
no objection to the allowance thereof has been interposed within the applicable
period of limitation fixed by this Plan, the Bankruptcy Code, the Bankruptcy
Rules, the Local Rules or a Final Order, or (ii) no action has been commenced to
avoid such Claim or Equity Interest within the applicable period of limitation
fixed by this Plan, or (iii) an objection has been interposed, to the extent
such Claim or Equity Interest has been allowed
<PAGE>
-3-
(whether in whole or in part) by a Final Order, (b) if no proof of claim was so
filed, any Claim against or Equity Interest in the Debtors which has been listed
by the Debtors in their Schedules as liquidated in amount and not disputed or
contingent, (c) any Claim arising from the recovery of property under section
550 or 553 of the Bankruptcy Code and allowed in accordance with section 502(h)
of the Bankruptcy Code, or (d) any Claim allowed hereunder.
1.11. Allowed Club Loan Claims means the Club Loan Claims allowed as
of October 11, 1995, in accordance with the January 12th Settlement Agreement
Order, in the amount of $165,508,335.43 (plus interest and costs from and after
October 11, 1995 to the extent payable and allowable under the agreements
evidencing the Club Loan and under applicable law).
1.12. Amex means American Express Company and/or any Affiliate
thereof.
1.13. Amex/Retailco Lease means that certain lease dated June 15,
1983, as assigned pursuant to that certain Assignment and Assumption of Retail
Lease dated as of February 28, 1986 by Tower A Co. to Retailco, as amended by
that certain First Amendment of Retail Lease dated August 12, 1987.
1.14. Amex Settlement means the compromise and settlement of the
various Claims of Amex to be effected in accordance with section 4.8 hereof.
1.15. Apollo means Apollo Real Estate Investment Fund, L.P. and/or any
Affiliate thereof.
1.16. Available Cash means, as of any date and with respect to any
Debtor or successor to a Debtor under this Plan, the amount of Cash or Cash
equivalents available as of such date to make distributions to holders of
Administrative Expense Claims, Allowed Claims and Allowed Equity Interests in
accordance with this Plan, including, with respect to the Entities owning Tower
A, 245 Park Avenue and OLP, Cash that is subject to a Lien of the mortgagee
relating to such buildings to the extent such mortgagee votes to accept the Plan
or otherwise as ordered by the Bankruptcy Court.
1.17. Baden means Baden Real Estate Corp., a Delaware corporation and
a Debtor in the Reorganization Cases.
<PAGE>
-4-
1.18. Baden Pledge means that certain pledge by Baden to Bank of Nova
Scotia of the MCJV Pledged Notes made pursuant to that certain Assignment and
Pledge Agreement dated February 25, 1992.
1.19. Ballot means the form or forms distributed to each holder of an
impaired Claim or Equity Interest on which is to be indicated acceptance or
rejection of this Plan.
1.20. Ballot Agent means Georgeson & Co., Inc., Wall Street Plaza, New
York, New York 10005, (212) 440-9820 or 1-800-223-2064.
1.21. Ballot Date means the date set by the Bankruptcy Court by which
all Ballots must be received.
1.22. Bank Leumi Claims means the Claims of Bank Leumi arising in
connection with the Decision, any Judgment, the Holdings Guaranty and the Devco
LP Loan Documents (each as defined in that certain Standstill Agreement among
the Family Corps., O&Y 25 Realty Company and O&Y 25 Realty Company, L.P. and
Bank Leumi, dated November 24, 1993).
1.23. Bank of Nova Scotia means The Bank of Nova Scotia and/or any
Affiliate thereof.
1.24. Bank of Nova Scotia Claims means any and all Claims of Bank of
Nova Scotia against Baden, MCJV and all other O&Y Affiliates arising under or
relating to the MCJV Pledged Notes, the Baden Pledge and the OYDL Swap
Agreements; provided, however, that "Bank of Nova Scotia Claims" shall not
include any Claims arising from or related to Bank of Nova Scotia's status as a
tenant at OLP.
1.25. Bank of Nova Scotia Settlement means the compromise and
settlement of the Bank of Nova Scotia Claims to be effected in accordance with
section 4.9 hereof.
1.26. Bankruptcy Code means the Bankruptcy Reform Act of 1978, as
amended and as codified at title 11, United States Code.
1.27. Bankruptcy Court means the United States District Court for the
Southern District of New York having jurisdiction over the Reorganization Cases
and, to the extent of any reference under section 157, title 28, United
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States Code, the unit of such District Court constituted under section 151,
title 28, United States Code.
1.28. Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure
as promulgated by the United States Supreme Court under section 2075, title 28,
United States Code.
1.29. BPHI means Battery Park Holdings Inc.
1.30. BPHI Group means, collectively, BPHI, CIBC and Dragon.
1.31. BPHI Partnerships means, collectively, Tower A Co., Tower A
Holding, Tower B Holding I and Tower D Holding I.
1.32. BPHI Settlement means the compromise and settlement of various
Claims of and against BPHI and the Equity Interests of BPHI to be effected in
accordance with section 4.3 hereof and the Tower B Co. Plan.
1.33. Business Day means any day other than a Saturday, a Sunday, any
other day on which banking institutions in New York, New York are required or
authorized to close by law or executive order or Rosh Hashanah (first day), Yom
Kippur and the Friday after Thanksgiving.
1.34. Carena means Carena Bancorp US, Inc.
1.35. Cash means legal tender of the United States of America.
1.36. Catch-Up Cash Distribution means, for each such period for which
such amount shall be determined in accordance with section 20.5 hereof, and for
each class entitled to be distributed Cash under this Plan, a distribution in
Cash equal to each holder of an Allowed Claim's Ratable Proportion of the
Aggregate Disallowed Amount.
1.37. Catch-Up Equity Distribution means, with respect to the Class
8.6 Disputed Claims Equity Escrow, and for each such period for which such
amount shall be determined in accordance with section 20.5 hereof, a
distribution of that number of Equity Interests in Newco LP equal to each holder
of an Allowed Claim's Ratable Proportion of the Aggregate Disallowed Amount,
plus the
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portion of the net earnings, dividends, distributions and
interest attributable thereto.
1.38. Causes of Action means any and all actions, causes of action,
liabilities, obligations, rights, suits, debts, sums of money, damages,
judgments, claims and demands whatsoever, whether known or unknown, in law,
equity or otherwise.
1.39. Chase Note means that certain Promissory Note, dated September
20, 1994, made by Chase Family Limited Partnership No. 2 to O&Y Finco in the
original principal amount of $2,500,000, which promissory note (a) provides for
five equal annual installments of $500,000 payable on September 20 in 1995,
1996, 1997, 1998 and 1999, (b) does not accrue interest unless an event of
default thereunder has occurred, and (c) was assigned by O&Y Finco to Baden in
connection with that certain Memorandum of Sale among Baden, Devco, Equityco and
O&Y Finco, dated as of October 11, 1995.
1.40. CIBC means Canadian Imperial Bank of Commerce and/or any
Affiliate thereof.
1.41. CIBC Amended and Restated Indemnity Agreement means that certain
Indemnity Agreement to be executed and delivered by Newco LP on the Effective
Date in accordance with sections 7.9 and 18.15 hereof.
1.42. CIBC/Lost Note Indemnity means that certain Indemnification
Agreement dated January 6, 1995 among O&Y Finco, Equityco, Equity GP and CIBC,
pursuant to which O&Y Finco, Equityco and Equity GP indemnified CIBC and certain
of its designees from any and all losses, costs, liabilities, claims, damages,
fines, penalties and expenses relating to the loss or misplacement of the
original of a certain promissory note made by 3832 Associates to the National
Bank of Canada, New York Branch, as amended pursuant to that certain undated
Allonge to Note executed by National Bank of Canada, New York Branch and as
endorsed by such bank to O&Y Finco, which note is in the principal amount of
$25,000,000.
1.43. CIBC/Lost Note Indemnity Claims means any Claim under or
relating to the CIBC/Lost Note Indemnity.
1.44. CIBC/OLP Claims means any Claim under or relating to the
CIBC/OLP Loan, including (a) any and all Claims relating to or Liens securing
the Allowed CIBC/OLP Claims or granted by any of the Debtors and/or any of their
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Affiliates or (b) any and all Claims based upon guarantees of collection,
payment or performance of any obligation of any of the Debtors relating to the
CIBC/OLP Loan and any and all Liens granted by any such Debtor or Affiliate to
secure such guarantee(s) or obligation(s).
1.45. CIBC/OLP Loan means that certain loan made in accordance with
that certain Credit Agreement dated September 26, 1991 between U.S. Finco and
CIBC, in the original principal amount of $55,000,000, which loan is secured by
(a) a pledge and collateral assignment by U.S. Finco of its interest in the U.S.
Finco Mortgages, (b) the pledge and collateral assignment by Devco and Devco GP
of their partner interests in OLP Co., Trinity Place Co. and Liberty Plaza Co.,
and (c) payment guarantees from OYDL, Devco and Devco GP.
1.46. Citibank means Citibank, N.A. and/or any Affiliate thereof.
1.47. Citibank Canada means Citibank Canada, a Canadian banking
corporation.
1.48. Citibank Canada Claims means any Claim under or relating to the
Citibank Canada Loan.
1.49. Citibank Canada Loan means that certain loan made in accordance
with a loan agreement dated February 17, 1988, between Citibank Canada and
Realty Corp., as amended.
1.50. Citibank Letter of Credit means that certain irrevocable standby
letter of credit of Citibank issued pursuant to that certain Letter of Credit
Agreement dated September 27, 1983 by Citibank in favor of Park-Lex Co., the
reimbursement obligation of Equityco relating to which is secured by various
marketable securities.
1.51. Citibank Letter of Credit Claims means any Claim under or
relating to the Citibank Letter of Credit.
1.52. Citibank Swap Claim means that certain Secured Claim relating to
an Interest Rate and Currency Exchange Agreement, dated as of August 14, 1989,
between Devco and Citibank.
1.53. Claim means (a) right to payment or alleged right to payment,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent,
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matured, unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured; or (b) right to an equitable remedy or alleged right to an equitable
remedy for breach of performance of an obligation, if such breach gives rise to
a right to payment, whether or not such right to an equitable remedy or such
right to payment is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured, or unsecured.
1.54. Claims Objection Deadline means, with respect to parties in
interest other than the Debtors, the Confirmation Date or such other date as may
be ordered by the Bankruptcy Court, and, with respect to the Debtors, one
hundred and twenty (120) days after the Effective Date, unless extended by order
of the Bankruptcy Court.
1.55. Class A Interests means the Class A Limited Partner Interests in
Newco LP to be issued as described in section 18.1.1 hereof.
1.56. Class B Interests means the Exchangeable Class B Limited Partner
Interests in Newco LP to be issued as described in section 18.1.1 hereof.
1.57. Class 8.6 Disputed Claims Equity Escrow means the
interest-bearing escrow account in which Class A Interests and Class B Interests
shall be held in accordance with section 20.3.3 hereof.
1.58. Club Loan means that certain Revolving Credit Agreement dated
June 21, 1991 in the original principal amount of $160,000,000, made by Morgan
Guaranty Trust Company of New York, as agent, to, among other O&Y Affiliates,
Devco, secured by, among other things, pledges of partner interests and other
miscellaneous interests in the following six properties: (a) Tower A, (b) Tower
B, (c) 245 Park Avenue, (d) Maiden Lane, (e) 11601 Wilshire and (f) 400 South
Hope Street.
1.59. Club Loan Claims means any and all Claims under or relating to
the Club Loan, including (a) any and all Claims relating to or Liens securing
the Allowed Club Loan Claims against or granted by any of the Debtors and/or any
of their Affiliates and (b) any and all Claims based upon or Liens securing any
guarantees of collection, payment or performance of any obligation of any of the
Debtors relating to the Club Loan.
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1.60. Club Loan/245 Park Deficiency Claim means any Deficiency Claim
relating to the Allowed Club Loan Claims against 245 Corp. and 245 Holding LP.
1.61. Club Loan Transferors means the holders of the Club Loan who are
obligated to transfer their respective interests in the Club Loan to certain of
the Co-Proponents upon the terms and subject to the conditions set forth in the
January 12th Settlement Agreement.
1.62. Collateral means any property or interest in property of the
estate of a Debtor subject to a Lien to secure the payment or performance of a
Claim.
1.63. Compensation Claim means that portion of an Allowed Claim
representing compensation that is subject to withholding and employment tax
requirements under applicable law.
1.64. Confirmation Date means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order.
1.65. Confirmation Hearing means the hearing held by the Bankruptcy
Court to consider confirmation of this Plan, as it may be adjourned or continued
from time to time.
1.66. Confirmation Order means the order of the Bankruptcy Court
confirming this Plan.
1.67. Consolidated Devco means Devco, Devco GP, Equityco, Equity GP,
U.S. Finco, and O&Y Finco, as substantively consolidated in accordance with
section 2.1 hereof.
1.68. Consolidated Devco Convenience Claim means (a) an Allowed
Unsecured Claim against any of the Consolidated Devco Entities equal to $5,000
or less, (b) the Allowed Unsecured Claim against any of the Consolidated Devco
Entities of a holder that has irrevocably elected on its Ballot to reduce its
Claim against any of the Consolidated Devco Entities to the amount of $5,000 or
less, and/or (c) a Disputed Unsecured Claim against any of the Consolidated
Devco Entities which became an Allowed Unsecured Claim of $5,000 or less with
the consent of and in the amount agreed to by a Debtor and the Co-Proponents;
provided, however, that the Unsecured Claim of a holder of more than one
Unsecured Claim against any of the Debtors may not be a Consolidated Devco
Convenience Claim unless the
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holder has irrevocably elected on its Ballot to withdraw, consolidate, amend and
reduce all Unsecured Claims held by it against any of the Debtors to one
consolidated Unsecured Claim against the Consolidated Devco Entities in the
amount of $5,000 or less.
1.69. Consolidated Devco Entities means, collectively, Devco, Devco
GP, Equityco, Equity GP, U.S. Finco and O&Y Finco.
1.70. Consolidated Realty Corp. means Realty Corp., OYREUSA and Baden,
as substantively consolidated in accordance with section 2.2 hereof.
1.71. Consolidated OLP means Liberty Plaza Co., OLP Co. and Trinity
Place Co., as substantively consolidated in accordance with section 2.3 hereof.
1.72. Consolidated 245 means 245 Park Co., 245 Holding LP and 245
Corp., as substantively consolidated in accordance with section 2.4 hereof.
1.73. Controlled Affiliate means any O&Y Affiliate that is controlled
by one or more of Devco, Devco GP, Equityco, Equity GP, Realty Corp., OYREUSA,
Baden, and U.S. Finco; provided, however, that in all events, Controlled
Affiliate shall include O&Y Concord 60 Broad Street Company and 245 Park Co.;
and provided, further, that Controlled Affiliate shall not include U.S.
Holdings.
1.74. Controlling Interest means greater than 50% of the outstanding
Equity Interests in Newco LP.
1.75. Conversion Notice has the meaning assigned to such term in
section 7.11.1 hereof.
1.76. Conversion Right has the meaning assigned to such term in
section 7.11.1 hereof.
1.77. Convertible Note means that certain convertible note to be
issued by Newco LP to the holders of Allowed Unaffiliated Unsecured Claims in
the original principal amount equal to the product of (a) 5.71% multiplied by
(b) the sum of (i) the aggregate amount of Allowed Unaffiliated Unsecured Claims
and (ii) the Disputed Unaffiliated Unsecured Claims as of the Effective Date in
their Maximum Allowable Amounts, a form of the note and indenture relating to
which is annexed to the Plan as Exhibit B.
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1.78. Convertible Note Indenture Trustee means the indenture trustee
for the Convertible Note, which shall be selected by the Creditors' Committee
prior to the Effective Date and whose selection shall be reasonably satisfactory
to the Co-Proponents and the Debtors.
1.79. Convertible Note Interests means the interests in the
Convertible Note to be distributed to each holder of an Allowed Unaffiliated
Unsecured Claim in accordance with section 7.11.1 hereof, and to the Subclass
7.11.1 Disputed Claims Debt/Equity Escrow in accordance with section 20.3.2
hereof, which interests will either be in the form of (a) uncertificated
beneficial interests or (b) certificated, individual notes evidencing such
interests, as may be determined by the Debtors, the Co-Proponents and the
Creditors' Committee.
1.80. Coopers & Lybrand OYDL, Inc./Limited means, collectively, (a)
Coopers & Lybrand OYDL, Inc., (b) Coopers & Lybrand Limited, as the trustee in
bankruptcy for OYDL, (c) all current or former partners or owners of the
foregoing (including current or former owners of any direct or indirect interest
in the foregoing), and (d) all current and former officers, directors, trustees,
employees, agents, attorneys, accountants, financial advisors, investment
bankers, appraisers, advisors and engineers of any of the foregoing.
1.81. Co-Proponent Unsecured Claims means, collectively, (a) all
General Unsecured Claims against one or more of the Consolidated Devco Entities
held at any time by any Co-Proponent (other than any Claim or portion thereof
proof of which was filed by Citibank to account for Banco di Roma's $10,000,000
in original principal amount participation in the loan made by Citibank to the
predecessor of Olympia & York Massachusetts Financial Company, which Claim is an
Allowed Unaffiliated Unsecured Claim), whether or not at any relevant time such
Claim is continued to be held by such Co-Proponent, and (b) all General
Unsecured Claims transferred, or presently contemplated to be transferred, to
certain of the Co- Proponents by the Club Loan Transferors in accordance with
the January 12th Settlement Agreement.
1.82. Co-Proponents means, collectively, BPHI, Carena, CIBC, Dragon
and Citibank and/or any Affiliates (excluding any Debtors or O&Y Affiliates) of
such Entities.
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1.83. Co-Proponents' Capital Infusion means that certain capital
contribution of $75,000,000 to Newco LP to be provided by the Co-Proponents in
accordance with section 18.12 hereof.
1.84. Core Properties means, collectively, 53 State Street, OLP, 245
Park Avenue, Tower A, Tower B, and Tower D.
1.85. Creditors' Committee means the Official Committee of Unsecured
Creditors appointed under section 1102 of the Bankruptcy Code in the
Reorganization Cases that commenced on October 11, 1995.
1.86. Debtors means collectively, Realty Corp., SF Holdings, Devco,
Equityco, Devco Canada, Equity Canada, Devco GP, Equity GP, U.S. Finco, O&Y
Finco, OYREUSA, Baden, Tower Corp., Tower A Co., 245 Park Co., 245 Holding LP,
245 Corp., OLP Co., Liberty Plaza Co., Trinity Place Co. and Tower B Leaseco.
1.87. Debtors in Possession means the Debtors in their respective
capacities as debtors in possession under sections 1107(a) and 1108 of the
Bankruptcy Code.
1.88. Default Interest Component has the meaning assigned to such term
in section 15.3 hereof.
1.89. Deficiency Claim means, with reference to a Claim secured by a
Lien against Collateral, an amount equal to the difference between (a) the
aggregate amount of such Claim after giving effect to the operation of section
1111(b)(1)(A) of the Bankruptcy Code and (b) the amount of such Claim that is a
Secured Claim; provided, however, that, in the event that the class in which
such Secured Claim is classified makes the election under section 1111(b)(2) of
the Bankruptcy Code in accordance with Rule 3014 of the Bankruptcy Rules, the
Deficiency Claim otherwise relating to such Secured Claim shall be extinguished.
1.90. Devco means O&Y (U.S.) Development Company, L.P., a Delaware
limited partnership and a Debtor in the Reorganization Cases.
1.91. Devco Canada means O&Y (U.S.) Development Canada Ltd., a New
Brunswick corporation and a Debtor in the Reorganization Cases.
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1.92. Devco GP means O&Y (U.S.) Development General Partner Corp., a
Delaware corporation and a Debtor in the Reorganization Cases.
1.93. Dev Holding Corp. means O&Y Development Holding Corp., a
Delaware corporation, and an O&Y Affiliate.
1.94. DIP Loan means that certain debtor in possession credit
agreement executed and delivered by and among Citicorp Real Estate Inc., CIBC
and Carena, as lenders, Citicorp Real Estate Inc., as agent, and Devco, Devco
GP, Equityco, Equity GP, Devco Canada, Equity Canada, Realty Corp., OYREUSA,
Baden, U.S. Finco, Tower B Co. and WFC Fincorp, as borrowers, and Citibank, as
the same may be amended from time to time, which credit agreement was approved
by the DIP Order.
1.95. DIP Order means, collectively, those certain orders of the
Bankruptcy Court dated June 17, 1996 and July 26, 1996 approving the DIP Loan
entered in the chapter 11 cases In re Olympia & York Realty Corp. et al.,
Chapter 11 Case Nos. 92 B 42698 (JLG), In re Olympia & York Tower B Co., Chapter
11 Case No. 96 B 42186 (JLG), and In re Olympia & York World Financial Center
Finance Corp., Chapter 11 Case No. 95 B 43135 (JLG).
1.96. Disbursing Agent means, prior to the Effective Date, Devco GP
and, from and after the Effective Date, Newco LP.
1.97. Disclosure Statement means the Disclosure Statement relating to
this Plan, dated as of the date hereof, including the exhibits thereto, as the
same may be amended, modified or supplemented from time to time.
1.98. Disputed Claim means (a) a Claim against a Debtor to the extent
that the allowance of such Claim is the subject of an objection, appeal or a
motion to estimate interposed by a party in interest prior to the Claims
Objection Deadline, which objection, appeal or motion has not been determined by
a Final Order or (b) prior to the Claims Objection Deadline, to the extent that
any Claim is scheduled as other than disputed, contingent or unliquidated, that
portion of a Claim in excess of the amount of the Claim scheduled by the
Debtors.
1.99. Disputed Claims Cash Reserve means one or more segregated
accounts in which Cash shall be held in accordance with section 20.3 hereof.
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1.100. Disputed Claims Convertible Note Interests means that number of
Convertible Note Interests to be issued in accordance with section 20.3.2 hereof
in the amount equal to the amount that would be distributable on account of the
aggregate amount of Disputed Claims in Subclass 7.11.1 as if such Disputed
Claims were Allowed Claims in their respective Maximum Allowable Amounts on the
Effective Date.
1.101. Disputed Equity Interest means any claim of ownership of an
Equity Interest in a Debtor to the extent that the allowance thereof is the
subject of a timely objection interposed by a Debtor or other party in interest
in accordance with section 20.1 hereof, which objection has not been determined
by a Final Order.
1.102. Disputed MCJV Recovery means the recovery that may be realized
by Baden or a subsidiary thereof from the sale of the MCJV Lands, the amount of
which is dependent upon the resolution of the claims alleged in a suit captioned
In re Holywell Corp., Case No. 84-01590/94-BKC- PGH, before the United States
Bankruptcy Court for the Southern District of Florida.
1.103. Disputed Realty Corp. Assets means the Disputed MCJV Recovery
and the Disputed SF Cash.
1.104. Disputed SF Cash means the Cash of SF Holdings, subject to a
claim of ownership made by Coopers & Lybrand OYDL, Inc./Limited in a case before
the Ontario Court of Justice captioned Coopers & Lybrand Limited v. Olympia &
Realty Corp. and Olympia & York SF Holdings Corporation, Ontario Court Action
No. 93-CQ-38609.
1.105. DKB means The Dai Ichi Kangyo Bank, Limited.
1.106. DKB Mortgage Loan means the three mortgage loans made by DKB to
245 Park Co., under that certain Financing Transaction for 245 Park Avenue, New
York, New York, among 245 Park Co., 245 Leaseco, DKB, CIBC and Aetna dated
September 7, 1989, as amended, in the original aggregate principal amount of
$192,500,000, which mortgage loans matured on October 1, 1994, and which
mortgage loans are secured by second, third and fourth mortgages on and
assignments of leases relating to 245 Park Avenue.
1.107. DKB Mortgage Loan Claims means any Claim under or relating to
the DKB Mortgage Loan.
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1.108. DKB Restructured Mortgage Loan means the DKB Mortgage Loan, as
amended and modified in accordance with section 15.4 hereof and the DKB
Restructured Mortgage Loan Documents.
1.109. DKB Restructured Mortgage Loan Documents means the documents
required to execute and deliver the DKB Restructured Mortgage Loan, the cash
management agreement and subordination agreement of which are annexed to the
Plan as Exhibit C.
1.110. Dragon means Dragon Holdings Limited or its designee.
1.111. Dragon Settlement means the compromise and settlement of the
various Claims of Dragon to be effected in accordance with section 4.10 hereof.
1.112. Dragon Unsecured Claim means that certain General Unsecured
Claim of Dragon against Equityco and Equity GP arising out of that certain loan
made in the original principal amount of $50,000,000 under that certain Amended
and Restated Mortgage and Security Agreement dated as of October 15, 1991
between O&Y Concord 60 Broad Street Company and Dragon.
1.113. Earn-back Amounts has the meaning assigned to such term in
section 15.3 hereof.
1.114. Effective Date means the date upon which each of the conditions
precedent specified in section 22.2 hereof shall have been satisfied or waived
in accordance with section 22.3 hereof.
1.115. Employee Withholding Requirement means any requirement pursuant
to applicable law that a percentage of the value of the Cash and other property
paid or distributed on account of a Compensation Claim be withheld from such
payment or distribution and paid to all appropriate taxing authorities.
1.116. Entity has the meaning assigned to such term in section 101(15)
of the Bankruptcy Code.
1.117. Equity Canada means O&Y Equity (Canada) Ltd., a New Brunswick
corporation and a Debtor in the Reorganization Cases.
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1.118. Equityco means O&Y Equity Company, L.P., a Delaware limited
partnership and a Debtor in the Reorganization Cases.
1.119. Equity GP means O&Y Equity General Partner Corp., a Delaware
corporation and a Debtor in the Reorganization Cases.
1.120. Equity Interest means any partner interest or other instrument
evidencing an ownership interest in a Debtor or in any Entity, whether or not
transferable, and any warrant or right (other than a right to convert) to
purchase, sell or subscribe for an interest or security in any of the Debtors or
in any Entity.
1.121. ERISA means Title IV of the Employee Retirement Income Security
Act of 1974, as amended.
1.122. Exercising Holder has the meaning assigned to such term in
section 7.11.1 hereof.
1.123. Exercising Tag-Along Holder has the meaning assigned to such
term in section 18.13 hereof.
1.124. Family Corps. means, collectively, A.R.F. Corp., R.R.F. Corp.,
P.R.F. Corp. and R. Investment Corp.
1.125. FCA Inc. means Olympia & York FCA Inc., a Delaware corporation
and an O&Y Affiliate.
1.126. Federal Center Associates means Federal Center Associates, a
Washington, D.C. joint venture and an O&Y Affiliate.
1.127. Final Order means (a) an order of the Bankruptcy Court as to
which the time to appeal, petition for certiorari or move for reargument or
rehearing has expired and as to which no appeal, petition for certiorari or
other proceedings for reargument or rehearing shall then be pending, or (b) if
an appeal, writ of certiorari, reargument or rehearing thereof has been filed or
sought, such order of the Bankruptcy Court shall have been affirmed by the
highest court to which such order was appealed, or certiorari shall have been
denied or reargument or rehearing shall have been denied or resulted in no
modification of such order, and the time to take any further appeal, petition
for certiorari or move for reargument or rehearing shall have expired; provided,
however, that the possibility that a motion under Rule 59 or Rule 60 of the
Federal Rules
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of Civil Procedure, or any analogous rule under the Bankruptcy Rules or the
Local Rules, may be filed with respect to such order shall not cause such order
not to be a Final Order.
1.128. Full Payment Triggering Event has the meaning assigned to such
term in section 7.11.1 hereof.
1.129. General Partner Interest means the 1% general partner interest
in Newco LP to be issued to the Co- Proponents (indirectly through Managing GP)
in accordance with section 3 hereof, which shall have the same rights in respect
of distributions and allocations as the Class A Interests but shall entitle
Managing GP to all of the rights, and subject Managing GP to all of the
obligations, of a general partner under the Newco LP Partnership Agreement and
applicable law.
1.130. General Unsecured Claim means any Unsecured Claim against any
of the Debtors that is not a Consolidated Devco Convenience Claim,
Administrative Claim, Priority Tax Claim, Priority Non-Tax Claim, Insured Claim
or Intercompany Claim.
1.131. Gross Asset Value means, with reference to calculating asset
management fees in respect of any Core Property, the gross value of such
property determined annually by applying a 9% capitalization rate to the net
operating income for such Core Property for the prior four quarters.
1.132. Independence Bay means those certain parcels totaling 167 acres
of real property located in Broward County, Florida.
1.133. Independence Bay Contracts means (a) that certain Agreement for
Purchase and Sale, dated as of November 2, 1995, between York Venture Co. and
Centex Real Estate Corporation, as amended, (b) that certain Agreement for
Purchase and Sale, dated as of November 2, 1995, between York Venture Co. and HG
Management Joint Venture, as amended, and (c) any other contracts of sale of all
or a portion of Independence Bay that may be executed and delivered by York
Venture Co., with the consent of Toronto Dominion, on or prior to the Effective
Date.
1.134. Insured Claim means any Claim against any of the Debtors
arising out of or in connection with events allegedly causing personal injury or
property damage, which
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events are alleged to have occurred at any property owned by the Debtors or the
O&Y Affiliates and which Claims are covered by one or more of the general
liability insurance policies held by the Debtors or the O&Y Affiliates.
1.135. Intercompany Claim means any Claim held by a Debtor, a
Wholly-Owned Affiliate or a Controlled Affiliate against a Debtor, a
Wholly-Owned Affiliate or a Controlled Affiliate.
1.136. IRC means the Internal Revenue Code of 1986, as amended.
1.137. January 12th Settlement Agreement means that certain Settlement
Agreement dated as of January 12, 1996 by and among certain of the Debtors,
Carena, BPHI, CIBC, Dragon, Citibank and Apollo, as amended from time to time
through the date of entry of the January 12th Settlement Agreement Order and as
it may be amended to address matters identified in section V.C.6 and 7 of the
Disclosure Statement, which have not been agreed to by any Entities that may be
party thereto.
1.138. January 12th Settlement Agreement Order means either (a) an
order of the Bankruptcy Court approving in all respects the January 12th
Settlement Agreement or (b) if the order described in clause (a) is not entered
by the commencement of the Confirmation Hearing, the Confirmation Order;
provided, however, that the approval of the transfer of the O&Y Affiliates'
ownership interests in 11601 Wilshire contemplated by the January 12th
Settlement Agreement may be the subject of an order entered on the Confirmation
Date other than the orders referred to in clauses (a) and (b) hereof.
1.139. January 12th Settlement Motion means that certain motion of
Devco, Devco GP, Equityco, Equity GP, Equity Canada, Devco Canada, Realty Corp.,
OYREUSA, Baden, SF Holdings and U.S. Finco dated January 12, 1996 requesting
approval of the January 12th Settlement Agreement, as such motion may be amended
from time to time prior to the date of entry of the January 12th Settlement
Agreement Order.
1.140. JMB means JMB/245 Park Avenue Co. or any Affiliate thereof.
1.141. JMB/245 Conditions means, with reference to section 15.8
hereof, the following conditions: (a) the interests of the Debtors in each of
OLP, 245 Park Avenue and
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Tower D shall have been transferred to Newco LP on the Effective Date and (b)
the Co-Proponents shall have provided the Co-Proponents' Capital Infusion on or
before the Effective Date.
1.142. JMB/245 Park Member Option means that certain option of JMB
described in section 15.8.1 hereof.
1.143. JMB/245 Park Payments has the meaning assigned to such term in
section 15.8.1 hereof.
1.144. JMB Restructuring Documents means those documents required to
implement the restructuring of JMB's partnership interest in 245 Park Co.
1.145. Liabilities means any and all costs, expenses, actions, causes
of action, suits, controversies, damages, claims, liabilities or demands of any
nature, whether known or unknown, foreseen or unforeseen, existing or
hereinafter arising, liquidated or unliquidated, matured or not matured,
contingent or direct, whether arising at common law, in equity, or under any
statute, based in whole or in part upon any act or omission or other occurrence
taking place on or prior to the Effective Date.
1.146. Liberty Plaza Co. means O&Y Liberty Plaza Co., a New York
limited partnership and a Debtor in the Reorganization Cases.
1.147. LIBOR means the London Interbank Offered Rate.
1.148. Lien has the meaning assigned to such term in section 101(37)
of the Bankruptcy Code (a lien that has been avoided in accordance with sections
544, 545, 546, 547, 548 and 549 of the Bankruptcy Code shall not constitute a
Lien).
1.149. Liquidating Corp. means Liquidating Corp., a Delaware
corporation, to be formed in accordance with section 18.4 hereof.
1.150. Liquidating Corp. Shares means the shares of capital stock of
Liquidating Corp. to be issued to the Co-Proponents in accordance with this
Plan.
1.151. Liquidation Funding Advance means that certain credit facility
to be provided by Newco LP to
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Liquidating Corp. in accordance with section 18.4.4 hereof.
1.152. Local Rules means the local rules of the Bankruptcy Court.
1.153. Maiden Lane means that certain parcel of real property located
at 59 Maiden Lane, New York, New York, together with the office building and
other improvements existing thereon.
1.154. Managing GP means Newco GP Corp., a Delaware corporation, the
sole stockholders of which, on the Effective Date, will be the Co-Proponents.
1.155. Maximum Allowable Amount means, with respect to any Disputed
Claim, the least of the amounts (a) set forth in the proof(s) of claim filed by
the holder thereof, (b) determined by order of the Bankruptcy Court or any other
court of competent jurisdiction as the maximum fixed amount of such Claim or as
the estimated amount for such Claim for allowance, distribution and reserve
purposes, (c) in the case of a proof of claim filed in an unliquidated,
undetermined or contingent amount, as determined by order of the Bankruptcy
Court or any other court of competent jurisdiction, or (d) as agreed upon, in
writing, by the Debtors and the holder of a Disputed Claim.
1.156. MCJV means Miami Center Joint Venture, a Florida joint venture,
and an O&Y Affiliate.
1.157. MCJV Deadline has the meaning assigned to such term in section
18.1.1 hereof.
1.158. MCJV Funding Commitment has the meaning assigned to such term
in section 4.9 hereof.
1.159. MCJV Lands means those certain four parcels of real estate
located east of Southeast 2nd Avenue, west of Biscayne Bay, north of the Miami
River, and south of Southeast 2nd Street in Miami, Florida.
1.160. MCJV Pledged Notes means those two promissory notes in the
respective original principal amounts of $38,678,648 and $600,000 made by MCJV
in favor of Baden, which notes were pledged by Baden to secure the OYDL Swap
Agreements.
1.161. MCJV Tax Payment has the meaning assigned to such term in
section 4.9 hereof.
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1.162. Merrill Lynch means Merrill Lynch & Co., Inc. and/or any
Affiliate thereof, but excluding Merrill Lynch, Pierce, Fenner & Smith
Incorporated, in its capacity as the New Lender (as defined in and as more
particularly described in the Tower B Co. Plan).
1.163. Merrill Lynch Capital Fund means that certain fund to be held
by Merrill Lynch in accordance with section 4.4(b) hereof.
1.164. Merrill Lynch Escrow means that certain escrow amount of
$2,500,000 in Cash, plus interest, if any, thereon, comprised of: (a)
$1,250,000, which was posted by Tower A Co. in July 1995 with the Supreme Court
of New York as a Court-ordered undertaking to secure Merrill Lynch against
losses during the pendency of an ex parte stay imposed upon Merrill Lynch, and
(b) $1,250,000, which was posted by Tower A Co. on October 6, 1995, pursuant to
an agreement with Merrill Lynch.
1.165. Merrill Lynch Settlement means the compromise and settlement of
various Claims of Merrill Lynch to be effected in accordance with section 4.4
hereof and the Tower B Co. Plan with the cooperation of Merrill Lynch Tower D
Partner.
1.166. Merrill Lynch/Tower B Leaseco Secured Claims means the Claim of
Merrill Lynch that is secured by the assignment of the rents under the subleases
of Tower B Leaseco.
1.167. Merrill Lynch Tower B Lease means that certain Lease Agreement
between Tower B Co. and Merrill Lynch WFC/L, Inc. dated September 29, 1988, as
amended.
1.168. Merrill Lynch Tower B Lease Amendment means the amendment of
the Tower B Lease to be effected in accordance with the Merrill Lynch
Settlement, a form of which is annexed to the Plan as Exhibit F.
1.169. Merrill Lynch Tower D Lease means that certain Lease Agreement
between Tower D Co. and Merrill Lynch/WFC/L, Inc. dated February 26, 1988, as
amended, and as assigned to Merrill Lynch, Pierce, Fenner & Smith, Incorporated.
1.170. Merrill Lynch Tower D Lease Amendment means the amendment of
the Tower D Lease to be effected in
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accordance with the Merrill Lynch Settlement, a form of which is
annexed to the Plan as Exhibit G.
1.171. Merrill Lynch Tower D Partner means HQ North Company, Inc.
1.172. Net MCJV Proceeds has the meaning assigned to such term in
section 18.1.1 hereof.
1.173. Net SF Cash has the meaning assigned to such term in section
18.1.1 hereof.
1.174. New Club Loan Disbursing Agent means the agent for
certain of the Co-Proponents as transferees of the Club Loan under the January
12th Settlement Agreement, which agent will be designated by the Co-Proponents
on or before the Effective Date, and which will distribute to each such
Co-Proponent or its respective designee in accordance with the Restructuring
Transactions, such Co-Proponent's allocable share of the Class A Interests to be
distributed to certain of the Co-Proponents, as transferees of the Club Loan
under the January 12th Settlement Agreement, in accordance with this Plan.
1.175. Newco LP means Newco Limited Partnership, a Delaware limited
partnership, to be formed in accordance with section 18.1.1 hereof.
1.176. Newco LP Partnership Agreement means the limited partnership
agreement of Newco LP, a form of which is annexed to the Plan as Exhibit H.
1.177. Newco LP Reorganization Value means the net equity value of
Newco LP on the Effective Date (determined as of the Confirmation Date) after
taking into account all Effective Date indebtedness of Newco LP (including the
Convertible Note) and after giving effect to the transactions to be effected
pursuant to the Plan on the Effective Date (including the Co-Proponents' Capital
Infusion, but excluding any value that may be attributable to the Disputed
Realty Corp. Assets).
1.178. New Liberty Plaza LP means Liberty Plaza Co., as reorganized as
a Delaware limited partnership in accordance with section 18.5.1 hereof.
1.179. New OLP Corp. means New OLP Corporation, a Delaware
corporation, to be formed in accordance with section 18.5.1 hereof.
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1.180. New OLP Corp. Class A Stock means those shares of capital stock
of New OLP Corp. to be owned by Devco GP in accordance with section 18.5.3
hereof.
1.181. New OLP Corp. Class B Stock means those shares of capital stock
of New OLP Corp. to be owned by Devco GP and to be pledged to Sanwa in
accordance with section 18.5.3 hereof.
1.182. New Tower A Corp. means New Tower A Corporation, a Delaware
corporation, to be formed in accordance with section 18.7.1 hereof.
1.183. New Tower A Corp. Class A Stock means those shares of capital
stock of New Tower A Corp. to be owned by Devco GP in accordance with section
18.7.3 hereof.
1.184. New Tower A Corp. Class B Stock means those shares of capital
stock of New Tower A Corp. to be owned by Devco GP and to be pledged to Sanwa in
accordance with section 18.7.3 hereof.
1.185. New Tower A LP means WFC Tower A Company, as reorganized as a
Delaware limited partnership in accordance with section 18.7.1 hereof.
1.186. New Tower D Holding I LP means Tower D Holding Company I, as
reorganized as a Delaware limited partnership in accordance with the
Restructuring Transactions.
1.187. New Tower D Holding II LP means Tower D Holding Company II, as
reorganized as a Delaware limited partnership in accordance with the
Restructuring Transactions.
1.188. New 245 Park LP means 245 Park Co., as reorganized as a
Delaware limited partnership in accordance with section 18.6 hereof.
1.189. Non-Core Properties means, collectively, those properties and
interests in property of the Debtors and the O&Y Affiliates that are not Core
Properties.
1.190. Old Bridge Lands means the real property owned by A.R.F. Corp.
and located in Old Bridge Township, New Jersey.
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1.191. OLP means that certain parcel of real property located at One
Liberty Plaza, New York, New York, together with the office building and other
improvements existing thereon.
1.192. OLP Co. means Olympia & York OLP Co., a New York general
partnership and a Debtor in the Reorganization Cases.
1.193. Olympia Centre means that certain parcel of real property
located at 737 North Michigan Avenue, Chicago, Illinois, together with the
office building and other improvements existing thereon.
1.194. OpCo Notes means those certain promissory notes made pursuant
to that certain Basic Agreement among O&Y (U.S.) Development Corp. (the
predecessor in interest to Devco), O&Y Alpha Corp., Oppenheimer Capital Corp.
and Tower A Associates dated as of August 15, 1985 in the original aggregate
principal amount of $68,131,313, as amended from time to time, by Tower A
Associates, and payable to U.S. Finco and OYREUSA, which notes are secured by a
pledge of the partner interests of Tower A Associates and OYREUSA in TALP.
1.195. Oppenheimer means Oppenheimer & Company and/or any Affiliate
thereof.
1.196. Oppenheimer Settlement means the compromise and settlement of
various Claims of Oppenheimer and Oppenheimer's indirect Equity Interest in
Tower A Co. to be effected in accordance with section 4.11 hereof.
1.197. OYDL means Olympia & York Developments Limited, an Ontario
corporation.
1.198. OYDL Swap Agreements means, collectively, the Master Interest
Rate Conversion Agreement between OYDL and Bank of Nova Scotia, made as of June
12, 1986; the confirmation, dated October 30, 1985, relating to $75,000,000; the
ISDA Interest Rate and Currency Exchange Agreement dated as of October 10, 1989;
the confirmation, dated June 7, 1990, relating to $100,000,000; the
confirmation, dated July 30, 1990, relating to $25,000,000; the side letter,
dated September 4, 1990, between the Bank of Nova Scotia and OYDL relating to
cross-defaults; the confirmation, dated November 19, 1990, relating to
$25,000,000; the confirmation, dated December 3, 1990,
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relating to $25,000,000; and the confirmation, dated
January 17, 1991, relating to $25,000,000.
1.199. OYREUSA means Olympia & York Real Estate (U.S.A.),
Inc., a Delaware corporation and a Debtor in the Reorganization Cases.
1.200. O&Y Affiliates means the Entities which are identified on
Schedule 1.200 hereto.
1.201. O&Y Finco means O&Y Financial Company, a New York general
partnership and a Debtor in the Reorganization Cases.
1.202. O&Y Releasees means, collectively, (a) the O&Y Affiliates, (b)
the respective successors, predecessors, assignors or assignees of any of the
foregoing, in their capacity as such, (c) all current or former stockholders,
partners or owners of any of the foregoing, in their capacity as such, and (d)
all current and former officers, directors, trustees, employees, agents,
attorneys, accountants, financial advisors, investment bankers, appraisers,
advisors and engineers of any of the foregoing, in their capacity as such;
provided, however, that O&Y Releasees shall not include (i) any and all
Reichmann Entities (provided that the Reichmann Entities shall receive the
releases described in section 4.7 hereof), (ii) Coopers & Lybrand OYDL,
Inc./Limited (provided that Coopers & Lybrand OYDL, Inc./Limited shall be
designated a Plan Releasee and receive the releases described in section 24.3 of
the Plan), (iii) U.S. Holdings, (iv) O&Y 25 Realty Company, and (v) O&Y 25
Realty Company, L.P.
1.203. O&Y (U.S.) means Devco, Devco GP, Equityco, Equity GP, OYREUSA,
Baden and any Entity wholly owned, directly or indirectly, by one or more of
such Entities and, as the context may require, such Entities' successors and
assigns.
1.204. O&Y (U.S.)/Reichmann Claims means any and all Claims held by
one or more of the Debtors, the Debtors in Possession and the O&Y Affiliates
against, directly or indirectly, the Reichmann Entities (including, but not
limited to, Claims against individuals included among the Reichmann Entities)
for (a) reimbursement of, contribution to, indemnity against or subrogation in
respect of payments by one or more of the Debtors, the Debtors in Possession or
the O&Y Affiliates of monies made as advances to or in satisfaction of
obligations of partnerships among DMML
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Limited, 608863 Ontario, Inc., or O&Y 25 Realty Company, L.P., on the one hand,
and one or more of the Debtors, the Debtors in Possession and the O&Y
Affiliates, on the other hand, (b) repayment of advances made to or on behalf of
individuals included among the Reichmann Entities or indemnity against or
subrogation in respect of payments made by one or more of the Debtors, the
Debtors in Possession and the O&Y Affiliates of monies on account of obligations
(including, without limitation, guarantees of borrowings by third parties) of
Reichmann Entities (including, without limitation, individuals included among
the Reichmann Entities), (c) damages arising out of wrongful acts or omissions
of individuals included among the Reichmann Entities in their capacities as
officers, directors or controlling persons of one or more of the Debtors, the
Debtors in Possession and the O&Y Affiliates, (d) repayment of indebtedness for
borrowed money owed by one or more Reichmann Entities to one or more of the
Debtors, the Debtors in Possession and the O&Y Affiliates, (e) other obligations
of the Reichmann Entities to one or more of the Debtors, the Debtors in
Possession and the O&Y Affiliates, and (f) the O&Y (U.S.)/Reichmann Partner
Claims.
1.205. O&Y (U.S.)/Reichmann Partner Claims means any Claim of one or
more of the Debtors, the Debtors in Possession and the O&Y Affiliates against
one or more of the Reichmann Entities arising by reason of such Reichmann
Entities' status as a direct or indirect partner of O&Y 25 Realty Company, O&Y
25 Realty Company, L.P. and U.S. Holdings; provided, however, that O&Y
(U.S.)/Reichmann Partner Claims shall not include any Claim held by one or more
of the Debtors, the Debtors in Possession or the O&Y Affiliates against O&Y 25
Realty Company, O&Y 25 Realty Company, L.P. and U.S. Holdings.
1.206. Park-Lex Co. means Park-Lexington Co., Inc.
1.207. Pennland GP Corp. means Pennland General Partner Corporation, a
Delaware corporation to be formed in accordance with the Restructuring
Transactions.
1.208. Pennland LP means Pennland, L.P., a Delaware limited
partnership to be formed in accordance with the Restructuring Transactions.
1.209. Pension Plan has the meaning assigned to such term in section
21.1 hereof.
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1.210. Petition Date means, as to the Debtors, (a) with respect to
Realty Corp., SF Holdings, Devco Canada and Equity Canada, May 14, 1992; (b)
with respect to Devco GP, Equity GP, Devco, Equityco, OYREUSA, Baden, U.S.
Finco, Tower Corp., Tower A Co., 245 Corp., and 245 Holding LP, October 11,
1995; (c) with respect to Tower B Leaseco, January 9, 1996; and (d) with respect
to OLP Co., Liberty Plaza Co., Trinity Place Co., O&Y Finco and 245 Park Co.,
April 23, 1996.
1.211. Plan means this Second Amended Joint Plan of
Reorganization, including the exhibits hereto, as the same may be amended,
modified or supplemented from time to time in accordance with the terms hereof.
1.212. Plan Releasees means, collectively, (a) the Co-Proponents, the
Creditors' Committee and the current and former members of the Creditors'
Committee in their capacity as such, determined as of the Ballot Date, and
Coopers & Lybrand OYDL, Inc./Limited, (b) the respective successors,
predecessors, Affiliates, assignors or assignees of any of same, in their
capacity as such, (c) all current or former stockholders, members, partners, or
owners of any of the foregoing (including current or former owners of any direct
or indirect interest in any of the foregoing), in their capacity as such, and
(d) all current and former officers, directors, trustees, employees, agents,
attorneys, accountants, financial advisors, investment bankers, appraisers,
advisors and engineers of any of the foregoing, in their capacity as such.
1.213. Post-Effective Date Capital Infusion means any post-Effective
Date rights offering or equity issuance by or other capital contribution (other
than the Co- Proponents' Capital Infusion) into, and any post-Effective Date
debt financing issued by Newco LP or any Affiliate in which Newco LP has a
direct or indirect interest that increases (a) the aggregate consolidated
indebtedness of Newco LP or (b) the aggregate consolidated indebtedness of Newco
LP and its Affiliates in which Newco LP owns a direct or indirect interest, in
each case over the aggregate consolidated indebtedness of such Entities on the
Effective Date (after giving effect to debt conversions, forgiveness and
compromises effectuated pursuant to this Plan), less any amortization payments
or other principal repayments made after the Effective Date; provided, however,
that (a) any distribution of Convertible Note Interests, and any conversion
thereof, by the holders of such interests pursuant to this Plan and (b) any
conversion of Class B
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Interests into Class A Interests, shall not constitute a Post-Effective Date
Capital Infusion.
1.214. Principal Component has the meaning assigned to such term in
section 15.3 hereof.
1.215. Priority Non-Tax Claim means any Claim of a kind specified in
section 507(a)(3), (4), (5), (6), (7) or (9) of the Bankruptcy Code.
1.216. Priority Tax Claim means any Claim of a kind specified in
section 507(a)(8) of the Bankruptcy Code.
1.217. Project Operating Agreement means that certain master agreement
originally executed by Battery Park City Authority, Olympia & York Battery Park
Company, American Express Company, Shearson/American Express, Inc., American
Express International Banking Corporation and American Express Travel Related
Services Company, Inc., dated June 15, 1983, as amended and modified, which
master agreement is comprised of: (a) the WFC Operator Component and (b) the WFC
Tenants Component.
1.218. Ratable Proportion means, (a) with reference to any
distribution on account of any Allowed Claim in any class, the ratio (expressed
as a percentage) that the amount of such Allowed Claim bears to the sum of all
Allowed Claims and all Disputed Claims in such class for which a reserve is
required to be established pursuant to this Plan, and (b) with reference to any
distribution on account of any Allowed Equity Interest in any class, the ratio
(expressed as a percentage) that the number of units of such Equity Interest
bears to the sum of that number of units of all Allowed Equity Interests and
Disputed Equity Interests of the same class.
1.219. Realty Corp. means Olympia & York Realty Corp., a New Brunswick
corporation and a Debtor in the Reorganization Cases.
1.220. Realty Corp. Cash-Out Claim means (a) an Allowed Unsecured
Claim against any of Realty Corp., OYREUSA and Baden equal to $50,000 or less,
(b) the Allowed Unsecured Claim against any of Realty Corp., OYREUSA and Baden
of a holder that has voted to accept the Plan and has irrevocably elected on its
Ballot to reduce its Claim to the amount of $50,000 or less, and/or (c) a
Disputed Unsecured Claim against any of Realty Corp., OYREUSA and Baden which
became an Allowed Unsecured Claim of $50,000 or less with
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the consent of and in the amount agreed to by Realty Corp., OYREUSA, Baden and
the Co-Proponents; provided, however, that the Unsecured Claim of a holder of
more than one Unsecured Claim against any of Realty Corp., OYREUSA and Baden may
not be a Realty Corp. Cash-Out Claim unless the holder has irrevocably elected
on its Ballot to withdraw, consolidate, amend and reduce all Unsecured Claims
held by it against any of Realty Corp., OYREUSA and Baden to one consolidated
Unsecured Claim in the amount of $50,000 or less.
1.221. Reichmann Bank Claims means, collectively, (a) the Svenska
Claims and (b) the Bank Leumi Claims.
1.222. Reichmann Claims means any and all Claims of any of the
Reichmann Entities against the Debtors, the Debtors in Possession and the O&Y
Affiliates, including but not limited to, (a) Claims against Equityco which have
been identified in the chapter 11 plan of 125 Broad Street Co. in favor of DMML
Limited and 608863 Ontario, Inc. and which arise from or relate to the
partnerships among DMML Limited, 608863 Ontario, Inc. and/or O&Y 25 Realty Co.,
L.P. and one or more of the Debtors, the Debtors in Possession and the O&Y
Affiliates and (b) any Claims that could be asserted by any of the Reichmann
Entities on behalf of O&Y 25 Realty Company, O&Y 25 Realty Company, L.P., DMML
Limited and/or 608863 Ontario, Inc. against one or more of the Debtors, the
Debtors in Possession and the O&Y Affiliates.
1.223. Reichmann Entities means, collectively, (a) the Reichmann
Group, (b) the Reichmann Trusts, (c) any one or more business entities,
including but not limited to corporations, partnerships and joint ventures, a
majority of the equity or voting control of which is owned legally or
beneficially by any one or more of the Reichmann Group or the Reichmann Trusts,
(d) MAT Investment, Inc., and (e) the Family Corps.; provided, however, that the
Reichmann Entities shall not include O&Y 25 Realty Company, O&Y 25 Realty
Company, L.P. and U.S. Holdings.
1.224. Reichmann Group means Albert Reichmann, Paul Reichmann, Ralph
Reichmann and their respective spouses, the descendants of any of them or of the
late Mr. and Mrs. Samuel Reichmann or a spouse of any such descendant.
1.225. Reichmann Settlement means the compromise and settlement of
various Claims of the Reichmann Entities to be effected in accordance with
section 4.7 hereof.
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1.226. Reichmann Trusts means a trust or trusts, substantially all of
the beneficiaries of which consist of either (a) one or more of the Reichmann
Group or (b) one or more of the Reichmann Group and one or more charitable
foundations and organizations.
1.227. Rent Abatement Termination Date means the date that is the
earlier to occur of (1) February 28, 2002 and (2) the last day of the month that
is a certain number of months prior to February 2002, which certain number of
months is equal to (x), if the date upon which the Confirmation Order becomes a
Final Order is on or before February 28, 1997, the sum of (i) two multiplied by
the number of whole months during the period from June 1996 through the month
during which the Confirmation Order becomes a Final Order, plus (ii), if the
date upon which the Confirmation Order becomes a Final Order occurs after the
15th day of a calendar month, one or (y), if the date upon which the
Confirmation Order becomes a Final Order is after February 28, 1997, the sum of
(i) two multiplied by the number of whole months during the period from June
1996 through February 1997, plus (ii) the number of whole months during the
period from March 1997 through the month during which the Confirmation Order
becomes a Final Order plus (iii), if the date upon which the Confirmation Order
becomes a Final Order occurs after the 15th day of a calendar month, one.
1.228. Reorganization Cases means the cases commenced under chapter 11
of the Bankruptcy Code by the Debtors.
1.229. Residual Newco Equity has the meaning assigned to such term in
section 3 hereof.
1.230. Restructuring Transactions means the transactions described in
Schedule 18 hereto.
1.231. Retailco means Olympia & York WFC Retail Company, a New York
general partnership and an O&Y Affiliate.
1.232. Retailco B Lease means that certain Amended and Restated Retail
Lease B, dated as of September 29, 1988, between Tower B Co., as landlord, and
Retailco, as tenant, with respect to the retail space of Tower B.
1.233. Retailco D Lease means that certain Amended and Restated Retail
Lease D, dated as of February
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26, 1988, between Tower D Co., as landlord, and Retailco, as tenant, with
respect to the retail space of Tower D.
1.234. Retiree means any individual who retired from employment with a
Debtor before the Petition Date and was and continues to be eligible for
medical, death or insurance benefits provided in a Retiree Benefit Plan as
required by section 1114 of the Bankruptcy Code.
1.235. Retiree Administrative Claim means an Administrative Expense
Claim of a Retiree under a Retiree Benefit Plan.
1.236. Retiree Benefit Plan means any plan or policy of a Debtor in
full force and effect as of the Petition Date under which medical, death or
insurance benefits are provided to Retirees, as any such plan or policy may have
been modified during the pendency of the Reorganization Cases.
1.237. River Water By-Pass Project means that certain project to
construct at the World Financial Center a redundant pipe to enable repair and
maintenance of the main river intake pipe serving the central plant chilled
water system without system shutdown, which project is the subject of an
agreement to be executed by and among Amex, Merrill Lynch/WFC/L, Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Tower A Co., Tower B Co., Tower D
Co. and Devco.
1.238. Sanwa means The Sanwa Bank Limited (New York Branch).
1.239. Sanwa/OLP Claims means any Claim under or relating to the
Sanwa/OLP Loan.
1.240. Sanwa/OLP Loan means that certain loan in the original
principal amount of $530,000,000, made pursuant to that certain Loan Agreement
dated as of July 19, 1989 by and among Devco GP, OLP Co., Liberty Plaza Co. and
Trinity Place Co., as amended, supplemented and consolidated from time to time,
which loan is secured by (a) two mortgages on and assignment of rents relating
to OLP and (b) guarantees by Devco, Devco GP and O&Y 25 Realty Company, L.P.,
which guarantees are secured by each such Entity's partner interests in 53 State
Limited.
1.241. Sanwa/OLP Restructured Mortgage Loan means the Sanwa/OLP Loan,
as amended and modified pursuant to
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section 12.2 hereof and the Sanwa/OLP Restructured Mortgage
Loan Documents.
1.242. Sanwa/OLP Restructured Mortgage Loan Documents means the
documents required to execute and deliver the Sanwa/OLP Restructured Mortgage
Loan, forms of which are annexed to the Plan as Exhibit I, which documents shall
incorporate the terms of the Sanwa/OLP Restructured Mortgage Loan described in
section 12.2 hereof and which shall contain such other terms and conditions as
shall be reasonably satisfactory to Sanwa, the Debtors and the Co- Proponents.
1.243. Sanwa/Tower A Claims means any Claim under or relating to the
Sanwa/Tower A Loan, including any Claim under or relating to that certain
Assumption Agreement dated July 31, 1987 pursuant to which Devco assumed
$84,797,980 of the Sanwa/Tower A Loan.
1.244. Sanwa/Tower A Loan means that certain mortgage loan made
pursuant to those certain First Leasehold Mortgages and Assignments of Leases
and Rents dated January 25, 1989, as amended, which loan is secured by, among
other things, Tower A Co.'s leasehold interest in Tower A.
1.245. Sanwa/Tower A Restructured Mortgage Loan means the Sanwa/Tower
A Loan, as amended and modified pursuant to section 13.2 hereof and the
Sanwa/Tower A Restructured Mortgage Loan Documents.
1.246. Sanwa/Tower A Restructured Mortgage Loan Documents means the
documents required to execute and deliver the Sanwa/Tower A Restructured
Mortgage Loan, forms of which are annexed to the Plan as Exhibit J, which
documents shall incorporate the terms of the Sanwa/Tower A Restructured Mortgage
Loan described in section 13.2 hereof and which shall contain such other terms
and conditions as shall be reasonably satisfactory to Sanwa, the Debtors and the
Co-Proponents.
1.247. Schedules means the schedules of assets and liabilities and the
statements of financial affairs filed by the Debtors under section 521 of the
Bankruptcy Code and the Official Bankruptcy Forms of the Bankruptcy Rules, as
such schedules and statements have been or may be supplemented or amended from
time to time.
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1.248. Secured Claim means a Claim secured by a Lien on Collateral, as
determined in accordance with section 506(a) of the Bankruptcy Code.
1.249. Securities Act means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
1.250. Selling Holder has the meaning assigned to such term in section
18.13 hereof.
1.251. SF Deadline has the meaning assigned to such term in section
18.1.1 hereof.
1.252. SF Holdings means Olympia & York SF Holdings Corporation, a New
Brunswick corporation and a Debtor in the Reorganization Cases.
1.253. Shared Management Agreements means, collectively, (a) that
certain Management Agreement between O&Y (U.S.) Development Corporation and
Merrill Lynch/WFC/L, Inc. dated July 18, 1986, as amended and assigned, and (b)
that certain Management Agreement between Devco and Merrill Lynch/WFC/L, Inc.
dated July 22, 1987, as amended.
1.254. State Street Action means the action captioned Teachers
Insurance and Annuity Association of America v. Olympia & York State Street
Company, Olympia & York State Street Corp., Olympia & York Congress Street
Corp., et al., Index No. 84 Civ. 4611 (JES), pending in the United States
District Court for the Southern District of New York.
1.255. Sterling National means Sterling National Bank & Trust Company
of New York.
1.256. Sterling National Amended and Restated Reimbursement Agreement
means that certain reimbursement agreement, to be executed and delivered by
Sterling National and Newco LP on the Effective Date in accordance with section
7.8 hereof.
1.257. Sterling National Letter of Credit Claims means any Claim under
or relating to two letters of credit issued by Sterling National in favor of
certain officers of Devco GP, the reimbursement obligations of Devco GP relating
to which are secured by Cash collateral deposits in the amounts of $2,000,000
and $666,666, respectively.
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1.258. Subclass 7.11.1 Disputed Claims Debt/Equity Escrow means the
interest-bearing escrow account in which Class A Interests, the Disputed Claims
Convertible Note Interests and all dividends, interest payments and other
proceeds of the foregoing shall be held in accordance with section 20.3.2
hereof.
1.259. Sumitomo Bank means The Sumitomo Bank, Limited, New York
Branch.
1.260. Sumitomo Bank/Tower D Pledge Loan means that certain pledge
loan made in the original principal amount of $74,750,000 under that certain
Amended and Restated Loan Agreement dated as of July 12, 1990 among Sumitomo
Bank, Devco, Devco GP and Tower D Holding II, which loan is secured by the
pledge of the partner interests in Tower D Co. of Devco, Devco GP and Tower D
Holding II and certain of their Affiliates.
1.261. Sumitomo Bank/Tower D Pledge Loan Claims means any Claim under
or relating to the Sumitomo Bank/Tower D Pledge Loan.
1.262. Svenska Claims means the Claims of Svenska Handelsbanken
arising in connection with the Judgment, the Holdings Loan Documents, the Tower
B Documents, the Tower B Guaranty and the Letter of Credit Guaranty (each as
defined in that certain Standstill Agreement among the Family Corps., O&Y 25
Realty Company and O&Y 25 Realty Company, L.P. and Svenska Handelsbanken, dated
November 16, 1993).
1.263. Tag-Along Notice has the meaning assigned to such term in
section 18.13 hereof.
1.264. TALP means Tower A Limited Partnership, a Delaware limited
partnership, and an O&Y Affiliate.
1.265. Tax Advance means an advance to be made by Newco LP to a Claims
reserve established in accordance with section 20 hereof in the event that such
reserve does not have sufficient Cash to pay required taxes, which Tax Advance
shall be repaid to Newco LP in accordance with section 20.3.4 hereof.
1.266. Tax Note means a note of a Debtor or a substantively
consolidated group of Debtors, or a successor in interest thereto, in the full
amount of an Allowed Priority Tax Claim payable over a period of six years from
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the date of assessment, bearing interest at the applicable
statutory interest rate.
1.267. TIAA means Teachers Insurance and Annuity Association of
America and/or any Affiliate thereof.
1.268. TIAA Judgment Claims means any Claims under or relating to the
judgment entered on February 9, 1996 by Justice Cahn of the Supreme Court of the
State of New York, pursuant to which TIAA was found entitled to a judgment in
the amount of $41,160,779, plus prejudgment interest in the amount of
$38,536,638.38 and costs in the amount of $1,275.
1.269. TIAA Settlement means the compromise and settlement of various
Claims of TIAA to be effected in accordance with section 4.5 hereof.
1.270. Toronto Dominion means The Toronto Dominion Bank and/or any
Affiliate thereof.
1.271. Toronto Dominion Judgment Claims means any Claim under or
relating to (a) that certain judgment against Baden, as guarantor of the
obligations of York Venture Co. under the York Chase Ronto Loan, entered by the
United States District Court for the Southern District of New York on October
28, 1993 in the amount of $11,900,153.34 (as reduced from time to time in
accordance with the Toronto Dominion 1994 Settlement Agreement, (b) the York
Chase Ronto Loan, (c) the Toronto Dominion 1994 Settlement Agreement and (d)
that certain Memorandum of Sale among Baden, Devco, Equityco and O&Y Finco,
dated as of October 11, 1995.
1.272. Toronto Dominion Letter of Credit means, collectively, (a) that
certain letter of credit, dated September 19, 1994, issued by Toronto Dominion
in favor of Broward County, Florida in the amount of $1,702,544.75 and (b) that
certain letter of credit, dated August 31, 1988, issued by Toronto Dominion in
favor of Broward County, Florida in the amount of $168,000.
1.273. Toronto Dominion Settlement means the compromise and settlement
of various Claims of Toronto Dominion to be effected in accordance with section
4.6 hereof.
1.274. Toronto Dominion 1994 Settlement Agreement means that certain
Settlement Agreement by and among York
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Chase Ronto Co., Baden and Toronto Dominion, dated April 30,
1994.
1.275. Tower A means that certain parcel of real property located at
One World Financial Center, New York, New York, together with the office
building and other improvements existing thereon.
1.276. Tower A Action means the action entitled Teachers Insurance and
Annuity Association of America v. WFC Tower A Co. (f/k/a Olympia & York Battery
Park Company), O&Y Battery Park Corp. and O&Y (U.S.) Development Company, L.P.,
Index No. 14617/86, brought in the Supreme Court of the State on New York.
1.277. Tower A Co. means WFC Tower A Company, a New York general
partnership and a Debtor in the Reorganization Cases.
1.278. Tower A Partner Receivable has the meaning assigned to such
term in section 4.11 hereof.
1.279. Tower A Co. Partnership Agreement means the Restated and
Amended Partnership Agreement of Tower A Co. among O&Y (U.S.) Development Corp.,
O&Y Alpha Corp. and Tower A Associates, dated August 15, 1985, as amended.
1.280. Tower A Holding means O&Y Tower A Holding Company, a New York
general partnership, and an O&Y Affiliate.
1.281. Tower A Segregated Funds mean those funds which were held in
Citibank, N.A. Account No. 845302 and Canada Trust Account No. 381025.3 for the
benefit of TIAA in connection with TIAA's lawsuit relating to the alleged breach
of a loan commitment regarding Tower A and which funds were recovered by TIAA in
accordance with that order of the Bankruptcy Court dated April 3, 1996.
1.282. Tower B means that certain parcel of real property located at
Two World Financial Center, New York, New York, together with the office
building and other improvements existing thereon.
1.283. Tower B Co. means Olympia & York Tower B Company, a New York
general partnership, an O&Y Affiliate and a debtor in a case related to the
Reorganization Cases, which, on the Effective Date, shall be dissolved and
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reconstituted in accordance with the Restructuring
Transactions.
1.284. Tower B Co. Credit Agreement means that certain Credit
Agreement dated as of December 14, 1988 between Tower B Co. and U.S. Finco
together with that certain Assumption Agreement dated December 29, 1989 executed
and delivered by BPHI relating to the same and that certain Assumption Agreement
dated December 29, 1989 between U.S. Finco and Devco relating to the same.
1.285. Tower B Co. Plan means that certain First Amended Joint Plan of
Reorganization, dated July 27, 1996, filed by Tower B Co. and WFC Fincorp in
their reorganization cases, as the same may be amended from time to time.
1.286. Tower B Financing Documents means the documents required to
effect a refinancing of Tower B in accordance with the Tower B Co. Plan, forms
of which are annexed to the Plan as Exhibit K.
1.287. Tower B Holding I means O&Y Tower B Holding Company I, a New
York general partnership, which, on the Effective Date, shall be reconstituted
in accordance with the Restructuring Transactions.
1.288. Tower B Leaseco means Olympia & York Tower B Lease Company, a
New York general partnership and a Debtor in the Reorganization Cases.
1.289. Tower B Noteholders means the holders, as
of July 29, 1996, of the Tower B Notes.
1.290. Tower B Noteholders' Claims means the "Noteholders' Claims," as
such term is defined in the Tower B Co. Plan.
1.291. Tower B Notes means those certain 7.75% Secured Notes due March
25, 1998 in the aggregate face amount of $800,000,000 (payable in the U.S.
dollar equivalent of (Y)98,640,000,000) issued under that certain Indenture,
dated as of December 14, 1988, among WFC Fincorp, Devco and Bank of New York, as
successor trustee to NationsBank of Virginia, N.A., as successor trustee to
Manufacturers Hanover Trust Company.
1.292. Tower B Reimbursement Agreement means that certain
Reimbursement Agreement between Tower B Co. and Merrill Lynch/WFC/L, Inc. dated
August 24, 1984, as amended,
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a form of which, as amended by the Merrill Lynch Settlement, is annexed to the
Plan as Exhibit L.
1.293. Tower C means that certain parcel of real property located at
Three World Financial Center, New York, New York, together with the office
building and other improvements existing thereon.
1.294. Tower Corp. means O&Y WFC Tower Corp., a Delaware Corporation
and a Debtor in the Reorganization Cases.
1.295. Tower D means that certain parcel of real property located at
Four World Financial Center, New York, New York, together with the office
building and other improvements existing thereon.
1.296. Tower D Associates means O&Y Tower D Associates, L.P., a
Delaware limited partnership, and an O&Y Affiliate.
1.297. Tower D Co. means WFC Tower D Company, a New York general
partnership, and an O&Y Affiliate.
1.298. Tower D Co. Partnership Agreement means that certain Restated
and Amended Partnership Agreement of Tower D Co., dated as of December 24, 1986,
among O&Y (U.S.) Development Corp., Tower D Holding II and O&Y Delta Corp.
(renamed HQ North Company, Inc.), as amended.
1.299. Tower D Finance Corp. means Tower D Finance Corporation, a
Delaware corporation to be formed on the Effective Date.
1.300. Tower D Financing Documents means the documents required to
effect a refinancing of Tower D, forms of which are annexed to the Plan as
Exhibit M.
1.301. Tower D Financing Condition has the meaning assigned to such
term in section 22.2.2 hereof.
1.302. Tower D GP Corp. means O&Y Tower D GP Corp., a Delaware
corporation, and an O&Y Affiliate.
1.303. Tower D Holding I means O&Y Tower D Holding Company I, a New
York general partnership, and an O&Y Affiliate.
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1.304. Tower D Holding I Corp. means O&Y Tower D Holding I Corp., a
Delaware corporation, to be formed in accordance with section 18.9 hereof.
1.305. Tower D Holding II means O&Y Tower D Holding Company II L.P., a
Delaware limited partnership, and an O&Y Affiliate.
1.306. Tower D Mortgage Debt means any current or future mortgage debt
secured by one or more mortgages encumbering Tower D, which mortgage debt
complies with the limitations of the Tower D Co. Partnership Agreement, as it
may be amended or modified, and as modified by section 4.4(d) hereof.
1.307. Tower D Reimbursement Agreement means that certain
Reimbursement Agreement between Tower D Co. and Merrill Lynch/WFC/L, Inc., dated
August 24, 1984, as amended and assigned, a form of which, as amended and
assigned by the Merrill Lynch Settlement, is annexed to the Plan as Exhibit N.
1.308. Trinity Place Co. means Trinity Place Company, a New York
general partnership and a Debtor in the Reorganization Cases.
1.309. Unaffiliated Unsecured Claims means those General Unsecured
Claims against any of the Consolidated Devco Entities other than Co-Proponent
Unsecured Claims.
1.310. Undisputed Realty Corp. Assets means the properties and
interests in property of Realty Corp., OYREUSA and Baden other than the Disputed
SF Cash and the Disputed MCJV Recovery.
1.311. Unsecured Claim means any Claim against a Debtor that is not a
Secured Claim or an Administrative Expense Claim.
1.312. U.S. Finco means O&Y (U.S.) Financial Company, a New York
general partnership and a Debtor in the Reorganization Cases.
1.313. U.S. Finco Mortgages means, collectively, (a) that certain
Amended and Restated Mortgage Two-A in the principal amount of $50,000,000 dated
as of September 27, 1991 made by Liberty Plaza Co., Trinity Place Co. and OLP
Co. in favor of Sanwa, as assigned to U.S. Finco pursuant to that certain
Assignment of Mortgage dated as of Septem-
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ber 27, 1991 made by Sanwa; (b) that certain Amended and Restated Mortgage Three
in the principal amount of $50,000,000 dated as of October 22, 1990 made by
Liberty Plaza Co., Trinity Place Co. and OLP Co. in favor of Sanwa, as assigned
to U.S. Finco pursuant to that certain Assignment of Mortgage dated as of
January 11, 1991 made by Sanwa; (c) that certain Second Amended and Restated
Mortgage Four in the principal amount of $5,000,000 dated as of September 3,
1991 made by Liberty Plaza Co., Trinity Place Co. and OLP Co. to U.S. Finco; and
(d) that certain Amended and Restated Mortgage Five in the principal amount of
$100,000,000 dated as of March 21, 1991 made by Liberty Plaza Co., Trinity Place
Co. and OLP Co. in favor of Sanwa, as assigned to U.S. Finco pursuant to that
certain Assignment of Mortgage dated as of March 21, 1991 made by Sanwa, which
mortgages have been pledged and collaterally assigned by U.S. Finco to secure
the CIBC/OLP Loan.
1.314. U.S. Finco/OLP Claims means any Claim of
U.S. Finco under or relating to the U.S. Finco Mortgages.
1.315. U.S. Holdings means Olympia & York (U.S.) Holdings Company, a
New York general partnership.
1.316. U.S. Trustee means the United States Trustee appointed under
section 581, title 28, United States Code to serve in the Southern District of
New York.
1.317. WFC Fincorp means Olympia & York World Financial Center Finance
Corp., a Delaware corporation and a debtor in a case related to the
Reorganization Cases.
1.318. WFC Operator Component means that component of the Project
Operating Agreement that governs the obligations of the Operator (as defined
therein) of the World Financial Center.
1.319. WFC Retailco Holding Corp. means WFC Retailco Holding Corp., a
Delaware corporation to be formed in accordance with section 18.10 hereof.
1.320. WFC Retailco LP means WFC Retailco LP, a Delaware limited
partnership to be formed in accordance with section 18.10 hereof.
1.321. WFC Tenants Component means that component of the Project
Operating Agreement that governs certain cost-sharing arrangements among the
parcel tenants of the World Financial Center. The WFC Operator Component and the
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WFC Tenants Component, together, comprise the entire Project Operating
Agreement.
1.322. WFC Tower B Co. LP means WFC Tower B Company, L.P., a Delaware
limited partnership to be formed in accordance with section 18.8 hereof.
1.323. WFC Tower B GP Corp. means WFC Tower B GP Corporation, a
Delaware corporation to be formed in accordance with section 18.8 hereof.
1.324. WFC Tower B Holding Co. LP means WFC Tower B Holding LP, a
Delaware limited partnership to be formed in accordance with section 18.8
hereof.
1.325. WFC Tower D Co. LP means WFC Tower D Company, as reorganized as
a Delaware limited partnership in accordance with section 18.9 hereof.
1.326. WFC Tower D GP Corp. means WFC Tower D GP Corporation, a
Delaware corporation to be formed in accordance with section 18.9.1 hereof.
1.327. Wholly-Owned Affiliate means any O&Y Affiliate that is wholly
owned by one or more of Devco GP, Equity GP, Devco, Equityco, Realty Corp.,
Baden, OYREUSA and U.S. Finco.
1.328. Willful Misconduct means, with respect to a director, officer
or employee, embezzlement or other criminal conduct by such director, officer or
employee or other conduct by such director, officer or employee that was in bad
faith and did not meet the standard of conduct required of directors and
executive officers holding office pursuant to the Examiner's Governance Protocol
for Realty Corp., Devco Canada, Equityco Canada and SF Holdings approved by
order of the Bankruptcy Court dated July 15, 1993 (regardless of whether the
director, officer or employee was a director or executive officer of any of
Realty Corp., Devco Canada, Equityco Canada or SF Holdings at such time).
1.329. Withholding Advances means amounts paid by Newco LP, on behalf
of a partner in Newco LP or an assignee of an Equity Interest in Newco LP, in
respect of any amount that Newco LP determines in its reasonable judgment is
required to be withheld under applicable law in connection with the interest of
such partner in Newco LP or its assignee, which amounts have not been paid or
otherwise
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satisfied (including by way of withholding, offset or deduction against the
interest of such partner or assignee) by such partner or assignee.
1.330. World Financial Center means, collectively, Tower A, Tower B,
Tower C and Tower D, together with any and all common areas appurtenant thereto.
1.331. York Chase Ronto Loan means that certain loan in the amount of
$23,139,045 made to York Chase Ronto Co., as borrower, by Toronto Dominion, as
lender, in accordance with that certain Loan Agreement, dated September 1, 1983,
between Toronto Dominion and York Chase Ronto Co. and Baden, as guarantor, which
loan is secured by, among other things, a mortgage on Independence Bay.
1.332. York Venture Co. means York Venture Co., a Florida joint
venture and a successor to York Chase Ronto Co.
1.333. 25 Realty Note means that certain note issued to OYDL by O&Y 25
Realty Company pursuant to those certain Plans of Compromise and Arrangement
Pursuant to the Companies' Creditors Arrangement Act, dated December 16, 1992,
in the original principal amount of $124,404,850.72.
1.334. 53 Holding Company LP means 53 Holding Company, L.P., as
reorganized in accordance with the Restructuring Transactions.
1.335. 53 State Limited means Olympia & York State Limited
Partnership, a Massachusetts limited partnership and an O&Y Affiliate.
1.336. 53 State Street means that certain parcel of real property
located at 53 State Street, Boston, Massachusetts, together with the office
building and other improvements existing thereon.
1.337. 53 State Street Collateral means the Equity Interests of Devco
and Devco GP in 53 State Limited pledged to secure the Sanwa/OLP Loan.
1.338. 53 State Street Segregated Funds mean those funds, which are
held in Citibank N.A. Account No. 845303 for the benefit of TIAA in connection
with TIAA's lawsuit relating to the alleged breach of a loan commitment
regarding 53 State Street.
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1.339. 237 LLC means 237 Park Avenue LLC, a New York limited liability
company, an O&Y Affiliate and a debtor in a case related to the Reorganization
Cases.
1.340. 245 Accounts has the meaning assigned to
such term in section 15.3 hereof.
1.341. 245 Cash Collateral Order has the meaning assigned to such term
in section 15.3 hereof.
1.342. 245 Corp. means O&Y 245 Corp., a Delaware corporation and a
Debtor in the Reorganization Cases.
1.343. 245 Corp. Class A Stock means those shares of capital stock of
245 Corp. to be owned by Devco GP in accordance with section 18.6 hereof.
1.344. 245 Corp. Class B Stock means those shares of capital stock of
245 Corp. to be owned by Devco GP and to be pledged to Aetna in accordance with
section 18.6 hereof.
1.345. 245 Holding LP means Olympia & York 245 Park Avenue Holding
Company, L.P., a Delaware limited partnership and a Debtor in the Reorganization
Cases.
1.346. 245 Leaseco means Olympia & York 245 Lease Company, a New York
general partnership, and an O&Y Affiliate.
1.347. 245 Park Avenue means that certain parcel of real property
located at 245 Park Avenue, New York, New York, together with the office
building and other improvements existing thereon.
1.348. 245 Park Co. means 245 Park Avenue Company, a New York general
partnership and a Debtor in the Reorganization Cases.
1.349. 245 Park Co. Partnership Claims means any Claim under or
relating to the obligations of Equityco under the First Amended and Restated
Agreement of General Partnership of 245 Park Co. dated December 29, 1983, which
Claims are secured by a pledge of Equityco's partner interest in 245 Park Co.
1.350. 245 Park Note has the meaning assigned to such term in section
15.3 hereof.
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1.351. 245 Park Senior Lender means the holder of the 245 Park Senior
Loan.
1.352. 245 Park Senior Loan means the Aetna Restructured Mortgage Loan
or any loan replacing the Aetna Restructured Mortgage Loan.
1.353. 245 Reserve Account has the meaning assigned to such term in
section 15.3 hereof.
1.354. 400 South Hope Street means that certain parcel of real
property located at 400 South Hope Street, Los Angeles, California, together
with the office building and other improvements existing thereon.
1.355. 970 Plan means the plan of reorganization under chapter 11 of
the Bankruptcy Code filed by 237 LLC and 1290 LLC on April 23, 1996 in their
reorganization cases, as the same may be amended from time to time.
1.356. 970 REIT means AmeriPark, Inc., a Maryland corporation, which
corporation intends to qualify as a real estate investment trust for federal
income tax purposes and which corporation will be organized pursuant to the 970
Plan.
1.357. 1290 LLC means 1290 Associates, LLC, a New
York limited liability company, an O&Y Affiliate and a
debtor in a case related to the Reorganization Cases.
1.358. 11601 Wilshire means that certain parcel of real property
located at 11601 Wilshire Boulevard, Los Angeles, California, together with the
office building and other improvements existing thereon.
B. Interpretation; Application of
Definitions and Rules of Construction.
Unless otherwise specified, all section, schedule or exhibit
references in this Plan are to the respective section in, article of, schedule
or exhibit to this Plan, as the same may be amended, waived or modified from
time to time. The words "herein," "hereof," "hereto," "hereunder," and other
words of similar import refer to this Plan as a whole and not to any particular
section, subsection, or clause contained in this Plan. A term used herein that
is not defined herein shall have the meaning assigned to that term in the
Bankruptcy Code. The rules of construction contained in section 102 of the
Bankruptcy Code apply to the
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construction of this Plan. The headings in this Plan are for convenience of
reference only and shall not limit or otherwise affect the provisions of this
Plan. Unless otherwise indicated herein, all references to dollars means United
States dollars.
SECTION 2. PROVISIONS FOR
SUBSTANTIVE CONSOLIDATION.
2.1. Substantive Consolidation of
Consolidated Devco Entities.
All assets and Liabilities of each of the Consolidated Devco Entities
shall be substantively consolidated. On the Effective Date (a) each Intercompany
Claim held by a Consolidated Devco Entity against a Consolidated Devco Entity
shall be eliminated in accordance with the Restructuring Transactions or
otherwise cancelled, (b) all assets and Liabilities of each of the Consolidated
Devco Entities (other than Devco) shall be treated as though they were merged
with the assets and Liabilities of Devco, (c) each guarantee by a Consolidated
Devco Entity of an obligation of a Consolidated Devco Entity shall be eliminated
so that any Claim against a Consolidated Devco Entity and any guarantee thereof
by a Consolidated Devco Entity and any joint or several liability of two or more
of the Consolidated Devco Entities shall be deemed to be one obligation of
Devco, and (d) each Claim filed or to be filed in the Reorganization Cases of
the Consolidated Devco Entities shall be deemed filed against Devco and shall be
deemed one Claim against and obligation of Devco.
2.2. Substantive Consolidation of
Realty Corp., OYREUSA and Baden.
All assets and Liabilities of Realty Corp., OYREUSA and Baden shall be
substantively consolidated. On the Effective Date (a) each Intercompany Claim
held by Realty Corp., OYREUSA or Baden against Realty Corp., OYREUSA or Baden
shall be eliminated in accordance with the Restructuring Transactions or
otherwise cancelled, (b) all assets and Liabilities of OYREUSA and Baden shall
be treated as though they were merged with the assets and Liabilities of Realty
Corp., (c) each guarantee by Realty Corp., OYREUSA, or Baden of an obligation of
Realty Corp., OYREUSA or Baden shall be eliminated so that any Claim against
Realty Corp., OYREUSA or Baden and any guarantee thereof by Realty Corp.,
OYREUSA or Baden and any joint or several
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liability of two or more of Realty Corp., OYREUSA or Baden shall be deemed to be
one obligation of Realty Corp. and (d) each Claim filed or to be filed in the
Reorganization Cases of Realty Corp., OYREUSA or Baden shall be deemed filed
against Realty Corp. and shall be deemed one Claim against and obligation of
Realty Corp.
2.3. Substantive Consolidation of Liberty
Plaza Co., OLP Co. and Trinity Place Co.
All assets and Liabilities of Liberty Plaza Co., OLP Co. and Trinity
Place Co. shall be substantively consolidated. On the Effective Date (a) each
Intercompany Claim by Liberty Plaza Co., OLP Co. or Trinity Place Co. against
Liberty Plaza Co., OLP Co. or Trinity Place Co. shall be eliminated in
accordance with the Restructuring Transactions or otherwise cancelled, (b) all
assets and Liabilities of OLP Co. and Trinity Place Co. shall be treated as
though they were merged with the assets and Liabilities of Liberty Plaza Co.,
(c) each guarantee by Liberty Plaza Co., OLP Co. and Trinity Place Co. of an
obligation of Liberty Plaza Co., OLP Co. or Trinity Place Co. shall be
eliminated so that any Claim against any of Liberty Plaza Co., OLP Co. or
Trinity Place Co. and any guarantee thereof by Liberty Plaza Co., OLP Co. and
Trinity Place Co. and any joint or several liability of two or more of Liberty
Plaza Co., OLP Co. or Trinity Place Co. shall be deemed to be one obligation of
Liberty Plaza Co. and (d) each Claim filed or to be filed in the Reorganization
Cases of Liberty Plaza Co., OLP Co. and Trinity Place Co. shall be deemed filed
against Liberty Plaza Co. and shall be deemed one Claim against and obligation
of Liberty Plaza Co.
2.4. Substantive Consolidation of
245 Park Co., 245 Holding LP and 245 Corp.
All assets and Liabilities of 245 Park Co., 245 Holding LP and 245
Corp. shall be substantively consolidated. On the Effective Date (a) each
Intercompany Claim held by 245 Park Co., 245 Holding LP or 245 Corp. against 245
Park Co., 245 Holding LP or 245 Corp. shall be eliminated in accordance with the
Restructuring Transactions or otherwise cancelled, (b) all assets and
Liabilities of 245 Holding LP and 245 Corp. shall be treated as though they were
merged with the assets and Liabilities of 245 Park Co., (c) each guarantee by
245 Park Co., 245 Holding LP or 245 Corp. of an obligation of 245 Park Co., 245
Holding LP or 245 Corp. shall be eliminated so that any Claim against 245 Park
Co., 245 Holding LP or 245 Corp. and any guarantee
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thereof by 245 Park Co., 245 Holding LP or 245 Corp. and any joint or several
liability of two or more of 245 Park Co., 245 Holding LP or 245 Corp. shall be
deemed to be one obligation of 245 Park Co., and (d) each and every Claim filed
or to be filed in the Reorganization Cases of 245 Park Co., 245 Holding LP or
245 Corp. shall be deemed filed against 245 Park Co. and shall be deemed one
Claim against and obligation of 245 Park Co.
SECTION 3. PROVISIONS RELATING TO
DISTRIBUTIONS TO THE CO-PROPONENTS.
On the Effective Date, each of the Co-Proponents shall receive the
treatment accorded each of their Allowed Claims and Allowed Equity Interests, as
set forth in sections 4.3, 7.2, 7.4, 8.2, 8.6, 12.3, 14.2, 15.2 and 15.5 hereof.
In accordance with this Plan, after giving effect to the distributions of Class
A Interests and Class B Interests to (a) the holders of Allowed Unaffiliated
Unsecured Claims in accordance with section 7.11.1 hereof, (b) the holders of
Allowed General Unsecured Claims against any of Realty Corp., OYREUSA and/or
Baden in accordance with section 8.6 hereof, and (c) JMB, on account of its
Allowed Equity Interest in 245 Park Co., in accordance with section 15.8 hereof,
the Co-Proponents, on account of their respective Allowed Claims and Allowed
Equity Interests and in accordance with this Plan and the Restructuring
Transactions, shall be distributed the General Partner Interest in Newco LP, the
remaining Class A Interests, Class B Interests in accordance with section 8.6
hereof, and 100% of the Liquidating Corp. Shares (the "Residual Newco Equity")
in partial consideration for the Co-Proponents' Capital Infusion and the Allowed
Co-Proponent Unsecured Claims. The General Partner Interests and a 1% Class B
Interest will be held by the Co-Proponents through Managing GP, a newly-formed
corporation to be owned by the Co- Proponents. Other than in respect of the
Equity Interests in Newco LP held by the Co-Proponents through Managing GP, the
Co-Proponents will hold their remaining Equity Interests in Newco LP either
directly or indirectly, as each determines. The Co-Proponents will enter into a
stockholders' agreement with respect to their ownership in, and the governance
of, Managing GP.
<PAGE>
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SECTION 4. PROVISIONS FOR THE SETTLEMENT OF CLAIMS.
4.1. Settlement of Intercompany Claims.
On the Effective Date, all Claims held by a Debtor, a Wholly-Owned
Affiliate or a Controlled Affiliate against a Debtor, a Wholly-Owned Affiliate
or a Controlled Affiliate shall be released and cancelled in accordance with the
Restructuring Transactions and, to the extent not so released and cancelled,
released and cancelled in consideration for the mutual release and cancellation
of any and all Claims held by a Debtor, a Wholly-Owned Affiliate or a Controlled
Affiliate against such Debtor, Wholly-Owned Affiliate or such Controlled
Affiliate; provided, however, that this section 4.1 shall not release and
eliminate the Claims of Tower B Co. against WFC Fincorp, the Claims of Olympia &
York Maiden Lane Company to Olympia & York Maiden Lane Finance Corp., the U.S.
Finco/OLP Claims not contributed to OLP under the Restructuring Transactions and
the Claims of Tower A Co. against Tower A Holding and Devco remaining
outstanding under the Restructuring Transactions. Notwithstanding the foregoing,
all postpetition Claims held by a Debtor, a Wholly-Owned Affiliate or a
Controlled Affiliate against a Debtor, a Wholly-Owned Affiliate or a Controlled
Affiliate that arise by reason of (a) the guarantee by a Debtor of the payment
of postpetition professional fees and expenses of another Debtor or the payment
by the Debtor of Administrative Expense Claims of another Debtor in accordance
with the DIP Order, (b) any Cash assets required to be advanced to Devco and
deposited in accordance with the DIP Loan and the DIP Order, including the
proceeds of any postpetition asset sale occurring prior to the Effective Date
required to be repaid under the DIP Loan and DIP Order, (c) the Services
Agreements approved by the Bankruptcy Court by order dated October 11, 1995, (d)
the Restructuring Transactions, (e) the Order of the Court pursuant to section
105 of the Bankruptcy Code Authorizing Consolidation of O&Y Finco Cash, dated
July 26, 1996, and (f) the terms of the January 12th Settlement Agreement, shall
not be released and cancelled. To the extent the postpetition Claims described
in clauses (a), (b), (c), (e) and (f) of this section 4.1 are Claims against one
or more the Debtors, such Claims shall be treated as Administrative Expense
Claims under this Plan.
4.2. The January 12th Settlement Agreement.
In the event the January 12th Settlement Agreement has not been
approved in all respects by a Final Order on or
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before the commencement of the Confirmation Hearing, the January 12th Settlement
Motion is incorporated herein and made a part hereof, and this Plan shall
constitute a motion of the Debtors requesting: (a) all of the relief requested
in the January 12th Settlement Motion; (b) approval of the transfer of Claims,
properties, interests in property and assets under the January 12th Settlement
Agreement prior to the Effective Date; and (c) approval of the protections
afforded to the Claims, properties, interests in property and assets to be
transferred under the January 12th Settlement Agreement as of the date of
transfer irrespective of whether the Effective Date occurs.
4.3. BPHI Settlement.
On the Effective Date and in accordance with the terms of this Plan,
the Tower B Co. Plan and the Restructuring Transactions, the BPHI Settlement
shall be effective. In accordance with the BPHI Settlement, any and all Claims
of BPHI against the Debtors and Tower B Co. will be resolved and compromised and
BPHI will exchange its Claims against the Debtors and Tower B Co. and Equity
Interests in and Claims against the BPHI Partnerships as follows, in accordance
with the terms of section 7.11.2 hereof governing distributions to the holders
of Allowed Co- Proponent Unsecured Claims, and in the case of such Equity
Interests, in accordance with the terms of this section 4.3 as well as the Tower
B Co. Plan.
(a) On the Effective Date, BPHI or its designee, in accordance with
the Restructuring Transactions, shall be distributed on account of (i) its
Equity Interests in the BPHI Partnerships, (ii) the Claims of BPHI against Tower
B Co. and the BPHI Partnerships, and (iii) the Claims of BPHI against Devco (to
the extent of and in its capacity as a partner in the BPHI Partnerships) and
certain other Debtors, Class A Interests representing 30.06% of the ownership of
Newco LP (before taking into account the Co-Proponents' Capital Infusion).
(b) On the Effective Date, BPHI, in accordance with the Restructuring
Transactions, shall fund 48.75% of the Co-Proponents' Capital Infusion to be
effected in accordance with section 18.12 hereof.
(c) In addition to the consideration to be provided in accordance with
paragraph (a) of this section 4.3, on the Effective Date, BPHI shall have an
Allowed General Unsecured Claim against Devco in the amount of
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$22,250,000, which Allowed Claim shall receive the same treatment accorded to
holders of Allowed Co-Proponent Unsecured Claims against the Consolidated Devco
Entities in accordance with section 7.11.2 hereof and BPHI shall have an
unsecured Claim against Tower B Co., which shall receive the treatment provided
in the Tower B Co. Plan.
(d) On the Effective Date of the Plan and the effective date of the
Tower B Co. Plan, in addition to the releases provided in accordance with
section 24 hereof and in the Tower B Co. Plan, Tower B Co. and the O&Y
Affiliates and the Controlled Affiliates, on the one hand, and BPHI, on the
other hand, will execute and deliver mutual releases of all Liabilities and
Causes of Action relating to all acts and omissions occurring prior to the
Effective Date with respect to the Debtors, the Plan, the Reorganization Cases,
Tower B Co., the Tower B Co. reorganization case and the Tower B Co. Plan.
Without limiting the generality of the foregoing, (a) Tower B Co. and U.S. Finco
shall release BPHI from any and all Liabilities it may have or may be alleged to
have under the Tower B Co. Credit Agreement and (b) Tower B Co. and BPHI shall
release any and all Claims they may have against or may be alleged to have
against U.S. Finco with respect to any and all amounts which may be owed or
alleged to be owed by U.S. Finco to Tower B Co. under the Tower B Co. Credit
Agreement. In addition, under this section 4.3 and in accordance with section 24
hereof, BPHI shall be released, in connection with this Plan and the Tower B Co.
Plan, from any (a) Liabilities relating to the making of any loans or equity
investments in any of the Debtors, the Debtors in Possession or the O&Y
Affiliates, (b) obligations or Claims under any statutory or decisional law or
principle which could require return, disgorgement, restitution or repayment of
any kind of payment of any damages with respect to amounts received by BPHI
prior to the Effective Date in respect of any investment (including equity, debt
or loan participation interests), (c) Claim relating to the character (as debt
or equity) or the enforceability in accordance with its terms of any instrument
evidencing any investment made by BPHI in any of the Debtors, the Debtors in
Possession or the O&Y Affiliates, (d) Claim with respect to an avoidable
transfer, and (e) Liabilities with respect to any Claim of any Entity against
any Debtor, Debtor in Possession or any O&Y Affiliate. On the Effective Date,
Newco LP will indemnify Tower B Co. and Tower B Holding I, Entities through
which BPHI will own certain of their Equity Interests in Newco LP, for any and
all Liabilities arising prior to the Effective
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Date not released and discharged under this Plan and the
Tower B Co. Plan.
4.4. Merrill Lynch Settlement.
On the Effective Date, and in accordance with the Tower B Co. Plan and
the Restructuring Transactions relating to Merrill Lynch, the Merrill Lynch
Settlement shall be effective. Under the Merrill Lynch Settlement, the following
claims of Merrill Lynch will be resolved and compromised, in full and final
settlement and disposition of all proofs of claim filed by Merrill Lynch in the
Reorganization Cases of the Debtors and the reorganization cases of Tower B Co.
and WFC Fincorp:
(a) Merrill Lynch, through its designees on the Management Committee
(as defined in the Project Operating Agreement) and as the beneficiaries of
certain rights granted to them under section 27.02 of the Merrill Lynch Tower B
Lease and section 27.02 of the Merrill Lynch Tower D Lease, shall consent to the
assumption by Devco and Tower A Co. pursuant to section 365 of the Bankruptcy
Code of the WFC Operator Component and the assignment of such WFC Operator
Component to Newco LP in accordance with section 21 hereof. The O&Y Affiliates
will confirm that the WFC Tenants Component of the Project Operating Agreement
is a covenant that runs with the land and binds the parcel tenants of the World
Financial Center and burdens their tenancies for both prepetition and
postpetition obligations. To the extent that any portion or component of the
Project Operating Agreement is an executory contract, Devco and Tower A Co.
shall assume such portion or component and assign such portion or component of
the Project Operating Agreement to Newco LP. Merrill Lynch, through its
designees on the Management Committee under the Project Operating Agreement,
shall consent to such assumption and assignment. In accordance with section
365(b) of the Bankruptcy Code, Merrill Lynch/WFC/L, Inc. or its designee shall
be entitled to the release of the funds held in the Merrill Lynch Escrow and the
O&Y Affiliates shall release any and all claims for the return of the funds held
in the Merrill Lynch Escrow. The O&Y Affiliates will not seek or pursue any
claims for legal fees, the miswired electrical meter and the cost of time or
money for personnel or other resources incurred in connection with the
arbitration matters relating to the Tower D electricity charges. There will be
no further action taken in connection with such arbitration of the claims which
are described therein or herein as against Merrill Lynch/WFC/L, Inc., and the
O&Y Affiliates will
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assume responsibility for any third-party claims arising by reason of any action
that the O&Y Affiliates may take to collect or pursue such claims from third
parties.
(b) Merrill Lynch/WFC/L, Inc. shall consent to the provisions of this
Plan relating to Tower B Leaseco as set forth in this section 4.4 and section 16
hereof and to the provisions of the Tower B Co. Plan relating to Merrill
Lynch/WFC/L, Inc. as set forth therein. Merrill Lynch/WFC/L, Inc. shall consent
to all Available Cash of Tower B Leaseco being used: (i) to pay in full
Administrative Expense Claims, Allowed Priority Tax Claims and Allowed
Priority-Non Tax Claims against Tower B Leaseco; (ii) thereafter, as a
distribution on account of the Merrill Lynch/Tower B Leaseco Secured Claim equal
to $502,000 to the Merrill Lynch Capital Fund to be held by Merrill Lynch and to
be used to fund the River Water By-Pass Project and certain window and facade
repairs required to be made to Tower B; and (iii) thereafter, to pay each holder
of an Allowed General Unsecured Claim against Tower B Leaseco such holder's
Ratable Proportion of the Available Cash of Tower B Leaseco, after giving effect
to clauses (i) and (ii) of this section 4.4(b). Merrill Lynch will assert no
other claims against Tower B Leaseco in relation to the River Water ByPass
Project or against Tower B Co. for the Tower B window and facade repairs
currently under discussion as of the date hereof.
(c) Merrill Lynch/WFC/L, Inc. shall have an Allowed General Unsecured
Claim against Tower B Leaseco of $93,000,000 and, to the extent such Allowed
General Unsecured Claim against Tower B Leaseco shall not receive a payment in
full in accordance with section 16.4 hereof, Merrill Lynch/WFC/L, Inc. shall
have an Allowed Unaffiliated Unsecured Claim against Devco arising from Devco's
guarantee of the obligations of Tower B Leaseco, which Allowed Claim shall be in
an amount equal to the difference between $93,000,000 and the amount of any
distributions received by Merrill Lynch/WFC/L, Inc. on account of its Allowed
General Unsecured Claim against Tower B Leaseco and shall be provided a
distribution thereon in accordance with section 7.11.1 hereof.
(d) Merrill Lynch shall consent, pursuant to an instrument in form and
substance satisfactory to the Debtors, the O&Y Affiliates, the Co-Proponents and
Merrill Lynch, which instrument is to be filed with the Bankruptcy Court prior
to the Confirmation Hearing, to the modification and amendment of the Tower D
Co. Partnership Agreement,
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which modification and amendment will provide for the elimination of the debt
service and principal limitations applicable to a refinancing of mortgage debt
relating to Tower D as set forth in section 16 of such partnership agreement;
provided, however, that any refinancing of mortgage debt relating to Tower D
shall:
(i) permit annual partnership distributions of $11,379,000 to
Merrill Lynch Tower D Partner; and
(ii) self-liquidate over the initial term of the Merrill Lynch
Tower D Lease, which initial term is currently scheduled to
expire on September 29, 2013.
Merrill Lynch will cooperate in effectuating such a financing on terms which are
mutually acceptable (as determined in each party's sole discretion), provided
that such modifications will result in no cost to Merrill Lynch. Such financing
is a condition precedent to the Effective Date and is expected to take the form
of securitized rated debt.
(e) Merrill Lynch shall consent, pursuant to an instrument in form and
substance satisfactory to the Debtors, the O&Y Affiliates, the Co-Proponents and
Merrill Lynch, which instrument is to be filed with the Bankruptcy Court prior
to the Confirmation Hearing, to the modification and amendment of the Tower B
Reimbursement Agreement and the Tower D Reimbursement Agreement, which
modifications and amendments shall provide that:
(i) the limitation of the recourse provisions of the Tower B
Reimbursement Agreement and the Tower D Reimbursement
Agreement such that the obligations under such agreements
will only be recourse to Tower B Co. and Tower D Co.,
respectively;
(ii) the provisions of the Tower D Reimbursement Agreement will
be guaranteed by Newco LP; provided, however, that such
guarantee shall not cover matters for which Merrill Lynch
Tower D Partner is obligated under the Tower D Co.
Partnership Agreement;
<PAGE>
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(iii) the make-whole provisions relating to Floors 26, 27 and 28
of Tower B in the Tower B Reimbursement Agreement will be
deleted; and
(iv) in connection with the Tower B refinancing contemplated by
section 7.1 of the Tower B Co. Plan or any other refinancing
of Tower B, Merrill Lynch/WFC/L, Inc. will cooperate with
respect to modifications of the Tower B Reimbursement
Agreement, including the agreement by Merrill Lynch not to
pursue collection of amounts due or interest accruing
thereon (such interest at the annual rate of prime plus 3%
compounded monthly, payable from the due date) under the
Tower B Reimbursement Agreement and the agreement by Merrill
Lynch to subordinate and forbear its rights to pursue
collection of such amounts due or interest accruing thereon
through at least September 29, 2013; provided, however, with
respect to any Refinancing of the Funding Commitment Letter
Loan (as defined in the Tower B Co. Plan) or the ML Lease
Securitization (as defined in the Tower B Co. Plan) during
the initial term of the Merrill Lynch Tower B Lease, if such
refinancing provides for funds (after repaying any existing
mortgage(s) and all expenses of refinancing) which are not
to be used for Tower B building expenditures, including
costs of leasing, then all accrued and unpaid amounts under
the Tower B Reimbursement Agreement must be paid and WFC
Tower B Co. LP must provide such reserves or other
assurances satisfactory to Merrill Lynch that all amounts
which thereafter may be payable under the Tower B
Reimbursement Agreement will be paid; and provided, further,
that any such forbearance will not in any way prejudice or
impair in any way the validity or enforceability of Merrill
Lynch's claim under the Tower B Reimbursement Agreement.
<PAGE>
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(v) Retailco shall be primarily responsible to Merrill Lynch for
the payment of all expenses of the retail spaces of Tower B
and Tower D as such expenses are contemplated by the Tower B
Reimbursement Agreement and the Tower D Reimbursement
Agreement, and recourse to Retailco shall include access to
Retailco's excess cash flow from its retail lease at Tower
D; and
(vi) section 9.01(e) of each of the Merrill Lynch Tower B Lease
and the Merrill Lynch Tower D Lease shall be amended to
provide in each case that the maximum loan condemnation
amount shall be based on a schedule to be inserted which
will match the amortization schedule of the financing to be
placed on each of the leasehold interests in Tower B or
Tower D, respectively, on or about the Effective Date (as
defined in the Tower B Co. Plan) of the Tower B Co. Plan,
with respect to Tower B, and the Effective Date of this Plan
with respect to Tower D, subject to adjustment in the case
of Tower B for the ML Lease Securitization (as defined in
the Tower B Co. Plan).
(f) In exchange for the consideration provided by Merrill Lynch in
paragraphs (d) and (e) of this section 4.4 and in the Tower B Co. Plan, Merrill
Lynch will elect on the Ballot to be distributed with respect to this Plan and
the Tower B Co. Plan:
(i) a payment in Cash to Merrill Lynch/WFC/L, Inc. equal to
$26,400,000, payable on the Effective Date, plus interest at
the rate of 9% per annum for the period commencing on July
1, 1996 and ending on the Effective Date, or
(ii) a rent reduction on the Merrill Lynch Tower D Lease
equivalent to the Cash payment determined in clause (i) of
the immediately preceding paragraph, which will be recovered
over a period of at least five (5) years following the
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Effective Date using an annual discount rate
(payable monthly in advance) of 6.73%.
(g) With respect to the Tower D Reimbursement Agreement:
(i) there shall be a first-priority nonrecourse pledge to
Merrill Lynch of the equity in Tower D Co. owned, subject to
the terms of section 7.4 hereof, directly or indirectly, by
the O&Y Affiliates, BPHI and/or Newco LP, as the successor
to the O&Y Affiliates, to secure the obligations of Tower D
Co. under the Tower D Reimbursement Agreement;
(ii) any claim arising under the Tower D Reimbursement Agreement
shall be subordinate only to the Tower D Mortgage Debt and
no remedies will be exercisable against Tower D Co. until
the Tower D Mortgage Debt is satisfied; and
(iii) until the Tower D Mortgage Debt is satisfied, Merrill Lynch
will agree not to pursue collection of such amounts due or
interest accruing thereon from any of the Entities owning
Tower D under the Tower D Reimbursement Agreement; provided,
however, that such forbearance will not in any way prejudice
or impair the right of Merrill Lynch to pursue Newco LP, as
guarantor, or impair in any way the validity or
enforceability of Merrill Lynch's claim under the Tower D
Reimbursement Agreement. Interest (at the annual rate of
prime plus 3% compounded monthly) on such claim shall be
payable from the due date.
(h) The Shared Management Agreement for Tower D shall be modified to
delete (effective as of July 1, 1996) 100% of the management fee (currently
$227,000 annually). Merrill Lynch shall be provided an initial credit of
$33,000, increasing by 3% annually, for a total initial credit of $260,000,
against the operating and other costs payable by Merrill Lynch under such
agreement, and, as
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modified, assumed and assigned to Newco LP. The present value of the amounts
described in this paragraph shall be increased at a rate of 9% per annum from
July 1, 1996 through the Effective Date.
(i) With respect to any and all other agreements relating to the World
Financial Center, Merrill Lynch shall agree to accept Newco LP or its designee
as the successor to any O&Y Affiliate under such agreements. The following
agreements, as amended and assigned, will be assumed and assigned by the Debtors
to Newco LP under section 365 of the Bankruptcy Code:
(i) The Shared Management Agreement relating to Tower B;
(ii) The Shared Management Agreement relating to Tower D;
(iii) The Sublease dated September 29, 1988 between Devco and
Merrill Lynch/WFC/L, Inc. for the Winter Garden and the
Liberty Street Bridge and certain other portions of Tower B;
(iv) The Sublease dated February 26, 1988 between Devco and
Merrill Lynch/WFC/L, Inc. for the central plant and certain
other portions of Tower D;
(v) The Fire Safety Agreement dated February 26, 1988 between
Merrill Lynch/WFC/L, Inc., Retailco and Devco; and
(vi) The Fire Safety Agreement dated September 29, 1988 between
Merrill Lynch/WFC/L, Inc., Retailco and Devco.
(j) Merrill Lynch shall incur no additional costs or risks or adverse
impact with respect to the value of Tower D Co. as a result of any modifications
to the leases and agreements to which Retailco is a party.
(k) Merrill Lynch's obligation to proceed with the
transactions contemplated under the Merrill Lynch Settlement is conditioned upon
it being satisfied as to the assumption or rejection, as the case may be, of any
agreements of the Debtors, Tower B Co. or WFC Fincorp to which Merrill Lynch is
a party; and, that such transactions
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will not result in: (i) the termination of the Tower D Co.
partnership for federal income tax purposes or (ii) the
imposition of any other tax cost on Merrill Lynch (except as
paid by the O&Y Affiliates).
(l) Merrill Lynch agrees that it has no objection to the release by
Tower B Co. and Tower A Co. of any receivables or payables owed to them by their
partners or their Affiliates.
(m) In exchange for the entirety of the consideration provided to
Merrill Lynch in this section 4.4 and in the Tower B Co. Plan, Merrill Lynch
will support and vote to accept this Plan as well as the Tower B Co. Plan
(provided that Merrill Lynch's treatment under such plan is consistent with the
terms hereof and does not otherwise create additional cost to or adversely
impact Merrill Lynch). Those portions of the foregoing specifically relating to
Tower B Co. shall be effectuated under the Tower B Co. Plan. Merrill Lynch shall
agree to the designation of Newco LP or any Affiliate thereof (or such other
Entity as applicable) as the successor to any O&Y Affiliates at the World
Financial Center. The O&Y Affiliates will continue to address all other
operating issues between the O&Y Affiliates and Merrill Lynch to maximize the
mutual benefits to the O&Y Affiliates and Merrill Lynch. The settlement of the
matters set forth herein is subject to the documentation of same prior to the
Confirmation Date mutually acceptable to the parties thereto.
4.5. TIAA Settlement.
On the Effective Date, the Claims of TIAA shall be accorded the
treatment in this section 4.5 in full satisfaction of (i) the TIAA Judgment
Claims, (ii) all Claims of TIAA against Tower A Co., 53 State Limited, Devco,
and all of the O&Y Affiliates, including, without limitation, any Claims
asserted in or otherwise arising out of the Tower A Action or the State Street
Action, and (iii) all Claims of TIAA against BPHI and Carena asserted in or
otherwise arising out of the Tower A Action or the State Street Action or
arising in connection with or relating to BPHI's investment in the World
Financial Center.
Cash Payments on the
Effective Date: $6,500,000 Cash payment on the
Effective Date.
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Deferred Cash Payments: $3,000,000, payable by a note
issued by New Tower A LP to
TIAA providing for aggregate
payments of $1,000,000 per
year for the first three years
following the Effective Date.
In each of such first three
years following the Effective
Date, the obligations under
such note shall be paid
quarterly in arrears in four
equal installments of $250,000
from the asset management fees
payable to Newco LP as
provided in "Management Fees"
in section 13.2 hereof. Newco
LP will guarantee the
obligations of New Tower A LP
to TIAA and shall waive its
rights of subrogation relating
to the same. Newco LP will
collaterally assign to TIAA
the asset management fees
payable to Newco LP as
provided in "Management Fees"
in section 13.2 hereof to
secure the obligations under
the note to TIAA. New Tower A
LP will not make any
distributions to Newco LP or
any of its Affiliates other
than the fees payable to Newco
LP as provided in "Management
Fees" in section 13.2 hereof
and all such fees shall be
subordinate to the obligations
under the note issued to TIAA
and payment may not be made
upon an event of default under
such note.
TIAA Unaffiliated Unsecured
Claim Against Devco: TIAA shall have an Allowed
Unaffiliated Unsecured Claim
against Devco of $75,000,000,
on account of which TIAA shall
be distributed Class A
Interests having a value equal
to $1,714,286 and Convertible
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Note Interests having a
face amount equal to
$4,285,714.
Release of
Segregated Funds: The 53 State Street Segregated
Funds shall be released to
TIAA, and the Debtors and the
O&Y Affiliates shall release
all Claims that they have or
may have relating to the 53
State Street Segregated Funds
and the Tower A Segregated
Funds.
Release of Lis Pendens: TIAA shall release any and all
lis pendens relating to 53
State Street.
Mutual Releases: In addition to the releases
provided in section 24 hereof,
TIAA, BPHI, Carena and the O&Y
Affiliates (or their
respective successors) will
execute and deliver mutual
releases consistent with this
section 4.5.
4.6. Toronto Dominion Settlement.
On the Effective Date, in full satisfaction of the Toronto Dominion
Judgment Claims and all other Claims that Toronto Dominion may have against any
of Baden, York Venture Co. or all other O&Y Affiliates (including any Claims
under or related to the Toronto Dominion Letter of Credit), Toronto Dominion or
its designee shall be distributed (a) the Chase Note and any proceeds of the
Chase Note received by the O&Y Affiliates after August 9, 1996 and prior to the
Effective Date and (b) a deed to the unsold property currently owned by York
Venture Co. located at Independence Bay; provided, however, that the transfer of
such unsold property shall remain subject to the rights and obligations set
forth in the Independence Bay Contracts. To the extent that such property, or
any portion thereof, is sold prior to the Effective Date pursuant to the
Independence Bay Contracts, the proceeds thereof (net of the costs of sale)
shall be delivered to Toronto Dominion upon the consummation of such sale. In
the event that such transactions are not consummated prior to the Effective
Date, Toronto Dominion shall assume and perform any and all obligations under
the
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Independence Bay Contracts from and after the Effective Date, and shall
indemnify and hold harmless York Venture Co., the Debtors, the Debtors in
Possession, any and all other O&Y Affiliates and each of their respective
successors in interest from any and all Liabilities that may arise from the
failure of Toronto Dominion to specifically perform the Independence Bay
Contracts from and after the Effective Date.
4.7. Reichmann Settlement.
On the Effective Date, the Reichmann Entities shall release the
Reichmann Claims. On the Effective Date, the Debtors, the Debtors in Possession
and the O&Y Affiliates shall release the O&Y (U.S.)/Reichmann Claims to the
extent that such Claims have not otherwise been released pursuant to section 4.1
hereof or as a Restructuring Transaction pursuant to section 18 hereof. The
release provided in the preceding sentence shall not in any way release O&Y 25
Realty Company, O&Y 25 Realty Company, L.P. or U.S. Holdings from any
Liabilities; provided, however, that the Reichmann Entities shall be exculpated
from all Liabilities arising from the status of one or more of the Reichmann
Entities as a direct or indirect partner of O&Y 25 Realty Company, O&Y 25 Realty
Company, L.P. and U.S. Holdings, leaving the O&Y Affiliates and its successors
with recourse only to the assets of O&Y 25 Realty Company, O&Y 25 Realty
Company, L.P. and U.S. Holdings. Notwithstanding the foregoing, the release and
exculpation provided for in this section 4.7 shall not prohibit the use by one
or more of the Debtors, the Debtors in Possession and the O&Y Affiliates of the
O&Y (U.S.)/Reichmann Claims as an affirmative defense or a counterclaim;
provided, however, that any such defense or counterclaim shall be used for
purposes of offset or recoupment only and shall not provide a basis for any
affirmative recovery against any Reichmann Entity.
In addition to the foregoing, the Reichmann Entities shall release any
Claims that they may have against the O&Y Affiliates arising under or relating
to their ownership interest in U.S. Holdings or in any way relating to U.S.
Holdings and, if requested by the Debtors or their successors in interest,
cause, or consent to, the dissolution of U.S. Holdings. The Reichmann Entities
shall release any Claims that they may have against the O&Y Affiliates arising
under or relating to their ownership interest in O&Y 25 Realty Company and O&Y
25 Realty Company, L.P. or in any way relating to O&Y 25 Realty Company and/or
O&Y 25 Realty Company, L.P. The Reichmann Entities shall
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release any Claims that they may have against the O&Y Affiliates arising under
or relating to their ownership interest in 53 State Street or in any way
relating to 53 State Street and shall cause, or consent to, the transfer by O&Y
25 Realty Company and O&Y 25 Realty Company, L.P. of their interests in 53 State
Street to Newco LP or its designee. The Reichmann Entities shall consent to the
execution and delivery by O&Y 25 Realty Company, O&Y 25 Realty Company, L.P and
OYDL of a settlement agreement with O&Y (U.S.), which settlement agreement will
be the subject of a separate motion to be filed with the Court and will be
consistent with the Reichmann Settlement.
The Reichmann Entities acknowledge that the Debtors and their
respective officers and directors have fully discharged all obligations to the
Reichmann Entities under the Corporate Governance Protocol approved by the Court
on July 15, 1993 and that, following consummation of this settlement on the
Effective Date of this Plan, the Debtors and their respective officers and
directors will owe no further obligations to the Reichmann Entities under the
Corporate Governance Protocol.
If A.R.F. Corp. acquires title to the Reichmann Bank Claims from
Svenska Handelsbanken and/or Bank Leumi prior to the Effective Date, A.R.F.
Corp. shall subordinate such acquired Reichmann Bank Claims to Allowed General
Unsecured Claims against Consolidated Devco and/or Consolidated Realty Corp., as
the case may be (with the effect that the Reichmann Bank Claims shall receive no
distribution under the Plan), or transfer the Reichmann Bank Claims so acquired
as directed by one or more of the Debtors, the Debtors in Possession and the O&Y
Affiliates.
If A.R.F. Corp. does not acquire title to the Reichmann Bank Claims
prior to the Effective Date, the Svenska Claims and the Bank Leumi Claims will
be reserved for in the Subclass 7.11.1 Disputed Claims Debt/Equity Escrow and
the Class 8.6 Disputed Claims Equity Escrow as General Unsecured Claims. The
Disbursing Agent shall continue to maintain reserves on account of the Svenska
Claims and the Leumi Claims, respectively, until such time as Svenska
Handelsbanken and/or Bank Leumi, as the case may be, shall have each
independently elected to either (a) receive the Old Bridge Lands in full
satisfaction of their respective interests in such Claims (subject to the
provisions relating to "penalty events" described below) or (b) receive the
respective distributions reserved for on account of the Svenska Claims and the
Bank Leumi Claims.
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Such election shall determine title to the Svenska Claims and the Bank Leumi
Claims.
In the event Svenska Handelsbanken and/or Bank Leumi elect to receive
the treatment provided in clause (a) of the preceding paragraph, Svenska
Handelsbanken and/or Bank Leumi, as the case may be, shall (subject to the
provisions relating to "penalty events" described below) transfer its Reichmann
Bank Claims to A.R.F. Corp. and A.R.F. Corp. shall subordinate such Claims to
Allowed General Unsecured Claims against Consolidated Devco and/or Consolidated
Realty Corp., as the case may be (with the effect that the Reichmann Bank Claims
shall receive no distribution under the Plan), or transfer such Reichmann Bank
Claims as directed by one or more of the Debtors, the Debtors in Possession and
the O&Y Affiliates. In this event, the reserves established on account of the
Reichmann Bank Claims will be released to the Co-Proponents.
In the event Svenska Handelsbanken and/or Bank Leumi elect to receive
the treatment provided in clause (b) of the second preceding paragraph, (a)
Svenska Handelsbanken, in the event it has made such election, will receive the
reserved distribution on account of the Svenska Claims from the Class 8.6
Disputed Claims Equity Escrow and the Subclass 7.11.1 Disputed Claims
Debt/Equity Escrow and (b) Bank Leumi, in the event it has made such election,
will receive the reserved distribution on account of the Bank Leumi Claims from
the Subclass 7.11.1 Disputed Claims Debt/Equity Escrow. In consideration of such
distributions, on the date of such distributions, Svenska Handelsbanken and/or
Bank Leumi, in the case of its or their election in clause (b) of the second
preceding paragraph, shall transfer its or their rights under the mortgages
relating to the Old Bridge Lands to A.R.F. Corp. and A.R.F. Corp. shall transfer
such mortgages to Newco LP or its designee. In the event of such transfers, the
Reichmann Entities agree to sell the Old Bridge Lands as directed by Newco LP or
its designee.
The provisions of the preceding four paragraphs will be implemented
through a four-party agreement to be executed and delivered by and among O&Y
(U.S.), A.R.F. Corp., Svenska Handelsbanken and Bank Leumi on or prior to the
Effective Date. Such agreement shall provide, among other things, that (a) in
the event certain "penalty events" occur in connection with the Old Bridge
Lands, Svenska Handelsbanken and Bank Leumi shall be entitled to receive the Old
Bridge Lands and a distribution from, and only from, the Subclass 7.11.1
Disputed Claims Debt/Equity Escrow and
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the Class 8.6 Disputed Claims Equity Escrow equal to the out-of-pocket costs of
Svenska Handelsbanken and Bank Leumi incurred in connection with curing such
penalty events or the diminution in value of the Old Bridge Lands caused thereby
as set forth in such agreement but in no event shall such distribution from such
escrows exceed the amount reserved in such escrows on the Effective Date on
account of the Leumi Claims and the Svenska Claims in accordance with this
settlement, (b) Paul Reichmann will indemnify O&Y (U.S.) for any diminution in
the value of the consideration to be provided to O&Y (U.S.) under this
settlement arising from a distribution required to be made from the reserves to
Svenska Handelsbanken and Bank Leumi in accordance with clause (a) of this
paragraph , (c) the sole recourse of Svenska Handelsbanken on account of the
Svenska Claims and Bank Leumi on account of the Bank Leumi Claims with respect
to the Debtors and the O&Y Affiliates shall be to the amounts reserved in the
Subclass 7.11.1 Disputed Claims Debt/Equity Escrow and the Class 8.6 Disputed
Claims Equity Escrow on account of the Leumi Claims and the Svenska Claims and
their rights under the four-party agreement, (d) A.R.F. Corp. shall be
authorized to sell the Old Bridge Lands and distribute the proceeds thereof upon
the consent of Svenska Handelsbanken and Bank Leumi and (e) upon a default by
A.R.F. Corp. under the four-party agreement, each of Bank Leumi and Svenska
Handelsbanken shall be entitled to receive the Old Bridge Lands and the reserved
distribution on account of the Bank Leumi Claims and the Svenska Claims,
respectively, and O&Y (U.S.) shall have recourse in such event to the indemnity
to be issued by Paul Reichmann.
In addition to the foregoing:
(a) The Reichmann Entities shall provide to the Debtors a letter in
the form previously provided to the Debtors by counsel for the Reichmann
Entities describing the financial condition of MAT Investment, Inc.
(b) The Family Corps. shall provide to the Debtors their most recent
financial statements and journal entries reflecting significant transactions
subsequent to the date of such financial statements in the form actually
maintained by the Family Corps. in the operation of their respective businesses.
(c) The Reichmann Entities shall cooperate in all reasonable requests
made by the Debtors to assist them in prosecuting this Plan and any requests to
preserve and protect the assets of the Debtors, the Debtors in Possession
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and the O&Y Affiliates; provided, however, that, in no event shall this
agreement to cooperate require any Reichmann Entity to take any action which
could create, impose or otherwise result in any liability to any Reichmann
Entity. At the request of one or more of the Debtors or their respective
successors, such cooperation shall include:
(i) Albert Reichmann shall provide testimony and any existing
and available documentary evidence relating to the
management and control of OYREUSA, Baden and Realty Corp.
in connection with the substantive consolidation of such
Entities; and
(ii) Subject to any required consent of and receipt of any
required waivers by Coopers & Lybrand OYDL, Inc./Limited
for (or any other person authorized to act on behalf of)
OYDL, OYDL's Canadian counsel shall provide information
concerning the tax history and reporting provisions of
Realty Corp., Devco Canada, Equity Canada and SF Holdings,
including the history of significant transactions and
assist in the defense of any actions prosecuted or Claims
asserted by OYDL or Coopers & Lybrand OYDL, Inc./Limited to
establish or collect on Claims against SF Holdings.
(d) If requested by one or more of the Debtors, the Debtors in
Possession, the O&Y Affiliates or Newco LP, the Reichmann Entities shall cause
the current owners of the capital stock of OYDL, if provided the opportunity at
no out-of-pocket cost to such owners and provided that there are no adverse tax
consequences to such owners, to receive and hold, directly or indirectly, the
capital stock of Realty Corp. in the same proportions as such owners currently
hold such stock. The Reichmann Entities shall, and shall cause the direct and
indirect beneficial owners of the stock of Realty Corp. (including, to the
extent the Reichmann Entities are able, OYDL) to, refrain from taking any action
that would result in an "ownership change" of Realty Corp. within the meaning of
section 382 of the IRC.
(e) In the event that subsequent to the Effective Date,
Coopers & Lybrand OYDL, Inc./Limited or any other person claiming by, through,
or under OYDL or any successor
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holder of the 25 Realty Note, shall maintain any action or proceeding
challenging the enforceability or propriety of the transfer or subordination of
the Reichmann Bank Claims in accordance with this settlement, or to impose any
Liability on any Reichmann Entity as a result of such transfer or subordination,
Newco LP shall defend any such action and shall hold the Family Corps. and each
and every Reichmann Entity harmless from any and all Claims, debts or
Liabilities based upon, arising out of and related to such transfer or
subordination.
4.8. Amex Settlement.
On the Effective Date and in full satisfaction of all Claims of Amex
against the Debtors, the Debtors in Possession and the O&Y Affiliates, the
Claims of Amex shall be accorded the following treatment:
River Water
By-Pass Project: Amex shall cooperate in the
construction of the River Water By-
Pass Project.
Electric
Arbitration: The O&Y Affiliates will bear the
entire cost of the Merrill Lynch
Settlement relating to the electric
arbitration, including legal fees.
Project Operating
Agreement: Tower A Co. will assume the WFC
Operator Component and will
designate Newco LP or an Affiliate
thereof to perform the services
described in the Project Operating
Agreement.
Existing Claims: All existing claims between Amex
and the O&Y Affiliates with respect
to the World Financial Center will
be released and forever barred.
Amex will have an Allowed
Unaffiliated Unsecured Claim
against Devco in the amount of
$320,000 in complete settlement of
all Claims relating to the World
Financial Center, including,
without limitation, Claims relating
to roof and window warranties, and
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chilled water and other charges
under the Project Operating Agreement.
Amex/Retailco
Lease: Amex will have an Allowed
Unaffiliated Unsecured Claim
against Devco in the amount of
$4,000,000, representing the
maximum damages that Amex would be
allowed under the Bankruptcy Code
for unpaid rent and for damages if
the Amex/Retailco Lease had been
rejected.
Retailco shall hold any amounts due
Amex for the existing base rent
under the Amex/Retailco Lease
(approximately $50,000 per month)
which have accrued or will accrue
for the period from June 1, 1996
through the last day of the month
prior to the month in which the
Confirmation Order becomes a Final
Order. On the date upon which the
Confirmation Order becomes a Final
Order, such amounts will be released
and paid over to Amex. Thereafter,
for each whole month beginning with
the month during which the
Confirmation Order becomes a Final
Order and ending February 1997,
Retailco shall pay to Amex the
amounts due Amex for the existing
base rent under the Amex/Retailco
Lease (approximately $50,000 per
month).
Notwithstanding the terms of the
immediately preceding paragraph, in
the event that the Confirmation
Order does not become a Final Order
on or prior to December 30, 1996,
then, on December 31, 1996, Retailco
shall release to Amex an amount
equal to the existing monthly base
rent under the Amex/Retailco Lease
for the preceding seven (7) months
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(approximately $350,000).
Thereafter, for each of January
1997 and February 1997, Retailco
shall pay to Amex the amounts due
Amex for the existing base rent
under the Amex/Retailco Lease
(approximately $50,000 per month).
In addition to the amounts to be
paid to Amex in the preceding two
paragraphs, as of the Effective
Date, the Amex/Retailco Lease will
be restructured as follows:
The Amex/Retailco Lease will be
modified to reduce the base rent
thereunder to $1 per annum for the
period commencing June 1, 1996 and
ending on the Rent Abatement
Termination Date. After this initial
period, there will be fair market
rent reviews at five (5) year
intervals. There will be no accrual
of rent. Fair market rent reviews
will be based on the actual net
income which the tenant under the
Amex/Retailco Lease can reasonably
be anticipated to receive during the
next five (5) year period, taking
into account continued use of space
for current uses, leases in place,
anticipated renewals, actual and
anticipated expenses and capital
requirements, and leaseability of
vacant space as retail space. Rent
reviews will be upward or downward
(but not less than $1). The tenant
will continue to be obligated to pay
PILOT (payment in lieu of taxes),
other ground rent obligations,
directly metered utilities and the
tenant's share of actual costs for
shared expense areas, including
Winter Garden PILOT and insurance
and Central Plant PILOT and
insurance, in each case as per the
existing Amex/Retailco Lease, and
other operating expenses at the rate
of
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$4.25 per usable square foot,
escalated annually by the percentage
increase in WFC Common Area
Expenses, exclusive of Major Repairs
(as such terms are defined in the
Project Operating Agreement).
If the fair market rent as
determined in any fair market rent
review is less than 90% of the base
rent that would have been payable
under the existing Amex/Retailco
Lease, Amex will have the right to
cancel the Amex/Retailco Lease
(unless the successor tenant to the
O&Y Affiliates agrees to pay at
least 90% of the existing base
rent). If Amex cancels the
Amex/Retailco Lease, the successor
tenant to the O&Y Affiliates shall
have the right of first refusal to
manage the retail areas of Tower C.
The Amex/Retailco Lease, as
modified, will be assigned to Newco
LP or an affiliate thereof. The
tenant's liability under the
Amex/Retailco Lease will be limited
to its interest in the leased
premises. In the event that an
entity that elects to be treated as
a real estate investment trust for
federal income tax purposes is
admitted to Newco LP as a partner,
Newco LP may assign to such Entity
its rights and obligations under the
Amex/Retailco Lease.
Mutual Releases: Subject to the other provisions of
this Amex Settlement, from and
after the Effective Date, (i) Amex
and any Entity related to Amex, and
each of their Affiliates, agents,
officers, directors, employees,
representatives, attorneys,
accountants, financial advisors,
investment bankers, appraisers,
advisors and engineers (each in
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their capacity as such) shall be
released from all claims of the O&Y
Affiliates and the Debtors and (ii)
the O&Y Affiliates and the Debtors
and each of their Affiliates,
agents, officers, directors,
employees, representatives,
attorneys, accountants, financial
advisors, investment bankers,
appraisers, advisors and engineers
(each in their capacity as such)
shall be released from all claims of
Amex, any Entity related to Amex and
each of their Affiliates.
4.9. Bank of Nova Scotia Settlement.
On the Effective Date, in full satisfaction of the Bank of Nova Scotia
Claims, Bank of Nova Scotia will be delivered an instrument entitling it to
participate in any monetary recoveries from the sale of the MCJV Lands, which
instrument shall be secured by a pledge of the MCJV Pledged Notes, on the
following basis:
Management: Newco LP will be solely responsible
for:
(i) managing the MCJV Lands,
(ii) making all decisions with
respect to the conduct of
litigation (including
settlement thereof) affecting
the interest of Newco LP in
the MCJV Lands (including any
litigation with respect to the
MCJV Notes), and
(iii) making all decisions with
respect to all matters
pertaining to the
maintenance, management,
marketing and sale of the
MCJV Lands.
Budgets: Newco LP will provide Bank of Nova
Scotia with annual budgets with
respect to the MCJV Lands and the
interest of Newco LP therein,
including anticipated litigation
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costs. Budgets, and any amendments
thereto, will be subject to the
review and approval of Bank of Nova
Scotia. Newco LP shall not make any
payments to enhance the value of the
MCJV Lands not in compliance with
the approved budget without the
consent of Bank of Nova Scotia.
Newco LP shall be entitled to make
any payment and incur any cost that
it reasonably determines to be
necessary to preserve the value of
the MCJV Lands or to protect the
interest of Newco LP therein. Other
than with respect to the consent
rights described in this paragraph,
Newco LP shall consult with Bank of
Nova Scotia prior to making any
payment not in compliance with the
approved Budget. Newco LP will
advise Bank of Nova Scotia of any
material developments relating to
the maintenance, management,
marketing and sale of the MCJV
Lands.
Funding Commitment: Subject to the preceding paragraph,
Newco LP will pay up to $4,500,000
of the costs incurred with respect
to the preservation, maintenance,
management, marketing and sale of
the MCJV Lands (including all
unpaid real estate taxes relating
to the MCJV Lands), the enhancement
of the value of the MCJV Lands, and
the conduct of any litigation
affecting the interest of Newco LP
in the MCJV Lands (the "Costs").
"Costs," as defined, shall not
include any Costs pertaining to the
construction of a building on the
MCJV Lands. All Costs shall be
paid in a timely manner, provided
that real estate taxes may be
deferred until such time as the
MCJV Lands may be subjected to a
tax sale. Subject to the preceding
paragraph, in addition to the
commitment to fund up to $4,500,000
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of Costs, Newco LP shall be
entitled, in its sole discretion
(but not obligated), to fund any
other Costs in excess of $4,500,000
All Costs paid by Newco LP with
respect to this section (whether
under the $4,500,000 commitment or
the discretionary authority of Newco
LP) shall be entitled to a priority
recovery (the "Cost Recovery
Priority") from any sales proceeds
of the MCJV Lands (and/or Newco LP's
interest therein) as specified
below. Solely to the extent Newco LP
shall fail to pay any Costs required
to preserve the value of the MCJV
Lands when due and payable, the Bank
of Nova Scotia shall have the right
to pay such Costs and shall be
entitled to reimbursement thereof
together with interest as specified
below as a Cost Recovery Priority.
All income generated by the MCJV
Lands and distributed to Newco LP
and any Affiliates shall be first
applied to the payment of Costs.
Allocation of Sale
Proceeds: Upon a sale or sales of all or a
portion of the MCJV Lands, the
proceeds thereof shall be allocated
and paid (subject to any applicable
withholding tax requirements) as
follows:
The first $15,000,000 in gross sales
proceeds from the sale of all or a
portion of the MCJV Lands will be
used first to (a) pay any then
outstanding real estate taxes
(unless assumed by the purchaser),
(b) pay all outstanding costs of the
sale or any prior sale that have not
yet been reimbursed pursuant to this
section, and (c) repay any
outstanding Cost Recovery Priority,
together with interest accrued
thereon at 10% per annum,
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calculated and compounded annually
(which repayment obligation shall be
evidenced by the issuance and
delivery from the entity at the time
owning the MCJV Lands of a
nonrecourse promissory note made
payable to Newco LP). The balance of
the first $15,000,000 in gross sales
proceeds shall be distributed 50% to
Newco LP and 50% to Bank of Nova
Scotia. The gross sales proceeds in
excess of $15,000,000 shall be
distributed 75% to Newco LP and 25%
to Bank of Nova Scotia.
Pledge Agreement: The instrument issued to Bank of
Nova Scotia shall be secured by a
pledge of Newco LP's interest in
the MCJV Pledged Notes, which
pledge shall either be the Baden
Pledge, as modified, or a new
pledge of the MCJV Pledged Notes.
4.10. Dragon Settlement.
On the Effective Date, in full satisfaction of any and all Claims of
Dragon against the Debtors, the Debtors in Possession and the O&Y Affiliates
(other than O&Y Concord 60 Broad Street Company), the Dragon Unsecured Claim
shall be Allowed in the amount of $60,000,000 and shall be provided the
treatment accorded to Allowed Co-Proponent Unsecured Claims set forth in section
7.11.2 hereof. Nothing in this section 4.10 or any other provision of this Plan
shall prejudice or in any way release the Liens and Claims of Dragon against O&Y
Concord 60 Broad Street Company. In consideration of the treatment provided to
Dragon in this section 4.10, Dragon shall release and waive all other Claims
that it has or may have against the Debtors, the Debtors in Possession and the
O&Y Affiliates (other than O&Y Concord 60 Broad Street Company) with the effect
that Dragon shall only have recourse to the assets of O&Y Concord 60 Broad
Street Company.
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4.11. Oppenheimer Indirect Capital Contribution and
Treatment of Oppenheimer Claim.
On the Effective Date, (a) in order to assist Tower A Co. in its
settlement with TIAA and subject to a resolution of the partnership issues
relating to Tower A as set forth below, Oppenheimer shall contribute to the
capital of Tower A Associates the sum of $6,000,000 which will ultimately be
used by Tower A Co. to fund $6,000,000 of the Cash payments required to be made
to TIAA in accordance with section 4.5 hereof and (b) in full satisfaction and
settlement of all Claims that Oppenheimer has filed or could have filed against
any of the Debtors, the Debtors in Possession and the O&Y Affiliates (other than
Oppenheimer's Claim against Devco relating to commercial rent taxes and any
claims arising in connection with Oppenheimer's lease of space at Tower A) and
all Claims arising in connection with Oppenheimer's indirect Equity Interest in
Tower A Co., Oppenheimer shall have an Allowed Unaffiliated Unsecured Claim
against Devco arising out of the partnership agreement for Tower A Co. in an
agreed amount equal to $60,000,000, which Claim shall receive the treatment
described in section 7.11.1 hereof.
Oppenheimer and the Debtors have agreed that the Tower A Co.
Partnership Agreement shall be amended in the following manner.
The Tower A Co. Partnership Agreement will be amended to include a
provision that specially allocates a portion of the federal income tax deduction
attributable to the TIAA settlement to TALP in an amount equal to the
Oppenheimer contribution. Tower A Co. will report the TIAA settlement as a
deductible payment for federal income tax purposes.
The receivable due to Tower A Co. from BPHI, Devco, and Tower A
Holding (the "Tower A Partner Receivable") will be amended to accrue interest at
10.5% per annum, compounded semi-annually. Such interest will be due and payable
upon a repayment of the Tower A Partner Receivable. Tower A Co.'s tax reporting
for interest accruals on the Tower A Partner Receivable will conform to the
obligor's reporting of such interest accruals.
All existing preferences in the Tower A Co. Partnership Agreement will
be deleted.
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The Tower A Co. Partnership Agreement will be amended to explicitly
acknowledge that the Restructuring Transactions involving Tower A Co. will not
increase the amount of gain allocable to TALP under section 704(c) of the IRC or
increase TALP's share of "partnership minimum gain" (as such term is defined in
Treasury Regulation ss. 1.704- 2(c)) as described in Treasury Regulation ss.
1.704-2(g)(1) and that the aggregate book value of the assets of Tower A Co.
will be unchanged as a result of the Restructuring Transactions.
Section 7.1(c) of the Tower A Co. Partnership Agreement will be
amended to provide that if the 1987 assumptions of portions of the Sanwa
indebtedness made by the partners of Tower A Co. result in an Adjusted Capital
Deficit (as defined in the Tower A Co. Partnership Agreement) for TALP, unless
otherwise required by explicit authority to the contrary, items of Tower A Co.
income and gain shall first be specially allocated to all partners of Tower A
Co. other than TALP until the Adjusted Capital Deficits of such other partners
have been eliminated before any income or gain is allocated to TALP pursuant to
such section 7.1(c).
As of the closing of the Restructuring Transactions, all provisions of
the Tower A Co. Partnership Agreement requiring one party to indemnify the other
with respect to tax terminations will be deleted (including the Target
Allocations, as defined in the Tower A Co. Partnership Agreement). All partners
will waive any claims against the Debtors, the Debtors in Possession, the O&Y
Affiliates, and BPHI with respect to tax terminations in connection with or
prior to the Restructuring Transactions, provided that Oppenheimer receives an
Allowed Unaffiliated Unsecured Claim in the amount of $60,000,000.
Any other amendment to the Tower A Co. Partnership Agreement, or any
tax reporting by Tower A Co. that is inconsistent with the tax reporting
contemplated by this section 4.11 or otherwise adversely affects Oppenheimer,
shall require the consent of Oppenheimer, which consent shall not be
unreasonably withheld.
<PAGE>
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SECTION 5. PROVISIONS FOR PAYMENT OF
ADMINISTRATIVE EXPENSE CLAIMS,
PRIORITY TAX CLAIMS AND OTHER CLAIMS.
5.1. Administrative Expense Claims.
Except as provided in section 26.5.1 hereof, on the Effective Date,
each holder of an Administrative Expense Claim shall be distributed on account
of such Administrative Expense Claim an amount in Cash equal to the amount of
such Administrative Expense Claim allowed by the Bankruptcy Court, except to the
extent that any Entity entitled to payment of any Administrative Expense Claim
agrees to a different treatment of such Administrative Expense Claim. Each
holder of an Administrative Expense Claim against a Debtor or a substantively
consolidated group of Debtors shall be paid by such Debtor or substantively
consolidated group of Debtors, or the successor(s) in interest thereto, (a) upon
the later of (i) the Effective Date and (ii) the date that is ten (10) Business
Days after an order of the Bankruptcy Court with respect to any such
Administrative Expense Claim becomes a Final Order or (b) upon such other terms
as may be mutually agreed upon between such holder of an Administrative Expense
Claim and any of the Debtors.
5.2. Priority Tax Claims.
Except as provided in section 26.5.1 hereof, on the Effective Date,
with respect to each Debtor or substantively consolidated group of Debtors
(other than Tower B Leaseco), each holder of an Allowed Priority Tax Claim shall
be distributed on account of such Allowed Priority Tax Claim a Tax Note from
such Debtor or substantively consolidated group of Debtors, or the successor(s)
in interest thereto, that complies with the requirements of section
1129(a)(9)(C) of the Bankruptcy Code or such other, more favorable treatment, as
the Debtors in their sole discretion shall elect. On the Effective Date, each
holder of an Allowed Priority Tax Claim against Tower B Leaseco shall receive a
payment in Cash equal to the amount of such Allowed Priority Tax Claim.
5.3. Consolidated Devco Convenience Claims.
Each holder of a Consolidated Devco Convenience Claim shall be paid in
full the amount of such Consolidated Devco Convenience Claim, in Cash, on the
Effective Date, subject to satisfaction of the Employee Withholding
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Requirement for Consolidated Devco Convenience Claims that
are Compensation Claims.
SECTION 6. CLASSIFICATION OF CLAIMS
AND EQUITY INTERESTS.
Claims (except for Administrative Expense Claims, Priority Tax Claims
and Consolidated Devco Convenience Claims) against and Equity Interests in the
Debtors are classified as follows:
6.1. Claims Against and Equity
Interests in Consolidated Devco.
6.1.1. Consolidated Devco Class 1 -- Priority Non-Tax Claims against
the Consolidated Devco Entities.
6.1.2. Consolidated Devco Class 2 -- Secured Club Loan Claims against
Devco, Devco GP, Equityco, Equity GP and U.S. Finco.
6.1.3. Consolidated Devco Class 3 -- Secured CIBC/OLP Claims against
Devco, Devco GP and U.S. Finco.
6.1.4. Consolidated Devco Class 4 -- Secured Sumitomo Bank/Tower D
Pledge Loan Claims against Devco and Devco GP.
6.1.5. Consolidated Devco Class 5 -- Secured Citibank Letter of Credit
Claims against Equityco.
6.1.6. Consolidated Devco Class 6 -- Secured Citibank Swap Claim
against Devco.
6.1.7. Consolidated Devco Class 7 -- Secured Sterling National Letter
of Credit Claims against Devco GP.
6.1.8. Consolidated Devco Class 8 -- Secured 245 Park Co. Partnership
Claims against Equityco.
6.1.9. Consolidated Devco Class 9 -- CIBC/Lost Note Indemnity Claims
against O&Y Finco, Equityco and Equity GP.
6.1.10. Consolidated Devco Class 10 -- Insured Claims against the
Consolidated Devco Entities.
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6.1.11. Consolidated Devco Class 11 -- General Unsecured Claims
against the Consolidated Devco Entities.
6.1.12. Consolidated Devco Class 12 -- Equity Interests in the
Consolidated Devco Entities.
6.2. Claims Against and Equity Interests in Consolidated Realty Corp.
6.2.1. Consolidated Realty Corp. Class 1 -- Priority Non-Tax Claims
against Realty Corp, OYREUSA and Baden.
6.2.2. Consolidated Realty Corp. Class 2 -- Secured Club Loan Claims
against OYREUSA.
6.2.3. Consolidated Realty Corp. Class 3 -- Toronto Dominion Judgment
Claims against Baden.
6.2.4. Consolidated Realty Corp. Class 4 -- Bank of Nova Scotia Claims
against Baden.
6.2.5. Consolidated Realty Corp. Class 5 -- Insured Claims against
Realty Corp., OYREUSA and Baden.
6.2.6. Consolidated Realty Corp. Class 6 -- General Unsecured Claims
against Realty Corp, OYREUSA and Baden.
6.2.7. Consolidated Realty Corp. Class 7 -- Equity Interests in Realty
Corp., OYREUSA and Baden.
6.3. Claims Against and Equity
Interests in SF Holdings.
6.3.1. SF Holdings Class 1 -- Priority Non-Tax Claims against SF
Holdings.
6.3.2. SF Holdings Class 2 -- General Unsecured Claims against SF
Holdings.
6.3.3. SF Holdings Class 3 -- Equity Interests in SF Holdings.
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6.4. Claims Against and Equity
Interests in Devco Canada.
6.4.1. Devco Canada Class 1 -- Priority Non-Tax Claims against Devco
Canada.
6.4.2. Devco Canada Class 2 -- Insured Claims against Devco Canada.
6.4.3. Devco Canada Class 3 -- General Unsecured Claims against Devco
Canada.
6.4.4. Devco Canada Class 4 -- Equity Interests in Devco Canada.
6.5. Claims Against and Equity
Interests in Equity Canada.
6.5.1. Equity Canada Class 1 -- Priority Non-Tax Claims against Equity
Canada.
6.5.2. Equity Canada Class 2 -- Insured Claims against Equity Canada.
6.5.3. Equity Canada Class 3 -- General Unsecured Claims against
Equity Canada.
6.5.4. Equity Canada Class 4 -- Equity Interests in Equity Canada.
6.6. Claims Against and Equity
Interests in Consolidated OLP.
6.6.1. Consolidated OLP Class 1 -- Priority Non- Tax Claims against
Liberty Plaza Co., OLP Co. and Trinity Place Co.
6.6.2. Consolidated OLP Class 2 -- Secured Sanwa/OLP Claims against
Liberty Plaza Co., OLP Co. and Trinity Place Co.
6.6.3. Consolidated OLP Class 3 -- Secured U.S. Finco/OLP Claims
against Liberty Plaza Co., OLP Co. and Trinity Place Co.
6.6.4. Consolidated OLP Class 4 -- Insured Claims against Liberty
Plaza Co., OLP Co. and Trinity Place Co.
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6.6.5. Consolidated OLP Class 5 -- General Unsecured Claims against
Liberty Plaza Co., OLP Co. and Trinity Place Co.
6.6.6. Consolidated OLP Class 6 -- Equity Interests in Liberty Plaza
Co., OLP Co. and Trinity Place Co.
6.7. Claims Against and Equity
Interests in Tower A Co.
6.7.1. Tower A Co. Class 1 -- Priority Non-Tax Claims against Tower A
Co.
6.7.2. Tower A Co. Class 2 -- Secured Sanwa/Tower A Claims against
Tower A Co.
6.7.3. Tower A Co. Class 3 -- TIAA Judgment Claims against Tower A Co.
6.7.4. Tower A Co. Class 4 -- Insured Claims against Tower A Co.
6.7.5. Tower A Co. Class 5 -- General Unsecured Claims against Tower A
Co.
6.7.6. Tower A Co. Class 6 -- Equity Interests in Tower A Co.
6.8. Claims Against and Equity
Interests in Tower Corp.
6.8.1. Tower Corp. Class 1 -- Priority Non-Tax Claims against Tower
Corp.
6.8.2. Tower Corp. Class 2 -- Secured Club Loan Claims against Tower
Corp.
6.8.3. Tower Corp. Class 3 -- Insured Claims against Tower Corp.
6.8.4. Tower Corp. Class 4 -- General Unsecured Claims against Tower
Corp.
6.8.5. Tower Corp. Class 5 -- Equity Interests in Tower Corp.
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6.9. Claims Against and
Equity Interests in Consolidated 245.
6.9.1. Consolidated 245 Class 1 -- Priority Non-
Tax Claims against 245 Park Co., 245 Holding LP and 245
Corp.
6.9.2. Consolidated 245 Class 2 -- Secured Club Loan Claims against
245 Holding LP and 245 Corp.
6.9.3. Consolidated 245 Class 3 -- Secured Aetna Mortgage Loan Claims
against 245 Park Co.
6.9.4. Consolidated 245 Class 4 -- Secured DKB Mortgage Loan Claims
against 245 Park Co.
6.9.5. Consolidated 245 Class 5 - Club Loan/245 Park Deficiency Claims
against 245 Holding LP and 245 Park Co.
6.9.6. Consolidated 245 Class 6 -- Insured Claims against 245 Park
Co., 245 Holding LP and 245 Corp.
6.9.7. Consolidated 245 Class 7 -- General Unsecured Claims against
245 Park Co., 245 Holding LP and 245 Corp.
6.9.8. Consolidated 245 Class 8 -- Equity Interests in 245 Park Co.,
245 Holding LP and 245 Corp.
6.10. Claims Against and Equity
Interests in Tower B Leaseco.
6.10.1. Tower B Leaseco Class 1 -- Priority Non- Tax Claims against
Tower B Leaseco.
6.10.2. Tower B Leaseco Class 2 -- Merrill Lynch/Tower B Leaseco
Secured Claim.
6.10.3. Tower B Leaseco Class 3 -- Insured Claims against Tower B
Leaseco.
6.10.4. Tower B Leaseco Class 4 -- General Unsecured Claims against
Tower B Leaseco.
6.10.5. Tower B Leaseco Class 5 -- Equity Interests in Tower B
Leaseco.
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SECTION 7. PROVISIONS FOR TREATMENT OF
CLAIMS AGAINST AND EQUITY
INTERESTS IN CONSOLIDATED DEVCO.
7.1. Priority Non-Tax Claims Against Consolidated Devco
Entities (Consolidated Devco Class 1).
On the Effective Date, in full satisfaction of the Allowed Priority
Non-Tax Claims against the Consolidated Devco Entities, each holder of an
Allowed Priority Non-Tax Claim against the Consolidated Devco Entities shall be
distributed on account of such Allowed Priority Non-Tax Claim a payment in Cash
equal to the amount of such holder's Allowed Priority Non-Tax Claim.
7.2. Secured Club Loan Claims Against
Devco, Devco GP, Equityco, Equity GP,
and U.S. Finco (Consolidated Devco Class 2).
On the Effective Date and in accordance with the Restructuring
Transactions, the New Club Loan Disbursing Agent shall be distributed, on
account of the Allowed Secured Club Loan Claims against Devco, Devco GP,
Equityco, Equity GP and U.S. Finco, Class A Interests having a value equal to
the lesser of (a) the Allowed Club Loan Claims and (b) the value on the
Confirmation Date of the Collateral securing the Allowed Club Loan Claims
pledged by Devco, Devco GP, Equityco, Equity GP and U.S. Finco. In accordance
with this section 7.2 and sections 8.2, 14.2 and 15.2 hereof and without
duplication, the New Club Loan Disbursing Agent shall be distributed, in the
aggregate and in full satisfaction of the Allowed Club Loan Claims, Class A
Interests having a value equal to the lesser of (a) the Allowed Club Loan Claims
and (b) the value on the Confirmation Date of the Collateral securing the
Allowed Club Loan Claims pledged by any Debtor under this Plan.
7.3. Secured CIBC/OLP Claims Against Devco, Devco GP
and U.S. Finco (Consolidated Devco Class 3).
On the Effective Date, the CIBC/OLP Claims shall be an Allowed Claim
in the amount of $75,658,000 plus interest accruing from and after June 30, 1996
through the Effective Date and any unpaid attorneys' fees and expenses incurred
through the Effective Date that are payable under the agreements evidencing the
CIBC/OLP Claims. On the Effective Date, in full satisfaction of the Allowed
CIBC/OLP Claims, CIBC or its designee, in accordance with the Restructuring
Transactions, shall be distributed Class A
<PAGE>
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Interests having a value equal to the lesser of (a) the amount of the Allowed
CIBC/OLP Claims on the Effective Date and (b) the value, as of the Confirmation
Date, of the Collateral securing the Allowed CIBC/OLP Claims. CIBC, as holder of
the Allowed CIBC/OLP Claims, shall not be entitled to any additional
distribution by reason of any Allowed CIBC/OLP Claims filed against other
Debtors for the same loss or damage.
7.4. Secured Sumitomo Bank/Tower D Pledge
Loan Claims Against Devco and Devco GP
(Consolidated Devco Class 4).
On the Effective Date, in full satisfaction of the Allowed Sumitomo
Bank/Tower D Pledge Loan Claims, Sumitomo Bank shall be distributed a payment in
Cash of $74,750,000 plus any unpaid interest at the rate of LIBOR plus 100 basis
points accrued on the Sumitomo Bank/Tower D Pledge Loan together with any costs
and expenses payable under the Sumitomo Bank/Tower D Pledge Loan through the
Effective Date. On the Effective Date, the Sumitomo Bank/Tower D Pledge Loan and
any Claims otherwise arising under or related to the Sumitomo Bank/Tower D
Pledge Loan or any of the guarantees, mortgages or security interests issued in
connection therewith shall be released and cancelled in consideration of the
treatment provided in this section 7.4.
7.5. Secured Citibank Letter of Credit Claims
Against the Consolidated Devco Entities
(Consolidated Devco Class 5).
On the Effective Date, in full satisfaction of the Allowed Citibank
Letter of Credit Claims against Equityco, Citibank shall be distributed the
Collateral that secures the reimbursement obligation under the Citibank Letter
of Credit.
7.6. Secured Citibank Swap Claims
Against Devco (Consolidated Devco Class 6).
On the Effective Date, in full satisfaction of the Secured Citibank
Swap Claim, Citibank shall be distributed the Collateral (a certain Cash account
which held $443,507.31 as of March 31, 1996) that secures the Citibank Swap
Claim to the extent such Claim is an Allowed Secured Claim. The Deficiency Claim
on the Allowed Citibank Swap Claim shall receive the treatment accorded to
Co-Proponent Unsecured Claims set forth in section 7.11.2 hereof.
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7.7. Secured Sterling National Letter of Credit Claims
Against Devco GP (Consolidated Devco Class 7).
On the Effective Date, in full satisfaction of the Allowed Sterling
National Letter of Credit Claims against Devco GP, Sterling National shall be
distributed the Sterling National Amended and Restated Reimbursement Agreement,
pursuant to which Newco LP will be substituted for Devco GP as the obligor on
such reimbursement agreement. The Sterling National Amended and Restated
Reimbursement Agreement will be secured by the Collateral that secures the
reimbursement obligation under the Sterling National Letter of Credit.
7.8. Secured 245 Park Co. Partnership Claims
Against Devco (Consolidated Devco Class 8).
On the Effective Date, in full satisfaction of the Allowed 245 Park
Co. Partnership Claims against Devco, the holders of Allowed 245 Park Co.
Partnership Claims against Devco shall receive the distributions provided to the
holders of Allowed Equity Interests in 245 Park Co. in section 15.8 hereof.
7.9. CIBC/Lost Note Indemnity Claims
Against O&Y Finco, Equityco and Equity GP
(Consolidated Devco Class 9).
On the Effective Date, in full satisfaction of the Allowed CIBC/Lost
Note Indemnity Claims against O&Y Finco, Equityco and Equity GP, CIBC shall be
distributed the CIBC Amended and Restated Lost Note Indemnity Agreement,
pursuant to which Newco LP will be substituted for O&Y Finco, Equityco and
Equity GP as the obligor on such indemnity agreement.
7.10. Insured Claims Against
Consolidated Devco Entities
(Consolidated Devco Class 10).
On the Effective Date, each holder of an Insured Claim against any of
the Consolidated Devco Entities shall only be entitled to maintain actions
against and obtain payment solely from an insurance company under an insurance
policy or policies issued by such company to, or for the benefit of, any of the
Consolidated Devco Entities.
<PAGE>
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7.11. General Unsecured Claims Against
Consolidated Devco Entities
(Consolidated Devco Class 11).
Consolidated Devco Class 11 consists of all General Unsecured Claims
against any of the Consolidated Devco Entities, including all Unaffiliated
Unsecured Claims against any of the Consolidated Devco Entities and all Co-
Proponent Unsecured Claims. Consolidated Devco Class 11 constitutes one class
for voting purposes.
7.11.1. Unaffiliated Unsecured Claims.
The provisions of this section 7.11.1 shall be amended as set forth in
Exhibit B hereto.
On the Effective Date and in accordance with the Restructuring
Transactions, each holder of an Allowed Unaffiliated Unsecured Claim against the
Consolidated Devco Entities shall be distributed consideration having a value
equal to 8% of the amount of such Allowed Unaffiliated Unsecured Claim. Such
consideration shall be comprised of (a) Class A Interests having a value on the
Confirmation Date equal to 2.29% of such holder's Allowed Unaffiliated Unsecured
Claim, and (b) a Convertible Note Interest having a value equal to 5.71% of such
Allowed Unaffiliated Unsecured Claim.
The Convertible Note shall include the following terms and conditions:
Borrower: Newco LP.
Lender: The Convertible Note Indenture
Trustee on behalf of the
holders of the Convertible
Note Interests.
Face Amount: 5.71% of the aggregate amount
of Allowed Unaffiliated
Unsecured Claims and Disputed
Unaffiliated Unsecured Claims
in their Maximum Allowable
Amounts.
Maturity: 7-1/2 years from the Effective
Date.
<PAGE>
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Interest Rate: 8% per annum until the second
anniversary of the Effective
Date; 9% per annum thereafter
until maturity or prepayment.
Interest to be paid quarterly
in arrears. Interest shall
accrue from the earlier of the
Effective Date and December 1,
1996.
Scheduled
Amortization: None.
Security: None.
Recourse: The Convertible Note will be
fully recourse to Newco LP.
Indenture: The terms of the Convertible
Note will be set forth in a
note indenture dated the
Effective Date between Newco
LP and the Convertible Note
Indenture Trustee, such terms
to include the terms set forth
in this section 7.11.1, and
otherwise to be in a form that
is reasonably satisfactory to
the Debtors, the Co-
Proponents, TIAA and the
Creditors' Committee.
Pre-Payment: At any time and from time to
time on or prior to the second
anniversary of the Effective
Date, the Convertible Note
will be pre-payable in whole
or in part, at Newco LP's
option, without penalty. The
Convertible Note Indenture
Trustee will be provided at
least thirty (30) days'
advance notice of any proposed
pre-payment (which notice
shall be sent by the
Convertible Note Indenture
Trustee to each holder of a
Convertible Note Interest) to
provide such holder with time
<PAGE>
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to elect to exercise its
right to convert such
interest into a Class A
Interest (the "Conversion
Right") prior to the
pre-payment date. From and
after the second
anniversary of the
Effective Date, the
Convertible Note may only
be pre-paid with the
consent (or deemed consent)
of the holders of
Convertible Note Interests
(such consent to be given
on a holder-by- holder
basis as to such holder's
Convertible Note
Interests). The mechanics
and timing of the
aforementioned pre-payments
will be set forth in the
indenture for the
Convertible Note.
The net proceeds of any
Post- Effective Date
Capital Infusion shall be
transferred (as a
contribution or in the form
of either debt or equity
subordinated to the
Convertible Note), directly
or indirectly, to Newco LP.
Newco LP shall apply any
Post- Effective Date
Capital Infusion (received
by contribution or
otherwise) to pre-payment
of the Convertible Note (to
the extent consented to or
deemed consented to by such
holders with respect to any
such infusion occurring
from and after the second
anniversary of the
Effective Date). The
Convertible Note Indenture
Trustee will be provided at
least thirty (30) days'
advance notice of the
proposed pre-payment (which
notice shall be sent by the
Convertible Note Indenture
Trustee to each holder of a
Convertible Note Interest)
to
<PAGE>
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provide each holder with time
to elect to exercise its
Conversion Right.
The pre-payment provisions
of the preceding paragraph
shall not apply with
respect to contributions of
capital (whether in the
form of debt or equity) on
an emergency basis, the
nature of such emergency
events to be agreed upon
and set forth in the
indenture for the
Convertible Note.
Conversion Right: The Conversion Right will be
exercisable at any time and
from time to time only upon
the written notice (the
"Conversion Notice") from a
holder of Convertible Note
Interests. The Conversion
Notice will be required to be
delivered by such holder
(each, an "Exercising Holder")
to the Convertible Note
Indenture Trustee who,
promptly upon receipt of such
notice, will be required to
notify Newco LP thereof. The
timing and other mechanics of
the exercise of the Conversion
Right will be set forth in the
indenture for the Convertible
Note and will be designed,
among other things, to allow
for the exercise of such right
in connection with any
voluntary prepayment, or
mandatory prepayment with the
proceeds of certain Post-
Effective Date Capital
Infusions as provided above,
in each case prior to the
second anniversary of the
Effective Date. Each
Exercising Holder will be
entitled to receive upon
<PAGE>
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conversion of its
Convertible Note Interests
that percentage of Class A
Interests that is
determined by dividing the
principal amount plus
accrued interest
outstanding with respect to
the Convertible Note
Interests tendered for
conversion by a conversion
price to be determined on
the Effective Date based on
the reorganization price
per Class A Interest issued
on the Effective Date,
adjusted in accordance with
the anti-dilution
protections set forth below
under "Anti-Dilution
Protections." If Newco LP
reasonably determines that
applicable law would
require Newco LP to
withhold any taxes
otherwise payable by the
relevant Exercising Holder
in respect of the
conversion of a Convertible
Note Interest, each
Exercising Holder shall be
required to fund such tax
withholding as a condition
to the exercise of its
Conversion Right.
Anti-Dilution
Protection: If a subsequent issuance of
equity or securities
exchangeable for or
convertible into equity of
Newco LP occurs, then the
conversion price shall be
adjusted to the extent
appropriate pursuant to a
standard formula to be agreed
upon in accordance with
customary anti-dilution
provisions. In addition, if
the Newco LP Equity Interests
are changed into or exchanged
for a different number or kind
of securities of or interests
in Newco LP or of another
<PAGE>
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Entity or for Cash and/or
other property or any
combination thereof by
reason of a merger,
consolidation,
recapitalization,
reclassification,
combination of interests,
exchange of interests or
otherwise, the interests
subject to the Conversion
Right shall be
appropriately and equitably
adjusted in number and kind
(to the extent then
unexercised) such that the
right to purchase such
interests shall thereafter
be exercisable for such
other securities, Cash
and/or other property as
would have been received
for the interests subject
to the Conversion Right had
the right to purchase such
interests been exercised in
full immediately prior to
such transaction. Any such
adjustment will be made
successively each time a
transaction described in
the immediately preceding
sentence is consummated.
Covenants: Until such time as Newco LP
shall have delivered a pre-
payment notice providing for
payment in full of all
outstanding amounts under the
Convertible Note (regardless
of whether the holders of
Convertible Note Interests
shall have elected to accept
such pre-payment), and funded
(or set aside sufficient
amounts to fund) the payments
required to be made to holders
that elect to accept such pre-
payment (a "Full Payment
Triggering Event"), no
restricted payments, such as
redemptions of Equity
<PAGE>
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Interests in Newco LP
(other than conversions or
exchanges of Class B
Interests into or for Class
A Interests) or
distributions of any kind
in respect of equity or
subordinated debt (by
contract or structure)
shall be made by Newco LP,
except in respect of (a)
Tax Advances or Withholding
Advances or (b)
distributions of Equity
Interests in connection
with an executive
compensation plan adopted
post-Effective Date by the
Board of Directors of
Managing GP.
No Affiliate transactions
other than on arm's length
terms will be permitted;
provided, however, that
banking and investment
banking transactions that
are concluded as part of a
public offering,
securitization, syndication
or similar distribution in
which non-affiliated
financial intermediaries
participate shall be
presumed to be on arm's
length terms but only to
the extent that the
relevant Affiliates
participate on the same
basis and capacity as the
non-affiliated financial
intermediaries. Any dispute
as to whether any such
Affiliate transaction is
arm's length shall be
resolved by binding
arbitration pursuant to
procedures to be described
in the indenture for the
Convertible Note.
The Convertible Note
Indenture Trustee shall be
provided financial
information relating to
Newco LP and certain of its
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Affiliates to be identified
and agreed upon by the
Debtors, the Co-Proponents
and the Creditors'
Committee.
The indenture for the
Convertible Note will
contain other standard
covenants, representations
and warranties to be agreed
upon by the Debtors, the
Co-Proponents and the
Creditors' Committee.
Tag-Along Rights: The holders of Class A
Interests shall be provided
tag-along rights in accordance
with section 18.13 hereof.
7.11.2. Co-Proponent Unsecured Claims.
On the Effective Date, each Co-Proponent agrees to subordinate the
Allowed Co-Proponent Unsecured Claims held by such Co-Proponent to enable the
holders of Allowed Unaffiliated Unsecured Claims to receive the distributions
under section 7.11.1 hereof. After all distributions required by section 7.11.1
hereof have been made, the Residual Newco Equity shall be distributed to the Co-
Proponents on account of the Co-Proponents' Capital Infusion and on account of
the Allowed Co-Proponent Unsecured Claims. In addition, in partial consideration
of the Co-Proponents' Capital Infusion and the Allowed Co-Proponent Unsecured
Claims, the Newco LP Partnership Agreement shall designate Managing GP as the
sole general partner of Newco LP in accordance with section 3 hereof.
7.12. Equity Interests in Consolidated Devco
Entities (Consolidated Devco Class 12).
Each holder of an Equity Interest in each of the Consolidated
Devco Entities will be released in accordance with section 24 of this Plan.
<PAGE>
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SECTION 8. PROVISIONS FOR TREATMENT OF CLAIMS
AGAINST AND EQUITY INTERESTS IN
CONSOLIDATED REALTY CORP.
8.1. Priority Non-Tax Claims Against
Realty Corp., Baden and OYREUSA
(Consolidated Realty Corp. Class 1).
On the Effective Date, in full satisfaction of the Allowed Priority
Non-Tax Claims against Realty Corp., each holder of an Allowed Priority Non-Tax
Claim against Realty Corp., Baden or OYREUSA shall be distributed on account of
such Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of its
Allowed Priority Non-Tax Claim.
8.2. Secured Club Loan Claims Against
OYREUSA (Consolidated Realty Corp. Class 2).
On the Effective Date and in accordance with the Restructuring
Transactions, the New Club Loan Disbursing Agent shall be distributed, on
account of the Allowed Secured Club Loan Claims against OYREUSA, Class A
Interests having a value equal to the lesser of (a) the Allowed Club Loan Claims
and (b) the value on the Confirmation Date of the Collateral securing the
Allowed Club Loan Claims pledged by OYREUSA, after taking into account the
treatment of the OpCo Notes set forth in the Restructuring Transactions. In
accordance with this section 8.2 and sections 7.2, 14.2 and 15.2 hereof and
without duplication, the New Club Loan Disbursing Agent shall be distributed, in
the aggregate and in full satisfaction of the Allowed Club Loan Claims, Class A
Interests having a value equal to the lesser of (a) the Allowed Club Loan Claims
and (b) the value on the Confirmation Date of the Collateral securing the
Allowed Club Loan Claims pledged by any Debtor under this Plan.
8.3. Toronto Dominion Judgment Claims Against
Baden (Consolidated Realty Corp. Class 3).
On the Effective Date, and in full satisfaction of the Toronto
Dominion Judgment Claims, Toronto Dominion shall receive the consideration
provided in the Toronto Dominion Settlement described in section 4.6 hereof.
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8.4. Bank of Nova Scotia Claims Against Baden
(Consolidated Realty Corp. Class 4).
On the Effective Date, in full satisfaction of the Bank of Nova Scotia
Claims, Bank of Nova Scotia shall receive the consideration provided in the Bank
of Nova Scotia Settlement described in section 4.9 hereof.
8.5. Insured Claims Against
Realty Corp., OYREUSA and Baden
(Consolidated Realty Corp. Class 5).
On the Effective Date, each holder of an Insured Claim against any of
Realty Corp., OYREUSA and/or Baden shall only be entitled to maintain actions
against and obtain payment solely from an insurance company under an insurance
policy or policies issued by such company to, or for the benefit of, any of
Realty Corp., OYREUSA and/or Baden.
8.6. General Unsecured Claims Against
Realty Corp., OYREUSA and Baden
(Consolidated Realty Corp. Class 6).
On the Effective Date, each holder of an Allowed General Unsecured
Claim against any of Realty Corp., OYREUSA and Baden shall be distributed, based
upon an election to be made by each such holder on such holder's Ballot,
distributions under either of the following options:
(a) In accordance with the Restructuring Transactions, each holder of
an Allowed General Unsecured Claim, including any Co-Proponent, against any of
Realty Corp., OYREUSA and/or Baden that so elects shall be distributed such
holder's Ratable Proportion of (x) Class A Interests having a value as of the
Confirmation Date equal to the value of the Undisputed Realty Corp. Assets and
(y) 100% of the outstanding Class B Interests; provided, however, that the
aggregate percentage of Class B Interests that is to be distributed to one or
more of the Co- Proponents under this section 8.6(a) shall be reduced by the
percentage, if any, required to be distributed to JMB in accordance with section
15.8.1 hereof.
or
(b) Each holder of an Allowed General Unsecured Claim against any of
Realty Corp., OYREUSA and Baden that qualifies as, and elects to be treated as,
a Realty Corp.
<PAGE>
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Cash-Out Claim shall be distributed a payment in Cash equal to such holder's
Realty Corp. Cash-Out Claim; provided, however, that in the event it is
determined, based on the Ballots received by Realty Corp., OYREUSA and Baden,
that the aggregate amount of Cash to be distributed on account of the Realty
Corp. Cash-Out Claims pursuant to this section 8.6(b) exceeds $500,000 (except
to the extent such amount is increased by the Debtors and the Co-Proponents in
their sole discretion), then the election offered in this section 8.6(b) shall
be eliminated and each holder of a Realty Corp. Cash-Out Claim shall receive the
treatment provided in subsection (a) of this section 8.6 without regard to any
election to be treated as a Realty Corp. Cash-Out Claim.
8.7. Equity Interests in Realty
Corp. (Consolidated Realty Corp. Class 7).
OYDL will retain its Equity Interest in Realty Corp.
SECTION 9. PROVISIONS FOR TREATMENT OF
CLAIMS AGAINST AND EQUITY
INTERESTS IN SF HOLDINGS.
9.1. Priority Non-Tax Claims Against
SF Holdings (SF Holdings Class 1).
On the Effective Date, in full satisfaction of the Allowed Priority
Non-Tax Claims against SF Holdings, each holder of an Allowed Priority Non-Tax
Claim against SF Holdings shall be distributed on account of such Allowed
Priority Non-Tax Claim a payment in Cash equal to the amount of such holder's
Allowed Priority Non-Tax Claim.
9.2. General Unsecured Claims Against
SF Holdings (SF Holdings Class 2).
On the Effective Date, after giving effect to the distributions
required by section 9.1 hereof and the payment of Administrative Expense Claims
against SF Holdings, in full satisfaction of the Allowed General Unsecured
Claims against SF Holdings, each holder of an Allowed General Unsecured Claim
against SF Holdings shall be distributed the lesser of (a) a payment in Cash
equal to the amount of such holder's Allowed General Unsecured Claim against SF
Holdings, if the Available Cash of SF Holdings at the time is sufficient to fund
such payment of all Allowed General Unsecured Claims against SF Holdings, and
(b) a payment in
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Cash equal to such holder's Ratable Proportion of the Available Cash of SF
Holdings on the Effective Date. From and after the Effective Date, in the event
the holders of Allowed General Unsecured Claims against SF Holdings are provided
the distribution provided in clause (b) of the immediately preceding sentence,
if any non-Cash assets of SF Holdings are converted to Cash, each holder of an
Allowed General Unsecured Claim against SF Holdings shall receive a semi-annual
distribution equal to such holder's Ratable Proportion of the Cash realized from
such conversion of the non-Cash assets in the immediately preceding six-month
period plus any additional Cash payment required by section 20.5 hereof.
9.3. Equity Interest in SF
Holdings (SF Holdings Class 3).
On the Effective Date, Realty Corp. will transfer all of its right,
title and interest in 100% of the outstanding stock of SF Holdings to Newco LP.
SECTION 10. PROVISIONS FOR TREATMENT OF
CLAIMS AGAINST AND EQUITY
INTERESTS IN DEVCO CANADA.
10.1. Priority Non-Tax Claims Against
Devco Canada (Devco Canada Class 1).
On the Effective Date, in full satisfaction of the Allowed Priority
Non-Tax Claims against Devco Canada, each holder of an Allowed Priority Non-Tax
Claim against DevcoCanada shall be distributed on account of such Allowed
Priority Non-Tax Claim a payment in Cash equal to the amount of such holder's
Allowed Priority Non-Tax Claim.
10.2. Insured Claims Against
Devco Canada (Devco Canada Class 2).
On the Effective Date, each holder of an Insured Claim against Devco
Canada shall only be entitled to maintain actions against and obtain payment
solely from an insurance company under an insurance policy or policies issued by
such company to, or for the benefit of, Devco Canada.
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10.3. General Unsecured Claims Against
Devco Canada (Devco Canada Class 3).
On the Effective Date, after giving effect to the distributions
required by section 10.1 hereof and the payment of Administrative Expense Claims
against Devco Canada, in full satisfaction of the Allowed General Unsecured
Claims against Devco Canada, each holder of an Allowed General Unsecured Claim
against Devco Canada shall be distributed the lesser of (a) a payment in Cash
equal to the amount of such holder's Allowed General Unsecured Claim against
Devco Canada, if the Available Cash of Devco Canada at the time is sufficient to
fund such payment of all Allowed General Unsecured Claims against Devco Canada,
and (b) a payment in Cash equal to such holder's Ratable Proportion of the
Available Cash of Devco Canada on the Effective Date. From and after the
Effective Date, in the event the holders of Allowed General Unsecured Claims
against Devco Canada are provided the distribution provided in clause (b) of the
immediately preceding sentence, if any non-Cash assets of Devco Canada are
converted to Cash, each holder of an Allowed General Unsecured Claim against
Devco Canada shall receive a semi-annual distribution equal to such holder's
Ratable Proportion of the Cash realized from such conversion of the non-Cash
assets in the immediately preceding six-month period plus any additional Cash
payment required by section 20.5 hereof.
10.4. Equity Interest in Devco
Canada (Devco Canada Class 4).
OYDL shall retain its Equity Interest in Devco Canada unless it seeks
to dissolve Devco Canada in accordance with the Restructuring Transactions.
SECTION 11. PROVISIONS FOR TREATMENT OF CLAIMS
AGAINST AND EQUITY INTERESTS IN
EQUITY CANADA.
11.1. Priority Non-Tax Claims Against
Equity Canada (Equity Canada Class 1).
On the Effective Date, in full satisfaction of the Allowed Priority
Non-Tax Claims against Equity Canada, each holder of an Allowed Priority Non-Tax
Claim against Equity Canada shall be distributed on account of such Allowed
Priority Non-Tax Claim a payment in Cash equal to the amount of such holder's
Allowed Priority Non-Tax Claim.
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11.2. Insured Claims Against
Equity Canada (Equity Canada Class 2).
On the Effective Date, each holder of an Insured Claim against
Equity Canada shall only be entitled to maintain actions against and obtain
payment solely from an insurance company under an insurance policy or policies
issued by such company to, or for the benefit of, Equity Canada.
11.3. General Unsecured Claims Against
Equity Canada (Equity Canada Class 3).
On the Effective Date, after giving effect to the distributions
required by section 11.1 hereof and the payment of Administrative Expense Claims
against Equity Canada, in full satisfaction of the Allowed General Unsecured
Claims against Equity Canada, each holder of an Allowed General Unsecured Claim
against Equity Canada shall be distributed the lesser of (a) a payment in Cash
equal to the amount of such holder's Allowed General Unsecured Claim against
Equity Canada, if the Available Cash of Equity Canada at the time is sufficient
to fund such payment of all Allowed General Unsecured Claims against Equity
Canada, and (b) a payment in Cash equal to such holder's Ratable Proportion of
the Available Cash of Equity Canada on the Effective Date. From and after the
Effective Date, in the event the holders of Allowed General Unsecured Claims
against Equity Canada are provided the distribution provided in clause (b) of
the immediately preceding sentence, if any non-Cash assets of Equity Canada are
converted to Cash, each holder of an Allowed General Unsecured Claim against
Equity Canada shall receive a semi-annual distribution equal to such holder's
Ratable Proportion of the Cash realized from such conversion of the non-Cash
assets in the immediately preceding six-month period plus any additional Cash
payment required by section 20.5 hereof.
11.4. Equity Interest in Equity
Canada (Equity Canada Class 4).
OYDL shall retain its Equity Interest in Equity Canada unless it seeks
to dissolve Equity Canada in accordance with the Restructuring Transactions.
<PAGE>
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SECTION 12. PROVISIONS FOR TREATMENT OF CLAIMS
AGAINST AND EQUITY INTERESTS IN
CONSOLIDATED OLP.
12.1. Priority Non-Tax Claims Against Liberty
Plaza Co., OLP Co. and Trinity Place Co.
(Consolidated OLP Class 1).
On the Effective Date, in full satisfaction of the Allowed Priority
Non-Tax Claims against Liberty Plaza Co., OLP Co. and Trinity Place Co., each
holder of an Allowed Priority Non-Tax Claim against any of Liberty Plaza Co.,
OLP Co. and/or Trinity Place Co. shall be distributed on account of such Allowed
Priority Non-Tax Claim a payment in Cash equal to the amount of its Allowed
Priority Non-Tax Claim.
12.2. Secured Sanwa/OLP Claims Against Liberty
Plaza Co., OLP Co. and Trinity Place Co.
(Consolidated OLP Class 2).
On the Effective Date, in full satisfaction of the Allowed Sanwa/OLP
Claims against Liberty Plaza Co., OLP Co. and Trinity Place Co., Sanwa shall be
distributed the Sanwa/OLP Restructured Mortgage Loan, which will have the
following terms and conditions:
Initial Loan Balance: $294,552,443, less the amount
of the Initial Paydown.
Initial Paydown/
Distribution: The amount of Cash available
after providing for (a) the
funding of the Real Estate Tax
and Insurance Reserve and the
Cash reserve described below;
(b) payment of chapter 11
costs, Administrative Expense
Claims, Allowed Priority Tax
Claims, Allowed Priority Non-
Tax Claims and Allowed General
Unsecured Claims in accordance
with the treatment accorded
such Allowed Claims in this
Plan, and (c) the
Restructuring Fee described
below, shall be used to fund
the Initial Paydown to Sanwa
and an Initial Distribution to
the holders of the Equity
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Interests in OLP, in each
case equal to one-half of
such available amount.
Maturity: 7 years from the Effective
Date, but not later than
December 31, 2003.
Restructuring Fee: 1% of the initial loan
balance, 50% payable when the
Confirmation Order becomes a
Final Order and 50% payable on
the Effective Date, in each
case payable from the
Available Cash of OLP.
Interest Rate: LIBOR or Sanwa's cost of funds
plus 175 basis points for 5
years. On the earlier of the
fifth anniversary of the
Effective Date and January 1,
2002, Sanwa's spread shall be
increased to 200 basis points
until maturity. Specific
decisions about fixing the
rate will be made by the
owners of New Liberty Plaza
LP, subject to Sanwa's
approval, which approval shall
not be unreasonably withheld.
Amortization/Payment Terms: Interest shall be paid monthly
in arrears. All excess Cash
available during each of the
first five years of the
Sanwa/OLP Restructured
Mortgage Loan will be split
50% to amortization and 50% to
the owners of New Liberty
Plaza LP or their designees
(including, for this purpose,
the asset management fee),
subject to adjustment
beginning in 1999, as provided
below. After the fifth
anniversary of the Effective
Date, all excess cash flow
will be reserved until an
amount is reached that, in
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Sanwa's reasonable
judgment, will be
sufficient to pay all
leasing costs (including
tenant improvements and
leasing commissions, taking
into account projected
vacancy periods) for lease
expirations and any
reasonably anticipated
other vacancies scheduled
or anticipated to occur
prior to December 31, 2005;
thereafter the 50%/50%
split of excess cash flow
will resume with no minimum
amortization, subject to
adjustment as provided
below.
It is agreed that, not
later than December 31,
2001, total principal
payments (including the
Initial Paydown) shall
total not less than total
principal payments would
have been after five years
on a loan amortizing on a
level payment schedule over
20 years with a beginning
balance of $294,552,000.
Beginning on January 1,
1999, the 50%/50% split
between amortization and
distributions will be
subject to adjustment to
increase amortization
payments to Sanwa in order
to generate total principal
payments to Sanwa in
accordance with this
paragraph.
It is also agreed that, not
later than December 31,
2003, total principal
payments shall total not
less than total principal
payments would have been
after seven years on a loan
amortizing on a level
payment schedule over 20
years with a beginning
balance of $294,552,000;
provided, however, that
amortization of
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principal in 2002 and 2003
shall be subordinate to the
establishment of reserves
for leasing costs as
provided above. In 2002 and
2003, the 50%/50% split
after establishment of
reserves for leasing will
be subject to adjustment to
increase amortization
payments to Sanwa in order
to generate total principal
payments to Sanwa in
accordance with this
paragraph.
Real Estate Tax and
Insurance Reserve: On the Effective Date, a Real
Estate Tax and Insurance
Reserve will be established to
provide for a balance of
$3,342,500 as of September 30,
1996, increasing by $1,114,000
per month through December 31,
1996 and by the amount
necessary to fund the timely
payment of insurance premiums.
After the Effective Date,
monthly deposits equal to one-
twelfth of the total annual
payments for real estate
taxes, water and sewer charges
and insurance premiums will be
made to the Real Estate Tax
and Insurance Reserve so as to
accumulate a sufficient
balance to allow timely
payment of all real estate
taxes, water and sewer charges
and insurance premiums when
due.
Cash Flow Application: Cash flow will be applied in
the following priority:
(i) operating expenses,
including property
management fees and
reserves for real estate
taxes (which reserves
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will be established on
the Effective Date);
(ii) interest on the
Sanwa/OLP
Restructured Mortgage
Loan;
(iii) top up Cash reserve to
the amount required for
leasing costs and
asbestos removal in
accordance with the
Business Plan described
below;
(iv) capital expenditures
and
leasing costs to the
extent not paid from
reserves;
and
(v) remaining Cash will be
split with 50% going to
amortization on the
Sanwa/OLP Restructured
Mortgage Loan and 50%
being distributed to
the owners
of New Liberty
Plaza LP or their
designees. The 50%
distribution to the
owners of New Liberty
Plaza LP or their
designees will include
asset management fees,
subject to adjust-
ment as
described above to
achieve the required
minimum amortization
after five years and
seven years.
Cash Reserves: The initial deposit will be
such amount as is necessary to
achieve a balance of
$7,200,000 not later than
December 31, 1996, plus the
sum of any unexpended amounts
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for (a) leasing costs
(including payments to or
for the benefit of tenants
and leasing commissions)
required with respect to
existing leases and (b)
capital costs (including
asbestos removal) at an
agreed upon level for 1996.
Cash reserves will be
available for leasing
costs, asbestos removal and
other approved uses.
Deposits to and
expenditures from the Cash
reserves shall be in
accordance with the
Business Plan. Beginning on
the Effective Date, Cash
reserves will be increased
to and maintained at the
level necessary to pay all
leasing costs (as
reasonably estimated by
Sanwa) for existing
scheduled and anticipated
vacancies within the
succeeding 24 months, which
shall be carried out in
accordance with the
Business Plan; provided,
however, that in 1997 not
less than $12,500,000 shall
be deposited in the Cash
reserves or expended from
1997 revenues for leasing
costs and other capital
expenditures. As described
above in
Amortization/Payment Terms,
all excess cash flow in the
last two years of the loan
will be reserved until a
reserve amount is
established to cover
upcoming vacancies
scheduled or anticipated
through December 31, 2005.
Asbestos Removal: All remaining asbestos shall
be removed from the building
as soon as reasonably
possible. The cost of such
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removal shall be paid from the
Cash reserves.
Management Fees: Property management fees of 2%
of gross revenues, except that
with respect to revenues from
leases signed after the
Effective Date the fee shall
be 1%. Standard leasing
commissions shall be paid (50%
thereof when the tenant is
represented by a broker).
Asset management fees of 0.5%
in the first and second year
after the Effective Date, and
thereafter 0.35% until
maturity, of Gross Asset
Value, as determined by
trailing four quarters of Net
Operating Income, payable at
the level of priority
described above and in
accordance with the
requirements set forth in Cash
Flow Application.
Collateral: First mortgage on OLP and a
Lien on Cash reserves. The
existing pledge of the O&Y
Affiliates' Equity Interest in
53 State Street and O&Y 25
Realty Co.'s interest in 53
State Street will be released.
Recourse: Nonrecourse. Sanwa will waive
all Claims against OYDL and
Sanwa's guaranty Claim
against Devco will be
estimated at zero and
disallowed.
No Subordinate
Financing: If there are not sufficient
funds in the Cash reserves to
permit timely payment of all
leasing costs as the result of
leasing occurring more quickly
than is currently anticipated
or otherwise, the shortfall
necessary to pay such costs
<PAGE>
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shall be provided by the
owners of New Liberty Plaza
LP. Neither the building
nor the revenues of the
building may be used as
Collateral for any loan
obtained by the owners of
New Liberty Plaza LP.
Business Plan: Annually, the managing agent
of the building will present
to Sanwa for its review and
approval, not to be
unreasonably withheld,
provided that it conforms with
sound ownership practices for
first class office buildings
in New York City and does not
impair the ability of New
Liberty Plaza LP to repay
Sanwa at maturity, a "Business
Plan", which shall be updated
on a quarterly basis and shall
be updated more frequently if
circumstances warrant. The
managing agent shall manage
the building in accordance
with the Business Plan. The
Business Plan shall include
the following:
(a) Annual "Budgets", on a
Cash basis, broken down by
month, for (A) revenues,
(B) operating expenses, (C)
capital expenditures
(exclusive of lease-up
costs), and (D) lease-up
costs, which shall be
subject to Sanwa's review
and approval in accordance
with the foregoing
standards. Operating
expenses will include
third-party costs, such as
professional and
consultants' fees to the
extent that such fees are
ordinarily paid in addition
to property management and
asset management fees. In
addition,
<PAGE>
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quarterly and no later than
the first business day
after the 20th day of the
first month after each
calendar quarter, the
managing agent shall
provide an actual operating
statement, which will also
show variances from the
prior quarter's Budget and
compare actual year-to-date
performance to the Budget
for the year-to-date
period. The managing agent
shall provide a written
explanation of each
variance that exceeds the
lesser of (x) $50,000 or
(y) 10% of the approved
Budget for that line item
on a year-to-date basis.
(b) Annual "Leasing
Reports", detailing leasing
activity and programs for
the prior calendar year
shall be presented to Sanwa
by the leasing agent,
comparing the actual
activity to the prior
year's projected activity.
Each Leasing Report shall
also (A) describe major
anticipated leasing events,
such as vacancies,
renewals, terminations (due
to anticipated tenant
bankruptcies or defaults),
modifications or take-back
opportunities, (B)
generally describe the
proposed strategy for
dealing with such
anticipated leasing events,
(C) set forth proposed
leasing parameters for
entering into new or
renewal leases in the
building, including credit
standards for tenants,
minimum base rent and
maximum tenant allowances
(whether in the form of
free rent, construction or
other
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inducements or allowances),
and (D) a proposed leasing
budget. The proposed
strategy, leasing
parameters and leasing
budget shall be subject to
Sanwa's prior approval,
which shall not be
unreasonably withheld,
provided that they conform
with sound leasing
practices for first class
office buildings in New
York City and do not impair
the ability of New Liberty
Plaza LP to pay Sanwa in
full at maturity.
Notwithstanding the
foregoing, including the
parameters set forth in the
Leasing Report, eligibility
for applying the Cash
reserves shall be governed
by the leasing standards to
be agreed upon by Sanwa and
the Debtors. New Liberty
Plaza LP may amend, modify
or terminate leases in
accordance with the
approved Leasing Report and
Business Plan. The monthly
report of operating
expenses shall be
accompanied by copies of
all newly executed leases
and amendments, extensions,
etc., of existing leases.
Consent to Use
of Cash Collateral: Sanwa shall consent to the use
of its Cash Collateral to be
used to fund the distributions
to the holders of
Administrative Expense Claims,
Allowed Priority Tax Claims,
Allowed Priority Non-Tax
Claims and Allowed General
Unsecured Claims in accordance
with sections 5.1, 12.1 and
12.5 hereof.
Outside Closing Date: If the Effective Date is after
December 31, 1996, Sanwa shall
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be paid monthly amounts
calculated as interest on
the Sanwa/OLP Mortgage Loan
at a rate of LIBOR plus 175
basis points for the period
commencing December 31,
1996 and ending on the
Effective Date.
Ownership/Bankruptcy
Remote Structure: A bankruptcy remote structure
will be provided as set forth
in section 18.5.3 hereof.
Events of Default: The Sanwa/OLP Restructured
Mortgage Loan will contain
customary events of default in
similar circumstances,
including but not limited to
the following events of
default:
(i) Failure to comply with a
cash management system to
be agreed upon;
(ii) Bankruptcy of New Liberty
Plaza LP or New OLP
Corp.;
(iii) Failure to pay all
monthly expenses under
items (i) and (ii) of
"Cash Flow Application;"
(iv) Failure to cooperate in
the replacement of a
leasing or management
agent following an event
of default under a
leasing or management
contract;
and
(v) Events of default under
the Sanwa/OLP Loan.
Other Provisions: Leasing/Management shall be
consistent with the Tower A
<PAGE>
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Plan. Minimum Leasing
Standards and Lease Approval
Standards will be agreed upon
in a manner that reflects
current market conditions.
On the Effective Date, the Sanwa/OLP Mortgage Loan and the Liens on the 53 State
Street Collateral (excluding the pledge of O&Y 25 Realty Company's interest in
53 State Limited) and any Claims otherwise arising under or related to the
Sanwa/OLP Loan or any of the guarantees, mortgages or security interests issued
in connection therewith shall be released and cancelled in consideration of the
Sanwa/OLP Restructured Mortgage Loan. Sanwa, as the holder of the Allowed
Sanwa/OLP Claims, shall not be entitled to any additional distribution by reason
of an Allowed Sanwa/OLP Claim filed against other Debtors for the same loss or
damage or otherwise arising under or related to the Sanwa/OLP Loan or any of the
guarantees, mortgages or security interests granted in connection therewith.
12.3. Secured U.S. Finco/OLP Claims Against
Liberty Plaza Co., OLP Co. and
Trinity Place Co. (Consolidated OLP Class 3).
On the Effective Date, after giving effect to the distribution to CIBC
in accordance with section 7.3 hereof and in full satisfaction of the U.S.
Finco/OLP Claims against Liberty Plaza Co., CIBC, as the collateral assignee of
the U.S. Finco Mortgages, shall elect, on behalf of U.S. Finco, to contribute
the Allowed U.S. Finco/OLP Claims to the capital of New Liberty Plaza LP to the
extent provided in the Restructuring Transactions.
12.4. Insured Claims Against Liberty
Plaza Co., OLP Co. and Trinity Place Co.
(Consolidated OLP Class 4).
On the Effective Date, each holder of an Insured Claim against any of
Liberty Plaza Co., OLP Co. and Trinity Place Co. shall only be entitled to
maintain actions against and obtain payment solely from an insurance company
under an insurance policy or policies issued by such company to, or for the
benefit of, any of Liberty Plaza Co., OLP Co. and Trinity Place Co.
<PAGE>
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12.5. General Unsecured Claims Against Liberty
Plaza Co., OLP Co. and Trinity Place Co.
(Consolidated OLP Class 5).
On the Effective Date, in full satisfaction of the Allowed General
Unsecured Claims against Liberty Plaza Co., OLP Co. and/or Trinity Place Co.,
each holder of an Allowed General Unsecured Claim against Liberty Plaza Co., OLP
Co. and/or Trinity Place Co. will be distributed a payment in Cash equal to the
amount of such Allowed General Unsecured Claim against Liberty Plaza Co., OLP
Co. and/or Trinity Place Co.
12.6. Equity Interests in Liberty Plaza Co., OLP Co.,
and Trinity Place Co. (Consolidated OLP Class 6).
On the Effective Date and in accordance with the Restructuring
Transactions, Devco and Devco GP shall be distributed, on account of their
Allowed Equity Interests in Liberty Plaza Co., OLP Co. and Trinity Place Co.,
Equity Interests in New Liberty Plaza LP, the reorganized successor to Liberty
Plaza Co., OLP Co. and Trinity Place Co. pursuant to section 18.5 hereof.
SECTION 13. PROVISIONS FOR TREATMENT OF CLAIMS
AGAINST AND EQUITY INTERESTS IN
TOWER A CO.
13.1. Priority Non-Tax Claims Against
Tower A Co. (Tower A Co. Class 1).
On the Effective Date, in full satisfaction of the Priority Non-Tax
Claims against Tower A Co., each holder of an Allowed Priority Non-Tax Claim
against Tower A Co. shall be distributed a payment in Cash equal to the amount
of such holder's Allowed Priority Non-Tax Claim against Tower A Co.
13.2. Secured Sanwa/Tower A Claims Against
Tower A Co. (Tower A Co. Class 2).
On the Effective Date, in full satisfaction of the Sanwa/Tower A
Claims, Sanwa shall be distributed the Sanwa/Tower A Restructured Mortgage Loan,
which will provide for the following:
<PAGE>
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Initial Loan
Balance: $480,000,000, less the sum of
(i) amortization paid during
the chapter 11 case and (ii)
the Initial Paydown.
Initial Paydown: $22,400,000.
Initial Settlement
Distribution: $5,000,000.
Initial Distribution: None.
Maturity: 7 years from the Effective
Date, but not later than
December 31, 2003.
Interest Rate: 8.893125% until January 25,
1999, thereafter Sanwa's cost
of funds plus 50 basis points
until maturity. Prior to the
Confirmation Hearing, Sanwa
shall propose, subject to the
agreement of New Tower A LP,
when and to what extent the
interest rate is to be fixed
for the period from January 1,
1999 until maturity.
Amortization/
Payment Terms: Interest shall be paid monthly
in arrears. All available
Cash, after payment of
expenses and deposits in
reserves to the extent
described below, will be
applied quarterly to
amortization of the
Sanwa/Tower A Restructured
Mortgage Loan.
Cash Flow
Application: Cash flow will be applied in
the following priority:
(i) operating expenses,
including property
management fees and
reserves for PILOT
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(payment in lieu of
taxes) and ground rent
payments and for
insurance (which reserves
will be established on
the Effective Date);
(ii) interest on the
Sanwa/Tower A
Restructured Mortgage
Loan;
(iii) deposits to the Cash
reserve for leasing and
capital costs to the
extent required by the
Business Plan approved by
Sanwa;
(iv) leasing costs and capital
expenditures, to the
extent not paid from the
Cash reserves;
(v) $1,000,000 in asset
management fees, payable
quarterly in arrears in
1997-1999, but no asset
management fees
thereafter; and
(vi) the balance quarterly to
Sanwa to amortize
the Sanwa/Tower A
Restructured
Mortgage Loan.
Cash Reserves on the
Effective Date: Initially, $5,000,000 which
will be available for leasing
costs and capital
expenditures, the amount and
expenditure of which will be
pursuant to the Business Plan
approved by Sanwa.
Management Fees: Property management fees of 2%
of gross revenues, except that
with respect to revenues from
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leases signed after October
11, 1995 the fee shall be
1%. Standard leasing
commissions (50% thereof
when the tenant is
represented by a broker).
Asset management fees of $1
million per annum in
1997-1999 only.
Collateral: First mortgage on leasehold
estate and a first Lien on
Cash reserves.
Recourse: Nonrecourse.
TIAA: TIAA will have no further
Claims whatsoever against
Tower A or Tower A Co, except
as expressly provided in
section 4.5 hereof.
Business Plan: Annually, the managing agent
of the building will present
to Sanwa for its review and
approval, not to be
unreasonably withheld,
provided that it conforms with
sound ownership practices for
first class office buildings
in New York City, a "Business
Plan", which shall be updated
on a quarterly basis and shall
be updated more frequently if
circumstances warrant. The
managing agent shall manage
the Building in accordance
with the Business Plan. The
Business Plan shall include
the following:
(a) Annual "Budgets", on a
Cash basis, broken down by
month, for (A) revenues,
(B) operating expenses, (C)
capital expenditures
(exclusive of lease-up
costs), and (D) lease-up
costs, which shall be
subject to Sanwa's review
and approval in
<PAGE>
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accordance with the
foregoing standards.
Operating expenses will
include third-party costs,
such as professional and
consultants' fees to the
extent that such fees are
ordinarily paid in addition
to property management and
asset management fees,
subject to reasonable
restrictions on payments to
Affiliates. In addition,
quarterly and no later than
the first Business Day
after the 20th day of the
first month after each
calendar quarter, the
managing agent shall
provide an actual operating
statement, which will also
show variances from the
prior quarter's Budget and
compare actual year-to-date
performance to the Budget
for the year-to-date
period. The managing agent
shall provide a written
explanation of each
variance that exceeds the
lesser of (x) $50,000 or
(y) 10% of the approved
Budget for that line item.
Upon request of Sanwa, the
managing agent shall
deliver to Sanwa evidence
satisfactory to Sanwa of
payment of operating
expenses required to have
been paid in accordance
with the Budget. In
addition, prior to the
Effective Date, the
managing agent shall
provide Sanwa with a
description of current and
anticipated capital
expenditures for 1996
through 2001.
(b) Annual "Leasing
Reports", detailing leasing
activity and programs for
the prior calendar year
shall be presented to Sanwa
by the leasing agent,
comparing the
<PAGE>
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actual activity to the
prior year's projected
activity. Each Leasing
Report shall also (A)
describe major anticipated
leasing events, such as
vacancies, renewals,
terminations (due to
anticipated tenant
bankruptcies or defaults),
modifications or take-back
opportunities, (B)
generally describe the
proposed strategy for
dealing with such
anticipated leasing events,
(C) set forth proposed
leasing parameters for
entering into new or
renewal leases in the
building, including credit
standards for tenants,
minimum base rent and
maximum tenant allowances
(whether in the form of
free rent, construction or
other inducements or
allowances), and (D) a
proposed leasing budget.
The proposed strategy,
leasing parameters and
leasing budget shall
conform with sound leasing
practices for first class
office buildings in New
York City. New Tower A LP
may amend, modify or
terminate leases in
accordance with the
approved Leasing Report and
Business Plan. The monthly
report of operating
expenses shall be
accompanied by copies of
all newly executed leases
and amendments, extensions,
etc. of existing leases.
Leasing/Management: A designee of Newco LP will be
the leasing agent and the
managing agent for the
building during the remaining
term of the Sanwa/Tower A
Restructured Mortgage Loan,
subject to the requirements of
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this section. Such Entity
will be entitled, as the
leasing agent for the
building, to a standard
commission for leases for
which there is no broker
and to 50% of a standard
commission for leases for
which the tenant is
represented by a broker. A
schedule of leasing
commissions shall be
proposed by the O&Y
Affiliates prior to the
Effective Date, which shall
be subject to Sanwa's
approval; provided,
however, that such schedule
shall not exceed the
schedule for leasing
commissions for space owned
by Newco LP in the other
"core" New York City
buildings owned by Newco LP
(other than buildings for
which there is no unleased
office space in excess of
10,000 rentable square feet
projected prior to the
maturity of the existing
Sanwa/Tower A Loan, subject
to periodic verification by
Sanwa). Newco LP's designee
may be dismissed as leasing
and managing agent and as
asset manager upon the
occurrence and during the
continuance of an event of
default. In addition, at
Sanwa's option, Newco LP's
designee may be dismissed
as managing agent and asset
manager if occupancy of the
building falls below 85% or
due to the failure to
manage the building within
the approved Budget,
exclusive of (A) emergency
items, (B) tenant defaults
and bankruptcies, (C) items
approved by Sanwa, (D)
failure to manage the
building within
<PAGE>
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the approved Budget due to
receipt of revenues either
prior to or later than the
anticipated receipt or due
to payment of expenses
prior to or later than the
anticipated payment,
provided in either case
that the actual receipt or
payment, as the case may
be, is within sixty (60)
days of the projected
receipt or payment, and (E)
increases caused by labor
contracts affecting
commercial buildings
generally or increases in
utility costs that affect
commercial buildings
generally, it being
understood (x) that the
Budget will, to the extent
that it is reasonably
possible to anticipate such
increases (but not the
amount of such increases),
so state, and (y) that
Newco LP will provide
specific information about
such increased expenses
within thirty (30) days
after such information is
available to Newco LP. If
Sanwa exercises the
foregoing right, the
existing leasing and/or
management contracts will
be terminated on thirty
(30) days' notice and
contracts with persons
satisfactory to Sanwa will
be executed and delivered.
Thereafter, no further
leasing, property
management or asset
management fees will be
paid to Newco LP, as the
case may be.
Loan Sales: The limitation set forth in a
side letter dated January 25,
1989 on Sanwa's right to
participate or assign the
Sanwa/Tower A Restructured
Mortgage Loan expired on
<PAGE>
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January 25, 1992. The
remaining limitations in
the side letter on Sanwa's
right to participate or
assign the Sanwa/Tower A
Restructured Mortgage Loan,
in whole or in part, will
be eliminated. If Sanwa
determines that it wishes
to solicit bids for the
purchase of all or
substantially all of its
rights and obligations as
lender to New Tower A LP,
Sanwa shall give not less
than twenty (20) days'
written notice of its
intention to solicit bids
to New Tower A LP. In
addition, if a prospective
purchaser solicits an
opportunity to make a bid
to purchase all or
substantially all of
Sanwa's rights and
obligations as lender to
New Tower A LP, and Sanwa
wishes to provide
information to such
prospective purchaser of a
nature that requires or
makes advisable a
confidentiality agreement
between Sanwa and such
prospective purchaser,
within two Business Days
after entering into such
confidentiality agreement,
Sanwa shall give notice
thereof to New Tower A LP.
Other than the rights and
obligations expressly set
forth in the preceding two
sentences, Sanwa shall have
no other obligations and
Tower A Co. shall have no
other rights with respect
to the sale by Sanwa of any
of Sanwa's rights and
obligations as lender to
New Tower A LP.
<PAGE>
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Events of Default: The Sanwa/Tower A Restructured
Mortgage Loan will contain
customary events of default in
similar circumstances,
including but not limited, the
following events of default:
(i) Failure to comply with a
cash management system to
be agreed upon;
(ii) Bankruptcy of New Tower
A LP or New Tower A
Corp.;
(iii) Failure to pay all
monthly expenses under
items (i) and (ii) of
"Cash Flow Application";
(iv) Failure to
cooperate in the
replacement of a
leasing or
management agent
following an event
of default under a
leasing or
management
contract; and
(v) Events of default under
the Sanwa/Tower A Loan.
Consent to Use
of Cash Collateral: Sanwa shall consent to the use
of its Cash Collateral to be
used to fund the distributions
to the holders of
Administrative Expense Claims,
Allowed Priority Tax Claims,
Allowed Priority Non-Tax
Claims and Allowed General
Unsecured Claims in accordance
with sections 5.1, 13.1 and
13.5 hereof.
Bankruptcy Remote Structure: A bankruptcy remote structure will be
provided as set forth in section 18.7.3 hereof.
<PAGE>
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On the Effective Date, the Sanwa/Tower A Mortgage Loan and any Claims
otherwise arising under or related to the Sanwa/Tower A Mortgage Loan or any of
the guarantees, mortgages or security interests issued in connection therewith,
shall be released and cancelled in consideration of the Sanwa/Tower A
Restructured Mortgage Loan.
13.3. TIAA Judgment Claims Against
Tower A Co. (Tower A Co. Class 3).
On the Effective Date and in full satisfaction of the Allowed TIAA
Judgment Claims, TIAA shall receive the consideration provided in the TIAA
Settlement described in section 4.5 hereof.
13.4. Insured Claims Against
Tower A Co. (Tower A Co. Class 4).
On the Effective Date, each holder of an Insured Claim against Tower A
Co. shall only be entitled to maintain actions against and obtain payment solely
from an insurance company under an insurance policy or policies issued by such
company to, or for the benefit of, Tower A Co.
13.5. General Unsecured Claims Against
Tower A Co. (Tower A Co. Class 5).
On the Effective Date, in full satisfaction of the Allowed General
Unsecured Claims against Tower A Co., each holder of an Allowed General
Unsecured Claim against Tower A Co. shall be distributed such holder's Ratable
Proportion of $100,000, payable from the Available Cash of Tower A Co.
13.6. Equity Interests in
Tower A Co. (Tower A Co. Class 6).
On the Effective Date and in accordance with the Restructuring
Transactions, each holder of an Allowed Equity Interest in Tower A Co. shall
have an Allowed Equity Interest and shall retain such Allowed Equity Interest in
Tower A Co.
<PAGE>
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SECTION 14. PROVISIONS FOR TREATMENT OF
CLAIMS AGAINST AND EQUITY
INTERESTS IN TOWER CORP.
14.1. Priority Non-Tax Claims Against Tower
Corp. (Tower Corp. Class 1).
On the Effective Date, in full satisfaction of the Allowed Priority
Non-Tax Claims against Tower Corp., each holder of an Allowed Priority Non-Tax
Claim against Tower Corp. shall be distributed on account of such Allowed
Priority Non-Tax Claim a payment in Cash equal to the amount of such holder's
Allowed Priority Non-Tax Claim against Tower Corp.
14.2. Secured Club Loan Claims
Against Tower Corp. (Tower Corp. Class 2).
On the Effective Date and in accordance with the Restructuring
Transactions, the New Club Loan Disbursing Agent shall be distributed, on
account of the Allowed Secured Club Loan Claims against Tower Corp., Class A
Interests having a value equal to the lesser of (a) the Allowed Club Loan Claims
and (b) the value on the Confirmation Date of the Collateral securing the
Allowed Club Loan Claims pledged by Tower Corp. In accordance with this section
14.2 and sections 7.2, 8.2 and 15.2 hereof and without duplication, the New Club
Loan Disbursing Agent shall be distributed, in the aggregate and in full
satisfaction of the Allowed Club Loan Claims, Class A Interests having a value
equal to the lesser of (a) the Allowed Club Loan Claims and (b) the value on the
Confirmation Date of the Collateral securing the Allowed Club Loan Claims
pledged by any Debtor under this Plan.
14.3. Insured Claims Against
Tower Corp. (Tower Corp. Class 3).
On the Effective Date, each holder of an Insured Claim against Tower
Corp. shall only be entitled to maintain actions against and obtain payment
solely from an insurance company under an insurance policy or policies issued by
such company to, or for the benefit of, Tower Corp.
<PAGE>
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14.4. General Unsecured Claims Against
Tower Corp. (Tower Corp. Class 4).
Each holder of a General Unsecured Claim against Tower Corp. will
receive no distribution on account of such holder's General Unsecured Claim
against Tower Corp.
14.5. Equity Interests in Tower
Corp. (Tower Corp. Class 5).
Each holder of an Equity Interest in Tower Corp. shall receive no
distribution on account of such Equity Interest in Tower Corp.
SECTION 15. PROVISIONS FOR TREATMENT OF
CLAIMS AGAINST AND EQUITY
INTERESTS IN CONSOLIDATED 245.
15.1. Priority Non-Tax Claims Against
245 Park Co., 245 Holding LP
and 245 Corp. (Consolidated 245 Class 1).
On the Effective Date, in full satisfaction of the Allowed Priority
Non-Tax Claims against 245 Park Co., 245 Holding LP and/or 245 Corp., each
holder of an Allowed Priority Non-Tax Claim against any of 245 Park Co., 245
Holding LP and 245 Corp. shall be distributed on account of such Allowed
Priority Non-Tax Claim a payment in Cash equal to the amount of its Allowed
Priority Non-Tax Claim.
15.2. Secured Club Loan Claims Against 245 Holding LP
and 245 Corp. (Consolidated 245 Class 2).
On the Effective Date and in accordance with the Restructuring
Transactions, the New Club Loan Disbursing Agent shall be distributed, on
account of the Allowed Secured Club Loan Claims against 245 Holding LP and 245
Corp., Class A Interests having a value equal to the lesser of (a) the Allowed
Club Loan Claims and (b) the value on the Confirmation Date of the Collateral
securing the Allowed Club Loan Claims pledged by 245 Holding LP and 245 Corp. In
accordance with this section 15.2 and sections 7.2, 8.2 and 14.2 hereof and
without duplication, the Disbursing Agent shall be distributed, in the aggregate
and in full satisfaction of the Allowed Club Loan Claims, Class A Interests
having a value equal to the lesser of (a) the Allowed Club Loan Claims and (b)
the value on the
<PAGE>
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Confirmation Date of the Collateral securing the Allowed Club Loan Claims
pledged by any Debtor under this Plan.
15.3. Secured Aetna Mortgage Loan Claims
Against 245 Park Co. (Consolidated 245 Class 3).
On the Effective Date, in full satisfaction of the Allowed Aetna
Mortgage Loan Claims, the Aetna Restructured Mortgage Loan Documents shall be
executed and delivered to Aetna, which shall provide for the following:
Components of Initial
Loan Balance: Subject to the section below
captioned "Failure of Closing
to Occur by January 31, 1997",
the amount of the Aetna
Restructured Mortgage Loan, as
of September 30, 1996
(exclusive of the Additional
Payments to be paid to Aetna
as described below), shall be
$202,430,717, comprising the
following components:
Principal: $190,680,717 (the
"Principal Component"), as of
September 30, 1996.
Default Interest: $11,750,000
(the "Default Interest
Component").
Interest Rate: The Principal Component shall
bear interest at a fixed rate
per annum equal to the
mortgage equivalent of the per
annum yield, as of the
Effective Date, of a U.S.
Treasury security maturing on
or about 10 years from the
Effective Date, plus 250 basis
points.
The Default Interest
Component shall bear
interest at a fixed rate
per annum equal to seven
percent (7%).
<PAGE>
-125-
Term: 10 years from the Effective
Date.
Payments; Amortization: Monthly payments of interest
only in respect of the
Principal Component shall be
payable in years 1 through 3
of the Aetna Restructured
Mortgage Loan. Monthly
payments of principal and
interest on the Principal
Component shall be payable in
years 4 through maturity of
the Aetna Restructured
Mortgage Loan based on a 30-
year amortization schedule.
Interest on the Default
Interest Component shall be
payable currently on a
monthly basis. The
outstanding principal
balance of the Aetna
Restructured Mortgage Loan
shall be payable at
maturity. No prepayments of
principal in respect of the
Default Interest Component
shall be required.
Late debt service payments
and late payments or
deposits to the 245 Reserve
Account and to the Tax
Escrow (as defined below)
(with respect to late
payments or deposits to the
245 Reserve Account, only
to the extent cash flow is
sufficient to require such
payments or deposits),
shall be subject to a 6%
late charge. Upon default
as well as after maturity,
the Principal Component
shall bear interest at a
rate equal to six
percentage points above the
regular contract rate in
respect of the Principal
Component and the Default
Interest Component shall
bear
<PAGE>
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interest at the rate of 13%
per annum.
Collateral: The Aetna Restructured
Mortgage Loan and that portion
of the Additional Payments (as
defined herein) not paid on
the Effective Date shall be
secured by a first-priority
lien on and security interest
in 245 Park Avenue and the 245
Accounts (as defined below)
referred to in "Cash
Management; Reserves;
Budgets."
Additional Payments: In addition to the Principal
Component and the Default
Interest Component, New 245
Park LP shall make the
following payments (the
"Additional Payments") to
Aetna:
$2,000,000, payable in Cash on
the Effective Date, as an
extension fee.
$5,000,000, payable in Cash on
the Effective Date, in respect
of default interest.
$2,000,000 payable in Cash
(without interest) on
January 2, 1998 in respect
of default interest. New
245 Park LP will pay to
Aetna interest at the rate
of thirteen percent per
annum (13%) on such
$2,000,00 payment from and
after January 2, 1998 in
the event that such payment
is not made to Aetna on or
before January 2, 1998.
A sum equal to Aetna's
reasonable fees and
expenses, including,
without limitation,
attorneys' fees,
consultants'
<PAGE>
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fees and experts' fees
incurred through and
including the Effective
Date, in connection with
the Reorganization Cases
and the protection and
enforcement of Aetna's
rights under its loan
documents, payable in Cash
on the Effective Date,
which sum (exclusive of
title insurance premiums
and charges, filing and
recording fees and expenses
and other standard and
customary closing costs,
all of which shall be paid
by New 245 Park LP on the
Effective Date) shall not
exceed $650,000, provided
that the Effective Date
occurs on or before October
31, 1996.
Payments prior to
Effective Date: Prior to the Effective Date,
monthly payments shall
continue to be paid to Aetna
in an amount and at the time
prescribed by the "Final
Stipulation and Consent Order
Conditioning 245 Park Avenue's
Use of Rents and Providing
Adequate Protection of the
Respective Interests of Aetna
Life Insurance Company and The
Dai-Ichi Kangyo Bank, Limited,
New York Branch" entered by
the Bankruptcy Court on or
about May 13, 1996 (the "245
Cash Collateral Order").
Failure of Closing to
Occur by January 31, 1997: In the event that the
Effective date does not occur
on or before January 31, 1997,
(i) on each of March 1, 1997,
April 1, 1997, May 1, 1997,
June 1, 1997 and July 1, 1997,
the Default Interest Component
of the Aetna Restructured
Mortgage Loan shall increase
<PAGE>
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by a sum equal to $450,000
(individually, an
"Earn-back Amount" and,
collectively, the
"Earn-Back Amounts"), in
the event that the
Effective Date shall not
have occurred during the
immediately preceding
calendar month, provided,
however, if the Effective
Date shall have occurred
during such immediately
preceding calendar month, a
proportionate amount of the
Earn-back Amount allocable
to such month shall be
added to the Default
Interest Component as of
the Effective Date, and
(ii) on and after February
1, 1997, and continuing
through and including the
Effective Date, the
Principal Component of the
Aetna Restructured Mortgage
Loan shall accrue interest
at a rate equal to eighteen
percent (18%) per annum,
provided, however, that
interest (and amortization)
in respect of the Principal
Component shall continue to
be paid in accordance with
the provisions of the 245
Cash Collateral Order.
Any and all Earn-back
Amounts added to the
Default Interest Component
pursuant to the provisions
of this section shall not
bear interest prior to the
Effective Date.
The difference between
interest that accrues on
the Principal Component at
the rate of eighteen
percent (18%) per annum
during the period from
February 1, 1997 through
and including the Effective
Date and interest that is
paid on the Principal
Component in
<PAGE>
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respect of such period
shall be added to the
Default Interest Component,
provided, however, that
such difference shall not
itself bear interest prior
to the Effective Date.
Prepayment: The Aetna Restructured
Mortgage Loan shall be
prepayable, in whole but not
in part, at any time after the
Effective Date, together with
a yield maintenance fee
described herein; provided,
however, that during the six-
month period immediately
preceding the maturity of the
Aetna Restructured Mortgage
Loan, the Aetna Restructured
Mortgage Loan shall be open to
prepayment, in whole but not
in part, at par.
The yield maintenance fee
payable to Aetna shall be
determined on a present
value basis, based upon an
assumed reinvestment rate
derived from the yield of
U.S. Treasury securities
having a maturity most
closely comparable to the
remaining term of the Aetna
Restructured Mortgage Loan
at the time of prepayment,
plus (i) in the event of
prepayment during the
period from the Effective
Date through and including
a date that is 18 months
prior to the maturity, 50
basis points, and (ii) in
the event of prepayment
during the period between
the date that is 18 months
prior to maturity, through
and including the date that
is six months prior to
maturity, 100 basis points.
Cash Management; Reserves;
<PAGE>
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Budgets: On the Effective Date, there
shall be established (i) a
lockbox account, (ii) a
disbursement account, (iii) a
tax account (the "Tax
Escrow"), (iv) a security
deposit account and (v) a
capital reserve account (the
"245 Reserve Account" and,
together with the
aforementioned accounts, the
"245 Accounts").
Notwithstanding any other
provision hereof, an initial
deposit of not less than
$20,000,000 or such lesser
amount as shall be agreed to
by Aetna and DKB (each in its
sole and absolute discretion)
(such $20,000,000 amount to be
inclusive of all amounts in
escrow accounts which fund
leasing obligations of 245
Park Co. under leases existing
as of the Effective Date) will
fund the 245 Reserve Account.
The funds on deposit from time
to time in the 245 Reserve
Account may be used (i) to
pay, or reimburse the costs
of, tenant improvements and
capital improvements
(including any such
improvements performed prior
to the Effective Date), (ii)
to pay the $2 million
amortization payment owing to
Aetna on January 2, 1998 and
(iii) to pay real estate taxes
(in the case of real estate
taxes, solely to the extent
that the Tax Escrow is
insufficient at any time to
fund payment of accrued and
unpaid real estate taxes).
All other Cash and other
liquid assets of 245 Park
Avenue (if any and whether
held by 245 Park Co. or any
<PAGE>
-131-
mortgagee) remaining after
funding such $20,000,000
and making any other
payments required to be
made by 245 Park Co. under
the Plan on the Effective
Date shall be deposited in
the 245 Reserve Account or
such other 245 Account
agreed to by and among
Aetna, DKB and 245 Park Co.
The 245 Reserve Account
shall be increased by
deposits of funds generated
by 245 Park Avenue. Certain
amounts held in the 245
Reserve Account may be
available to pay, subject
to certain conditions,
optional amortization of
the DKB Restructured
Mortgage Loan. In addition,
the Tax Escrow shall be
established for the payment
of taxes and other
impositions assessed
against 245 Park Avenue. In
the event the Effective
Date occurs prior to
January 1, 1997, the Tax
Escrow shall be funded
during 1996 with monthly
deposits totalling, in
aggregate, $7,500,000 from
the Effective Date through
December 31, 1996. In the
event that the Effective
Date occurs on or after
January 1, 1997, 245 Park
Co. shall pay when due in
January 1997 any real
estate taxes relating to
245 Park Avenue and,
thereafter, shall reserve
in the Tax Escrow on a
monthly basis an amount
equal to one-twelfth of the
estimated real estate taxes
due on 245 Park Avenue for
the 1997 calendar year.
No dispositions of income from
245 Park Avenue shall be
<PAGE>
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allowed other than in
accordance with operating
and capital budgets
approved by Aetna and DKB
or otherwise in accordance
with a Cash Management
Agreement to be agreed upon
by Aetna, New 245 Park LP
and DKB.
Cash Flow Priority: Net cash flow from the
operations of 245 Park Avenue
after payment of operating
expenses (including the
property management fees
described below), and real
estate taxes shall be
allocated according to the
following priority:
a. To the 245 Park Senior
Lender to pay
interest and
principal on the
Aetna Restructured
Mortgage Loan.
b. To DKB to pay interest on
the DKB Restructured
Mortgage Loan.
c. To DKB to pay the
following First-Tier
Junior Indebtedness
Amortization payments:
First-Tier Junior
Indebtedness
Year Amortization
---- ------------
1999 5,000,000
2000 5,000,000
2001 5,000,000
2002 5,000,000
----- -----------
Total $20,000,000
d. To the 245 Reserve
Account to fund the
following reserve
payments for leasing,
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capital and other costs
at 245 Park Avenue:
Reserve
Year Funding
---- -------
1997 13,000,000
1998 15,000,000
1999 20,500,000
2000 14,000,000
2001 14,500,000
2002 18,500,000
----- -----------
Total $95,500,000
After 2002, funding of the
Reserve Account shall be
determined by agreement of
Aetna, DKB and New 245 Park
LP. If such agreement
cannot be achieved within a
prescribed time, the matter
will be submitted to
binding arbitration in
accordance with a procedure
to be set forth in the Cash
Management Agreement.
At the request of Aetna,
DKB and/or New 245 Park LP,
the foregoing projected
reserve funding schedule
may be adjusted upward or
downward from time to time
to assure sufficient (but
not excessive) funding of
actual or reasonably
projected leasing costs,
capital expenditures or
other items agreed to by
and among Aetna, DKB and
245 Park Co. payable from
the 245 Reserve Account;
provided, however, that
disagreements among the 245
Park Senior Lender, DKB and
New 245 Park LP with
respect to the proper
amount of such reserve
funding will be submitted
to binding arbitration in
accordance with
<PAGE>
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a procedure to be set forth in
the Cash Management Agreement.
e. To pay the owners of New
245 Park LP or their
designee the asset
management fees and
leasing commissions set
forth below under
"Management Fees and
Leasing Commissions."
f. To DKB to pay the balance
of the following Second-
Tier Junior Indebtedness
Amortization after taking
into account the payment
of the First-Tier Junior
Indebtedness Amortization
in Priority c:
Second-Tier
Junior
Indebtedness
Year Amortization
1999 $13,500,000
2000 13,500,000
2001 13,500,000
2002 13,500,000
----- -----------
Total $54,000,000
g. To the 245 Reserve
Account through December
31, 2002 (or, at the
request of New 245 Park
LP, to DKB to amortize
the DKB Restructured
Mortgage Loan). From and
after January 1, 2003, to
amortize the DKB
Restructured Mortgage
Loan in accordance with
the terms of "Extension
Option" in section 15.4
of the Plan. From and
after the date of payment
in full of the DKB
Restructured Mortgage
<PAGE>
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Loan, to New 245
Park LP or its
designee.
To the extent cash flow
from 245 Park Avenue or
from reserves is
insufficient in any period
to make all payments
provided for in subsections
d. through g. above, New
245 Park LP shall have no
obligation to make or fund
such payments at such time
and unpaid amounts thereof
will be accrued and paid
during the next period
after all expenses for
higher priorities have been
paid. Lower priority
expenses will only be paid
after all higher priority
expenses have been paid in
full.
Restrictions on Transfer: Restrictions on transfer or
encumbrances of 245 Park
Avenue or of interests in New
245 Park LP shall be agreed
upon in writing by New 245
Park LP and Aetna.
Subordinate Financing: The DKB Restructured Mortgage
Loan will be restructured in
accordance with section 15.4
hereof. No additional
subordinate financing shall be
permitted, except that the DKB
Restructured Mortgage Loan may
be refinanced under certain
conditions to be set forth in
the Aetna Restructured
Mortgage Loan Documents and
the Cash Management Agreement.
Management Fees and
Leasing Commissions: Newco LP or its designee will
provide both property
management and asset
management services to New 245
Park LP and will be
compensated out of cash flow
<PAGE>
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as follows: (i) a property
management fee equal to 2%
of collected gross revenues
from existing leases and 1%
of collected gross revenues
from all leases executed
after the Effective Date;
(ii) an annual asset
management fee equal to .5%
of Gross Asset Value in
years 1 and 2 and .35% of
Gross Asset Value
thereafter; and (iii)
leasing commissions for
leasing transactions equal
to (a) a full standard
commission (at market
rates) for leasing
transactions if the tenant
is not represented by an
outside broker and (b) a
50% override on commissions
paid to outside brokers.
Consent to Use Cash
Collateral: Aetna shall consent to the use
of its Cash Collateral to fund
the payments described in
"Other Costs" below (but only
to the extent provided
therein), and the
distributions to the holders
of Administrative Expense
Claims, Allowed Priority Tax
Claims, Allowed Priority Non-
Tax Claims, Allowed Aetna
Mortgage Loan Claims, Allowed
DKB Mortgage Loan Claims and
Allowed General Unsecured
Claims in accordance with
sections 5.1, 15.1, 5.2, 15.3,
15.4, and 15.7 hereof;
provided, however, that none
of Aetna's Cash Collateral
shall be used to fund any such
Claims that are not Claims
against 245 Park Co., 245
Holding LP and/or 245 Corp.
Other Costs: On the Effective Date, New 245
Park LP may pay legal fees of
counsel to JMB in an amount
<PAGE>
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not exceeding $375,000;
provided, that the sum of
such payment plus the
aggregate amount of all
transaction costs incurred
in respect of closing of
the DKB Restructured
Mortgage Loan and the Aetna
Restructured Mortgage Loan
shall not exceed
$12,000,000.
Audit and Inspections: Prior to the Effective Date,
Aetna shall have the
opportunity to conduct a
financial audit of 245 Park
Co. and engineering studies
and inspections of 245 Park
Avenue.
Recourse: Nonrecourse subject to
customary exceptions,
including fraud or other
misconduct.
Bankruptcy Remote: Bankruptcy remote structure in
accordance with section 18.6.3
hereof. Without limiting the
generality of the foregoing,
such bankruptcy-remote
structure shall provide for
indemnification (to the extent
lawful) of any designee of
Aetna (in his/her individual
capacity as a director)
serving as a director of an
entity integral to such
bankruptcy-remote structure.
The Restructured Aetna
Mortgage Loan Documents shall
contain such other bankruptcy
protections, if any, as 245
Park Co. and Aetna may
expressly agree upon in
writing.
On the Effective Date, the Aetna Mortgage Loan and any Claims
otherwise arising under or related to the Aetna Mortgage Loan or any of the
guarantees, mortgages or security interests issued in connection therewith shall
be
<PAGE>
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released and cancelled in consideration of the Aetna
Restructured Mortgage Loan.
15.4. Secured DKB Mortgage Loan Claims
Against 245 Park Co. (Consolidated 245 Class 4).
-----------------------------------------------
On the Effective Date, in full satisfaction of the Allowed DKB
Mortgage Loan Claims, the DKB Restructured Mortgage Loan Documents shall be
executed and delivered to DKB, which shall provide for the following:
Initial Paydown: DKB shall be repaid
$103,500,000 of principal on
the Effective Date.
Initial Loan Balance: After paydown, $89,000,000.
Settlement Fee: A Settlement Fee shall be paid
to DKB on the Effective Date
in the amount of $1,600,000.
Interest Rate: DKB's fixed rate cost of funds
plus 175 basis points, per
annum. Interest shall be paid
monthly, in arrears.
Maturity Date: December 31, 2002.
Amortization: DKB shall receive annual
amortization payments in
accordance with "Cash Flow
Priority" below. The payments
shall consist of First-Tier
Junior Indebtedness
Amortization and Second-Tier
Junior Indebtedness
Amortization to be paid out of
available cash flow as
follows:
Second-Tier First-Tier
Junior Junior
Indebtedness Indebtedness
Year Amortization Amortization
1999 $13,500,000 $ 5,000,000
2000 13,500,000 5,000,000
2001 13,500,000 5,000,000
2002 13,500,000 5,000,000
----------- -----------
<PAGE>
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Total $54,000,000 $20,000,000
Late Payments: Late debt service payments and
late payments or deposits to
the 245 Reserve Account and to
the Tax Escrow (with respect
to late payments or deposits
to the 245 Reserve Account,
only to the extent cash flow
is sufficient to require such
payments or deposit) shall be
subject to a 6% late charge.
Upon default as well as after
maturity of the DKB
Restructured Mortgage Loan,
the DKB Restructured Mortgage
Loan shall bear interest at a
rate of 6 percentage points
above the non-default contract
rate of interest under the DKB
Restructured Mortgage Loan.
Extension Option: New 245 Park Co. shall have
the option at the maturity of
the DKB Restructured Mortgage
Loan to extend the maturity of
the unamortized balance
thereof (not to exceed $50
million) for an additional 4-
year term (i.e., upon exercise
of such option by New 245 Park
Co., the extended maturity of
the DKB Restructured Mortgage
Loan would be coterminous with
the Aetna Restructured
Mortgage Loan). The DKB
Restructured Mortgage Loan as
so extended will be amortized
with net cash flow after
payment or funding of:
a. real estate taxes and
appropriate reserves
therefor;
b. operating expenses of 245
Park Avenue (including
the property management
fees described in the
<PAGE>
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"Management Fees and
Leasing Commissions"
below);
c. interest and principal on
the Aetna Restructured
Mortgage Loan to the 245
Park Senior Lender;
d. interest on the DKB
Restructured Mortgage
Loan to DKB;
e. capital, leasing and
other costs at the
property and appropriate
reserves therefor;
f. asset management fees and
leasing commissions
payable to the owners of
New 245 Park LP or their
designee as described in
"Management Fees and
Leasing Commissions"
below.
Collateral: Second, third and fourth
mortgages (with related
assignments of rents and
leases and security
agreements) relating to 245
Park Avenue will be
consolidated into a second
mortgage (with related
assignments of rents and
leases and security
agreements) on the Effective
Date.
245 Park Senior
Loan: The DKB Restructured Mortgage
Loan will be subordinate to a
first mortgage loan with a
term of 10 years. The
combined balance of the first
and second mortgage loan will
not exceed $300,000,000. To
the extent that as of the
<PAGE>
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Effective Date (but not
thereafter) the Aetna
Restructured Mortgage Loan
exceeds $211,000,000, the
DKB Restructured Mortgage
Loan will be reduced on a
dollar for dollar basis.
The amortization schedule
of the DKB Restructured
Mortgage Loan will then be
adjusted on a pro rata
basis.
Remedies: The DKB Restructured Mortgage
Loan will be subordinate to
the 245 Park Senior Loan. The
terms of such subordination
will be set forth in a
subordination agreement to be
agreed to by and among DKB,
Aetna and New 245 Park LP,
which agreement shall provide,
among other things, for the
right of DKB (a) to exercise
remedies in the event of the
occurrence of certain material
events of default and (b) to
cure defaults under the Aetna
Restructured Mortgage Loan in
certain circumstances.
Cash Management; Reserves;
Budgets: On the Effective Date, there
shall be established (i) a
lockbox account, (ii) a
disbursement account, (iii)
the Tax Escrow, (iv) a
security deposit account and
(v) the 245 Reserve Account.
Notwithstanding any other
provision hereof, an initial
deposit of not less than
$20,000,000 or such lesser
amount as shall be agreed to
by Aetna and DKB (each in its
sole and absolute discretion)
(such $20,000,000 or lesser
amount to be inclusive of all
amounts in escrow accounts
which fund leasing obligations
<PAGE>
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of 245 Park Co. under
leases existing as of the
Effective Date) will fund
the 245 Reserve Account.
The funds on deposit from
time to time in the 245
Reserve Account may be used
(i) to pay, or reimburse
the costs of, tenant
improvements and capital
improvements (including any
such improvements performed
prior to the Effective
Date), (ii) to pay the $2
million amortization
payment owing to Aetna on
January 2, 1998 and (iii)
to pay real estate taxes
(in the case of real estate
taxes, solely to the extent
that the Tax Escrow is
insufficient at any time to
fund payment of accrued and
unpaid real estate taxes).
All other Cash and other
liquid assets of 245 Park
Avenue (if any and whether
held by 245 Park Co. or any
mortgagee) remaining after
funding such $20,000,000
and making any other
payments required to be
made by 245 Park Co. under
the Plan on the Effective
Date shall be deposited in
the 245 Reserve Account or
such other 245 Account
agreed to by and among
Aetna, DKB and 245 Park Co.
Except as provided in the
next sentence, 245 Park Co.
shall represent on the
Effective Date that, as of
such date and to the best
of the knowledge of 245
Park Co., no Cash owned by
245 Park Co. has been
disbursed other than to pay
amounts owing to DKB and
Aetna, respectively, and
other amounts contemplated
in the Plan or in
accordance with the 245
Cash Collateral Order from
<PAGE>
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the date of approval of
such Cash Collateral Order
through the Effective Date.
Such representation shall
be subject to such
exceptions as are
reasonably acceptable to
Aetna and DKB and such
representation shall not
survive the Effective Date.
The 245 Reserve Account
shall be increased by
deposits of funds generated
by 245 Park Avenue. Certain
amounts held in the 245
Reserve Account may be
available to pay, subject
to certain conditions,
optional amortization of
the DKB Restructured
Mortgage Loan. In addition,
the Tax Escrow shall be
established for the payment
of taxes and other
impositions assessed
against 245 Park Avenue. In
the event the Effective
Date occurs prior to
January 1, 1997, the Tax
Escrow shall be funded
during 1996 with monthly
deposits totalling, in
aggregate, $7,500,000 from
the Effective Date through
December 31, 1996. In the
event that the Effective
Date occurs on or after
January 1, 1997, 245 Park
Co. shall pay when due in
January 1997 any real
estate taxes relating to
245 Park Avenue and,
thereafter, shall reserve
in the Tax Escrow on a
monthly basis an amount
equal to one-twelfth of the
estimated real estate taxes
due on 245 Park Avenue for
the 1997 calendar year.
No dispositions of income from
245 Park Avenue shall be
allowed other than in
<PAGE>
-144-
accordance with operating
and capital budgets
approved by Aetna and DKB
or otherwise in accordance
with a Cash Management
Agreement to be agreed upon
by Aetna, New 245 Park LP
and DKB.
Cash Flow Priority: Net cash flow from the
operations of 245 Park Avenue
after payment of operating
expenses (including the
property management fees
described below), and real
estate taxes shall be
allocated according to the
following priority:
a. To the 245 Park Senior
Lender to pay
interest and
principal on the
Aetna Restructured
Mortgage Loan.
b. To DKB to pay interest on
the DKB Restructured
Mortgage Loan.
c. To DKB to pay the
following First-Tier
Junior Indebtedness
Amortization payments:
First-Tier Junior
Indebtedness
Year Amortization
1999 5,000,000
2000 5,000,000
2001 5,000,000
2002 5,000,000
-----------
Total $20,000,000
d. To the 245 Reserve
Account to fund the
following reserve
payments for leasing,
capital and other costs
at 245 Park Avenue:
<PAGE>
-145-
Reserve
Year Funding
1997 13,000,000
1998 15,000,000
1999 20,500,000
2000 14,000,000
2001 14,500,000
2002 18,500,000
-----------
Total $95,500,000
After 2002, funding of the
Reserve Account shall be
determined by agreement of
Aetna, DKB and New 245 Park
LP. If such agreement
cannot be achieved within a
prescribed time, the matter
will be submitted to
binding arbitration in
accordance with a procedure
to be set forth in the Cash
Management Agreement.
At the request of Aetna,
DKB and/or New 245 Park LP,
the foregoing projected
reserve funding schedule
may be adjusted upward or
downward from time to time
to assure sufficient (but
not excessive) funding of
actual or reasonably
projected leasing costs,
capital expenditures or
other items agreed to by
and among Aetna, DKB and
245 Park Co. payable from
the 245 Reserve Account;
provided, however, that
disagreements among the 245
Park Senior Lender, DKB and
New 245 Park LP with
respect to the proper
amount of such reserve
funding will be submitted
to binding arbitration in
accordance with a procedure
to be set forth in the Cash
Management Agreement.
<PAGE>
-146-
e. To pay the owners of New
245 Park LP or their
designee the asset
management fees and
leasing commissions set
forth below under
"Management Fees and
Leasing Commissions."
f. To DKB to pay the balance
of the following Second-
Tier Junior Indebtedness
Amortization after taking
into account the payment
of the First-Tier Junior
Indebtedness Amortization
in Priority c:
Second-Tier
Junior
Indebtedness
Year Amortization
1999 $13,500,000
2000 13,500,000
2001 13,500,000
2002 13,500,000
-----------
Total $54,000,000
g. To the 245 Reserve
Account through December
31, 2002 (or, at the
request of New 245 Park
LP, to DKB to amortize
the DKB Restructured
Mortgage Loan). From and
after January 1, 2003, to
amortize the DKB
Restructured Mortgage
Loan in accordance with
the terms of "Extension
Option" in section 15.4
of the Plan. From and
after the date of payment
in full of the DKB
Restructured Mortgage
Loan, to New 245 Park LP
or its designee.
<PAGE>
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To the extent cash flow
from 245 Park Avenue or
from reserves is
insufficient in any period
to make all payments
provided for in subsections
d. through g. above, New
245 Park LP shall have no
obligation to make or fund
such payments at such time
and unpaid amounts thereof
will be accrued and paid
during the next period
after all expenses for
higher priorities have been
paid. Lower priority
expenses will only be paid
after all higher priority
expenses have been paid in
full.
Subordinate
Financing: No additional financing
subordinate to the DKB
Restructured Mortgage Loan
shall be permitted.
Management Fees and
Leasing Commissions: Newco LP or its designee will
provide both property
management and asset
management services to New 245
Park LP and will be
compensated out of cash flow
as follows: (i) a property
management fee equal to 2% of
collected gross revenues from
existing leases and 1% of
collected gross revenues from
all leases signed in the
future; (ii) an annual asset
management fee equal to .5% of
Gross Asset Value in years 1
and 2 and .35% of Gross Asset
Value thereafter; and (iii)
leasing commissions for
leasing transactions equal to
(a) a full standard commission
(at market rates) for leasing
transactions if the tenant is
not represented by an outside
<PAGE>
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broker and (b) a 50% override
on commissions paid to outside
brokers.
Prepayment Option: New 245 Park LP shall pay to
DKB (a) the actual cost of
unwinding interest rate swaps
or other similar contracts to
be entered into by DKB (and/or
its participants and
affiliates) with a third party
as of the Effective Date under
which fixed amounts are paid
equal to DKB's fixed rate cost
of funds underlying the DKB
Restructured Mortgage Loan
(and LIBOR is received), and
(ii) any other actual breakage
costs incurred by DKB (and/or
its participants and
affiliates); but New 245 Park
LP shall be entitled to a
prepayment discount to the
extent of any termination
payment DKB (and/or its
participants and affiliates)
receives as a result of an
unwind of such swaps or
similar contracts upon
prepayment.
DKB's Fees and
Costs: On or before the Effective
Date, New 245 Park LP shall
pay DKB's reasonable fees and
expenses incurred in
connection with the
Reorganization Cases,
including, without limitation,
attorneys' fees, title
insurance premiums and
charges, filing and recording
fees and expenses, other
standard and customary closing
costs, consultants' and
experts' fees, financial audit
fees, and expenses of
engineering and environmental
studies and inspections of 245
<PAGE>
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Park Avenue, subject to the
terms of "Financial Audit"
below; provided, however,
that the fees of attorneys,
consultants and experts
(excluding those already
paid by 245 Park Co. prior
to September 12, 1996)
through October 31, 1996,
financial audit fees of 245
Park Co., and expenses of
engineering and
environmental studies and
inspections of 245 Park
Avenue, shall not, in the
aggregate, exceed $500,000.
Financial Audit: DKB shall be entitled to
perform a financial audit of
245 Park Co. and to conduct
engineering and environmental
studies and inspections of 245
Park Avenue prior to the
Effective Date; provided,
however, that, without
limiting the foregoing, DKB
shall endeavor in good faith
to enter into an agreement
with Aetna and 245 Park Co. to
coordinate the work associated
with any such financial audit
or studies and inspections and
for the sharing of work
product relating thereto, all
for the purpose of avoiding
duplicative expense.
Payments prior to
Effective Date: Prior to the Effective Date,
monthly payments shall
continue to be paid to DKB in
an amount and at the time
prescribed by the 245 Cash
Collateral Order.
Restrictions on Transfer: Restrictions on transfer or
encumbrances of 245 Park
Avenue or of interests in New
245 Park LP shall be agreed
<PAGE>
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upon in writing by New 245
Park LP and DKB.
Consent to Use
of Cash Collateral: DKB shall consent to the use
of its Cash Collateral to fund
the payments described in
"Other Costs" below (but only
to the extent provided
therein), and the
distributions to the holders
of Administrative Expense
Claims, Allowed Priority Tax
Claims, Allowed Priority Non-
Tax Claims, Allowed Aetna
Mortgage Loan Claims, Allowed
DKB Mortgage Loan Claims and
Allowed General Unsecured
Claims in accordance with
sections 5.1, 5.2, 15.1, 15.2,
15.3 and 15.7 hereof.
Other Costs: On the Effective Date, New 245
Park LP may pay legal fees of
counsel to JMB in an amount
not exceeding $375,000;
provided, that the sum of such
payment plus the aggregate
amount of all transaction
costs incurred in respect of
closing of the DKB
Restructured Mortgage Loan and
the Aetna Restructured
Mortgage Loan shall not exceed
$12,000,000.
On the Effective Date, the DKB Mortgage Loan and any Claim under or
relating to the DKB Mortgage Loan or any of the guarantees, mortgages or
security interests issued in connection therewith shall be released and
cancelled in consideration of the DKB Restructured Mortgage Loan.
15.5. Club Loan/245 Park Deficiency Claims Against 245
Holding LP and 245 Corp. (Consolidated 245 Class 5).
On the Effective Date, in full satisfaction of the Allowed Deficiency
Claims of the holders of the Allowed Club Loan Claims against 245 Holding LP and
245 Corp., the New Club Loan Disbursing Agent shall receive the distributions
<PAGE>
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provided to the New Club Loan Disbursing Agent (for the benefit of those
Co-Proponents for which it is agent) in accordance with sections 7.2, 8.2, 14.2
and 15.2 hereof.
15.6. Insured Claims Against
245 Park Co., 245 Holding LP and
245 Corp. (Consolidated 245 Class 6).
On the Effective Date, each holder of an Insured Claim against any of
245 Park Co., 245 Holding LP and 245 Corp. shall only be entitled to maintain
actions against and obtain payment solely from an insurance company under an
insurance policy or policies issued by such company to, or for the benefit of,
any of 245 Park Co., 245 Holding LP and 245 Corp.
15.7. General Unsecured Claims Against
245 Park Co., 245 Holding LP and
245 Corp. (Consolidated 245 Class 7).
On the Effective Date, in full satisfaction of the Allowed General
Unsecured Claims against 245 Park Co., each holder of an Allowed General
Unsecured Claim against 245 Park Co., 245 Holding LP and 245 Corp. will be
distributed a Cash payment equal to the amount of such Allowed General Unsecured
Claim against 245 Park Co., 245 Holding LP and 245 Corp.
15.8. Equity Interests in 245 Park Co., 245 Holding LP
Co. and 245 Corp. (Consolidated 245 Class 8).
15.8.1. Equity Interests of JMB in 245 Park Co.
--------------------------------------
On the Effective Date, in accordance with the Restructuring
Transactions, JMB shall retain its general partner interest in 245 Park Co. and,
after taking into account the transactions effected by this Plan, 245 Park Co.
will become 245 Holding LP. On the Effective Date, JMB, through 245 Holding LP,
shall receive, in full satisfaction of 245 Park Co.'s Equity Interest in 245
Park Avenue, distributions in accordance with this section 15.8.1.
JMB Distribution: JMB, through
245 Holding LP, shall roll
up its interest in 245 Park
Avenue for:
(1) on the Effective Date,
indirect Class A Interests in
Newco LP having a value equal
<PAGE>
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to the greater of (a) the
Newco LP Reorganization Value
multiplied by 5.44% and
(b) $30,000,000; plus
(2) that percentage of
Class B Interests (that
otherwise would be
distributed to the
Co-Proponents) determined
as follows:
if the Newco LP
Reorganization Value as of
the Confirmation Date is
greater than $551,000,000,
then 5.44% of the Class B
Interests on the Effective
Date; or
if the Newco Reorganization
Value as of the
Confirmation Date is less
than $551,000,000, then no
Class B Interests on the
Effective Date but
thereafter, if and at such
time as (a) $551,000,000
minus (b) the sum of (i)
the Newco LP Reorganization
Value as of the
Confirmation Date, and (ii)
the dollar amounts of the
Net SF Cash and Net MCJV
Proceeds converted into
Class A Interests in
accordance with section
18.1.1, is less than zero,
then 5.44% of the Class B
Interests.
Dilutive Events: In determining JMB's
distributions pursuant to the
preceding subsection of this
section 15.8.1, JMB's
interests shall be diluted to
the extent required to reflect
any transactions from and
after the Effective Date
(other than the contributions
arising from the conversion of
Class B Interests into Class A
Interests, the dilutive effect
of which has been taken into
<PAGE>
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account in the immediately
preceding paragraph) having
a dilutive effect on
outstanding Class A
Interests.
JMB Consent to
Waiver of Tower B
Condition: The condition precedent to the
Effective Date set forth in
section 22.2.3 hereof may only
be waived by the Debtors and
the Co-Proponents with the
consent of JMB.
Exchange Rights: From and after the Effective
Date, JMB shall have the right
to exchange its Equity
Interest in 245 Holding LP for
Class A Interests which would
have had a value (based on the
value of such interests as of
the Confirmation Date as
determined by the Bankruptcy
Court), in the aggregate,
equal to the value as of the
Confirmation Date of such 245
Holding LP interests, subject
to the restrictions on
transfer described in section
18.13 hereof.
Newco LP Equity
Interests: In the event of a public
offering and sale of Class A
Interests after the Effective
Date, JMB will receive notice
of such public offering and
sale and will be provided an
opportunity to exchange its
interest in 245 Holding LP for
Class A Interests, and if JMB
does so exchange its
interests, JMB shall be
provided the same "piggyback"
registration rights with
respect to its Class A
Interests as those provided to
the Co-Proponents on account
of their Class A Interests.
<PAGE>
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JMB shall be provided tag-
along rights in accordance
with section 18.13 hereof.
In the event JMB or any
Affiliate thereof seeks to
sell its direct or indirect
Equity Interests in Newco
LP to a bona fide
purchaser, then each of the
Co-Proponents shall be
entitled to a right of
first offer which shall
enable such Entities to
purchase such Equity
Interests from JMB pro rata
on terms offered by JMB. If
the Co-Proponents, either
singly or collectively, do
not elect to purchase all
of the Equity Interests
offered by JMB within
thirty (30) days of such
offer, JMB shall have the
right for ninety (90) days
thereafter to sell all of
such interests to any party
provided that the sale
price shall be at least 95%
of the per interest price
offered to the
Co-Proponents.
JMB/245 Park
Member Option: JMB shall have the right to
elect the JMB/245 Park Member
Option if one or both of the
JMB/245 Conditions are not
true on the Effective Date.
Notwithstanding the foregoing,
JMB shall be required to
inform the O&Y Affiliates
prior to the thirtieth (30th)
day after the Confirmation
Date whether it will elect the
JMB/245 Park Member Option if
one or both of the JMB/245
Conditions are not satisfied
on the Effective Date.
Under the JMB/245 Park Member
Option, JMB shall exchange its
general partner interest in
245 Park Co. for a general
<PAGE>
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partner interest in New 245
Park LP in a percentage
adjusted in a manner to be
agreed upon to reflect the
improved capital structure
of New 245 Park LP as a
result of implementing this
Plan, in all events subject
to fixed loan and
preference amounts in the
aggregate amount of
$110,000,000 (plus interest
from and after June 30,
1996) in favor of Newco LP,
which $110,000,000 will be
allocated between loan and
preference amounts in the
same proportion as existing
under the 245 Park Co.
partnership agreement on
the Effective Date. The
loan amount will mature on
December 31, 2004. Both the
loan and preference amounts
will accrue interest at a
fixed rate equal to the
blended fixed rate to be
paid on the Aetna
Restructured Mortgage Loan
and the DKB Restructured
Mortgage Loan or on any
replacement financing. In
all events, Newco LP or its
designee shall be the
managing agent of New 245
Park LP with such rights as
are contained in the
partnership agreement for
245 Park Co. (but without
giving effect to JMB's
rights under its consent to
the Club Loan).
Sale of the 245
Park Property: New 245 Park LP, as the
successor to title of 245 Park
Avenue, shall be prohibited
from selling, and the partners
in New 245 Park LP shall be
prohibited from causing the
sale or other transfer of, 245
Park Avenue prior to January
2, 2000 without the prior
consent of JMB, except that
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(a) JMB's consent shall not
be required for any such
sale in the event that such
sale or transfer shall be
either (i) an involuntary
sale or transfer, including
pursuant to a foreclosure,
or (ii) a sale occurring on
an emergency basis, the
nature of such emergency
basis to be agreed upon in
the definitive
documentation to be
executed on or prior to the
Effective Date, and (b) JMB
shall have no such consent
rights in the event that,
in the reasonable
determination of a
financial advisor retained
by Newco LP or its designee
(the selection of such
financial advisor to be
reasonably satisfactory to
JMB) to market any public
or private transaction for
Equity Interests in Newco
LP, the existence of such
consent rights or any other
restriction on the sale of
245 Park Avenue would have
an adverse effect on the
marketing of such equity
transaction.
Allocation of Debt: JMB, as holder of a direct
partner interest in 245
Holding LP, which holds a
direct partner interest in
Newco LP, shall have a share
of the liabilities of Newco LP
for purposes of sections 704
and 752 of the IRC as
described in this paragraph.
If requested by JMB, Newco LP
and New 245 Park LP and/or its
designee(s) shall adopt the
"remedial allocation method"
under Treasury Regulations
section 1.704-3, with respect
to 245 Park Avenue and Newco
LP shall agree not to revoke
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or withdraw the remedial
allocation method so long
as Newco LP continues to
own 245 Park Avenue (which
shall be at least until
January 2, 2000, as
provided above). If such
"remedial allocation
method" is adopted, the
partnership agreement for
Newco LP will reflect that
the partners intend that
(i) upon consummation of
the Plan, 245 Holding LP's
share of Newco LP's
liabilities secured by 245
Park Avenue will be
approximately $145,000,000
(this assumes that, JMB's
section 704(c) book/tax
difference is $155,000,000
on the Effective Date; to
the extent that such
book/tax difference is a
different amount, 245
Holding LP's share of Newco
LP's liabilities secured by
245 Park Avenue will change
accordingly, as provided
under applicable Treasury
Regulations) and,
subsequently, 245 Holding
LP's liabilities secured by
245 Park Avenue will be
approximately $145,000,000
(assuming JMB's section
704(c) book/tax difference
is $155,000,000 on the
Effective Date with the
adjustments as provided in
this clause (i)) less only
those reductions in 245
Holding LP's share of
liabilities required under
the remedial allocation
method under Treasury
Regulations Section
1.704-3), (ii) in addition
to the liabilities
described in clause (i),
upon consummation of the
Plan and subsequently (in
accordance wit the remedial
allocation method under
Treasury
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Regulations Section
1.704-3), 245 Holding LP's
share of Newco LP's section
752 liabilities shall be
equal to the product of (A)
the total amount of Newco
LP's section 752
liabilities described under
Treasury Regulation Section
1.752-3(a)(3) and (B) 245
Holding LP's Class A
percentage interest in
Newco LP (clause (ii) is
intended to provide for the
allocation to 245 Holding
LP of its share of Newco LP
liabilities under Treasury
Regulation section
1.752-3(a)(3)) and (iii)
all of such liabilities
(described in clauses (i)
and (ii)) will constitute
and be reported as
qualified nonrecourse
financing (within the
meaning of section
465(b)(6) of the IRC).
Based on existing law and
regulations, in preparing
any income tax return of
Newco LP, 245 Holding LP
and New 245 Park, there
will be no attachment or
statement that indicates
that there is more than one
activity for purposes of
section 465 of the IRC.
Notwithstanding anything to
the contrary in this
paragraph, (i) the
partnership agreements for
New 245 Park LP and 245
Holding LP shall not be
inconsistent with this
paragraph and (ii) all of
the statements and
representations set forth
in the section below
entitled "Other Agreements"
will be satisfied.
Other Agreement: The debt on 245 Park Avenue
cannot be reduced below $145
million prior to January 2,
1999 without JMB's consent,
which consent can be withheld
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in JMB's sole and absolute
discretion. Thereafter,
prior to January 2, 2003,
the debt on 245 Park Avenue
cannot be reduced below
$145 million without JMB's
consent (which consent can
be withheld in JMB's sole
and absolute discretion)
except in the following
circumstance (in which
circumstance, JMB's consent
shall not be required to a
reduction of the debt on
245 Park Avenue to the
level of debt that is
required by the transaction
with the purchaser
described immediately
below):
Newco is raising new equity through
the sale of new equity interests
and the purchaser(s) requires as a
condition to the transaction that
the debt on 245 Park Avenue be
reduced below $145 million and that
the satisfaction of that specific
condition, taking into account the
prepayment penalty, if any, on the
existing debt, will result in
materially better terms (as
reasonably determined by a
nationally recognized independent
investment and financial advisor
reasonably satisfactory to JMB) for
the equity sale by Newco than would
otherwise result if the debt on 245
Park Avenue were not so reduced.
If the debt on 245 Park Avenue
is to be reduced below $145
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million in accordance with
an equity sale transaction
described immediately
above, Newco shall not
consummate such equity sale
transaction unless (a)
Newco arranges for the
purchase, and offers to JMB
the right to sell, all or
any part of 245 Holding
LP's direct interests in
Newco LP at a gross price
per interest that Newco is
selling its new equity, and
(b) JMB either declines to
sell any of such direct
interests in Newco LP or
the equity sale transaction
closes for the purchase and
sale of the Newco LP
interests that JMB has
elected to sell.
JMB shall have no consent
rights with respect to the
level of debt on 245 Park
Avenue from and after
January 2, 2003.
Management Fees and
Leasing Commissions: Newco LP or its designee will
provide both property
management and asset
management services for 245
Park Avenue and will be
compensated out of cash flow
as follows: (i) a property
management fee equal to 2% of
collected gross revenues from
existing leases and 1% of
collected gross revenues from
all leases signed in the
future; (ii) an annual asset
management fee equal to 0.5%
of Gross Asset Value in the
first two years after the
Effective Date and .35% of
Gross Asset Value thereafter;
and (iii) leasing commissions
for leasing transactions equal
to (a) a full standard
commission for leasing
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transactions if the tenant
is not represented by an
outside broker and (b) a
50% override on commissions
paid to outside brokers.
JMB Payments: Newco LP shall be obligated to
pay, for a period of five (5)
years after the Effective
Date, a monthly payment in an
amount equal to one-third of
the property management fees
for 245 Park Avenue payable to
Newco LP or its designee (the
"JMB/245 Park Payments");
provided, however, that the
JMB/245 Park Payments shall
not, in any single year, be
less than $400,000 or greater
than $600,000; and provided,
further, that the JMB/245 Park
Payments shall not, in the
aggregate for such five-year
period, be less than
$2,300,000. The JMB/245 Park
Payments shall be payable to
JMB in all events, including
in the event that Newco LP or
its designee does not receive,
for any reason, the fees
referred to in the paragraph
above.
Professional
Costs: JMB shall be reimbursed for
the costs and expenses
(including fees and expenses
of legal and accounting
professionals) incurred in
implementing the transactions
contemplated by this section
15.8.1 to a maximum amount of
$375,000.
Releases: In addition to the releases
provided in section 24 hereof,
JMB and the O&Y Affiliates
will execute and deliver
mutual releases of Claims
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between JMB and the O&Y
Affiliates, other than
Claims and interests
arising in connection with
the transactions
contemplated by this Plan.
The distributions on account of the Equity Interests of JMB in 245
Park Co. provided in this section 15.8 shall be made in accordance with section
18.6 hereof.
15.8.2. Equity Interests of Equityco,
Equity GP, 245 Holding LP and
245 Corp. in 245 Park Co.
On the Effective Date and in accordance with the Restructuring
Transactions, each holder of an Allowed Equity Interest in 245 Park Co., 245
Holding LP and 245 Corp., other than JMB, shall be distributed on account of
such holder's Allowed Equity Interest, an Equity Interest in New 245 Park LP,
subject to the rights of JMB to retain its partner interest in 245 Park Co., in
certain instances, in accordance with section 15.8.1 hereof.
SECTION 16. PROVISIONS FOR TREATMENT OF
CLAIMS AGAINST AND EQUITY
INTERESTS IN TOWER B LEASECO.
16.1. Priority Non-Tax Claims Against
Tower B Leaseco (Tower B Leaseco Class 1).
On the Effective Date, in full satisfaction of the Allowed Priority
Non-Tax Claims against Tower B Leaseco, each holder of an Allowed Priority
Non-Tax Claim against Tower B Leaseco shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
16.2. Merrill Lynch/Tower B Leaseco Secured Claim
(Tower B Leaseco Class 2).
On the Effective Date, in full satisfaction of the Allowed Merrill
Lynch/Tower B Leaseco Secured Claim, Merrill Lynch shall be distributed a
payment in Cash of $502,000.
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16.3. Insured Claims Against
Tower B Leaseco (Tower B Leaseco Class 3).
On the Effective Date, each holder of an Insured Claim against Tower B
Leaseco shall only be entitled to maintain actions against and obtain payment
solely from an insurance company under an insurance policy or policies issued by
such company to, or for the benefit of, Tower B Leaseco.
16.4. General Unsecured Claims Against
Tower B Leaseco (Tower B Leaseco Class 4).
On the Effective Date, after giving effect to the payment of
Administrative Expense Claims against Tower B Leaseco and distributions required
by section 16.1 hereof and the distribution to the Merrill Lynch Capital Fund in
accordance with sections 4.4(b) and 16.2 hereof, and in full satisfaction of the
Allowed General Unsecured Claims against Tower B Leaseco, each holder of an
Allowed General Unsecured Claim against Tower B Leaseco shall be distributed the
lesser of (a) a payment in Cash equal to the amount of such holder's Allowed
General Unsecured Claim against Tower B Leaseco, if the Available Cash of Tower
B Leaseco at the time is sufficient to fund such payment of all Allowed General
Unsecured Claims against Tower B Leaseco, and (b) a payment in Cash equal to
such holder's Ratable Proportion of the Available Cash of Tower B Leaseco on the
Effective Date.
16.5. Equity Interests in Tower
B Leaseco (Tower B Leaseco Class 5).
On the Effective Date and in accordance with the Restructuring
Transactions, each holder of an Allowed Equity Interest in Tower B Leaseco will
receive no distribution on account of such Allowed Equity Interest in Tower B
Leaseco.
<PAGE>
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SECTION 17. IDENTIFICATION OF CLASSES OF CLAIMS AND
INTERESTS IMPAIRED AND NOT IMPAIRED UNDER
THIS PLAN; ACCEPTANCE OR REJECTION OF THIS
PLAN.
17.1. Holders of Claims and
Equity Interests Entitled to Vote.
Each holder of an Allowed Claim or an Allowed Equity Interest in an
impaired class of Claims against or Equity Interests in the Debtors shall be
entitled to vote separately to accept or reject this Plan.
Each of Consolidated Devco Classes 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and
12, Consolidated Realty Corp. Classes 2, 3, 4, 5, 6, and 7, SF Holdings Classes
2 and 3, Devco Canada Classes 2, 3, and 4, Equity Canada Classes 2, 3, and 4,
Consolidated OLP Classes 2, 3, 4, 5 and 6, Tower A Co. Classes 2, 3, 4, 5 and 6,
Tower Corp. Classes 2 and 3, Consolidated 245 Classes 2, 3, 4, 5, 6, 7 and 8,
and Tower B Leaseco Classes 2, 3 and 4 is impaired hereunder, and the holders of
Claims or Equity Interests in such classes are entitled to vote on this Plan. In
accordance with section 1126(g) of the Bankruptcy Code, each of Tower Corp.
Classes 4 and 5 and Tower B Leaseco Class 5 is conclusively deemed to have
rejected the Plan.
17.2. Acceptance by Unimpaired Classes.
Each of Consolidated Devco Class 1, Consolidated Realty Corp. Class 1,
SF Holdings Class 1, Devco Canada Class 1, Equity Canada Class 1, Consolidated
OLP Class 1, Tower A Co. Class 1, Tower Corp. Class 1, Consolidated 245 Class 1,
and Tower B Leaseco Class 1 is unimpaired under this Plan, and each such Class
is conclusively presumed to have accepted this Plan pursuant to section 1126(f)
of the Bankruptcy Code.
17.3. Elimination of Classes.
Any class of Claims that is not occupied as of the date of the
commencement of the Confirmation Hearing by an Allowed Claim or a Claim
temporarily allowed under Rule 3018 of the Bankruptcy Rules shall be deemed
deleted from this Plan for purposes of voting on this Plan, and for purposes of
determining acceptance or rejection of this Plan by such class under section
1129(a)(8) of the Bankruptcy Code.
<PAGE>
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17.4. Nonconsensual Confirmation.
If any impaired class of Claims or Equity Interests shall not have
accepted this Plan by the requisite statutory majorities provided in sections
1126(c) or 1126(d) of the Bankruptcy Code, as applicable, the Debtors and the
Co-Proponents reserve the right to (a) request the Bankruptcy Court to confirm
this Plan pursuant to section 1129(b) of the Bankruptcy Code, or (b) modify this
Plan in accordance with section 25.2 hereof.
17.5. Revocation of Plan.
The Debtors and the Co-Proponents reserve the right to revoke and
withdraw this Plan at any time prior to the Confirmation Date. If this Plan is
so revoked or withdrawn, then this Plan shall be deemed null and void.
SECTION 18. MEANS OF IMPLEMENTATION.
Each of the transactions required to implement the Plan shall be
implemented in accordance with this section 18 and the Restructuring
Transactions described in Schedule 18 hereto. The descriptions in this section
18 of the organizational and ownership structures, governance, and assets and
liabilities of the Entities to be organized or reorganized under the Plan assume
that the transactions required to implement the Plan have been completed. All
numbers used in this section 18 are estimates subject to adjustment prior to the
Effective Date.
18.1. Newco LP.
The provisions of this section 18.1 relating to the provisions of the
Newco LP partnership agreement (and such other provisions of the Plan describing
the Newco Lp partnership agreement) shall be amended as set forth in Exhibit H
hereto.
18.1.1. Organization, Capitalization
and Ownership of Newco LP.
By the Effective Date, Newco LP will be organized as a Delaware
limited partnership by the filing of a certificate of limited partnership with
the Delaware Secretary of State. After taking into account the distributions to
be made under this Plan, Managing GP will hold the General Partner Interest and
a 1% Class B Interest
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in, and will be the sole general partner of, Newco LP; 245 Holding LP will hold
a 5.4949% Class A Interest in Newco LP; and the remaining limited partner
interests in Newco LP will be held, directly or indirectly, by the
Co-Proponents, the holders of Allowed Unaffiliated Unsecured Claims, and the
holders of Allowed General Unsecured Claims against Consolidated Realty Corp. In
addition, the holders of Convertible Note Interests will have the right to
convert such interests into Class A Interests, as described in section 7.11.1
hereof, pursuant to the Conversion Right. Each holder of a Class B Interest will
have such interest automatically exchanged or converted for or into a Class A
Interest as provided below. Until such time as a Class B Interest is so
exchanged or converted, the holders thereof will not be entitled to any interest
in respect of the assets of Newco LP other than those assets that relate to the
Disputed SF Cash and/or the Disputed MCJV Recovery, as provided below.
If and when Newco LP's ownership interest in the Disputed SF Cash
ceases to be disputed by reason of the entry of an order of the Bankruptcy Court
or another court of competent jurisdiction either (a) confirming Newco LP's
ownership interest in the Disputed SF Cash or (b) approving an executed and
delivered settlement agreement with Coopers & Lybrand OYDL, Inc./Limited, or any
successor in interest to Coopers & Lybrand OYDL, Inc./Limited, Newco LP shall
determine the amount of SF Cash remaining after deducting litigation costs
and/or settlement amounts (the "Net SF Cash"). Within thirty (30) Business Days
after the date of entry of such court order (the "SF Deadline"), each then
outstanding Class B Interest shall automatically be exchanged or converted in a
manner or mechanic set forth in the Newco LP Partnership Agreement for or into
that percentage of Class A Interests determined by dividing (a) the Net SF Cash,
by (b) the sum of (x) the Newco LP Reorganization Value plus (y) the Net SF Cash
plus (z) the aggregate value of all capital contributions and issuances of Class
A Interests after the Effective Date (whether occurring pursuant to an exchange
or conversion of Class B Interests or a conversion of Convertible Note
Interests). If, on the SF Deadline, an exchange or conversion of Class B
Interests for or into Class A Interests has not already occurred by reason of a
sale of the MCJV Lands as described in the next paragraph, the holders of Class
B Interests shall continue to be entitled to participate in the value of the
Disputed MCJV Recovery.
<PAGE>
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If and when the Disputed MCJV Recovery ceases to be disputed and Newco
LP executes and delivers a contract of sale of the MCJV Lands, Newco LP shall
determine the amount of the net Cash proceeds of such sale, after deducting any
litigation costs, settlement amounts and the amount required to be distributed
to Bank of Nova Scotia in accordance with the Bank of Nova Scotia Settlement
(the "Net MCJV Proceeds"). Within thirty (30) Business Days after the date of
entry of an order of the Bankruptcy Court approving such sale (the "MCJV
Deadline"), each then outstanding Class B Interest shall automatically be
exchanged or converted in a manner or mechanic set forth in the Newco LP
Partnership Agreement for or into that percentage of Class A Interests
determined by dividing (a) the Net MCJV Proceeds, by (b) the sum of (x) the
Newco LP Reorganization Value plus (y) the Net MCJV Proceeds plus (z) the
aggregate value of all capital contributions and issuances of Class A Interests
after the Effective Date (whether occurring pursuant to an exchange or
conversion of Class B Interests or a conversion of Convertible Note Interests).
If, on the MCJV Deadline, an exchange or conversion of Class B Interests for or
into Class A Interests has not already occurred by reason of a resolution of the
Disputed SF Cash as described in the immediately preceding paragraph, the
holders of Class B Interests shall continue to be entitled to participate in the
value of the Disputed SF Cash.
Notwithstanding the foregoing, if, on the SF Deadline, an exchange or
conversion of Class B Interests for or into Class A Interests has not already
occurred by reason of a sale of the MCJV Lands, Newco LP shall deduct from the
amount of Net SF Cash used in the formula described in the second preceding
paragraph above (a) the litigation costs and other expenses of Newco LP expended
in attempting to settle or litigate Claims relating to the Disputed MCJV
Recovery and (b) the amount required to be deposited in a reserve to fund
litigation costs and other expenses of Newco LP estimated to be expended by
Newco LP in attempting to settle or litigate Claims relating to the Disputed
MCJV Recovery. Any amounts to be reserved pursuant to clause (b) of the
preceding sentence shall by subject to the approval of the Bankruptcy Court in
connection with any order of the Bankruptcy Court confirming Newco LP's
ownership interest in the Disputed SF Cash or approving an executed and
delivered settlement agreement with Coopers & Lybrand OYDL, Inc./Limited.
If, on the MCJV Deadline, an exchange or conversion of Class B
Interests for or into Class A
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Interests has not already occurred by reason of the resolution of the dispute
relating to the Disputed SF Cash, Newco LP shall deduct from the amount of Net
MCJV Proceeds used in the formula described in the second preceding paragraph
above (a) the litigation costs and other expenses of Newco LP expended in
attempting to settle or litigate Claims relating to the Disputed SF Cash and (b)
the amount required to be deposited in a reserve to fund litigation costs and
other expenses of Newco LP estimated to be expended by Newco LP in attempting to
settle or litigate Claims relating to the Disputed SF Cash. Any amounts to be
reserved pursuant to clause (b) of the preceding sentence shall by subject to
the approval of the Bankruptcy Court in connection with any order of the
Bankruptcy Court approving the sale of the MCJV Lands.
On the Effective Date, Realty Corp. will transfer 100% of the
outstanding stock of SF Holdings to Newco LP. On the Effective Date, SF Holdings
will transfer all of its right, title and interest in the Disputed SF Cash to an
independent third-party escrow agent postpetition pending the outcome of such
dispute, subject to any related income tax. On the Effective Date, Newco LP,
indirectly through its wholly owned subsidiary, Florida Equity Corp., a Florida
corporation, will hold a 50% joint venture interest in MCJV.
18.1.2. Assets and Liabilities of Newco LP.
On the Effective Date, Newco LP will own, among other things, the
following assets, free and clear of all Liens, Claims and encumbrances, subject
to the potential adjustments described in sections 18.8 and 18.9 hereof:
100% of the outstanding stock of Devco GP
99% limited partner interest in New 245 Park LP
70.6666667% partner interest in New Tower A LP
98% limited partner interest and 1% general
partner interest in WFC Tower B Holding Co. LP
99% limited partner interest in New Tower D
Holding I LP
49.25% limited partner interest in Tower D Holding
II LP
99% general partner interest in 53 Holding
Company LP
99% limited partner interest in New Liberty Plaza
LP
100% of the fixed loan from New 245 Park LP
99% limited partner interest in Pennland LP
99% limited partner interest in WFC Retailco LP
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100% of the outstanding stock of WFC Tower D GP
Corp.
100% of the outstanding stock of Florida Equity
Corp.
100% of the outstanding stock of SF Holdings
On the Effective Date, Newco LP shall be a borrower or an obligor, as
the case may be, under the Convertible Note, the deferred Cash payments to be
provided to TIAA in accordance with the TIAA Settlement and certain of the Tax
Notes to be issued under this Plan.
18.1.3. Repayment of Withholding Advances.
If a Withholding Advance on behalf of a partner or its assignee is
made by Newco LP, such partner or assignee shall have thirty (30) Business Days
within which to repay such advance in full in Cash. If such repayment is not
timely made, Newco LP shall be entitled to deduct such amount and permanently
adjust the interest of such partner or assignee accordingly. If Newco LP
determines that it would have insufficient funds to make a Withholding Advance,
Newco LP shall be entitled to require the partner for which the withholding
requirement applies to pay the amount of such withholding requirement
sufficiently in advance of the payment date to permit Newco LP to timely satisfy
its withholding tax liability.
18.1.4. Governance of Newco LP.
The business and affairs of Newco LP will be managed by its sole
general partner, Managing GP, acting by majority vote through its Board of
Directors; provided, however, that action by Newco LP in respect of the
following matters will require a supermajority vote (the percentage constituting
such supermajority shall be agreed to by the Co-Proponents) of the Board of
Directors of Managing GP:
(i) a significant acquisition or business combination, or disposition
of any Core Property;
(ii) any issuance or purchase by any Entity controlled by Managing GP
of any capital stock or any other Equity Interests (including any significant
long-term debt refinancing involving the issuance of any capital stock or any
other Equity Interests), except an issuance made in exchange for debt upon an
actual or anticipated default on such debt where no other available alternative
is acceptable to the creditor;
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(iii) any transaction between any Entity controlled by Managing GP and
any related party (other than ordinary course transactions);
(iv) the initial selection, and any removal or replacement, of
Managing GP's Chief Executive Officer during the three-year period following the
Effective Date; and
(v) any amendment of the organizational documents of any Entity owned
or controlled by Managing GP affecting cumulative voting in any election of
directors or affecting any of the matters referred to in clauses (i) through
(iv) of this section 18.1.4.
The Co-Proponents will enter into a stockholders' agreement with
respect to their ownership in and the governance of Managing GP, including,
without limitation, an agreement with respect to the nomination and election of
directors of Managing GP.
Managing GP will have the exclusive power and authority to reorganize
or restructure the ownership interests of Newco LP to permit an Entity
qualifying as a real estate investment trust for federal income tax purposes to
become a partner of Newco LP, including, in connection therewith, the power and
authority to distribute such ownership interests and any associated contractual
or other obligations of or held by Newco LP to Newco LP's partners.
18.2. Ownership of Managing GP.
On the Effective Date, the Co-Proponents will own 100% of the issued
and outstanding capital stock of Managing GP which, in turn, will own the
General Partner Interest and 1% of the Class B Interests in Newco LP. The
General Partner Interest of Managing GP in Newco LP will be issued by Newco LP
in partial consideration of the Co-Proponents' Capital Infusion and the Allowed
Co-Proponent Unsecured Claims.
18.3. Organization of Devco GP.
18.3.1. Organization and Ownership of Devco GP.
On the Effective Date, Equity GP will be merged with and into Devco
GP, with Devco GP as the surviving corporation. On the Effective Date, Newco LP
will own 100% of the outstanding common stock of Devco GP.
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18.3.2. Assets and Liabilities of Devco GP.
On the Effective Date, Devco GP will own the following assets, free
and clear of all Liens, Claims and encumbrances, subject to the potential
adjustments described in sections 18.8 and 18.9 hereof:
100% of the outstanding stock of WFC Tower B
Finance Corp.
15% of the outstanding stock of Brunswash
Development Corp.
100% of the New OLP Corp. Class A Stock and New
OLP Corp. Class B Stock
100% of the New Tower A Corp. Class A Stock and
New Tower A Corp. Class B Stock
.9% general partner interest in 245 Holding LP
1% general partner interest in WFC Tower B Holding
Co. LP
100% of the 245 Corp. Class A Stock and the
245 Corp. Class B Stock
100% of the outstanding stock of Tower D Holding I
Corp.
50.75% general partner interest in New Tower D
Holding II LP
1% limited partner interest in 53 Holding Company
LP
100% of the outstanding stock of WFC Retailco
Holding Corp.
100% of the outstanding stock of Pennland GP
Corp.
33.33% joint venture interest in Federal Center
Associates
On the Effective Date, Devco GP will have no material indebtedness.
18.3.3. Capital Stock of Devco GP.
On the Effective Date, the authorized capital stock of Devco GP shall
consist only of common stock, in such amount and having the par value and other
rights, privileges, limitations and restrictions as will be set forth in Devco
GP's certificate of incorporation.
18.3.4. Governance of Devco GP.
On the Effective Date, the business and affairs of Devco GP will be
managed by and under the direction of a
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board of directors elected by Newco LP, Devco GP's sole
stockholder.
18.4. Organization of Liquidating Corp.
By the Effective Date, Liquidating Corp. will be organized as a
Delaware corporation by the filing of a certificate of incorporation with the
Delaware Secretary of State. The Co-Proponents will own 100% of the issued and
outstanding Liquidating Corp. Shares.
18.4.1. Assets and Liabilities
of Liquidating Corp.
On the Effective Date, Liquidating Corp. will own, among other things,
the Equity Interests in the companies listed below, free and clear of all Liens,
Claims and encumbrances unless, with respect to the assets listed below that are
Entities, such Entities have been dissolved or otherwise eliminated prior to the
Effective Date.
Amland Properties Corp.
Forum Properties Corp.
Hartford Park Associates
Izzard Corp.
Olympia (U.S.) Development Subsidiary Corp.
Olympia Center Holding Company, L.P.
Olympia & York Bryan Holding Company
Olympia & York Colorado Development Corp.
Olympia & York Communications, Inc.
Olympia & York Cypress Corp.
Olympia & York Denver Properties Corp.
Olympia & York Development Seattle Company
Olympia & York Fountain Plaza Company
Olympia & York Grampian Corp.
Olympia & York Homes Corp.
Olympia & York Jefferson Street Company
Olympia & York KOIN Center Company
Olympia & York Maiden Lane Company
Olympia & York Maiden Lane Finance Corp.
Olympia & York Mass Investment Corp.
Olympia & York Properties (Portland) Company
Olympia & York Southeast Equity Corp.
Olympia & York State Street Company
Olympia & York Tower B Lease Company
Olympia & York Water Street Company
Olympia & York & O&Y FEC Corp Joint Venture
Olympia & York 245 Lease Company
Olympia & York 320 G.O.T. Company
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Olympia & York 320 Park Company
Orion Limited Partnership
OYCI Video, Inc.
O&Y Concord 60 Broad Street Company
O&Y Construction Corp.
O&Y Cypress Florida Inc.
O&Y Dalland Corp.
O&Y FEC Corp.
O&Y Hope Street, Inc.
O&Y I/S Guide Inc.
O&Y NY Building Corp.
O&Y Plaza Corp.
O&Y REUSA TALP Subsidiary Corp. O&Y WFC Maintenance Corp.
O&Y-YBG Corp.
O&Y-YBG L.P.
O&Y 7 Hanover Leasing Company, L.P. O&Y 55 WS Lease Co., L.P.
O&Y 233 Park South Company, L.P.
O&Y 320 Park Corp.
Senior Associates
SYR Mall Corp.
Tremont Park Associates
WFC Tower Corp.
West 31st Street Associates
2 Broadway Associates
2 Broadway Associates L.P.
2 Broadway Land Company
60 Broad Street Management Corp.
125 Broad Street Company
11601 Holding Corp.
11601 Holdings, L.P.
Notwithstanding anything in this section 18.4.1, the transfer of the Equity
Interests in O&Y Concord 60 Broad Street Company to Liquidating Corp. shall not
in any way affect the Liens of Dragon relating to such Equity Interests;
provided, however, that any Liabilities of the partners in O&Y Concord 60 Broad
Street Company shall be released in accordance with this Plan.
18.4.2. Governance of Liquidating Corp.
From and after the Effective Date, the business and affairs of
Liquidating Corp. will be managed by and under the direction of a board of
directors, initially designated by the Co-Proponents. Thereafter, the
composition of the board of directors of Liquidating Corp.
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will be determined in accordance with the articles of
incorporation of Liquidating Corp.
18.4.3. Funding of Liquidation Costs.
On the Effective Date, Newco LP shall provide Liquidating Corp. with
the Liquidation Funding Advance, which shall be a credit facility in a maximum
amount of $1,000,000, which credit facility may drawn upon from time to time by
Liquidating Corp., shall mature three years from the Effective Date, shall
accrue interest at 15% per annum, and shall be recourse to Liquidating Corp.
18.5. OLP Transactions.
18.5.1. Reorganization of OLP Entities.
By the Effective Date, New OLP Corp. will be organized as a Delaware
corporation by the filing of a certificate of incorporation with the Delaware
Secretary of State. The board of directors of New OLP Corp. will have at least
five (5) directors. By the Effective Date, Devco GP and Devco will transfer
their respective partnership interests in OLP Co. and Trinity Place Co. to
Liberty Plaza Co., with OLP Co. and Trinity Place Co. being dissolved by reason
of such transfers. Immediately thereafter, on the Effective Date, Liberty Plaza
Co., as successor to the respective assets and Liabilities of OLP Co. and
Trinity Place Co., will be reorganized as New Liberty Plaza LP, with New OLP
Corp. as a 1% sole general partner and Newco LP as a 99% limited partner. Such
partners shall be restricted from transferring or pledging their respective
interests in New Liberty Plaza LP pursuant to a partnership agreement of New
Liberty Plaza LP to be entered into by such partners as of the Effective Date.
18.5.2. Execution of Sanwa/OLP
Restructured Mortgage Loan Documents.
On the Effective Date, Sanwa and New OLP Corp. and New Liberty Plaza
LP will execute and deliver the Sanwa/OLP Restructured Mortgage Loan Documents.
18.5.3. Bankruptcy Remote Structure.
On the Effective Date and in accordance with section 12.2 hereof, New
OLP Corp. will have two classes of stock, the New OLP Corp. Class A Stock and
the New OLP Corp. Class B Stock, all of which will be held by Devco GP on the
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Effective Date. All of the shares of New OLP Corp. Class B Stock shall be
pledged by Devco GP to Sanwa to further secure the Sanwa/OLP Restructured
Mortgage Loan. The New OLP Corp. Class B Stock pledged to Sanwa shall be
entitled to elect one director of New OLP Corp., and Sanwa, as pledgee, shall be
entitled to vote such shares. New OLP Corp. shall not be authorized under its
certificate of incorporation to (a) commence a chapter 11 case or undertake
other insolvency or reorganization proceedings, or cause New Liberty Plaza LP to
do so, or (b) dissolve, in each case without the approval of Sanwa's director
for so long as the Sanwa/OLP Restructured Mortgage Loan shall be outstanding.
Sanwa's director shall not vote on any other issues. New Liberty Plaza LP and
New OLP Corp. will agree not to file a bankruptcy petition if Sanwa declares a
default or commences a foreclosure proceeding following a default, without the
vote of the director elected by Sanwa, and such director shall have the sole
right to authorize the filing of a plan of reorganization for New Liberty Plaza
LP or New OLP Corp. in any bankruptcy proceeding that may be filed by New
Liberty Plaza LP or New OLP Corp. If a bankruptcy petition is filed by or
against New Liberty Plaza LP or New OLP Corp. at any time after the Effective
Date, New Liberty Plaza LP and New OLP Corp. will be contractually obligated (a)
to agree to a modification of the automatic stay to permit, at Sanwa's option,
Sanwa to exercise its foreclosure and related rights, and (b) to enter into a
cash collateral stipulation providing for the application of revenues in
accordance with the cash management system at all times during the pendency of
any bankruptcy proceeding, except that property management fees will be reduced
by 50% and no asset management fees will be paid. In the event Sanwa files a
motion for a modification of the automatic stay in accordance with the preceding
sentence and such motion is denied by the Bankruptcy Court, neither New Liberty
Plaza LP nor New OLP Corp. shall have the right to seek any extension of
exclusivity in any such bankruptcy proceeding without the prior approval of
Sanwa.
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18.6. 245 Park Avenue Transactions.
18.6.1. Organization and Ownership
of 245 Holding LP.
On the Effective Date, 245 Holding LP will be reconstituted as a
Delaware limited partnership. If JMB does not elect the JMB/245 Park Member
Option in accordance with section 15.8.1 hereof, JMB will a hold a 99% limited
partner interest and Devco GP will hold a 1% general partner interest in 245
Holding LP. On the Effective Date, 245 Holding LP will hold a 5.4949% Class A
Interest in Newco LP. At JMB's request, 245 Holding LP will be organized as a
general partnership, unless the doing so shall cause or create an adverse tax
consequence.
18.6.2. Organization and Reorganization
of Other 245 Park Avenue Entities.
By the Effective Date, New 245 Park LP will be organized as a Delaware
limited partnership by the filing of a certificate of limited partnership with
the Delaware Secretary of State. Newco LP will hold a 99% limited partner
interest and 245 Corp. will hold a 1% sole general partner interest in New 245
Park LP. Such partners will be restricted from transferring or pledging their
respective interests in New 245 Park LP pursuant to a partnership agreement of
New 245 Park LP to be entered into by such partners as of the Effective Date.
18.6.3. Bankruptcy Remote Structure.
On the Effective Date and in accordance with section 15.3
hereof, 245 Corp. will have two classes of stock, the 245 Corp. Class A Stock
and the 245 Corp. Class B Stock, all of which will be held by Devco GP on the
Effective Date. All of the shares of 245 Corp. Class B Stock shall be pledged by
Devco GP to Aetna to further secure the Aetna Restructured Mortgage Loan. The
245 Corp. Class B Stock pledged to Aetna. Aetna shall be entitled to elect one
director of 245 Corp., and Aetna, as pledgee, shall be entitled to vote such
shares. The board of directors of 245 Corp. will have at least five (5)
directors. 245 Corp. will not be authorized under its certificate of
incorporation to (a) commence a chapter 11 case or undertake other insolvency or
reorganization proceedings, or cause New 245 Park LP to do so, or (b) dissolve,
in each case without the approval of Aetna's director for so long as the Aetna
Restructured Mortgage Loan
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remains outstanding. Aetna's director shall not vote on any other issues. The
independent director shall consult with DKB prior to and in connection with any
vote such director casts in such capacity. New 245 Park LP and 245 Corp. will
agree not to file a bankruptcy petition if Aetna declares a default or commences
a foreclosure proceeding following a default, without the vote of the director
elected by Aetna, and such director shall have the sole right to authorize the
filing of a plan of reorganization for New 245 Park LP and 245 Corp. in any
bankruptcy proceeding that may be filed by New 245 Park LP and 245 Corp. If a
bankruptcy petition is filed by or against New 245 Park LP or 245 Corp. at any
time after the Effective Date, New 245 Park LP and 245 Corp. will be
contractually obligated (a) to agree to a modification of the automatic stay to
permit, at Aetna's option, Aetna to exercise its foreclosure and related rights,
and (b) to enter into a cash collateral stipulation providing for the
application of revenues in accordance with the cash management system at all
times during the pendency of any bankruptcy proceeding, except that property
management fees will be reduced by 50% and no asset management fees will be
paid. In the event Aetna files a motion for a modification of the automatic stay
in accordance with the preceding sentence and such motion is denied by the
Bankruptcy Court, neither New 245 Park LP nor 245 Corp. shall have the right to
seek any extension of exclusivity in any such bankruptcy proceeding without the
prior approval of Aetna. In the event that the Aetna Restructured Mortgage Loan
is satisfied at a time when the DKB Restructured Mortgage Loan remains
outstanding, DKB shall be entitled to appoint an independent director of 245
Corp., which director shall replace, and shall serve in the same capacity as,
Aetna's director and shall be entitled to the same indemnification rights as the
director appointed by Aetna.
18.6.4. Execution of Aetna Restructured
Mortgage Loan Documents.
On the Effective Date, Aetna and New 245 Park LP will execute and
deliver the Aetna Restructured Mortgage Loan Documents.
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18.6.5. Execution of DKB Restructured
Mortgage Loan Documents.
On the Effective Date, DKB and New 245 Park LP will execute and
deliver the DKB Restructured Mortgage Loan Documents.
18.6.6. Execution of JMB
Restructuring Documents.
On the Effective Date, the JMB Restructuring Documents will be
executed and delivered.
18.7. Tower A Transactions.
18.7.1. Organization of Tower A Entities.
By the Effective Date, New Tower A Corp. will be organized as a
Delaware corporation by the filing of a certificate of incorporation with the
Delaware Secretary of State. The board of directors of New Tower A Corp. will
have at least five (5) directors. By the Effective Date, New Tower A LP will be
organized as a Delaware limited partnership by the filing of a certificate of
limited partnership with the Delaware Secretary of State. New Tower A LP will
have TALP as a 26.2626263% limited partner, Newco LP as a 70.6666667% limited
partner and New Tower A Corp. as a 3.070707% sole general partner. Such partners
will be restricted from transferring or pledging their respective interests in
New Tower A LP pursuant to the partnership agreement of New Tower A LP to be
entered into by such partners as of the Effective Date.
18.7.2. Execution of Sanwa/Tower A
Restructured Mortgage Loan Documents.
On the Effective Date, Sanwa and New Tower A LP will execute
and deliver the Sanwa/Tower A Restructured Mortgage Loan Documents.
18.7.3. Bankruptcy Remote Structure.
On the Effective Date and in accordance with section 13.2 hereof, New
Tower A Corp. will have two classes of stock, the New Tower A Corp. Class A
Stock and the New Tower A Corp. Class B Stock, all of which will be held by
Devco GP on the Effective Date. All of the shares of New Tower A Corp. Class B
Stock shall be pledged by Devco GP to Sanwa to further secure the Sanwa/Tower A
Restructured
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Mortgage Loan. The New Tower A Corp. Class B Stock pledged to Sanwa shall be
entitled to elect one director of New Tower A Corp., and Sanwa, as pledgee,
shall be entitled to vote such shares. New Tower A Corp. shall not be authorized
under its certificate of incorporation to (a) commence a chapter 11 case or
undertake other insolvency or reorganization proceedings, or cause New Tower A
LP to do so, or (b) dissolve, in each case without the approval of Sanwa's
director for so long as the Sanwa/Tower A Restructured Mortgage Loan remains
outstanding. Sanwa's director shall not vote on any other issues. New Tower A LP
and New Tower A Corp. will agree not to file a bankruptcy petition if Sanwa
declares a default or commences a foreclosure proceeding following a default,
without the vote of the director elected by Sanwa, and such director shall have
the sole right to authorize the filing of a plan of reorganization for New Tower
A LP or New Tower A Corp. in any bankruptcy proceeding that may be filed by New
Tower A LP or New Tower A Corp. If a bankruptcy petition is filed by or against
New Tower A LP or New Tower A Corp. at any time after the Effective Date, New
Tower A LP and New Tower A Corp. will be contractually obligated (a) to agree to
a modification of the automatic stay to permit, at Sanwa's option, Sanwa to
exercise its foreclosure and related rights, and (b) to enter into a cash
collateral stipulation providing for the application of revenues in accordance
with the cash management system at all times during the pendency of any
bankruptcy proceeding, except that property management fees will be reduced by
50% and no asset management fees will be paid. In the event Sanwa files a motion
for a modification of the automatic stay in accordance with the preceding
sentence and such motion is denied by the Bankruptcy Court, neither New Tower A
LP nor New Tower A Corp. shall have the right to seek any extension of
exclusivity in any such bankruptcy proceeding without the prior approval of
Sanwa.
18.8. Tower B Transactions.
18.8.1. Reorganization of Tower B Entities.
On the Effective Date, Tower B Co. and Tower B Holding I will be
dissolved and reconstituted as New York general partnerships and will bear the
same names. Pursuant to the Restructuring Transactions, BPHI will own indirectly
(through Tower B Co. and Tower B Holding I) a portion of the Class A Interests.
On the Effective Date, WFC Tower B Co. LP, a Delaware limited partnership, will
be formed by the filing of a certificate of limited partnership with the
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Delaware Secretary of State. In accordance with the Restructuring Transactions,
WFC Tower B Co. LP will own Tower B. Newco LP will own indirectly (through WFC
Tower B Holding Co. LP) a 99% limited partner interest in WFC Tower B Co. LP.
The 1% general partner interest in WFC Tower B Co. LP will be owned by WFC Tower
B GP Corp., a subsidiary wholly owned by one or more of the Co-Proponents. The
partners in WFC Tower B Co. LP shall be restricted from transferring or pledging
their respective interests in WFC Tower B Co. LP pursuant to a partnership
agreement of WFC Tower B Co. LP to be entered into by such partners as of the
Effective Date; provided, however, that such restrictions (other than any
restrictions reasonably acceptable to the representative of the holder(s) of the
Zero Coupon Note) will not apply to any interests in WFC Tower B Co. issued
pursuant to, and in satisfaction of, the Zero Coupon Note, unless prior to such
issuance, the general partner of WFC Tower B Co. and the representative of the
holder(s) of the Zero Coupon Note reasonably determine that such restrictions
are necessary to permit WFC Tower B Co. to lack free transferability of
interests for purposes of being classified as a partnership for federal income
tax purposes. The partnership agreement for WFC Tower B Co. LP and WFC Tower B
Holding Co. LP will be in scope and substance necessary to effect the ML Lease
Securitization (as defined in the Tower B Co. Plan). Notwithstanding the
foregoing, to the extent required to effect the ML Lease Securitization (as
defined in the Tower B Co. Plan), Tower B Co. and Tower B Holding I may be
reorganized as limited liability companies, not limited partnerships, having the
same ownership structure as set forth in this section 18.8.1 and/or the
ownership structure of Tower B Co. and its direct and indirect partners may be
revised.
18.9. Tower D Transactions.
18.9.1. Ownership of Tower D.
On the Effective Date, Tower D Co. and Tower D Holding I will each be
reconstituted as Delaware limited partnerships named WFC Tower D Co. LP and New
Tower D Holding I LP, respectively, by the filing of certificates of limited
partnership with the Delaware Secretary of State. Tower D Holding II will be
reconstituted as a Delaware limited partnership named New Tower D Holding II LP.
By the Effective Date, WFC Tower D GP Corp. will be organized as a Delaware
corporation by the filing of a certificate of incorporation with the Delaware
Secretary of State. The board of directors of WFC Tower D GP Corp. will have at
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least five (5) directors. Newco LP will own all of the outstanding stock of WFC
Tower D GP Corp. WFC Tower D Co. LP will own Tower D. New Tower D Holding I LP
will hold a 48% limited partner interest, New Tower D Holding II LP will hold a
2% limited partner interest, WFC Tower D GP Corp. will hold a 1% general partner
interest, Merrill Lynch Tower D Partner will hold a 48.1% limited partner
interest, and an affiliate of Merrill Lynch Tower D Partner will hold a .9%
general partner interest in WFC Tower D Co. LP. Newco LP will hold a 99% limited
partner interest and Tower D Holding I Corp. will hold a 1% sole general partner
interest in New Tower D Holding I LP. Such partners shall be restricted from
transferring or pledging their respective partner interests in New Tower D
Holding I LP pursuant to a partnership agreement of New Tower D Holding I LP to
be entered into by such partners as of the Effective Date. Newco LP will hold a
49.25% limited partner interest and Devco GP will hold a 50.75% sole general
partner interest in New Tower D Holding II LP. The board of directors of Tower D
Holding I Corp. will have at least five (5) directors. Notwithstanding the
foregoing, to the extent required to effect the refinancing of Tower D, Tower D
Co. and Tower D Holding I may be reorganized as limited liability companies, not
limited partnerships, having the same ownership structure as set forth in this
section 18.9.1 and/or the ownership structure of Tower D Co. and its direct and
indirect partners may be revised.
18.9.2. Tower D Refinancing.
On the Effective Date, the Tower D Financing Documents shall be
executed and delivered.
18.10. WFC Retailco Holding Corp. and WFC Retailco LP.
By the Effective Date, WFC Retailco Holding Corp. will be organized as
a Delaware corporation by the filing of a certificate of incorporation with the
Delaware Secretary of State. Devco GP will hold 100% of the outstanding stock of
WFC Retailco Holding Corp. The board of directors of WFC Retailco Holding Corp.
will have at least five (5) directors. By the Effective Date, WFC Retailco LP
will be organized as a Delaware limited partnership by the filing of a
certificate of limited partnership with the Delaware Secretary of State. Newco
LP will hold a 99% limited partner interest and WFC Retailco Holding Corp. will
hold a 1% general partner interest in WFC Retailco LP. Such partners will be
restricted from transferring or pledging their respective interests in WFC
Retailco LP pursuant to a
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partnership agreement of WFC Retailco LP to be entered into by such partners as
of the Effective Date.
18.11. Transfers in Furtherance of the Plan.
Prior to the proposal of, and in furtherance of, this Plan, the
Non-Core Properties listed below were either returned to lenders in exchange for
debt forgiveness or sold to third parties:
One Corporate Center
One Financial Plaza
Wood Ranch
1999 Bryan Street
Cypress Creek
KOIN Center
320 Park Avenue
Winter Park
Plaza Olympia
Place Chino Hills
400 South Hope Street
La Santa Maria
1250 Broadway
18.12. Co-Proponents' Capital Infusion.
On the Effective Date, subject to the satisfaction or waiver of the
conditions precedent set forth in section 22.2 hereof, the Co-Proponents shall
contribute to the capital of Newco LP $75,000,000 in Cash. Notwithstanding the
foregoing, the Co-Proponents' Capital Infusion is subject to the internal
approvals (to the extent required) of the Co-Proponents, confirmation of receipt
of which is to be provided by the Co-Proponents to the Debtors at or prior to
the hearing to approve the Disclosure Statement.
18.13. Restrictions on Transferability and Assignability
of Class A Interests and Class B Interests and on
Admission of Substitute Partners; Tag-Along Rights.
The Newco LP Partnership Agreement will prohibit a partner of Newco LP
from assigning its partner interest in Newco LP to an assignee that is not a
"United States person" (within the meaning of section 7701(a)(30) of the IRC),
without the prior written consent of Managing GP, which consent shall be granted
unless Managing GP determines that the withholding obligations to which Newco LP
reasonably may be expected to be subject as a result of the ownership of such
partner interest by such assignee, when taken together
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with such withholding obligations with respect to all other Newco LP partner
interests held by non-United States persons, would have a material adverse
effect on the ability of Newco LP and its Affiliates to satisfy their debt
service requirements and other contractual obligations and operational
requirements.
Notwithstanding any other provision of this Plan, the Newco LP
Partnership Agreement will prohibit any direct or indirect transfer of any
partner interest that would result in a "termination" of Newco LP under section
708 of the IRC, without the prior written consent of Managing GP.
The Newco LP Partnership Agreement will require that Managing GP (and
any successor general partner) maintain at least a 1% general partner interest
in the capital of, and in all items of income, gain, loss, deduction and credit
of, Newco LP.
The Newco LP Partnership Agreement will prohibit Managing GP's
withdrawal from Newco LP in certain circumstances and also will prohibit the
admission of an assignee of a partner interest in Newco LP (including a
permitted assignee who is a non-United States person) as a substitute partner of
Newco LP without the consent of a majority in interest of the non-transferring
partners (after taking into account the exercise of tag-along rights). Pending
the assignee's admission as a substitute partner of Newco LP, and upon receipt
of written notice by Managing GP of the transfer, the assignee shall be entitled
to share in all allocations and distributions of Newco LP (including liquidating
distributions) on the same basis as a partner. Unless and until the assignee is
admitted as a substitute partner of Newco LP, the assignee shall not be entitled
to exercise any other rights of a partner of Newco LP, including the right to
vote on any matter submitted to the partners for approval, and the assignor
shall retain the right to vote the partner interests so assigned; provided,
however, that such restriction on substitution will not apply with respect to
any permitted assignee of a Class A Interest distributed to holders of
Unaffiliated Unsecured Claims or JMB pursuant to the Plan or upon conversion of
the Convertible Note Interests, unless prior to the Effective Date the
Co-Proponents, on the one hand, and the Creditors' Committee or JMB, on the
other hand (as the case may be), reasonably determine that such restriction is
necessary to permit Newco LP to lack free transferability of interests for
purposes of being classified as a partnership for federal income tax purposes;
and, provided, further, that
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the Newco LP Partnership Agreement will provide for the elimination of such
restriction on substitution with respect to all permitted assignees in the event
that Treasury Regulations are adopted to replace or supplement, with an elective
regime, the existing Treasury Regulations for classifying certain business
organizations, and such elimination or supplementation does not adversely affect
the partnership status of Newco LP from its inception.
In addition, the Newco LP Partnership Agreement will provide for
tag-along rights as follows. If any holder of Equity Interests in Newco LP
(alone or together with any other such holder) proposes to sell (in such
capacity, the "Selling Holder") a Controlling Interest in Newco LP to a third
party investor pursuant to a bona fide offer, the Selling Holder will give each
other holder of Equity Interests in Newco LP written notice of such proposed
sale (the "Tag-Along Notice"), and each such other holder will have the right
(subject to the restrictions on transfer and the provisions on assignees' rights
in the first four paragraphs of this section 18.13) to participate in such
proposed sale on the same terms and conditions offered by such investor. The
Tag-Along Notice will be required to set forth (i) the identity of the third
party investor, (ii) the total percentage of Equity Interests in Newco LP
proposed to be sold by the Selling Holder to such investor, (iii) the purchase
price for such interests (which may only be paid in cash) and (iv) the other
material terms of such proposed sale. Such right to participate in the proposed
sale will be exercisable by written notice to the Selling Holder given not later
than ten (10) days after receipt of a Tag-Along Notice, which written notice
must set forth the percentage of Equity Interests in Newco LP proposed to be
sold by the holder exercising such right, which percentage may be equal to or
less than the total percentage of Equity Interests held by the Selling Holder
and proposed to be sold by the Selling Holder to the third-party investor (the
"Exercising Tag-Along Holder"). The percentage of Equity Interests in Newco LP
to be sold in such proposed sale by any participating holder of Equity Interests
in Newco LP (including the Selling Holder) will be determined by multiplying the
total percentage of Equity Interests in Newco LP originally proposed to be sold
by the Selling Holder (which total percentage of Equity Interests in Newco LP
may be increased, in the third party investor's discretion, so as to allow the
sale of the total percentage of Equity Interests in Newco LP originally proposed
to be sold by the Selling Holder together with the total percentage of Equity
Interests in Newco LP proposed to be
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sold by all of the Exercising Tag-Along Holders as set forth in their exercise
notices) by a fraction, the numerator of which will be the percentage of Equity
Interests in Newco LP proposed to be sold by such participating holder and the
denominator of which will be the total percentage of Equity Interests in Newco
LP originally proposed to be sold by the Selling Holder together with the total
percentage of Equity Interests in Newco LP proposed to be sold by all of the
Exercising Tag-Along Holders as set forth in their exercise notices.
If the Selling Holder proposes to sell less than a Controlling
Interest but at least 35% of the total Equity Interests in Newco LP to a third
party investor pursuant to a bona fide offer, the Selling Holder will give each
other holder of at least 4% of the total Equity Interests a Tag- Along Notice,
and each such other holder will have the right (subject to the restrictions on
transfer and the provisions on assignees' rights in the first four paragraphs of
this section 18.13) to participate in such proposed sale on the same terms and
conditions offered by such investor. Such right will be exercisable in the same
manner and within the same period as described in the immediately preceding
paragraph. In addition, the percentage of Equity Interests in Newco LP to be
sold by any participating holder (including the Selling Holder) will be
determined in the same manner as described in the immediately preceding
paragraph. In the event a holder of Equity Interests in Newco LP entitled to
tag-along rights in accordance with this section 18.13 exercises such rights and
the purchaser purchases a portion, but not all, of such holder's Equity
Interests in Newco LP pursuant to this section 18.13, such holder shall
thereafter continue to be entitled to tag-along rights to sell its remaining
Equity Interest in Newco LP in connection with a sale of less than a Controlling
Interest but at least 35% of the total Equity Interests in Newco LP
notwithstanding that, at the time of such sale, such holder holds less that 4%
of the total Equity Interests of Newco LP.
In connection with the foregoing rights, notwithstanding the terms of
the fourth paragraph of this section 18.13, JMB will be provided with an
opportunity to exchange its Equity Interests in 245 Holding LP for Class A
Interests to allow it to participate in any proposed sale by a Selling Holder
giving rise to such rights (on the same terms and subject to the same conditions
applicable to the other holders of Class A Interests (including the 4% minimum
percentage ownership requirement described in the
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immediately preceding paragraph)), provided that any tax or other cost of doing
so will be borne by JMB. If JMB does not make any such exchange, it still may
exercise the foregoing rights (subject to the restrictions on transfer and the
provisions on assignees' rights in the first four paragraphs of this section
18.13) and participate in any such proposed sale (on the same terms and subject
to the same conditions as if it were a direct holder of Class A Interests) if
and only to the extent that the third party investor agrees to purchase JMB's
Equity Interests in 245 Holding LP (the percentage of such Equity Interests and
the 4% minimum percentage ownership requirement to be determined as if such
interests had been exchanged for Class A Interests). If, after the Effective
Date, 245 Holding LP's ownership interest in Newco LP falls below 4% solely by
reason of a subsequent issuance of equity or securities exchangeable for or
convertible into equity of Newco LP, JMB shall be entitled to tag-along rights
notwithstanding the 4% minimum percentage ownership requirement.
18.14. Letter of Credit Transactions.
On the Effective Date, Newco LP and Sterling National will execute and
deliver the Sterling National Amended and Restated Reimbursement Agreement.
18.15. Execution of CIBC Amended and
Restated Lost Note Indemnity Agreement.
On the Effective Date, Newco LP and CIBC will execute and deliver the
CIBC Amended and Restated Lost Note Indemnity Agreement.
18.16. Abandonment of Interest in Olympia &
York (U.S.) Holdings Company, L.P.
By the Effective Date, Realty Corp., as a Debtor and a Debtor in
Possession, shall abandon its Equity Interest in U.S. Holdings to U.S. Holdings.
18.17. Distributions under this Plan.
Except as provided herein and in the January 12th Settlement
Agreement, on the Effective Date, the Disbursing Agent shall make, or shall make
adequate reserve for, the distributions required to be made under this Plan.
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SECTION 19. PROVISIONS GOVERNING DISTRIBUTIONS.
19.1. Date of Distributions.
Any distributions and deliveries to be made hereunder shall be made on
the Effective Date or as soon as practicable thereafter. If any payment or act
under this Plan is required to be made or performed on a date that is not a
Business Day, then the making of such payment or the performance of such act may
be completed on the next succeeding Business Day, but shall be deemed to have
been completed as of the required date.
19.2. Delivery of Distributions.
Subject to Rule 9010 of the Bankruptcy Rules, distributions to holders
of Allowed Claims and Allowed Equity Interests shall be made at the address of
each such holder as set forth on the Schedules filed with the Bankruptcy Court,
unless superseded by the address set forth on proofs of claim or proofs of
equity interest filed by such holders (or at the last known address of such a
holder if no proof of claim or proof of equity interest is filed or if the
Debtors have been notified in writing of a change of address). If any
distribution to any holder is returned as undeliverable, the Disbursing Agent
shall use reasonable efforts to determine the current address of such holder,
but no distribution to such holder shall be made unless and until the Disbursing
Agent has determined the then current address of such holder, at which time such
distribution shall be made to such holder without interest. Amounts in respect
of any undeliverable distributions made through a Disbursing Agent shall be
returned to the Disbursing Agent making such distribution until such
distribution is claimed. If no proofs of claim are filed and the Schedules filed
with the Bankruptcy Court fail to state addresses for holders of Allowed Claims,
such Allowed Claims shall be deemed unclaimed property under section 347(b) of
the Bankruptcy Code at the expiration of one year from the first date on which
delivery of that distribution was reasonably attempted pursuant hereto. After
such date, all unclaimed property shall be transferred to Newco LP and the Claim
of any holder to such property shall be discharged and forever barred.
19.3. Time Bar to Cash Payments.
Checks issued by the Disbursing Agent on account of Allowed Claims
shall be null and void if not negotiated within sixty (60) days after the date
of issuance thereof.
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Requests for reissuance of any check shall be made in writing directly to the
Disbursing Agent by the holder of the Allowed Claim with respect to which such
check originally was issued. Any Claim in respect of such a voided check shall
be made in writing on or before the later of the second anniversary of the
Effective Date or ninety (90) days after the date of issuance of such check.
After such date, all Claims in respect of void checks shall be discharged and
forever barred.
19.4. Manner of Payment Under this Plan.
At the option of the Debtors, any Cash payment to be made by any of
the Debtors pursuant to this Plan may be made by a check or wire transfer or as
otherwise required or provided in applicable agreements.
19.5. Cap on Distributions.
In no event shall a holder of an Allowed Claim or an Allowed Equity
Interest receive a distribution on account of such Allowed Claim or Allowed
Equity Interest of a value, as of the Confirmation Date, greater than such
Allowed Claim or Allowed Equity Interest.
SECTION 20. PROCEDURES FOR RESOLVING AND TREATING
DISPUTED CLAIMS UNDER THIS PLAN.
20.1. Prosecution of Objections.
On or before the Confirmation Date, the Debtors shall notify each
holder of a Claim filed with the Bankruptcy Court with respect to which any of
the Debtors disputes liability in whole or in part on such Claim if the Debtors
have not notified such holder of such dispute before such date. Prior to the
Effective Date, the Debtors will be responsible for pursuing any objection to
the allowance of any such Claim with respect to which such notice was provided.
From and after the Effective Date, Newco LP will be responsible for pursuing any
objection to the allowance of any such Claim with respect to which such notice
was provided. Newco LP may compromise and settle any objections to Claims after
notice and a hearing, subject to any objections to such settlement that may be
interposed. The Bankruptcy Court may approve any compromises and settlements in
accordance with Rule 9019(a) of the Bankruptcy Rules. Unless otherwise provided
herein or ordered by the Bankruptcy Court, all objections to Claims shall be
served by the Claims Objection Deadline.
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20.2. No Distributions Pending Allowance.
Notwithstanding any other provision hereof, if any portion of a Claim
is a Disputed Claim, no payment or distribution provided hereunder shall be made
on account of the portion of such Claim that is a Disputed Claim unless and
until such Disputed Claim becomes an Allowed Claim, but the payment or
distribution provided hereunder shall be made on account of the portion of such
Claim that is an Allowed Claim.
20.3. Claims Reserves.
20.3.1. Disputed Claims Cash Reserve.
On the Effective Date, the Disbursing Agent shall deposit in one or
more segregated accounts as the Disputed Claims Cash Reserve an amount of Cash
required to pay in full all Disputed Administrative Expense Claims and Disputed
Priority Non-Tax Claims. With respect to Disputed Claims in SF Holdings Class 2,
Devco Canada Class 3, Equity Canada Class 3, Consolidated OLP Class 5, Tower A
Co. Class 5, Consolidated 245 Class 7 and Tower B Leaseco Class 3, the
Disbursing Agent shall reserve, on account of the Disputed Claims in such
Classes, that amount of Cash required to provide distributions on account of
such Disputed Claims as if such Disputed Claims were Allowed Claims on the
Effective Date. The Cash held in the Disputed Claims Cash Reserve, together with
any net earnings thereon, shall be held in trust for the benefit of holders of
such Disputed Claims pending determination of their entitlement thereto. The
Disbursing Agent will establish a reserve for Disputed Priority Tax Claims only
if directed by order of the Bankruptcy Court.
20.3.2. Subclass 7.11.1 Disputed
Claims Debt/Equity Escrow.
On the Effective Date, the Disbursing Agent shall transfer to the
Subclass 7.11.1 Disputed Claims Debt/Equity Escrow an amount of Class A
Interests that would be distributable on account of the aggregate amount of
Disputed Claims in section 7.11.1 as if they were Allowed Unaffiliated Unsecured
Claims in their respective Maximum Allowable Amounts on the Effective Date. In
addition, on the Effective Date, the Disbursing Agent shall transfer to the
Subclass 7.11.1 Disputed Claims Debt/Equity Escrow the Disputed Claims
Convertible Note Interests, which will constitute that number of the Convertible
Note Interests
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which is equal to the amount that would be distributable on account of the
aggregate amount of Disputed Claims in section 7.11.1 as if they were Allowed
Unaffiliated Unsecured Claims in their respective Maximum Allowable Amounts on
the Effective Date. The Disbursing Agent shall serve as the escrow agent for the
Subclass 7.11.1 Disputed Claims Debt/Equity Escrow. Dividends, distributions,
interest payments and other payments payable on such Class A Interests and the
Disputed Claims Convertible Note Interests shall be paid into the Subclass
7.11.1 Disputed Claims Debt/Equity Escrow. The Class A Interests and the
Disputed Claims Convertible Note Interests (and any proceeds or net earnings
thereon) held in the Subclass 7.11.1 Disputed Claims Debt/Equity Escrow shall be
held in trust for the holders of Disputed Claims as of the Effective Date in
section 7.11.1 pending determination of their entitlement thereto. Each holder
of a Disputed Claim as of the Effective Date in section 7.11.1 entitled to be
distributed Class A Interests and Convertible Note Interests shall not have the
rights of holders (including voting rights) with respect to such interests until
such time, if any, that such interests are released to such holder in accordance
with section 20.4 hereof.
For all purposes, but subject to the remainder of this paragraph, the
Disbursing Agent, as escrow agent, shall be deemed the holder of all Cash,
securities and other interests held in the Subclass 7.11.1 Disputed Claims
Debt/Equity Escrow pending their release therefrom; provided, however, that (a)
the Disbursing Agent shall abstain from exercising any and all voting rights in
respect of the interests held in the Subclass 7.11.1 Disputed Claims Debt/Equity
Escrow unless otherwise ordered by the Bankruptcy Court on motion of a holder of
a Disputed Claim as of the Effective Date that, if Allowed, would receive
distributions as a Claim in Consolidated Devco Class 7.11 and (b) with respect
to each opportunity to exercise any right regarding the Convertible Note
Interests, the Disbursing Agent shall be deemed to have exercised all such
rights regarding the Convertible Note Interests held in the Subclass 7.11.1
Disputed Claims Debt/Equity Escrow (including, without limitation, with respect
to amendments, waivers, enforcement of remedies, acceptances of non- mandatory
pre-payments and conversions in response to mandatory or non-mandatory notices
of pre-payments, but solely to the extent of same) in the same manner and
proportion as the acceptances, enforcement and/or conversions (as applicable)
made by the actual holders of the Convertible Note Interests entitled to
exercise such
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right; provided further that, unless otherwise ordered by the Bankruptcy Court
upon motion of a holder of a Disputed Claim as of the Effective Date in subclass
7.11.1, the Disbursing Agent shall not exercise any conversion rights relating
to the Convertible Note Interests other than as specifically described above in
response to and to the extent of mandatory or non-mandatory notices of pre-
payments.
20.3.3. Class 8.6 Disputed
Claims Equity Escrow.
On the Effective Date, the Disbursing Agent shall transfer to the
Class 8.6 Disputed Claims Equity Escrow an amount of Class A Interests and Class
B Interests that would be distributable in accordance with the Restructuring
Transactions and section 8.6 hereof on account of the aggregate amount of
Disputed Claims in Consolidated Realty Corp. Class 6 as if they were Allowed
Claims in their respective Maximum Allowable Amounts on the Effective Date. The
Disbursing Agent shall serve as the escrow agent for the Class 8.6 Disputed
Claims Equity Escrow. Dividends, distributions and other payments payable on
such Class A Interests and Class B Interests shall be paid into the Class 8.6
Disputed Claims Equity Escrow. The Class A Interests and Class B Interests (and
any proceeds or net earnings thereon) held in the Class 8.6 Disputed Claims
Equity Escrow shall be held in trust for the holders of Disputed Claims in
Consolidated Realty Corp. Class 6 pending determination of their entitlement
thereto and all holders of previously Allowed Claims in Consolidated Realty
Corp. Class 6. Each holder of a Disputed Claim in Class 8.6 entitled to be
distributed Class A Interests and Class B Interests shall not have the rights of
holders (including voting rights) with respect to such interests until such
time, if any, that such interests are released to such holder in accordance with
section 20.4. hereof.
For all purposes, but subject to the remainder of this paragraph, the
Disbursing Agent, as escrow agent, shall be deemed the holder of all Cash,
securities and other interests held in the Class 8.6 Disputed Claims Equity
Escrow pending their release therefrom; provided, however, that the Disbursing
Agent shall abstain from exercising any and all voting rights in respect of the
interests held in the Class 8.6 Disputed Claims Equity Escrow unless otherwise
ordered by the Bankruptcy Court on motion of a holder of a Disputed Claim that,
if Allowed, would receive distributions as a Claim in Consolidated Realty Corp.
Class 6.
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20.3.4. Funding of Costs of the Claims Reserves.
The Disbursing Agent shall maintain a reserve within the Disputed
Claims Cash Reserve, the Subclass 7.11.1 Disputed Claims Debt/Equity Escrow and
the Class 8.6 Disputed Claims Equity Escrow to fund the payment of all taxes
payable by such reserves and escrow accounts in respect of earnings chargeable
to the relevant reserve or escrow and all reasonable and customary out-of-pocket
costs and expenses of maintaining the reserves and escrows; provided, however,
that the reserves shall not be charged for attorneys' fees and other similar
costs associated with prosecuting Disputed Claims. The Disbursing Agent shall
pay, or cause to be paid, out of the funds held in such reserve and escrow
accounts, any such taxes. The Disbursing Agent shall also file or cause to be
filed any tax or information returns related to the Disputed Claims Cash
Reserve, the Subclass 7.11.1 Disputed Claims Debt/Equity Escrow and the Class
8.6 Disputed Claims Equity Escrow that are required by any governmental unit. In
the event a reserve established pursuant to this section 20 does not have
sufficient Cash to make the required tax payments described in the first
sentence of this section 20.3.4, Newco LP shall provide such reserve with a Tax
Advance. If and when a claimant (whether by reason of a Disputed Claim becoming
an Allowed Claim or by reason of a Catch-Up Cash Distribution) becomes entitled
to a distribution in Cash from a reserve, the holder of such Allowed Claim shall
be charged such holder's pro rata portion of the Tax Advance and the Disbursing
Agent shall be entitled to withhold from such holder's distribution the amount
required to pay such pro rata portion of the Tax Advance. If and when a claimant
(whether by reason of a Disputed Claim becoming an Allowed Claim or by reason of
a Catch-Up Equity Distribution) becomes entitled to a distribution of an
interest or share from a reserve, the holder of such Allowed Claim shall have
thirty (30) Business Days in which to pay in Cash such holder's pro rata portion
of the Tax Advance. If a payment in full in Cash is not received in such thirty
(30) day period, Newco LP shall be entitled to reduce and permanently adjust the
partner interests otherwise distributable to such holder, accordingly.
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20.4. Distributions After Allowance.
Payments and distributions to each holder of a Disputed Claim or any
other Claim that is not an Allowed Claim, to the extent that such Claim
ultimately becomes an Allowed Claim, shall be made in accordance with the
provisions of this Plan, including the provision governing the class of Claims
in which such Claim is classified. As soon as practicable after the date that
the order or judgment of the Bankruptcy Court allowing any Disputed Claim or any
other Claim that is not an Allowed Claim becomes a Final Order, the Disbursing
Agent shall distribute to the holder of such Claim any payment or property that
would have been distributed to such holder if the Claim had been an Allowed
Claim on the Effective Date, plus any payments or other distributions that would
have been made on account of such Allowed Claim from the Effective Date through
such date, plus the portion of the net earnings attributable thereto, less any
amounts or distribution permitted to be deducted or withheld pursuant to this
section 20 and section 18 hereof.
20.5. Distributions After Disallowance.
With respect to the Disputed Claims Cash Reserve and the Class 8.6
Disputed Claims Equity Escrow, after the Effective Date and semi-annually, the
Disbursing Agent shall determine the Aggregate Disallowed Amount, if any,
applicable to each class of Claims. As soon as practicable after the Aggregate
Disallowed Amount is determined for each semi-annual period, the Disbursing
Agent shall distribute to each holder of an Allowed Claim in such classes
entitled to be distributed Cash under this Plan, a payment in Cash from the
Disputed Claims Cash Reserve equal to such holder's Catch-Up Cash Distribution.
With respect to each class of Claims entitled to be distributed Class A
Interests and Class B Interests under this Plan, as soon as practicable after
the Aggregate Disallowed Amount is determined for each semi-annual period, the
Disbursing Agent shall transfer from the Class 8.6 Disputed Claims Equity Escrow
each such holder's Catch-Up Equity Distribution.
With respect to the Subclass 7.11.1 Disputed Claims Debt/Equity
Escrow, after the Effective Date and semi-annually, the Disbursing Agent shall
determine the Aggregate Disallowed Amount, if any, applicable to such escrow. As
soon as practicable after the Aggregate Disallowed Amount is determined for each
semi-annual period, the Disbursing Agent shall distribute to each of the Co-
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Proponents, such Co-Proponent's allocable share of the Aggregate Disallowed
Amount relating to the Subclass 7.11.1 Disputed Claims Debt/Equity Escrow.
Immediately upon receipt of the Aggregate Disallowed Amount, each of the Co-
Proponents shall exercise its right to convert the Convertible Note Interests
distributed to them pursuant to this paragraph into Class A Interests.
In the event that any Cash held in the Disputed Claims Cash Reserve
remains after all Claims have been allowed or disallowed, such Cash shall be
transferred to Newco LP.
SECTION 21. PROVISIONS GOVERNING EXECUTORY CONTRACTS
AND UNEXPIRED LEASES UNDER THIS PLAN.
21.1. General Treatment.
This Plan constitutes a motion by the Debtors to reject, as of the
Confirmation Date, all executory contracts and unexpired leases to which any of
the Debtors is a party, except for an executory contract or unexpired lease that
(a) has been assumed pursuant to a Final Order prior to the Confirmation Date
(including the ground leases between Tower A Co. and Battery Park City Authority
and Tower B Co. and Battery Park City Authority), (b) is specifically listed on
Schedule 21.1 hereto (which schedule will be filed with the Bankruptcy Court one
week prior to the Confirmation Hearing), (c) is the subject of a separate motion
filed under section 365 of the Bankruptcy Code by any of the Debtors and pending
on the Confirmation Date or (d) has Merrill Lynch as a party, with respect to
which Merrill Lynch has not consented to rejection or has consented to
assumption, pursuant to section 4.4 hereof. For purposes hereof and subject to
the terms of section 4.4 hereof, each executory contract and unexpired lease
listed on Schedule 21.1 hereto that relates to the use or occupancy of real
property shall include modifications, amendments, supplements, restatements or
other agreements made directly or indirectly by any agreement, instrument or
other document that in any manner affects such executory contract or unexpired
lease, without regard to whether such agreement, instrument or other document is
listed on Schedule 21.1 hereto, unless any of the foregoing agreements is
rejected.
Certain of the Debtors, including Devco, 245 Park Co. and Tower A Co.,
are contributing sponsors to the Olympia & York (U.S.) Development Company, L.P.
Retirement
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Plan, as amended, (the "Pension Plan"). The Pension Plan is a multiple employer
pension plan covered by ERISA. Newco LP will assume the Pension Plan and
administer the Pension Plan in accordance with ERISA. Newco LP will comply with
all funding and other requirements of ERISA. Newco LP will be responsible for
any liability resulting from the termination of the Pension Plan. If the Pension
Plan has not been terminated prior to the Confirmation Date, any claims by the
Pension Plan or the PBGC will be treated as arising after the Confirmation Date
as an obligation of Newco LP. If the Pension Plan terminates after the
Confirmation Date, Newco LP will be responsible for all liabilities under 29
U.S.C.
1362 (b) and (c).
21.2. Amendments to Schedule; Effect of Amendments.
Subject to section 4.4 hereof, the Debtors shall assume and, as
applicable, assign each of the executory contracts and unexpired leases listed
on Schedule 21.1 hereto; provided, however, that the Debtors may, at any time on
or before the Confirmation Date, with the consent of the Co-Proponents (which
consent shall not be unreasonably withheld), amend Schedule 21.1 hereto to
delete therefrom or add thereto any executory contract or unexpired lease, in
which event such executory contract or unexpired lease shall be deemed to be
rejected or assumed, respectively, as of the Confirmation Date. The Debtors
shall provide notice of any amendments to Schedule 21.1 hereto to the parties to
the executory contracts or unexpired leases affected thereby and to parties on
the primary service list or master service list, as applicable. The fact that
any contract or lease is scheduled on Schedule 21.1 hereto shall not constitute
or be construed to constitute an admission that such contract or lease is an
executory contract or unexpired lease within the meaning of section 365 of the
Bankruptcy Code or that any Debtor or any successor in interest of any Debtor
has any Liability thereunder. With respect to assumption of any executory
contract or unexpired lease listed on Schedule 21.1, the payment of the cure
amount listed on such Schedule with respect to such executory contract or
unexpired lease shall be deemed a cure of any and all defaults relating to such
executory contract or unexpired lease; provided, however, that the foregoing
shall not apply to executory contracts and unexpired leases to which Merrill
Lynch is a party.
21.3. Bar to Rejection Damages.
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If the rejection of an executory contract or unexpired lease by the
Debtors results in damages to the other party or parties to such contract or
lease, a Claim for such damages, if not heretofore evidenced by a filed proof of
claim, shall be forever barred and shall not be enforceable against the Debtors,
or their properties or their interests in property or agents, successors or
assigns, unless a proof of claim is filed with the Bankruptcy Court and served
upon counsel for the Debtors on or before thirty (30) days after the earlier to
occur of (a) the Confirmation Date and (b) the entry of an order by the
Bankruptcy Court authorizing rejection of a particular executory contract or
lease.
SECTION 22. CONDITIONS PRECEDENT TO CONFIRMATION
DATE AND EFFECTIVE DATE.
22.1. Conditions Precedent to Confirmation of this Plan.
The confirmation of this Plan is subject to satisfaction of the
following conditions precedent:
22.1.1. Finality of January 12th Settlement Agreement Order.
If the January 12th Settlement Agreement shall have been approved by order of
the Bankruptcy Court prior to the Confirmation Hearing, the Clerk of the
Bankruptcy Court shall have entered the January 12th Settlement Agreement Order
and the January 12th Settlement Agreement Order shall have become a Final Order.
22.1.2. Entry of Confirmation Order. The Clerk
of the Bankruptcy Court shall have entered the Confirmation
Order, which shall, among other things:
(i) decree that the transfers contemplated
hereunder shall be free and clear of all Claims, Liens and
encumbrances, except as expressly provided herein;
(ii) decree that the Confirmation Order shall
supersede any Bankruptcy Court orders issued prior to the
Confirmation Date that may be inconsistent with the
Confirmation Order;
(iii) authorize the implementation of this
Plan in accordance with its terms;
(iv) provide that any transfers effected or
to be effected under this Plan (including transfers relating
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to, or the recording of mortgages in connection with, the Tower B Financing and
the Tower D Financing) shall be and are exempt from New York State and New York
City transfer taxes, mortgage recording taxes, and any other stamp or similar
tax under section 1146(c) of the Bankruptcy Code;
(v) approve the BPHI Settlement and each of
the terms thereof in all respects (as provided in section
4.3 hereof);
(vi) approve the Merrill Lynch Settlement and
each of the terms thereof in all respects (as provided in
section 4.4 hereof);
(vii) if the January 12th Settlement Agreement
has not been approved by a Final Order prior to the commencement of the
Confirmation Hearing, approve the January 12th Settlement Agreement pursuant to
decretal provisions reasonably satisfactory in form and substance to the Club
Loan Transferors and the additional relief requested in section 4.2 hereof in
all respects; provided, however, that the transfer of the O&Y Affiliates'
ownership interests in 11601 Wilshire contemplated by the January 12th
Settlement Agreement may be approved by a separate order of the Bankruptcy Court
entered on the Confirmation Date;
(viii) approve the other settlements, trans-
actions and agreements to be effected pursuant to this Plan
in all respects;
(ix) approve the indemnification of the
Reichmann Entities from any Claims or Liabilities arising out of the transfer or
subordination of the Reichmann Bank Claims in accordance with section 4.7
hereof; and
(x) provide that if this Plan is not
consummated, the Confirmation Order and all findings of fact and conclusions of
law relating thereto shall be null and void and the Debtors, the Co-Proponents,
the Creditors' Committee and other holders of Claims and Equity Interests, in
relation to one another, shall stand in the same position as if this Plan had
never been filed; provided, however, that each and every provision of the
January 12th Settlement Agreement Order (irrespective of whether such order is
part of the Confirmation Order) shall remain in full force and effect even if
the Plan is not consummated.
22.1.3. BPHI Ownership. Carena and certain of
its Affiliates shall own of record and beneficially 100% of
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BPHI, and evidence thereof reasonably satisfactory to the Debtors shall have
been presented to the Debtors.
22.1.4. DIP Loan. A default under the DIP Loan
shall not have occurred and be continuing.
22.1.5. Entry of an Order Confirming the 970
Plan. The Clerk of the Bankruptcy Court shall have entered
an order confirming the 970 Plan.
22.1.6. Entry of an Order Confirming the Tower B
Co. Plan. The Clerk of the Bankruptcy Court shall have
entered an order confirming the Tower B Co. Plan.
22.1.7. Intentionally Deleted.
22.1.8. Material Adverse Change. There shall
not have been a change in circumstances after the date of
approval of the Disclosure Statement by the Bankruptcy Court
that shall have caused a material adverse change in the
business, assets or financial position of the Debtors on a
collective basis that would, upon consummation of the Plan,
also be materially adverse to the business, assets or
liquidity of Newco LP in comparison to (a) that projected in
the pro forma balance sheet or cash flow projection of Newco
LP included in the Disclosure Statement as approved by the
Bankruptcy Court or (b) that known by the Co-Proponents as
of the date of approval of the Disclosure Statement by
reason of (i) being disclosed to the Co-Proponents in
writing by the Debtors or to the Bankruptcy Court upon
notice to the Co-Proponents, or (ii) being public
information relating to market conditions that is readily
available to the Co-Proponents.
22.2. Conditions Precedent to the
Effective Date of this Plan.
The occurrence of the Effective Date of this Plan is subject to
satisfaction of the following conditions precedent:
22.2.1. Ceiling on Administrative Claims and Extraordinary
Expenses. The aggregate amount of Administrative Expense Claims for (a)
substantial contribution claims under section 503(b) of the Bankruptcy Code, (b)
bonuses, success fees, other benefits or payments to any employee of any Debtor,
including officers, if payment thereof requires further application to or
approval by the Bankruptcy Court, and (c) similar extraordinary expenses
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that require specific approval or authorization by the Bankruptcy Court shall
not, without the approval of the Co- Proponents, have exceeded $8,800,000. Any
Administrative Expense Claims of any of the Debtors which constitute ordinary
course of business corporate-level obligations (including, without limitation,
accrued but unpaid salaries, wages and other employee-related costs) as of the
Effective Date and which are not claims included in the first sentence of this
section 22.2.1 shall be current (i.e., paid within thirty (30) days after
accrual thereof) and shall be consistent with the aggregate historical level of
such corporate-level obligations.
22.2.2. Tower D Financing Condition. The
financing necessary to fund the payments required under this
Plan, including the refinancing of the Tower D Mortgage
Debt, shall have occurred.
22.2.3. Tower B Effective Date. The Closing
Date (as defined in the Tower B Co. Plan) of the Tower B Co.
Plan shall have occurred or shall occur concurrently with
the Effective Date of this Plan.
22.2.4. Finality of the Confirmation Order. The
Clerk of the Bankruptcy Court shall have entered the
Confirmation Order and the Confirmation Order shall have
become a Final Order.
22.2.5. Material Adverse Change. There shall
not have been a change in circumstances after the
Confirmation Date that shall have caused a material adverse
change in the business, assets or financial position of the
Debtors on a collective basis that would, upon consummation
of the Plan, also be materially adverse to the business,
assets or liquidity of Newco LP in comparison to (a) that
projected in the pro forma balance sheet or cash flow
projection of Newco LP included in the Disclosure Statement
as approved by the Bankruptcy Court or (b) that known by the
Co-Proponents as of the Confirmation Date by reason of (i)
being disclosed to the Co-Proponents in writing by the
Debtors or to the Bankruptcy Court upon notice to the Co-
Proponents, or (ii) being public information relating to
market conditions that is readily available to the Co-
Proponents.
22.2.6. Co-Proponents' Capital Infusion. The
Co-Proponents shall have provided the Co-Proponents' Capital
Infusion in accordance with section 18.12 hereof.
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22.2.7. Consummation of the January 12th Settle-
ment Agreement. The January 12th Settlement Agreement shall
have been fully consummated on or prior to the Effective
Date.
22.2.8. Consummation of the Merrill Lynch Settlement. The
Merrill Lynch Settlement shall have been fully consummated on the Effective
Date; provided, however, that the Merrill Lynch Escrow may have been released
prior to the Effective Date.
22.2.9. Finality of 970 Confirmation Order. The
order confirming the 970 Plan shall have become a Final
Order.
22.2.10. Execution of Documents. All actions and documents
necessary to implement the provisions of this Plan to be effectuated on or prior
to the Effective Date shall be reasonably satisfactory to the Debtors and the
Co-Proponents and such actions and documents shall have been effected or
executed and delivered.
22.2.11. Intentionally Deleted.
22.2.12. Effective Date. The Effective Date must
occur by no later than December 31, 1996.
22.3. Waiver of Conditions Precedent.
Each of the conditions precedent in sections 22.1 and 22.2 hereof may
be waived, in whole or in part, or modified by written agreement among the
Debtors and the Co- Proponents to the extent such waiver is permitted under the
January 12th Settlement Agreement. Any such waiver or modification of a
condition precedent in sections 22.1 and 22.2 hereof may be effected at any
time, without notice, without leave or order of the Bankruptcy Court and without
any formal action; provided, however, that the condition set forth in section
22.1.2(x) hereof may only be waived or modified by the Debtors and the
Co-Proponents with written notice to and the consent of the Creditors'
Committee. The condition precedent set forth in section 22.2.3 hereof may only
be waived or modified by the Debtors and the Co- Proponents with written notice
to and the consent of JMB. The condition precedent set forth in section 22.2.8
may only be waived with the consent of Merrill Lynch. Unless a Noteholder (as
defined in the Tower B Co. Plan) objects to confirmation of the Tower B Co. Plan
or this Plan , the condition precedent set forth in section 22.1.6 hereof may
<PAGE>
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only be waived or modified with written notice to and the written consent of the
Noteholders' Representative (as defined in the Tower B Co. Plan).
SECTION 23. EFFECT OF CONFIRMATION.
23.1. Reorganized Debtors' Authority.
Until the Effective Date, the Bankruptcy Court shall retain custody
and jurisdiction of the Debtors, their properties and interests in property and
their operations. On the Effective Date, the Debtors, their properties and
interests in property and their operations shall be released from the custody
and jurisdiction of the Bankruptcy Court, except as provided in section 25.1
hereof.
23.2. Vesting and Liens.
On the Effective Date, all Liens against any property of the Debtors,
except to the extent provided in this Plan or any schedule or exhibit hereto or
in the Confirmation Order, shall be deemed extinguished and discharged;
provided, however, that the liens of the officers and directors on the assets
held in the pledge account created under the Corporate Governance Protocol
approved by the Court on July 15, 1993 shall not be extinguished without their
consent or further order of the Court. On the Effective Date, Newco LP or its
designee will be revested with the assets, if any, of the Debtors not
distributed or otherwise transferred under this Plan free and clear of all
Liabilities, except to the extent provided in this Plan, the Tower B Co. Plan
and the 970 Plan.
23.3. Discharge of the Debtors.
The rights afforded by this Plan and the treatment herein of Claims or
Equity Interests against a Debtor shall be in exchange for and in complete
satisfaction, discharge and release of all Claims or Equity Interests against a
Debtor of any nature whatsoever, including any interest accrued or expenses
incurred against such Debtor in respect thereof from and after the Petition Date
of such Debtor, and its estate, properties and interests in property. Except as
otherwise provided herein, on the Effective Date, all Claims against and Equity
Interests in the Debtors will be fully satisfied, discharged and released in
exchange for the consideration provided hereunder. All Entities shall be
enjoined and precluded from asserting against any Debtor,
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such Debtor's successor(s), assets, properties or interests in property any
other Claims based upon any act or omission, transaction or other activity of
any kind or nature that occurred prior to the Effective Date.
23.4. Term of Injunctions or Stays.
Unless otherwise provided, all injunctions or stays provided for in
the Reorganization Cases pursuant to section 105 or 362 of the Bankruptcy Code,
or otherwise, and in existence on the Confirmation Date, shall remain in full
force and effect until the Effective Date.
SECTION 24. RELEASES, INJUNCTION
AND WAIVER OF CLAIMS.
Nothing in this section 24 shall be construed to operate to release
the O&Y Releasees or any other Entity from the obligations expressly
contemplated by this Plan.
24.1. Release of the Debtors and Debtors in Possession.
Without limiting the provisions of section 23.3 of this Plan, from and
after the Effective Date, the Debtors and Debtors in Possession are released
from all Liabilities from the beginning of time.
24.2. Limited Release of O&Y Releasees.
Without limiting the release provided in section 24.1, from and after
the Effective Date, the O&Y Releasees are released from all Liabilities in any
way relating to, but solely to the extent relating to, the Debtors, the Debtors
in Possession, the Reorganization Cases, the O&Y Affiliates, the conduct of the
business and affairs of any of the Debtors, the Debtors in Possession or the O&Y
Affiliates, this Plan, the Tower B Co. Plan, or the properties or other assets
of any of the Debtors, the Debtors in Possession or the O&Y Affiliates;
provided, however, that nothing contained in this section 24.2 shall release (a)
any non-Debtor O&Y Affiliate (except Tower B Co., Tower B Holding and WFC
Fincorp, each of which shall be released of aforesaid) from any Liability
arising out of the ownership, management or operation of the properties or other
assets of such non-Debtor O&Y Affiliate or out of any other aspect of the
conduct by such non-Debtor O&Y Affiliate of its business, including any
Liability arising under any notes, mortgages and other loan documents relating
to any financing of any property owned by any such non-Debtor O&Y
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Affiliate (but any secondary Liability of any other O&Y Releasee, by reason of
being a partner of such O&Y Affiliate or any guarantee of any obligation of such
O&Y Affiliate or other undertaking or relationship with respect to such O&Y
Affiliate, shall be released hereby) or (b) any current or former director,
officer or employee of any Debtor, Debtor in Possession or O&Y Affiliate from
any Liability arising primarily from his or her Willful Misconduct (as
hereinafter defined in this section 24.2) or (c) any current or former director,
officer or employee of any Debtor, Debtor in Possession or O&Y Affiliate from
any Liability for repayment of any loan (both unpaid principal and any accrued
interest and charges) made to such director, officer or employee by a Debtor,
Debtor in Possession or O&Y Affiliate prior to the Effective Date and recorded
in the ordinary course of business on the books and records of such Debtor,
Debtor in Possession or O&Y Affiliate and that remains outstanding on the
Effective Date. The release of the O&Y Releasees provided in this section 24.2
includes, without limitation, a release from all Liabilities from the beginning
of time relating to:
(i) the involvement of any of the O&Y Releasees in or in
connection with the negotiation, formulation, documentation,
approval and implementation of the Plan or the Tower B Co. Plan
or the transactions required to implement this Plan or the Tower
B Co. Plan as required by section 18 hereof, including (without
limitation) any approval of this Plan or the Tower B Co. Plan or
the transactions contemplated thereby (but in the case of an O&Y
Affiliate subject to clause (a), and in the case of a current or
former director, officer or employee of a Debtor, Debtor in
Possession or O&Y Affiliate, subject to clause (b), of the
proviso to the immediately preceding sentence);
(ii) the ownership, management or operation of the
properties or other assets of the Debtors, the Debtors in
Possession or the O&Y Affiliates by any of the O&Y Releasees (but
in the case of an O&Y Affiliate subject to clause (a), and in the
case of a current or former director, officer or employee of any
Debtor, Debtor in Possession or O&Y Affiliate, subject to clauses
(b) and (c), of the proviso to the immediately preceding
sentence);
(iii) the preparation by any of the O&Y Releasees of
financial statements in respect of the Debtors, the Debtors in
Possession and the O&Y
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Affiliates (but in the case of a current or former director,
officer or employee of a Debtor, Debtor in Possession or O&Y
Affiliate, subject to clause (b) of the immediately preceding
sentence); and
(iv) the return, disgorgement, rescission or repayment, in
any form, of any payment (including any loan or advance) to any
current or former director, officer or employee of any Debtor
that was (A) made prior to the Effective Date, (B) made by any
Debtor, Debtor in Possession or O&Y Affiliate or any person who
was a stockholder or an Affiliate of a Debtor or an O&Y Affiliate
at the time when such payment was made or any earlier time, and
(C) made or taken either (1) as compensation for, or on account
of or relating to or in connection with, any services provided
prior to the Effective Date to any of the Debtors, the Debtors in
Possession, the O&Y Affiliates or any person who was a
stockholder or an Affiliate of a Debtor or an O&Y Affiliate at
the time when such payment was made or any earlier time or (2) on
account of or relating to or in connection with any full or
partial satisfaction or settlement of any claim for compensation
for such services (but shall not include a release of any
Liability to repay a loan described in clause (c) of the proviso
to the immediately preceding sentence or any Liability for the
return, disgorgement, rescission or repayment of any such payment
that was the product of Willful Misconduct by such director,
officer or employee).
Nothing in this section 24.2 shall release or in any way affect the obligations
of any of the O&Y Releasees, Coopers & Lybrand OYDL, Inc./Limited or the
Co-Proponents that are contained in that certain letter agreement dated on or
about September 10, 1996 among the O&Y Releasees, the Co- Proponents and Coopers
& Lybrand OYDL, Inc./Limited (the "O&Y Canada Settlement Agreement"), including
any obligations relating to the Disputed SF Cash.
24.3. Limited Release of the Plan Releasees.
From and after the Effective Date, the Plan Releasees are released
from all Liabilities in any way relating to, but solely to the extent relating
to, the Debtors, the Debtors in Possession, the O&Y Affiliates, the conduct of
the business and affairs of any of the Debtors, the Debtors in Possession and
the O&Y Affiliates, the Reorganization Cases, this Plan or the properties or
other
<PAGE>
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assets of the Debtors, the Debtors in Possession or the O&Y Affiliates. The
release of the Plan Releasees provided in this section 24.3 includes, without
limitation, a release from Liabilities from the beginning of time relating to:
(i) the involvement of any of the Plan Releasees in or with
this Plan, the Tower B Co. Plan or the transactions required to
implement this Plan or the Tower B Co. Plan as required by
section 18 hereof, including (without limitation) any approval of
this Plan or the Tower B Co. Plan or the transactions
contemplated hereby; and
(ii) any and all acts and/or omissions relating to the
acquisition of Claims against the Debtors, the Debtors in
Possession and the O&Y Affiliates.
In addition, BPHI, as a Plan Releasee, shall be released in accordance with the
BPHI Settlement as set forth in section 4.3 hereof.
Nothing in this section 24.3 shall release or in any way affect the obligations
of Coopers & Lybrand OYDL, Inc./Limited or the Co-Proponents that are contained
in the O&Y Canada Settlement Agreement, including any obligations relating to
the Disputed SF Cash.
Nothing in this section 24 shall be construed to release the O&Y Releasees or
any other Entity from the Liabilities or obligations expressly contemplated by
this Plan, or created pursuant to any of the documents to be executed in
connection with the transactions under this Plan, including
Nothing in this section 24.3 shall be deemed to release or otherwise affect any
Claims by and between the Reichmann Entities and Coopers & Lybrand OYDL,
Inc./Limited and the Reichmann Entities and OYDL.
Liabilities and obligations relating to the Project Operating Agreement, the
Merrill Lynch Tower B Lease, the Zero Coupon Note and the Zero Coupon Mortgage
(each as defined in the Tower B Co. Plan), the Tower B Financing Documents and
any executory contracts and unexpired leases to be assumed pursuant to section
21.1 hereof, to which Merrill Lynch is a party.
<PAGE>
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24.4. Injunction.
24.4.1. General Injunction. The Confirmation Order shall
include an injunction to permanently enjoin and restrain all Entities from
asserting against the Debtors, the Debtors in Possession, the O&Y Releasees
and/or the Plan Releasees, or their respective assets, any Liabilities that the
Debtors, the Debtors in Possession, the O&Y Releasees and/or the Plan Releasees
are released from pursuant to sections 24.1, 24.2 and 24.3 hereof, or from
taking any of the following actions against such Entities in respect of any
Claim respecting any Liability so released:
(i) the commencement or continuation of any action or
proceeding;
(ii) the enforcement, attachment, collection or recovery by
any manner or means of any judgment, award, decree or order;
(iii) the creation, perfection or enforcement of any
encumbrance of any kind; and/or
(iv) the assertion of any right of setoff, counterclaim,
subrogation or recoupment of any kind against any obligation due
from any such Entity.
24.4.2. Injunction Relating to Reichmann Settlement. The
Confirmation Order shall also include an injunction against all actions
inconsistent with the releases provided in section 4.7 hereof.
24.5. Avoidance and Recovery Actions.
As of the Effective Date, the Debtors waive the right to prosecute and
release, on behalf of themselves and their respective estates, any avoidance or
recovery actions under sections 542, 544, 545, 547, 548, 549, 550, 551 and 553
of the Bankruptcy Code or any other Causes of Action, or rights to payment of
Claims, that belong to or could have been raised by or on behalf of the Debtors
or Debtors in Possession or their respective estates, other than or in
connection with any such actions that were commenced on or before the Effective
Date. Newco LP, as a successor of the Debtors, shall retain and may prosecute
any such actions that may be pending on the Effective Date. Nothing in this
section 24.5 shall be deemed to waive any right of any Debtor or Debtor in
Possession to assert avoidance or recovery actions under sections 542, 544, 545,
547, 548,
<PAGE>
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549, 550, 551 and 553 of the Bankruptcy Code or any other Causes of Action
defensively, including by way of setoff, recoupment or counterclaim.
SECTION 25. RETENTION OF JURISDICTION.
25.1. Retention of Jurisdiction.
The Bankruptcy Court may retain jurisdiction, and if the Bankruptcy
Court exercises its retained jurisdiction, shall have exclusive jurisdiction, of
all matters arising out of, and relating to, the Reorganization Cases and this
Plan pursuant to, and for the purposes of, sections 105(a) and 1142 of the
Bankruptcy Code and for, among other things, the following purposes:
(i) To hear and determine pending applications for the
assumption or rejection of executory contracts or unexpired
leases, if any are pending, and the allowance of Claims resulting
therefrom;
(ii) To hear and determine motions to approve the transfer
of O&Y(U.S.)'s ownership interests in 11601 Wilshire as
contemplated in the January 12 Settlement Agreement;
(iii) To determine any and all adversary proceedings,
applications and contested matters;
(iv) To ensure that distributions to holders of Allowed
Claims are accomplished as provided herein;
(v) To hear and determine any timely objections to
applications for payment of Administrative Expense Claims or to
proofs of claim and equity interests filed, both before and after
the Confirmation Date, including any objections to the
classification of any Claim or Equity Interest, and to allow or
disallow any Disputed Claim, in whole or in part;
(vi) To enter and implement such orders as may be
appropriate in the event the Confirmation Order is for any reason
stayed, revoked, modified or vacated;
<PAGE>
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(vii) To issue such orders in aid of execution of this Plan,
to the extent authorized by section 1142 of the Bankruptcy Code;
(viii) To consider any modifications of this Plan, to cure
any defect or omission, or reconcile any inconsistency in any
order of the Bankruptcy Court, including the Confirmation Order;
(ix) To hear and determine all applications for awards of
compensation for services rendered and reimbursement of expenses
relating to implementation and consummation of this Plan;
(x) To hear and determine any disputes arising in connection
with the interpretation, implementation or enforcement of this
Plan;
(xi) To hear and consider any disputes relating to or
settlements of the Disputed SF Cash and the Disputed MCJV
Recovery and any matters relating to the sale of the MCJV Lands;
(xii) To hear and determine matters concerning state, local
and federal taxes in accordance with sections 346, 505 and 1146
of the Bankruptcy Code; and
(xiii) To enter a final decree closing the Reorganization
Cases.
25.2. Modification of Plan.
Modifications of this Plan may be proposed in writing by the
Debtors and the Co-Proponents at any time before the Confirmation Date;
provided, however, that this Plan, as modified, (a) satisfies the requirements
of sections 1122 and 1123 of the Bankruptcy Code, (b) to the extent that any
modification of this Plan materially and adversely affects the treatment of
holders of Unaffiliated Unsecured Claims, the modification is consented to in
writing by the Creditors' Committee, (c) to the extent that any modification of
this Plan materially and adversely affects the treatment of Merrill Lynch
hereunder, the modification is consented to in writing by Merrill Lynch, and (d)
the Debtors shall have complied with section 1125 of the Bankruptcy Code. This
Plan may be modified at any time after confirmation hereof and before
substantial consummation hereof; provided, however, that this Plan, as modified,
(a) satisfies the requirements of sections 1122
<PAGE>
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and 1123 of the Bankruptcy Code, (b) to the extent that any modification of this
Plan materially and adversely affects the treatment of holders of Unaffiliated
Unsecured Claims, the modification is consented to in writing by the Creditors'
Committee, (c) to the extent that any modification of this Plan materially and
adversely affects the treatment of Merrill Lynch hereunder, the modification is
consented to in writing by Merrill Lynch, (d) the Bankruptcy Court, after notice
and a hearing, confirms this Plan as modified under section 1129 of the
Bankruptcy Code, and (e) the circumstances warrant such modifications. In no
event shall this section 25.2 grant any rights to the New Lender (as defined in
the Tower B Co. Plan) with respect to its obligations under the Funding
Commitment Letter, the Securitization Letter, or in connection with the Funding
Commitment Letter Loan or the ML Lease Securitization (each as defined in the
Tower B Co. Plan). Any modification to the January 12th Settlement Agreement,
whether prior to or after the Confirmation Date, that materially and adversely
affects the treatment of holders of Unaffiliated Unsecured Claims shall not be
effective without the written consent of the Creditors' Committee. This Plan may
not be modified in any manner prohibited by the January 12th Settlement
Agreement, notwithstanding any other provision of this section 25.2. Any
modification of the Plan that materially and adversely affects the treatment of
Aetna shall not be effective without the written consent of Aetna. A holder of a
Claim or Equity Interest that has accepted this Plan shall be deemed to have
accepted the Plan as modified if the proposed modification does not materially
and adversely change the treatment of the Claim or Equity Interest of such
holder.
SECTION 26. MISCELLANEOUS PROVISIONS.
26.1. Payment of Statutory Fees.
All fees payable pursuant to section 1930, title 28, United States
Code, shall be paid on the Effective Date.
26.2. Retiree Benefits.
On and after the Effective Date, pursuant to section 1129(a)(13) of
the Bankruptcy Code, Newco LP or its designee shall continue to pay all retiree
benefits (within the meaning of section 1114 of the Bankruptcy Code), at the
level established in accordance with subsection (e)(1)(B) or (g) of section 1114
of the Bankruptcy Code, at any time
<PAGE>
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prior to the Confirmation Date for the duration of the period that any of the
Debtors has obligated itself to provide such benefits to any Retiree under any
Retiree Benefit Plan.
26.3. Dissolution of Creditors' Committee.
The Creditors' Committee shall be dissolved sixty (60) days after the
Effective Date unless the Bankruptcy Court shall order otherwise.
26.4. Recognition of Guarantee Rights.
The classification of and manner of satisfying all Claims under this
Plan take into consideration (a) the fact that certain of the Debtors may have
guaranteed the obligations of other Entities and (b) the fact that certain of
the Debtors may be a joint obligor with other Entities, with respect to an
obligation. All Claims against any one or more of the Debtors based upon any
such guarantees or joint obligations shall be released in the manner provided
herein but only as against the Debtors; provided, however, that no creditor
shall be entitled to receive more than a single satisfaction of its Allowed
Claim(s).
26.5. Severability.
26.5.1. Severability of Entire Plans.
If any Plan comprising this "Joint Plan of Reorganization" shall be
deemed non-confirmable by reason of the insufficiency of Cash of a particular
Debtor available on the Effective Date to pay in full all Administrative Expense
Claims, Allowed Priority Tax Claims and Allowed Priority Non-Tax Claims, the
Bankruptcy Court shall, upon the request of the Debtors and the Co-Proponents,
have the authority to delete such Plan and confirm this Joint Plan of
Reorganization as if such Plan were not included in this Joint Plan of
Reorganization. The deletion of any Plan that materially and adversely affects
the treatment of the holders of Allowed Unaffiliated Unsecured Claims shall
require written notice to and the consent of the Creditors' Committee. The
Debtors and the Co-Proponents shall not request the deletion of the Plans for
Consolidated Devco and Tower B Leaseco without written notice to and the consent
of Merrill Lynch.
<PAGE>
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26.5.2. Severability of Plan Provisions.
If, prior to the Confirmation Date, any term or provision of this Plan
is held by the Bankruptcy Court to be invalid, void or unenforceable, the
Bankruptcy Court shall, with the consent of the Debtors and the Co-Proponents,
have the power to interpret, modify or delete such term or provision (or
portions thereof) to make it valid or enforceable to the maximum extent
practicable, consistent with the original purpose of the term or provision held
to be invalid, void or unenforceable, and such term or provision shall then be
applicable as interpreted, modified or deleted. Notwithstanding any such
interpretation, modification or deletion, the remainder of the terms and
provisions of this Plan shall remain in full force and effect and shall in no
way be affected, impaired or invalidated by such interpretation, modification or
deletion. The Confirmation Order shall constitute a judicial determination and
shall provide that each term and provision of this Plan, as it may have been
interpreted, modified or deleted in accordance with the foregoing, is valid and
enforceable pursuant to its terms. Notwithstanding any provision herein, no
interpretation, modification or deletion of a provision of this Plan under this
section 26.5.2 that materially and adversely affects the treatment of the
holders of Unaffiliated Unsecured Claims shall be effective without the written
consent of the Creditors' Committee; no interpretation, modification or deletion
of a provision of this Plan under this section 26.5.2 that materially and
adversely affects the treatment of Merrill Lynch hereunder shall be effective
without the written consent of Merrill Lynch; and no interpretation,
modification or deletion of a provision of this Plan under this section 26.5.2
that violates or contravenes the January 12th Settlement Agreement shall be
effective without the written consent of the Club Loan Transferors.
26.6. Governing Law.
Except to the extent that the Bankruptcy Code or other federal law is
applicable, or to the extent a schedule or exhibit hereto provides otherwise,
the rights, duties and obligations arising under this Plan shall be governed by,
and construed and enforced in accordance with, the laws of the State of New
York.
<PAGE>
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26.7. Notices.
All notices, requests, and demands to be effective shall be in writing
(including by facsimile transmission) and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when actually delivered
or, in the case of notice by facsimile transmission, when received and
telephonically confirmed, addressed as follows:
To the Debtors:
Olympia & York Companies (U.S.A.)
237 Park Avenue, 12th Floor
New York, New York 10017
Attn: Managing Attorney
Telephone: (212) 850-9600
Telecopier: (212) 850-9833
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Corinne Ball, Esq.
Paul D. Leake, Esq.
Telephone: (212) 310-8000
Telecopier: (212) 310-8007
To the Creditors' Committee:
Kramer Levin Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attn: Kenneth H. Eckstein, Esq.
Saul E. Burian, Esq.
Telephone: (212) 715-9100
Telecopier: (212) 715-8000
<PAGE>
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To Carena or BPHI:
Battery Park Holdings Inc.
BCE Place
181 Bay Street
Suite 4400
P.O. Box 770
Toronto, Ontario M5J 2T3
Attn: Mr. Edwin B. Nordholm
Telephone: (416) 865-0430
Telecopier: (416) 865-1288
and
Rosebridge Capital Corp.
1920 Bankers Hall
855 Second Street, S.W.
Calgary, Alberta T2P 4J7
Canada
Attn: Mr. Joseph F. Killi
Telephone: (403) 269-0644
Telecopier: (403) 269-0688
and
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036
Attn: Alan B. Hyman, Esq.
Stephen B. Kuhn, Esq.
Telephone: (212) 969-3000
Telecopier: (212) 969-2900
and
Cahill, Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: Laurence A. Silverman, Esq.
Richard J. Sabella, Esq.
Telephone: (212) 701-3000
Telecopier: (212) 269-5420
<PAGE>
-214-
To CIBC:
Canadian Imperial Bank of Commerce
Commerce Court West, 6th Floor
Toronto, Ontario M5L 1A2
Attn: Mr. Brian T. McDonough
Telephone: (416) 861-3349
Telecopier: (416) 861-3602
and
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attn: Mr. Marc A. Bilbao
Telephone: (212) 865-3549
Telecopier: (212) 856-4135
and
Sidley & Austin
875 Third Avenue, 14th Floor
New York, New York 10022
Attn: J. Ronald Trost, Esq.
Telephone: (212) 906-2000
Telecopier: (212) 906-2021
and
Sidley & Austin
555 West Fifth Street, Suite 4000
Los Angeles, California 90013-1010
Attn: Joel G. Samuels, Esq.
Telephone: (213) 896-6030
Telecopier: (213) 896-6600
To Citibank:
Citibank, N.A.
153 E. 53rd Street
6th Floor
New York, New York 10043
Attn: Ms. Ann Goodbody
Telephone: (212) 559-1000
Telecopier: (212) 527-2737
and
<PAGE>
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Shearman & Sterling
153 E. 53rd Street
New York, New York 10022
Attn: George J. Wade, Esq.
Telephone: (212) 848-4000
Telecopier: (212) 848-5323
and
Shearman & Sterling
599 Lexington Ave.
New York, New York 10022
Attn: David Bleich, Esq.
Telephone: (212) 848-4000
Telecopier: (212) 848-7179
To Dragon:
Dragon Holdings Limited
c/o Concord Property and Finance Co., Ltd.
21st Floor, China Building
No. 29 Queen's Road Central
Hong Kong
Attn: Mr. Frank J. Sixt
Telephone: (011) 852-252-669-11
Telecopier: (011) 852-2845-2940
and
Coudert Brothers
1114 Avenue of the Americas
New York, New York 10036
Attn: Thomas J. Weber, Esq.
Gerard V. Hannon, Esq.
Telephone: (212) 626-4898
Telecopier: (212) 626-4400
<PAGE>
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Dated: New York, New York
September 12, 1996
Respectfully submitted,
OLYMPIA & YORK REALTY CORP., et al.
(for itself and on behalf of each
of the other Debtors)
By: /s/ Joel M. Simon
----------------------------
Name: Joel M. Simon
Title: Executive Vice-President
and Chief Operating
Officer
<PAGE>
-217-
CARENA BANCORP US, INC.
By: /s/ Edwin B. Nordholm
---------------------
Name: Edwin B. Nordholm
Title: Vice-President
<PAGE>
-218-
BATTERY PARK HOLDINGS INC.
By: /s/ Edwin B. Nordholm
----------------------
Name: Edwin B. Nordholm
Title: Vice-President
<PAGE>
-219-
CANADIAN IMPERIAL BANK OF
COMMERCE
By: /s/ Brian T. McDonough
---------------------------
Name: Brian T. McDonough
Title: Vice-President
<PAGE>
-220-
CITIBANK, N.A.
By: /s/ Ann M. Goodbody
-------------------------
Name: Ann M. Goodbody
Title: Vice-President
<PAGE>
-221-
DRAGON HOLDINGS LIMITED
By: /s/ Frank J. Sixt
----------------------
Name: Frank J. Sixt
Title: Director
<PAGE>
-222-
COUNSEL:
Corinne Ball (CB 8203)
Paul D. Leake (PL 1272)
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
ATTORNEYS FOR THE DEBTORS AND
DEBTORS IN POSSESSION (OTHER THAN OLYMPIA & YORK TOWER B
LEASE COMPANY)
Richard Seltzer
Andrew Kress
KAYE, SCHOLER, FIERMAN, HAYS
& HANDLER
425 Park Avenue
New York, New York 10022
(212) 836-8000
ATTORNEYS FOR OLYMPIA & YORK TOWER B LEASE COMPANY,
AS DEBTOR AND DEBTOR IN POSSESSION
Alan B. Hyman
Stephen B. Kuhn
PROSKAUER ROSE GOETZ &
MENDELSOHN LLP
1585 Broadway
New York, New York 10036
(212) 969-3000
ATTORNEYS FOR BATTERY PARK
HOLDINGS, INC. AND CARENA
BANCORP US, INC.
J. Ronald Trost, Esq.
Joel G. Samuels, Esq.
SIDLEY & AUSTIN
875 Third Avenue
New York, New York 10022
(212) 906-2000
ATTORNEYS FOR CANADIAN IMPERIAL
BANK OF COMMERCE
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Thomas J. Weber
Gerald V. Hannon
COUDERT BROTHERS
1114 Avenue of the Americas
New York, New York 10036
(212) 626-4400
ATTORNEYS FOR DRAGON
HOLDINGS LIMITED
George J. Wade, Esq.
David Bleich, Esq.
SHEARMAN & STERLING
153 East 53rd Street
New York, New York 10022
(212) 848-4000
ATTORNEYS FOR CITIBANK, N.A.
<PAGE>
Schedule 1.200 to Plan
Schedule of O&Y Affiliates
O&Y Affiliates means the following Entities:
1. Amland Properties Corp.
2. Olympia & York and Andrews Associates Venture
3. Baden Real Estate Corp.
4. Brunswash Development Corporation
5. Olympia & York Bryan Holding Company
6. Cabot Estate Development Company
7. Olympia & York Cherry Creek Company
8. Chicago-Superior Associates
9. Olympia & York Co., Inc.
10. Olympia & York Colorado Development Corp.
11. Olympia & York Communications, Inc.
12. Olympia & York Companies (U.S.A.), Inc.
13. O&Y Concord 60 Broad Street Company
14. O&Y Construction Corp.
15. Olympia & York Cypress Corp.
16. O&Y Cypress Florida Inc.
17. O&Y Dalland Corp.
18. Olympia & York Denver Properties Corp.
19. Devco - 11601-A, L.P.
20. Devco - 11601-B, L.P.
21. Dev GP 53 Holding Corp.
22. O&Y Devcon, Inc.
23. O&Y Development Holding Corp.
24. Olympia & York Development (Seattle) Company
25. O&Y Equity (Canada) Ltd.
26. O&Y Equity Company, L.P.
27. O&Y Equity General Partner Corp.
28. Olympia & York FCA Inc.
29. O&Y FEC Corp.
30. O&Y FEC Corp. Venture
31. Federal Center Associates
32. O&Y Financial Company
33. Financial Plaza Trust
34. O&Y Fiscal Corporation
35. Olympia & York Florida Equity Corp.
36. Forum Properties Corp.
37. Olympia & York Fountain Plaza Company
38. Olympia & York Grampian Corp.
39. Hartford Park Associates
40. Olympia & York Homes Corporation
41. O&Y Hope Street, Inc.
42. O&Y I/S Guide Inc.
43. Izzard Corp.
44. Olympia & York Jefferson Street Company
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45. Olympia & York KOIN Center Company
46. O&Y Liberty Plaza Company
47. Olympia & York Maiden Lane Company
48. Olympia & York Maiden Lane Finance Corp.
49. O&Y Maintenance Corp.
50. O&Y Management Corp.
51. Olympia & York Mass. Investment Corp.
52. Olympia & York Massachusetts Financial Company
53. Miami Center Joint Venture
54. NH Corp.
55. O&Y NY Building Corp.
56. O&Y OCP Corp.
57. Olympia & York OLP Company
58. Olympia/Roberts Company
59. Olympia Centre Holding Company, L.P.
60. One Commercial Plaza (Unnamed Co-Tenancy)
61. One Financial Plaza (Unnamed Joint Venture)
62. Orion Limited Partnership
63. OYCI Video, Inc.
64. Pennland Properties Corp.
65. Perkins Realty Trust
66. O&Y Plaza Corp.
67. Olympia & York Properties (Portland) Company
68. Olympia & York Real Estate (USA) Inc.
69. Olympia & York Realty Corp.
70. Olympia & York Residential Corp.
71. O&Y REUSA TALP Subsidiary Corp.
72. Senior Associates
73. Olympia & York SF Holdings Corporation
74. South Brunswick Industrial Properties Limited
Partnership
75. Brunswash Development Corporation
76. Olympia (U.S.) Development Subsidiary Corp.
77. Olympia & York Southeast Equity Corp.
78. Olympia & York State Limited Partnership
79. Olympia & York State Street Company
80. SYR Mall Corp.
81. O&Y Tower A Holding Company
82. O&Y Tower A Limited Partnership
83. Olympia & York Tower B Company
84. O&Y Tower B Holding Company I
85. Olympia & York Tower B Lease Company
86. O&Y Tower D Holding Company I
87. O&Y Tower D Holding Company II
88. Trinity Place Company
89. O&Y (U.S.) Development Canada Ltd.
90. O&Y (U.S.) Development Company, L.P
91. O&Y (U.S.) Development General Partner Corp.
92. O&Y (U.S.) Financial Company
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93. O&Y Venture Corp.
94. Olympia & York Water Street Company
95. West 31st Street Associates
96. O&Y WFC Maintenance Corp.
97. Olympia & York WFC Retail Company
98. WFC Tower A Company
99. O&Y WFC Tower Corp.
100. WFC Tower D Company
101. Olympia & York World Financial Center Finance Corp.
102. O&Y YBG Corp.
103. O&Y YBG L.P.
104. Yerba Buena Gardens, L.P.
105. York Venture Co.
106. 2 Broadway Associates
107. 2 Broadway Land Company
108. O&Y 7 Hanover Leasing Company, L.P.
109. O&Y 53 Finance Corp.
110. 53 Holding Company, L.P.
111. 53 State Street Corp.
112. O&Y 55 WS Lease Co., L.P.
113. 60 Broad Street Management Corp.
114. 125 Broad Street Company
115. O&Y 233 Park South Company, L.P.
116. 237 Park Avenue Associates, L.L.C.
117. O&Y 245 Corp.
118. Olympia & York 245 Lease Company
119. 245 Park Avenue Company
120. Olympia & York 245 Park Avenue Holding Company, L.P.
121. Olympia & York 320 G.O.T. Company
122. Olympia & York 320 Park Company
123. O&Y 320 Park Corp.
124. 1290 Associates, L.L.C.
125. 1999 Bryan Street Ltd.
126. 11601 Holding Corp.
127. 11601 Holdings, L.P.
128. 11601 Wilshire Associates
<PAGE>
Schedule 18 to Plan
Restructuring Transactions
To be filed with the Bankruptcy Court prior to the Disclosure
Statement Hearing.
<PAGE>
Schedule 21.1 to Plan
Executory Contracts to be Assumed under the Plan
Filed with the Court under separate cover on September 4,
1996.
<PAGE>
EXHIBIT A
Aetna Restructured Mortgage Loan Documents
Filed with the Court under separate cover on
September 4, 1996
<PAGE>
EXHIBIT B
Convertible Note and Indenture
<PAGE>
EXHIBIT C
DKB Restructured Mortgage Loan Documents
Filed with the Court under separate cover on
September 4, 1996
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EXHIBIT D
Intentionally Omitted
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EXHIBIT E
JMB Restructuring Documents
Intentionally Deleted
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EXHIBIT F
Merrill Lynch Tower B Amendment of Lease
Filed with the Court under separate cover on
September 4, 1996
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EXHIBIT G
Merrill Lynch Tower D Amendment of Lease
Filed with the Court under separate cover on
September 4, 1996
<PAGE>
EXHIBIT H
Newco LP Partnership Agreement
<PAGE>
EXHIBIT I
Sanwa/OLP Restructured Mortgage Loan Documents
Filed with the Court under separate cover on
September 4, 1996
<PAGE>
EXHIBIT J
Sanwa/Tower A Restructured Mortgage Loan Documents
Filed with the Court under separate cover on
September 4, 1996
<PAGE>
EXHIBIT K
Tower B Financing Documents
Filed with the Court under separate cover on
September 4, 1996
<PAGE>
EXHIBIT L
Tower B Amended Reimbursement Agreement
Filed with the Court under separate cover on
September 4, 1996
<PAGE>
EXHIBIT M
Tower D Financing Documents
Filed with the Court under separate cover on
September 4, 1996
<PAGE>
EXHIBIT N
Tower D Amended Reimbursement Agreement
Filed with the Court under separate cover on
September 4, 1996
<PAGE>
EXHIBIT O
New Tower D LP Partnership Agreement
Filed with the Court under separate
cover on September 4, 1996
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS AND INTERPRETATION.................... 1
A. Definitions....................................... 1
B. Interpretation; Application of
Definitions and Rules of Construction............. 45
SECTION 2. PROVISIONS FOR SUBSTANTIVE CONSOLIDATION.......... 46
2.1. Substantive Consolidation of Consolidated
Devco Entities.................................... 46
2.2. Substantive Consolidation of Realty Corp.,
OYREUSA and Baden................................. 46
2.3. Substantive Consolidation of Liberty Plaza
Co., OLP Co. and Trinity Place Co................. 47
2.4. Substantive Consolidation of 245 Park Co.,
245 Holding LP and 245 Corp....................... 47
SECTION 3. PROVISIONS RELATING TO DISTRIBUTIONS TO THE
CO-PROPONENTS..................................... 48
SECTION 4. PROVISIONS FOR THE SETTLEMENT OF CLAIMS........... 48
4.1. Settlement of Intercompany Claims................. 48
4.2. The January 12th Settlement Agreement............. 49
4.3. BPHI Settlement................................... 50
4.4. Merrill Lynch Settlement.......................... 51
4.5. TIAA Settlement................................... 59
4.6. Toronto Dominion Settlement....................... 61
4.7. Reichmann Settlement.............................. 62
4.8. Amex Settlement................................... 67
4.9. Bank of Nova Scotia Settlement.................... 71
4.10. Dragon Settlement................................. 74
4.11. Oppenheimer Indirect Capital Contribution and
Treatment of Oppenheimer Claim.................... 75
SECTION 5. PROVISIONS FOR PAYMENT OF ADMINISTRATIVE
EXPENSE CLAIMS, PRIORITY TAX CLAIMS AND OTHER
CLAIMS............................................ 77
5.1. Administrative Expense Claims..................... 77
5.2. Priority Tax Claims............................... 77
5.3. Consolidated Devco Convenience Claims............. 78
SECTION 6. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS..... 78
6.1. Claims Against and Equity Interests in
Consolidated Devco................................ 78
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6.2. laims Against and Equity Interests in
onsolidated Realty Corp........................... 79
6.3. laims Against and Equity Interests in SF
oldings........................................... 80
6.4. laims Against and Equity Interests in Devco
anada............................................. 80
6.5. laims Against and Equity Interests in Equity
anada............................................. 80
6.6. laims Against and Equity Interests in
onsolidated OLP................................... 80
6.7. laims Against and Equity Interests in
ower A Co......................................... 81
6.8. laims Against and Equity Interests in
ower Corp......................................... 81
6.9. laims Against and Equity Interests in
onsolidated 245................................... 82
6.10. laims Against and Equity Interests in
ower B Leaseco.................................... 82
SECTION 7. ROVISIONS FOR TREATMENT OF CLAIMS AGAINST AND
QUITY INTERESTS IN CONSOLIDATED DEVCO............. 83
7.1. riority Non-Tax Claims Against Consolidated
evco Entities (Consolidated Devco Class 1)........ 83
7.2. ecured Club Loan Claims Against Devco,
evco GP, Equityco, Equity GP, and U.S. Finco
Consolidated Devco Class 2)....................... 83
7.3. ecured CIBC/OLP Claims Against Devco, Devco
P and U.S. Finco (Consolidated Devco
lass 3)........................................... 84
7.4. ecured Sumitomo Bank/Tower D Pledge Loan
laims Against Devco and Devco GP (Consolidated
evco Class 4)..................................... 84
7.5. ecured Citibank Letter of Credit Claims
gainst the Consolidated Devco Entities
Consolidated Devco Class 5)....................... 84
7.6. ecured Citibank Swap Claims Against Devco
Consolidated Devco Class 6)....................... 85
7.7. ecured Sterling National Letter of Credit
laims Against Devco GP (Consolidated Devco
lass 7)........................................... 85
7.8. ecured 245 Park Co. Partnership Claims
gainst Devco (Consolidated Devco Class 8)......... 85
7.9. IBC/Lost Note Indemnity Claims Against O&Y
inco, Equityco and Equity GP (Consolidated
evco Class 9)..................................... 85
7.10. nsured Claims Against Consolidated Devco
ntities (Consolidated Devco Class 10)............. 86
7.11. eneral Unsecured Claims Against Consolidated
evco Entities (Consolidated Devco Class 11)....... 86
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7.12. quity Interests in Consolidated Devco
ntities (Consolidated Devco Class 12)............. 94
SECTION 8. ROVISIONS FOR TREATMENT OF CLAIMS AGAINST AND
QUITY INTERESTS IN CONSOLIDATED REALTY CORP....... 94
8.1. riority Non-Tax Claims Against Realty Corp.,
aden and OYREUSA (Consolidated Realty Corp.
lass 1)........................................... 94
8.2. ecured Club Loan Claims Against OYREUSA
Consolidated Realty Corp. Class 2)................ 94
8.3. oronto Dominion Judgment Claims Against
aden (Consolidated Realty Corp. Class 3).......... 95
8.4. ank of Nova Scotia Claims Against Baden
Consolidated Realty Corp. Class 4)................ 95
8.5. nsured Claims Against Realty Corp., OYREUSA
nd Baden (Consolidated Realty Corp. Class 5)...... 95
8.6. eneral Unsecured Claims Against Realty
orp., OYREUSA and Baden (Consolidated Realty
orp. Class 6)..................................... 95
8.7. quity Interests in Realty Corp.
Consolidated Realty Corp. Class 7)................ 96
SECTION 9. ROVISIONS FOR TREATMENT OF CLAIMS AGAINST AND
QUITY INTERESTS IN SF HOLDINGS.................... 96
9.1. riority Non-Tax Claims Against SF Holdings
SF Holdings Class 1).............................. 96
9.2. eneral Unsecured Claims Against SF Holdings
SF Holdings Class 2).............................. 97
9.3. quity Interest in SF Holdings (SF Holdings
lass 3)........................................... 97
SECTION 10. ROVISIONS FOR TREATMENT OF CLAIMS AGAINST AND
QUITY INTERESTS IN DEVCO CANADA................... 97
10.1. riority Non-Tax Claims Against Devco Canada
Devco Canada Class 1)............................. 97
10.2. nsured Claims Against Devco Canada (Devco
anada Class 2).................................... 98
10.3. eneral Unsecured Claims Against Devco Canada
Devco Canada Class 3)............................. 98
10.4. quity Interest in Devco Canada (Devco Canada
lass 4)........................................... 98
SECTION 11. ROVISIONS FOR TREATMENT OF CLAIMS AGAINST AND
QUITY INTERESTS IN EQUITY CANADA.................. 99
11.1. riority Non-Tax Claims Against Equity Canada
Equity Canada Class 1)............................ 99
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11.2. nsured Claims Against Equity Canada (Equity
anada Class 2).................................... 99
11.3. eneral Unsecured Claims Against Equity
anada (Equity Canada Class 3)..................... 99
11.4. quity Interest in Equity Canada (Equity
anada Class 4)....................................100
SECTION 12. ROVISIONS FOR TREATMENT OF CLAIMS AGAINST
ND EQUITY INTERESTS IN CONSOLIDATED OLP...........100
12.1. riority Non-Tax Claims Against Liberty Plaza
o., OLP Co. and Trinity Place Co.
Consolidated OLP Class 1).........................100
12.2. ecured Sanwa/OLP Claims Against Liberty
laza Co., OLP Co. and Trinity Place Co.
Consolidated OLP Class 2).........................100
12.3. ecured U.S. Finco/OLP Claims Against
iberty Plaza Co., OLP Co. and Trinity
lace Co. (Consolidated OLP Class 3)...............112
12.4. nsured Claims Against Liberty Plaza Co.,
LP Co. and Trinity Place Co. (Consolidated
LP Class 4).......................................112
12.5. eneral Unsecured Claims Against Liberty
laza Co., OLP Co. and Trinity Place Co.
Consolidated OLP Class 5).........................112
12.6. quity Interests in Liberty Plaza Co., OLP
o., and Trinity Place Co. (Consolidated OLP
lass 6)...........................................112
SECTION 13. ROVISIONS FOR TREATMENT OF CLAIMS AGAINST
ND EQUITY INTERESTS IN TOWER A CO.................113
13.1. riority Non-Tax Claims Against Tower A
o. (Tower A Co. Class 1)..........................113
13.2. ecured Sanwa/Tower A Claims Against Tower A
o. (Tower A Co. Class 2)..........................113
13.3. IAA Judgment Claims Against Tower A Co.
Tower A Co. Class 3)..............................122
13.4. nsured Claims Against Tower A Co. (Tower A
o. Class 4).......................................123
13.5. eneral Unsecured Claims Against Tower A Co.
Tower A Co. Class 5)..............................123
13.6. quity Interests in Tower A Co. (Tower A Co.
lass 6)...........................................123
SECTION 14. ROVISIONS FOR TREATMENT OF CLAIMS AGAINST
ND EQUITY INTERESTS IN TOWER CORP.................123
14.1. riority Non-Tax Claims Against Tower Corp.
Tower Corp. Class 1)..............................123
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14.2. ecured Club Loan Claims Against Tower Corp.
Tower Corp. Class 2)...............................123
14.3. nsured Claims Against Tower Corp. (Tower
orp. Class 3)......................................124
14.4. eneral Unsecured Claims Against Tower Corp.
Tower Corp. Class 4)...............................124
14.5. quity Interests in Tower Corp. (Tower Corp.
lass 5)............................................124
SECTION 15. ROVISIONS FOR TREATMENT OF CLAIMS AGAINST AND
QUITY INTERESTS IN CONSOLIDATED 245................124
15.1. riority Non-Tax Claims Against 245 Park Co.,
45 Holding LP and 245 Corp. (Consolidated 245
lass 1)............................................124
15.2. ecured Club Loan Claims Against 245 Holding
P and 245 Corp. (Consolidated 245 Class 2).........125
15.3. ecured Aetna Mortgage Loan Claims Against 245
ark Co. (Consolidated 245 Class 3).................125
15.4. ecured DKB Mortgage Loan Claims Against 245
ark Co. (Consolidated 245 Class 4).................139
15.5. lub Loan/245 Park Deficiency Claims Against
45 Holding LP and 245 Corp. (Consolidated 245
lass 5)............................................153
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15.6. nsured Claims Against 245 Park Co., 245
olding LP and 245 Corp. (Consolidated 245
lass 6).............................................153
15.7. eneral Unsecured Claims Against 245 Park
o., 245 Holding LP and 245 Corp.
Consolidated 245 Class 7)...........................153
15.8. quity Interests in 245 Park Co., 245 Holding
P Co. and 245 Corp. (Consolidated 245
lass 8).............................................153
SECTION 16. ROVISIONS FOR TREATMENT OF CLAIMS AGAINST AND
QUITY INTERESTS IN TOWER B LEASECO..................165
16.1. riority Non-Tax Claims Against Tower B
easeco (Tower B Leaseco Class 1)....................165
16.2. errill Lynch/Tower B Leaseco Secured Claim
Tower B Leaseco Class 2)............................165
16.3. nsured Claims Against Tower B Leaseco (Tower
Leaseco Class 3)...................................165
16.4. eneral Unsecured Claims Against Tower B
easeco (Tower B Leaseco Class 4)....................165
16.5. quity Interests in Tower B Leaseco (Tower B
easeco Class 5).....................................166
SECTION 17. DENTIFICATION OF CLASSES OF CLAIMS AND
NTERESTS IMPAIRED AND NOT IMPAIRED UNDER THIS
LAN; ACCEPTANCE OR REJECTION OF THIS PLAN...........166
17.1. olders of Claims and Equity Interests
ntitled to Vote.....................................166
17.2. cceptance by Unimpaired Classes.....................166
17.3. limination of Classes...............................167
17.4. onconsensual Confirmation...........................167
17.5. evocation of Plan...................................167
SECTION 18. EANS OF IMPLEMENTATION..............................167
18.1. ewco LP.............................................168
18.2. wnership of Managing GP.............................173
18.3. rganization of Devco GP.............................173
18.4. rganization of Liquidating Corp.....................174
18.5. LP Transactions.....................................176
18.6. 45 Park Avenue Transactions.........................178
18.7. ower A Transactions.................................180
18.8. ower B Transactions.................................182
18.9. ower D Transactions.................................183
18.10. FC Retailco Holding Corp. and WFC Retailco
.P..................................................184
18.11. ransfers in Furtherance of the Plan.................184
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18.12. o-Proponents' Capital Infusion......................185
18.13. estrictions on Transferability and
ssignability of Class A Interests and Class B
nterests and on Admission of Substitute
artners; Tag-Along Rights...........................185
18.14. etter of Credit Transactions........................189
18.15. xecution of CIBC Amended and Restated Lost
ote Indemnity Agreement.............................189
18.16. bandonment of Interest in Olympia & York
U.S.) Holdings Company, L.P.........................189
18.17 istributions under this Plan........................189
SECTION 19. ROVISIONS GOVERNING DISTRIBUTIONS...................189
19.1. ate of Distributions................................189
19.2. elivery of Distributions............................189
19.3. ime Bar to Cash Payments............................190
19.4. anner of Payment Under this Plan....................190
19.5. ap on Distributions.................................191
SECTION 20. ROCEDURES FOR RESOLVING AND TREATING DISPUTED
LAIMS UNDER THIS PLAN...............................191
20.1. rosecution of Objections............................191
20.2. o Distributions Pending Allowance...................191
20.3. laims Reserves......................................192
20.4. istributions After Allowance........................195
20.5. istributions After Disallowance.....................196
SECTION 21. ROVISIONS GOVERNING EXECUTORY CONTRACTS AND
NEXPIRED LEASES UNDER THIS PLAN.....................197
21.1. eneral Treatment....................................197
21.2. mendments to Schedule; Effect of Amendments.........198
21.3. ar to Rejection Damages.............................198
SECTION 22. ONDITIONS PRECEDENT TO CONFIRMATION DATE AND
FFECTIVE DATE.......................................199
22.1. onditions Precedent to Confirmation of this
lan.................................................199
22.2. onditions Precedent to the Effective Date of
his Plan............................................201
22.3. aiver of Conditions Precedent.......................203
SECTION 23. FFECT OF CONFIRMATION...............................204
23.1. eorganized Debtors' Authority.......................204
23.2. esting and Liens....................................204
23.3. ischarge of the Debtors.............................204
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23.4. erm of Injunctions or Stays.........................205
SECTION 24. ELEASES, INJUNCTION AND WAIVER OF CLAIMS............205
24.1. elease of the Debtors and Debtors in
ossession...........................................205
24.2. imited Release of O&Y Releasees.....................205
24.3. imited Release of the Plan Releasees................207
24.4. njunction...........................................209
24.5. voidance and Recovery Actions.......................209
SECTION 25. ETENTION OF JURISDICTION............................210
25.1. etention of Jurisdiction............................210
25.2. odification of Plan.................................211
SECTION 26. ISCELLANEOUS PROVISIONS.............................212
26.1. ayment of Statutory Fees............................212
26.2. etiree Benefits.....................................213
26.3. issolution of Creditors' Committee..................213
26.4. ecognition of Guarantee Rights......................213
26.5. everability.........................................213
26.6. overning Law........................................215
26.7. otices..............................................215
SCHEDULES TO PLAN
Schedule 1.194 Schedule of O&Y Affiliates
Schedule 18 Restructuring Transactions
Schedule 21.1 Executory Contracts to be Assumed Under The
Plan
EXHIBITS TO PLAN
Exhibit A Aetna Restructured Mortgage Loan Documents
Exhibit B Convertible Note and Indenture
Exhibit C DKB Restructured Mortgage Loan Documents
Exhibit D Intentionally Omitted
Exhibit E Intentionally Deleted
Exhibit F Merrill Lynch Tower B Lease Amendment
Exhibit G Merrill Lynch Tower D Lease Amendment
Exhibit H Newco LP Partnership Agreement
Exhibit I Sanwa/OLP Restructured Mortgage Loan
Documents
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Exhibit J Sanwa/Tower A Restructured Mortgage Loan
Documents
Exhibit K Tower B Amended Reimbursement Agreement
Exhibit L Tower B Financing Documents
Exhibit M Tower D Financing Documents
Exhibit N Tower D Amended Reimbursement Agreement
Exhibit O New Tower D LP Partnership Agreement
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