SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
METROPOLIS REALTY TRUST, INC.
(Exact name of registrant as specified in its charter)
Maryland 13-3910684
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
885 Third Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 593-5400
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None Not Applicable
Securities to be registered pursuant to Section 12(g) of the Act:
Class A Common Stock, par value $10.00 per share
(Title of class)
Class B Common Stock, par value $10.00 per share
(Title of class)
Class C Common Stock, par value $10.00 per share
(Title of class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Business.
See "BUSINESS AND PROPERTIES."
Item 2. Financial Information.
See "SELECTED FINANCIAL INFORMATION" and Financing Statements
appearing elsewhere in this Registration Statement."
Item 3. Properties.
See "BUSINESS AND PROPERTIES."
Item 4. Security Ownership of Certain Beneficial Owners and Management.
See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT."
Item 5. Directors and Executive Officers.
See "MANAGEMENT OF THE COMPANY."
Item 6. Executive Compensation.
See "MANAGEMENT OF THE COMPANY."
Item 7. Certain Relationships and Related Transactions.
See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-- Related Party Transactions."
Item 8. Legal Proceedings.
See "BUSINESS AND PROPERTIES -- Legal Proceedings."
Item 9. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
See "DESCRIPTION OF STOCK OF THE COMPANY" and BUSINESS AND PROPERTIES
-- Distribution Policy."
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Item 10. Recent Sales of Unregistered Securities.
See "RECENT SALES OF UNREGISTERED SECURITIES."
Item 11. Description of Registrant's Securities to be Registered.
See "DESCRIPTION OF STOCK OF THE COMPANY."
Item 12. Indemnification of Directors and Officers.
See "CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE COMPANY'S CHARTER
AND BYLAWS -- Indemnification Agreements" and -- Limitation of Liability and
Indemnification."
Item 13. Financial Statements and Supplementary Data.
See Financial Statements appearing elsewhere in this Registration
Statement.
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
See "AUDITORS."
Item 15. Financial Statements and Exhibits.
See Financial Statements appearing elsewhere in this Registration
Statement.
See "Exhibits"
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TABLE OF CONTENTS
Page
INFORMATION REQUIRED IN REGISTRATION STATEMENT.............................iii
INTRODUCTION............................................................... 1
BUSINESS AND PROPERTIES.................................................... 3
Business........................................................ 3
Properties...................................................... 3
The 1290 Property........................................... 3
The 237 Property............................................ 6
Other Assets.................................................... 8
Tenant Notes................................................ 8
JMB Notes................................................... 9
Claims Reserve.............................................. 9
Tax Certiorari Proceedings and Tenant Reimbursement Claims.. 9
Priority Utility Tax Claims................................. 10
Certain Assets Related to 2 Broadway........................ 11
Qualification as a REIT..................................... 11
Distribution Policy......................................... 13
Competition................................................. 13
Indebtedness................................................ 13
Legal Proceedings........................................... 13
Retention of Jurisdiction by Bankruptcy Court............... 14
Employees................................................... 14
DESCRIPTION OF CHASE FINANCING AND MORTGAGE ............................... 21
Credit Agreement................................................ 21
Mortgage Modification, Restatement and Security Agreement....... 25
DESCRIPTION OF THE LIMITED PARTNERSHIP AGREEMENTS OF THE PARTNERSHIPS...... 26
The Lower Tier Limited Partnership Agreement.................... 27
The Upper Tier Limited Partnership Agreement.................... 30
Property Owning Partnership Agreements.......................... 31
MANAGEMENT OF THE COMPANY.................................................. 33
Directors and Officers.......................................... 33
Compensation of Directors................................... 35
Asset Management Agreement.................................. 35
Management and Leasing Agreements........................... 36
BACKGROUND ................................................................ 38
The Debtors and Certain Affiliates.............................. 38
Summary of the Plan............................................. 38
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............. 42
Related Party Transactions...................................... 44
Description of Registration Rights Agreement.................... 44
Description of Stock Plan....................................... 44
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Page
DESCRIPTION OF STOCK OF THE COMPANY........................................ 45
General......................................................... 45
Common Stock.................................................... 46
Preferred Stock................................................. 48
Restrictions on Transfer........................................ 48
CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE COMPANY'S CHARTER AND
BYLAWS.......................................................... 50
Affiliate Transactions.......................................... 50
Business Combinations........................................... 51
Certain Voting Provisions....................................... 52
Control Share Acquisitions...................................... 52
Amendment of Charter and Bylaws................................. 53
Dissolution of the Company...................................... 53
Meetings of Stockholders........................................ 53
Additional Provisions Related to The Board of Directors......... 54
Limitation of Liability and Indemnification..................... 56
Indemnification Agreements...................................... 56
RECENT SALES OF UNREGISTERED SECURITIES.................................... 57
AUDITORS ................................................................ 57
SIGNATURES ................................................................S-1
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INTRODUCTION
Metropolis Realty Trust, Inc., a Maryland corporation (the
"Company"), which intends to qualify as a real estate investment trust (a
"REIT") under the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), was formed on May 13, 1996 to facilitate the consummation of the
Second Amended Joint Plan of Reorganization of 237 Park Avenue Associates,
L.L.C. ("237 LLC") and 1290 Associates, L.L.C. ("1290 LLC" and, together with
237 LLC, the "Debtors"), dated September 20, 1996 (as amended, the "Plan"), and,
thereby, acquire the interests of 237 LLC and 1290 LLC in the properties located
in New York City at 237 Park Avenue (the "237 Property") and 1290 Avenue of the
Americas (the "1290 Property," and together with the 237 Property, the
"Properties"). The Debtors were two of the many companies, partnerships and
joint ventures that collectively constituted the United States operations of the
Olympia & York ("O&Y") group of companies. The transactions contemplated by the
Plan were consummated on October 10, 1996 (the "Effective Date").
The Company owns a 95% partnership interest, as general partner,
in 237/1290 Lower Tier Associates, L.P., a Delaware limited partnership (the
"Lower Tier Limited Partnership") which owns a 99% partnership interest, as
limited partner, in each of 237 Park Partners, L.P., a Delaware limited
partnership (the "237 Property Owning Partnership") and 1290 Partners, L.P., a
Delaware limited partnership (the "1290 Property Owning Partnership," and
together with the 237 Property Owning Partnership, the "Property Owning
Partnerships"). The Property Owning Partnerships were formed to own the
Properties. The remaining 1% interest in each of the Property Owning
Partnerships is owned by one of two wholly-owned subsidiaries of the Company
(the "GP Corps"), as general partner. Pursuant to the Plan, the Company has also
succeeded to certain other assets held by the Debtors, and certain affiliates of
the Debtors (as further described under the caption titled "BUSINESS -- Other
Assets"). The remaining 5% interest in the Lower Tier Limited Partnership (the
"LP Interest") is owned by a limited partnership (the "Upper Tier Limited
Partnership") which is owned almost entirely by JMB/NYC Office Building
Associates, L.P. ("JMB LP"), a former holder of equity interests in the Debtors,
as limited partner. The 5% LP Interest is subordinated to the 95% partnership
interest of the Company with respect to certain priority distributions from the
Lower Tier Limited Partnership. See "DESCRIPTION OF THE LIMITED PARTNERSHIP
AGREEMENTS OF THE PARTNERSHIPS." The Upper Tier Limited Partnership, the Lower
Tier Limited Partnership and the Property Owning Partnerships are hereinafter
referred to, collectively, as the "Partnerships."
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The following chart depicts the Company's indirect ownership of
the Properties.
[CHART]
2
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BUSINESS AND PROPERTIES
Business
Since the Effective Date, the Company has held, through its
interests in the Partnerships, the assets described below under "Properties" and
"Other Assets." The Company's principal business objective is to operate the
Properties in a manner which will maximize the Properties' revenues and value
and in turn maximize stockholder value. The Company may acquire additional
properties in the future, although it has no present plans to do so. As further
described under "MANAGEMENT OF THE COMPANY -- Asset Management Agreement" and "
- -- Management and Leasing Agreements," the Property Owning Partnerships have
retained 970 Management, LLC (the "Asset Manager"), an affiliate of Victor
Capital Group, L.P. ("VCG"), to serve as asset manager and Tishman Speyer
Properties, L.P. ("Tishman Speyer" or the "Property Manager/Leasing Agent"), an
affiliate of Tishman-Speyer Properties, Inc., to serve as property
manager/leasing agent to manage the day-to-day operations of the Properties.
The Company intends to operate so as to qualify as a REIT under
the Internal Revenue Code commencing with its taxable year ending December 31,
1996. If it so qualifies, the Company's REIT income, with certain limited
exceptions, will not be subject to federal income tax at the corporate level. In
order to maintain its REIT status, the Company will be required, among other
things, to distribute annually (as determined under the Internal Revenue Code)
to its stockholders at least 95% of REIT income and to meet certain asset,
income and stock ownership tests. See "Qualification as a REIT" below.
Properties
The 1290 Property
The 1290 Property Owning Partnership holds the fee title to the
1290 Property and all improvements thereon. The 1290 Property, completed in
1963, is a 43-story, first class commercial office building with approximately
1,963,000 rentable square feet of space. The building is centrally located in
midtown Manhattan and is connected to the famed "Rockefeller Center" complex via
an underground passageway.
The occupancy rates for the 1290 Property for years 1991 to 1995
were 97%, 97%, 98%, 94% and 78% respectively.
As of October 10, 1996, the 1290 Property was approximately 97%
leased and there were leases and license agreements with 38 tenants and 4
licensees covering approximately 1,912,000 rentable square feet of space. As of
October 10, 1996, the annual average rent (including electricity and additional
rent payable on account of operating expenses and real estate tax escalations)
for space leased in the building was approximately $43.50 per square foot. As of
October 10, 1996, approximately 48,400 square feet of space was under lease to
retail tenants, at an average annual rent (including electricity and additional
rent payable on account of operating and real estate tax escalations) of
approximately $65.00 per rentable square foot. As of October 10, 1996,
approximately 51,000 rentable square feet of office and retail space was
available for rent.
The building serves as the corporate headquarters of The
Equitable Life Assurance Society of the United States ("Equitable"). In addition
to Equitable, the building houses a variety of tenants, including law firms,
financial institutions and entertainment companies.
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The following table summarizes certain information regarding the
largest leases at the 1290 Property:
<TABLE>
<CAPTION>
Annual Base
Leased Rent Gross Rent Date(s) of
square per square per square Lease
Tenant Nature of Business footage foot leased(1) foot leased(2) Expiration
<S> <C> <C> <C> <C> <C>
Equitable (3) Insurance/Financial
Services 502,480 $36.25 $36.47 12/31/11
Warner Communications, Inc. Entertainment 268,577 $37.32(4) $39.58(4) 6/30/12(5)
The Bank of New York Financial Services 167,574 $35.98(6) $36.20(6) 12/31/10(7)
EMI Entertainment World, Inc.Entertainment 144,981 $37.09(8) $37.50(8) 9/30/02
Other Tenants Various 860,000 $39.15 $43.50 1996-2005
</TABLE>
(1)Annual Base Rent means the amount contractually due (excluding recoveries
from tenants for common area maintenance charges, taxes, utilities or other
items) for the calendar month ending September 30, 1996, annualized. The
Company believes that base rent is a conservative and appropriate measure for
comparative purposes of commercial real estate rental revenue from office
building properties that do not generate percentage rents based on sales.
(2)Gross Rent means Annual Base Rent plus recoveries from tenants for common
area maintenance charges, taxes, utilities and other items. Information
necessary to compute effective rent, including rent concessions, leasing
commissions and tenant improvements is not available with respect to leases
entered into prior to the date the Properties were acquired by the Property
Owning Partnerships.
(3)The lease agreement with Equitable provides for the delivery of space to
Equitable in three separate blocks; Block A, comprising 287,664 rentable
square feet, Block B, comprising 135,528 rentable square feet and Block C,
comprising 79,288 rentable square feet. Equitable is currently in possession
of the space designated as Block A, and is entitled to a free rent period for
such space through June 1997. The space designated as Block B was delivered
to Equitable on October 1, 1996. Equitable is entitled to a free rent period
for such space through October 1997. The space designated as Block C is
currently occupied by another tenant and such space will be delivered to
Equitable on March 1, 1999. In addition to free rent, Equitable is entitled
to a credit against rent of up to approximately $1,600,000 for all three
blocks as reimbursement for the cost of certain tenant improvements made by
and paid for by Equitable.
(4)The lease agreements with Warner Communications, Inc. ("Warner") provide
that, with respect to 133,011 rentable square feet of space, Warner will not
be required to pay rent until July 1, 1997. A block of space constituting
24,380 rentable square feet is not scheduled to be delivered to Warner until
June 30, 1998, following which Warner is entitled to a free rent period of
approximately 14 1/2 months with respect to such space. Does not include
6,422 square feet of space leased in the basement at an Annual Base Rent of
$18.50 per square foot and a Gross Rent of $20.80 per square foot.
(5)Leases with Warner expire 5/31/99 (with respect to 76,708 square feet);
2/28/00 (with respect to 28,056 square feet and 6,422 square feet in the
basement); and 6/30/12 (with respect to 157,391 square feet).
(6)Does not include 11,633 square feet of space leased in the basement at an
Annual Base Rent of $40.00 per square foot and a Gross Rent of $40.00 per
square foot.
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(7)The Bank of New York lease expires 5/31/98 (with respect to 24,380 square
feet); 4/30/03 (with respect to 31,463 square feet and 11,633 square feet in
the basement); and 12/31/10 (with respect to 100,159 square feet). The Bank
of New York lease provides that the Bank of New York has the option to
terminate its lease with respect to the third floor of the 1290 Property
effective as December 31, 2006 by giving the 1290 Property Owning Partnership
notice on December 31, 2005 and by paying a fee of $1,000,000.
(8)Does not include (i) 923 square feet of space leased in the basement at an
Annual Base Rent of $4.84 per square foot and a Gross Rent of $5.84 per
square foot and (ii) an additional 1,533 square feet of space leased in the
basement at an Annual Base Rent of $28.50 per square foot and a Gross Rent of
$35.50 per square foot.
A major capital project is nearing completion at the 1290 Property which
includes a renovation of the building's lobby and is expected to be completed by
late December 1996. The total budget for the project was $7,700,000 with
approximately $1,900,000 remaining to be expended as of the Effective Date.
Anticipated expenditures for capital projects for the 1290 Property in 1997 are
approximately $3,000,000 and relate primarily to: (i) the commencement of an
elevator modernization program; (ii) conversion of a refrigeration machine (in
accordance with the 1992 Clean Air Act); (iii) the repair of certain roof
setbacks; and (iv) removal of asbestos in several mechanical rooms. Capital
expenditures in future years are estimated to be $1,000,000 per annum, and
relate primarily to the continuation of the elevator modernization program.
An environmental report prepared for the Properties indicates that the
1290 Property contains asbestos or asbestos containing materials in several
mechanical rooms and certain other locations. The cost of removing the asbestos
in accordance with the operations and maintenance plan for the 1290 Property is
estimated to be between $2,000,000 and $3,000,000.
The following table shows anticipated lease expirations on an aggregate
basis for the period from October 10, 1996 through December 31, 1996 and for
each calendar year from 1997 through and including 2005. Such chart assumes that
there are no early terminations of leases and that leases expire without
extension by existing tenants pursuant to lease options. See "SELECTED FINANCIAL
DATA."
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<TABLE>
<CAPTION>
Percentage of Total
1290 Property
Owning Partnership
Rentable Square Annual Base Rent Annual Base Rent
Year of Lease Number of Feet Subject to Represented by Represented
Expiration Leases Expiring Expiring Leases Expiring Leases by Expiring Leases
<S> <C> <C> <C> <C>
1996 2 45,762 $1,795,356.12 2.68%
1997 2 69,834 $2,042,876.00 3.85%
1998 2 16,925 $ 666,628.12 .97%
1999 3 80,562 $2,908,093.04 4.31%
2000 2 35,596 $1,466,036.00 1.79%
2001 2 98,501 $4,216,092.20 5.56%
2002 3 221,334 $8,703,463.50 11.84%
2003 2 45,044 $1,821,539.76 2.44%
2004 3 171,746 $7,861,370.55 10.30%
2005 5 16,734 $1,012,162.94 1.22%
</TABLE>
Annual real estate taxes assessed against the 1290 Property for the
fiscal years ended June 30, 1995 and 1996 were $19,094,400 and $19,023,178,
respectively, which amounts were calculated on assessed values of approximately
$180,000,000 and $189,000,000 respectively. On July 1, 1996, 1290 LLC paid a
portion of the real estate taxes assessed against the 1290 Property for the tax
year July 1, 1996 through June 30, 1997 in an amount equal to $8,776,687.50. See
"Tax Certiorari Proceedings and Tenant Reimbursement Claims."
The 237 Property
The 237 Property Owning partnership holds the fee title to the 237
Property and all improvements thereon. The 237 Property is a 23-story, first
class commercial office building with approximately 1,140,000 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. The building, centrally located in midtown Manhattan, is situated off of
one of New York City's prestigious thoroughfares and is within close proximity
to Grand Central Station, a transportation hub.
The occupancy rates for the 237 Property for years 1991 to 1995 were
100%, 98%, 98%, 98% and 98%, respectively.
As of October 10, 1996, the 237 Property was approximately 98% leased
and there were leases and license agreements with 16 tenants and 2 licensees
covering approximately 1,119,000 rentable square feet of space. As of October
10, 1996, the annual average rent (including electricity and additional rent on
this space payable on account of operating expenses and real estate tax
escalations) for space leased in the building was approximately $42.00 per
square foot. As of October 10, 1996, approximately 23,000 square feet of space
was under lease to retail tenants, at an average annual rent (including
electricity and additional rent on this space payable on account of operating
expenses and real estate tax escalations) of approximately $54.00 per rentable
square foot. As of October 10, 1996, approximately 23,000 rentable square feet
of retail space was available for rent.
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The following table summarizes certain information regarding the largest
leases at the 237 Property:
<TABLE>
<CAPTION>
Annual Base Gross
Leased Rent per Rent per Year of
Square square foot square foot Lease
Tenant Nature of Business Footage leased(2) leased(3) Expiration
<S> <C> <C> <C> <C> <C>
J. Walter Thompson Advertising 456,132 $22.39 $32.07 8/31/06
Company(1)
Swiss Reinsurance l
Company, U.S. Branch
(and certain of its Insurance/Financia
affiliates) Services 279,906 $36.09 $57.74 8/31/01
E.M. Warburg, Pincus
& Co., Inc. Financial Services 148,197 $48.57(4) $54.81 10/31/09
Champion International Pulp and Paper
Corporation Industry 110,800 $39.20 $44.80 9/30/11
Other Tenants Various 124,000 $23.17 $24.25 1998-2004
</TABLE>
(1) J. Walter Thompson Company has the option to terminate its lease on
September 30, 2000 on the 8th Floor, the 9th Floor or a portion
thereof, (totaling 110,607 square feet), only if J. Walter Thompson's
subtenant exercises its option to terminate its sublease. J. Walter
Thompson must provide notice to 237 Properties Owning Partnership at
least one year in advance.
(2) Annual Base Rent means the amount contractually due (excluding
recoveries from tenants for common area maintenance charges, taxes,
utilities or other items) for the calendar month ending September 30,
1996, annualized. The Company believes that base rent is a conservative
and appropriate measure for comparative purposes of commercial real
estate rental revenue from office building properties that do not
generate percentage rents based on sales.
(3) Gross Rent means Annual Base Rent plus recoveries from tenants for
common area maintenance charges, taxes, utilities and other items.
Information necessary to compute effective rent, including rent
concessions, leasing commissions and tenant improvements is not
available with respect to leases entered into prior to the date the
Properties were acquired by the Property Owning Partnerships.
(4) The lease agreement with E.M. Warburg, Pincus & Co. ("Warburg Pincus")
provides that with respect to 56,243 rentable square feet Warburg
Pincus will not be required to pay rent until May 1, 1997.
Anticipated expenditures for capital projects for the 237
Property in 1997 are approximately $1,000,000 and relate primarily to facade and
roof repairs, as well as an upgrade of the condenser water system. Capital
expenditures in future years are estimated to be $225,000 per annum.
The following table sets forth anticipated lease expirations on
an aggregate basis for the period from October 10, 1996 through December 31,
1996 and for each calendar year from 1997 through and
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including 2005. This chart assumes that there are no early terminations of
leases and that leases expire without extension by existing tenants pursuant to
lease options.
<TABLE>
<CAPTION>
Percentage of Total
237 Property Owning
Rentable Square Annual Base Rent Partnership Annual
Year of Lease Number of Feet Subject to Represented by Base Rent Represented
Expiration Leases Expiring Expiring Leases Expiring Leases by Expiring Leases
<S> <C> <C> <C> <C>
1996 -0- -0- -0- -0-
1997 -0- -0- -0- -0-
1998 1 900 $ 36,000 .10%
1999 2 28,452 $ 902,880 2.70%
2000 1 3,450 $ 190,665 .55%
2001 3 282,546 $ 10,152,775 31.46%
2002 -0- -0- -0- -0-
2003 2 21,641 $ 6,116,810 1.91%
2004 2 9,693 $ 241,085 .59%
2005 -0- -0- -0- -0-
</TABLE>
Annual real estate taxes assessed against the 237 Property for
the fiscal years ended June 30, 1995 and June 30, 1996 were $8,900,056 and
$9,511,807, respectively, which amounts were calculated on assessed values of
approximately $102,000,000 and $108,450,000, respectively. On July 1, 1996, the
237 LLC paid a portion of the real estate taxes assessed against the 237
Property for the tax year July 1, 1996 through June 30, 1997 in an amount equal
to $4,989,605.34. See "Tax Certiorari Proceedings and Tenant Reimbursement
Claims."
Other Assets
Tenant Notes
An affiliate of O&Y was the holder of a note (the "Robinson
Silverman Note") issued by Robinson, Silverman, Pearce & Aronsohn ("Robinson
Silverman") dated April 1, 1989 in the face amount of $6,500,000, which note was
executed in connection with Robinson Silverman's lease at the 1290 Property. The
Robinson Silverman Note was assigned to the 1290 Operating Partnership on the
Effective Date. In 1991 and 1992, Robinson Silverman claimed certain concessions
regarding the payment terms of such note. Although 1290 LLC was unable to locate
any records evidencing an agreement to such concessions, Robinson Silverman has
made payments reflecting such concessions and such payments were not rejected by
1290 LLC. Without the Company expressing any opinion with regard thereto, if
such concessions were granted, the Robinson Silverman note would have an
outstanding principal balance as of the Effective Date of $5,317,690, would bear
interest at 7.5% per annum, would require level monthly payments of interest and
principal of $75,000 and would mature on September 1, 1999. If such concessions
were not granted, then the Robinson Silverman Note would bear interest at 10%
and, based on the monthly payments of $75,000 received from Robinson Silverman,
the outstanding balance as of the Effective Date would be approximately
$6,113,946.
An affiliate of O&Y was the holder of a note (the "Warburg Pincus
Note," and together with the Robinson Silverman Note, the "Tenant Notes"),
issued by Warburg Pincus dated August 20, 1985, in the face amount of
$4,354,758.09, which note was executed in connection with Warburg Pincus' lease
at the 237 Property. The note is payable on October 31, 1999 and does not bear
interest prior to its maturity.
On the Effective Date, such affiliates of O&Y holding the Tenant
Notes assigned their interests in the Tenant Notes to the applicable Property
Owning Partnership and an amount equal to $450,000
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representing all cash paid in respect of the Tenant Notes from January 1, 1996
through the Effective Date net of certain payments made in connection with the
consummation of the Plan.
JMB Notes
Certain notes (the "JMB Notes") were issued by JMB LP's
predecessor in interest to an affiliate of O&Y in 1984 in connection with the
admission of such predecessor as a partner of the predecessor of the Debtors and
an affiliate of the Debtors which owned the property located at 2 Broadway, New
York, New York ("2 Broadway"). The amount outstanding on an aggregate basis
under all the JMB Notes, as of the Effective Date, was $83,918,815. On the
Effective Date, the JMB Notes and related security agreements were assigned by
such O&Y affiliate to the Company. Immediately prior to such assignment, the
Company entered into a Participation Agreement with an affiliate of JMB LP
pursuant to which the Company or its designee will receive the first $750,000 of
payments made pursuant to, or in respect of, the JMB Notes and the JMB LP
affiliate will receive all further payments in respect of the JMB Notes.
Amounts, if any, distributable to JMB LP from the Upper Tier Limited
Partnership, including pursuant to the Company's purchase option and JMB LP's
put option as described under "DESCRIPTION OF THE LIMITED PARTNERSHIP AGREEMENTS
OF THE PARTNERSHIPS--The Upper Tier Limited Agreement," would first be applied
to the prepayment of the JMB Notes. On the Effective Date, the JMB Notes were
restated. The JMB Notes, as restated, bear interest at 12.75% per annum and have
a maturity date of January 1, 2001. The JMB Notes are non-recourse and are
payable solely out of the distributions JMB LP receives from the Upper Tier
Limited Partnership.
Claims Reserve
On the Effective Date, the Indenture Trustee (as hereinafter
defined) transferred to segregated accounts maintained by Bankers Trust Company,
as disbursing agent under the Plan (the "Disbursing Agent"), $4,966,595,
representing the amount of cash estimated to be required to pay in full all
claims (disputed or otherwise), including Priority Utility Tax Claims, discussed
below, arising from the Debtors' bankruptcy cases. As of December 1, 1996,
$3,466,595 plus interest is being held in the Claims Reserve pending resolution
of such claims. The cash held in the Claims Reserve will be held in trust for
the benefit of holders of such claims pending determination of their entitlement
thereto. The Company believes that amounts in the Claims Reserve, together with
the Company's other cash on hand, will be sufficient to pay in full all claims
arising from the Debtors' bankruptcy cases.
Payments and distributions to each holder of a disputed claim
will be made in accordance with the provisions of the Plan as soon as
practicable after the date that the order or judgment of the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court")
allowing such disputed claim to be paid, without any interest thereon, from cash
held in the Claims Reserve becomes a final order.
In the event that any cash held in the Claims Reserve remains
after all claims have been allowed or disallowed and distributions have been
made in accordance with the Plan, such cash will be transferred to the Company.
Tax Certiorari Proceedings and Tenant Reimbursement Claims
The Debtors and their predecessors-in-interest commenced tax
certiorari proceedings which remain outstanding against the City of New York,
for over-assessment of property taxes for the tax year ending June 30, 1996 with
respect to the 237 Property and for the tax years ending June 30, 1991 through
June 30, 1996 with respect to the 1290 Property. The Property Owning
Partnerships have executed stipulations which would substitute the Property
Owning Partnerships for the Debtors in such tax certiorari proceedings. Such
stipulations have been filed with the Bankruptcy Court and the Property Owning
Partnerships are awaiting the Bankruptcy Court's approval. The Property Owning
Partnerships estimate Net Tax Proceeds (as hereinafter
9
C/M: 11764.0009 421963.11
<PAGE>
defined) from such tax certiorari proceedings of approximately $14,000,000.
Certain current and former tenants of the Properties hold unsecured claims (the
"Tenant Reimbursement Claims") against the Property Owning Partnerships based
upon a right to payment provided in such tenant's lease contingent upon the
realization by the Property Owning Partnerships of the proceeds, if any, of any
tax certiorari proceedings which were commenced by the Debtors with respect to
the Properties net of any amounts, fees and expenses incurred to prepare for,
institute and prosecute such tax certiorari proceedings (the "Net Tax
Proceeds"). The Property Owning Partnerships receiving such Net Tax Proceeds
will cause an amount necessary, in their sole determination, to reserve in full
for all Tenant Reimbursement Claims to be transferred to the Disbursing Agent
for deposit in the Claims Reserve. Within 30 days after the date of such
deposit, the Property Owning Partnerships will determine the entitlement of
holders of Tenant Reimbursement Claims to payment of such Tenant Reimbursement
Claims by reason of the receipt of such Net Tax Proceeds and, in making such
determination, will be entitled to give effect to any rights of setoff,
recoupment or other claims that the Property Owning Partnerships or any
predecessor-in-interest may have against the holders of such Tenant
Reimbursement Claims. Thereafter, the Property Owning Partnerships will deliver
a notice of such determination to each holder of a Tenant Reimbursement Claim.
Each holder of a Tenant Reimbursement Claim will have 30 days after receipt of
such notice to object to the determination by the Property Owning Partnerships
of the amount to which it is entitled. If the holder of a Tenant Reimbursement
Claim does not object to the determination by the Property Owning Partnerships
within such 30 day period, then such Tenant Reimbursement Claim will be paid
from the Claims Reserve at the request of the Property Owning Partnerships,
without the necessity of Bankruptcy Court approval. If the holder of a Tenant
Reimbursement Claim objects on a timely basis to the determination by the
Property Owning Partnerships, then such Tenant Reimbursement Claim will be a
disputed claim and no payments will be made on account of such claim until such
claim is allowed, in whole or in part, by final order of the Bankruptcy Court.
All remaining Net Tax Proceeds will be distributed by the Property Owning
Partnerships to the Lower Tier Limited Partnership which will in turn distribute
such Net Tax Proceeds to the Company; provided, that, the Property Owning
Partnerships are required to retain sufficient cash to pay all disputed Tenant
Reimbursement Claims until such claims have been allowed or disallowed. The
Property Owning Partnerships estimate that approximately $6,156,000 will be paid
to current and former tenants in respect of Tenant Reimbursement Claims.
Priority Utility Tax Claims
Pursuant to the Plan, the Debtors were deemed to have objected to
all claims against the Debtors arising from the nonpayment of New York State or
New York City utility taxes (the "Priority Utility Tax Claims") evidenced by a
filed proof of claim. As successor to the Debtors, the Upper Tier Limited
Partnership has the exclusive right to prosecute any objection to Priority
Utility Tax Claims, any litigation related to any objection to Priority Utility
Tax Claims and to compromise or settle any such objection or litigation.
Pursuant to the Plan, the Company deposited approximately $1,405,000 in the
Claims Reserve for such claims. In the event that the Upper Tier Limited
Partnership compromises any objection to any Priority Utility Tax Claim, the
Property Owning Partnership owning the Property in question will indemnify the
holders of equity interests in the Debtor which had formerly owned the Property
in question (and their successors and assigns) from all claims which may be made
by the City or State of New York in respect of utility taxes, interest and
penalties in connection with such Property unless such compromise includes a
release of such holders from all such claims. At such time as the Priority
Utility Tax Claims are disallowed or allowed (as determined by either a court of
competent jurisdiction or by agreement between the Company and the relevant
taxing authority), the Disbursing Agent will at the direction of the Company pay
any such allowed claims from cash held in the Claims Reserve and any amount held
in the Claims Reserve in excess of the amount of such allowed claims will be
paid to the Company.
10
C/M: 11764.0009 421963.11
<PAGE>
Certain Assets Related to 2 Broadway
Prior to the Merger (as hereinafter defined) of the Debtors into
the Upper Tier Limited Partnership, 1290 LLC assigned to the Company all of its
rights in certain assets related to the sale of 2 Broadway that was owned by 2
Broadway Associates, L.P. ("2 Broadway LP"), an affiliate of the Debtors (to the
extent that the same had not been paid to the Indenture Trustee prior to the
Effective Date), including the assets described below and segregated reserve
accounts established by the Indenture Trustee, as disbursing agent under the 2
Broadway Plan (as hereinafter defined) (the "2 Broadway Claims Reserves"), (i)
in the amount of $2,400,000 for potential utility tax claims of the taxing
authorities of the City and State of New York (the "2 Broadway Priority Utility
Tax Claims") and (ii) in the amount of $811,278, for the payment of all claims
which were not then, but might become allowed claims (other than the 2 Broadway
Priority Utility Tax Claims) in connection with the 2 Broadway Plan. See
"BACKGROUND -- The Debtors and Certain Affiliates." As of the Effective Date,
the $811,278 reserve was reduced to $346,139 as a result of the payment of
certain claims. Pursuant to an Assumption and Indemnification Agreement, dated
as of the Effective Date, by and among 1290 LLC, 2 Broadway LP, the Company and
the Indenture Trustee, (i) the Company assumed any and all remaining obligations
of 1290 LLC and 2 Broadway LP in connection with any claims reserved pursuant to
section 9.3 of the 2 Broadway Plan, and (ii) the Company received the remaining
$346,139 of the claims reserve. The Company believes that amounts held in the 2
Broadway utility tax reserves, together with the Company's other cash on hand,
will be sufficient to pay in full all claims arising under the 2 Broadway Plan.
The assets related to 2 Broadway that were assigned to the Company include the
following:
(a) the right to receive any surplus amounts in the claims reserve
and the utility tax reserve under the 2 Broadway Plan;
(b) the right to proceeds of certain tax certiorari proceedings
existing with respect to 2 Broadway (net of costs of collections
and payments to be made to tenants);
(c) the right to receive any remaining post-closing apportionments
under the contract of sale pursuant to which 2 Broadway was sold;
and
(d) the right to receive dividends and distributions under certain
non-transferable stock received by 2 Broadway LP in connection
with the bankruptcy of Drexel Burnham Lambert, a former tenant of
2 Broadway.
The Company has executed stipulations which would substitute the
Company for 2 Broadway LP in the above described tax certiorari proceedings.
Such stipulations have been filed with the Bankruptcy Court and the Company is
awaiting the Bankruptcy Court's approval.
Although all of the rights in the assets described above were
assigned to 1290 LLC pursuant to the 2 Broadway Plan, 2 Broadway LP, 2 Broadway
Associates and 2 Broadway Land Company have executed the aforesaid assignment to
convey to the Company any remaining rights they may have thereto.
Qualification as a REIT
The Company intends to operate so as to qualify as a REIT under
the Internal Revenue Code commencing with its taxable year ending December 31,
1996. A REIT generally is not taxed at the corporate level on income it
currently distributes to stockholders so long as it distributes at least 95% of
its REIT taxable income. For any year in which the Company does not meet the
requirements for electing to be taxed as a REIT, it will be taxed as a
corporation. Although the Company believes that it will operate in such a manner
so as to qualify and remain so qualified, qualification as a REIT involves the
application of highly technical and complex Internal Revenue Code provisions for
which there are only limited judicial or administrative interpretations. The
determination of various factual matters and circumstances not entirely within
the
11
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<PAGE>
Company's control may affect its ability to qualify and to continue to qualify
as a REIT. Moreover, no assurance can be given that legislation, new
regulations, administrative interpretations or court decisions will not change
the tax laws with respect to qualification as a REIT or the Federal income tax
consequences of such qualification.
To obtain the favorable tax treatment accorded to a REIT under
the Internal Revenue Code, the Company generally will be required each year to
distribute to its stockholders at least 95% of its Company taxable income. The
Company will be subject to income tax on any undistributed Company taxable
income and net capital gain, and to a 4% nondeductible excise tax on the amount,
if any, by which certain distributions paid by it with respect to any calendar
year are less than the sum of 85% of its ordinary income plus 95% of its capital
gain net income for the calendar year, plus 100% of its undistributed income
from prior years.
The Company intends to make distributions to its stockholders to
comply with the distribution provisions of the Internal Revenue Code and to
avoid Federal income taxes and the nondeductible 4% excise tax. A substantial
portion of the Company's income will consist of the income of the Property
Owning Partnerships and the Company's cash flow will consist primarily of
distributions from the Property Owning Partnerships through the Lower Tier
Limited Partnership.
Differences in timing between the receipt of income and the
payment of expenses in arriving at taxable income (of the Company, the Upper
Tier Limited Partnership, the Lower Tier Limited Partnership or the Property
Owning Partnerships), the effect of nondeductible capital expenditures, the
creation of reserves or required debt amortization payments could require the
Company to borrow funds on a short-term or long-term basis to meet the
distribution requirements that are necessary to continue to qualify as a real
estate investment trust. In such circumstances, the Company might need to borrow
funds to avoid adverse tax consequences even if the Company's management
believes that the then prevailing market conditions generally are not favorable
for such borrowings or that such borrowings are not advisable in the absence of
such tax considerations. There is no assurance that the Company will be able to
continue to satisfy the annual distribution requirement so as to qualify as a
REIT.
In order for the Company to qualify as a REIT under the Internal
Revenue Code, not more than fifty percent (50%) in value of its outstanding
stock may be owned, directly or indirectly, by five or fewer individuals
(defined in the Internal Revenue Code to include certain entities) during the
last half of a taxable year (other than the first year)(the "Five or Fewer
Requirement"), and such shares of stock must be beneficially owned by 100 or
more persons during at least 335 days of a taxable year of 12 months (other than
the first year) or during a proportionate part of a shorter taxable year. In
order to protect the Company against the risk of losing its status as a REIT on
account of a concentration of ownership among its stockholders, the Company's
Amended and Restated Articles of Incorporation (the "Charter") subject to
certain exceptions, provides that no Person (as defined in the Charter) may
beneficially own, or be deemed to own by virtue of the attribution provisions of
the Internal Revenue Code, more than 7.9% (the "Ownership Limit") of the
aggregate value of the Company's shares of stock. See "DESCRIPTION OF STOCK OF
THE COMPANY." The restrictions contained in the Charter, however, may not ensure
that the Company will be able to satisfy the Five or Fewer Requirement in all
cases. If the Company fails to satisfy such requirement, the Company's status as
a REIT will terminate, and the Company will not be able to prevent such
termination. If the Company were to fail to qualify as a REIT in any taxable
year, the Company would be subject to Federal income tax (including any
applicable alternative minimum tax) on its taxable income at regular corporate
rates, and would not be allowed a deduction in computing its taxable income for
amounts distributed to its stockholders. Moreover, unless entitled to relief
under certain statutory provisions, the Company also would be ineligible for
qualification as a REIT for the four taxable years following the year during
which qualification was lost. Such disqualification would reduce the net
earnings of the Company available for investment or distribution to its
stockholders due to the additional tax liability of the Company for the years
involved.
12
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<PAGE>
Subject to certain exceptions, the Charter does not permit any
person to acquire or own (either actually or constructively under the applicable
attribution rules of the Code) more than the Ownership Limit. In addition, no
holder may own or acquire (either actually or constructively under the
applicable attribution rules of the Code) shares of any class of the Company's
common stock, par value $10.00 per share (the "Common Stock") if such ownership
or acquisition (i) would cause more than 50% in value of the outstanding Common
Stock to be owned by five or fewer individuals or (ii) would otherwise result in
the Company failing to qualify as a REIT. The Charter provides that the
foregoing ownership restrictions will not apply to persons designated by Apollo
Real Estate Investment Fund, L.P. ("Apollo") provided that the aggregate
percentage by which all individuals permitted, by designation, to exceed the
Ownership Limit will not be greater than 10%.
Any attempted acquisition (actual or constructive) of Common
Stock by a person who, as a result of such acquisition, would violate certain of
the limitations set forth in the Charter will cause the Common Stock purportedly
transferred to be automatically transferred to the trustee of a trust for the
benefit of a charitable beneficiary and such shares will not be entitled to
voting rights or rights to distributions and the transfer resulting in such
violation may be deemed void ab initio. Violations of the ownership limitations
may result in a repurchase by the Company of the shares in excess of the
Ownership Limit.
Distribution Policy
The Company has not yet established a formal distribution policy
and has not made any distributions in respect of its Common Stock. The Company
intends to make periodic distributions to comply with the REIT distribution
requirements. In order to maintain its qualification as a REIT, the Company must
make annual distributions to stockholders of at least 95% of its REIT taxable
income (excluding capital gains).
Competition
Numerous office building properties in New York City compete with
the Properties in attracting tenants to lease space. Some of these competing
properties are newer or better located than the Properties. The amount of space
available in competitive commercial properties in the New York City area could
have a material effect on the Property Owning Partnerships' ability to lease
space in the Properties and on the rents charged.
Indebtedness
On the Effective Date, The Chase Manhattan Bank ("Chase") and
certain other lenders made a loan to the Property Owning Partnerships in the
principal amount of $420,000,000. See "DESCRIPTION OF CHASE FINANCING AND
MORTGAGE." The net proceeds (after fees, expenses and escrows) of the Chase
financing (approximately $398,741,189) were used to make distributions to the
Noteholders (as hereinafter defined) and the Morgan Loan Lenders (as such term
is defined in the Plan) pursuant to the Plan. The Company intends to cause the
Property Owning Partnerships to pay debt service on this indebtedness out of the
Property Owning Partnerships' revenues from their operation of the Properties.
The Company and the Property Owning Partnerships do not intend to incur any
additional indebtedness, other than trade payables incurred in the ordinary
course of business. The Company believes that the cash flow generated by the
Properties will be sufficient to meet the debt service requirements of the Loan
and that it has sufficient cash to fund its working capital needs for the next
twelve months.
Legal Proceedings
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business of the Company, against
or involving the Company, the Partnerships or the Properties.
13
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<PAGE>
Retention of Jurisdiction by Bankruptcy Court
The Bankruptcy Court may retain jurisdiction, and if the
Bankruptcy Court exercises its retained jurisdiction, will have exclusive
jurisdiction, of all matters arising out of, and related to, the Plan, and for,
among other things, the following purposes: (a) 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; (b)
to determine any and all adversary proceedings, applications and contested
matters; (c) to ensure that distributions to holders of Allowed Claims (as
defined in the Plan) are accomplished in accordance with the Plan; (d) to hear
and determine any timely objections to Administrative Expense Claims (as defined
in the Plan) or to proofs of claim and equity interests filed, including to
allow or disallow any Disputed Claim (as defined in the Plan), in whole or in
part; (e) 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;
(f) to issue such orders in aid of execution of the Plan, to the extent
authorized by section 1142 of the Bankruptcy Code; (g) to consider any
modifications of the Plan, to cure any defect or omission, or reconcile any
inconsistency in any order of the Bankruptcy Court, including the Confirmation
Order; (h) to hear and determine all applications for awards of compensation for
services rendered and reimbursement of expenses related to implementation and
consummation of the Plan; (i) to hear and determine disputes arising in
connection with the interpretation, implementation, or enforcement of the Plan;
(j) to hear and determine matters concerning state, local and federal taxes in
accordance with sections 346, 505 and 1146 of the Bankruptcy Code including,
without limitation, the New York Real Property Transfer Gains Tax, Article 31-B
of the New York Tax Law; and (k) to enter a final decree closing the
reorganization cases of the Debtors.
Employees
The Company does not have any employees. The Property Owning
Partnerships assumed the Debtors' labor agreements with respect to union
employees employed at the Properties. The Property Manager/Leasing Agent has
employed such union employees on behalf of the Property Owning Partnerships. The
Property Manager/Leasing Agent offered employment to the non-union employees of
the Properties and will continue the Debtors' non-union employee policies
relating to seniority, vacations and severance.
The Plan provided that pursuant to section 1129(a)(13) of the
Bankruptcy Code, the Property Owning Partnerships or their successors and
assigns will continue to pay all retiree benefits related to the Properties
(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 (as such term is
defined in the Plan) for the duration of the period the Debtors obligated
themselves to provide such benefits. The Company believes that there are no
unfunded retiree benefits liabilities under the pension plans established
pursuant to the labor agreements referred to above.
14
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<PAGE>
SELECTED FINANCIAL DATA
The following unaudited Pro Forma Consolidated Condensed Statements of Income
have been presented as if the transactions described under the heading captioned
"BACKGROUND" had been consummated on January 1, 1995. The unaudited Pro Forma
Consolidated Condensed Statements of Income should be read in conjunction with
the Combined Statements of Revenue and Certain Expenses for the period January
1, 1996 to October 10, 1996 and for the year ended December 31, 1995 included
elsewhere herein. The unaudited Pro Forma Consolidated Condensed Statements of
Income are not necessarily indicative of what actual results of operations of
the Company would have been had these transactions actually occurred as of
January 1, 1995, nor do they purport to represent the results of operations of
the Company for future periods.
<TABLE>
<CAPTION>
For the Period January 1, 1996 to For the Year Ended
October 10, 1996 (Unaudited) December 31, 1995 (Unaudited)
---------------------------------------------------------------------------------------------
Historical Historical
Consolidated Metropolis Consolidated Pro Forma Metropolis
Statement of Pro Forma Realty Trust Statement of Adjustments Realty Trust
Income Adjustments Pro Forma Income Pro Forma
---------------------------------------------------------------------------------------------
($000's Omitted)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental Income $90,993 - $90,993 $121,209 - $121,209
Interest Income 410 - 410 820 - 820
---------- ---------- ---------- ----------
Total Revenue 91,403 - 91,403 122,029 - 122,029
OPERATING EXPENSES
Payroll & Benefits 3,258 - 3,258 4,058 - 4,058
Operating and Maintenance 4,798 - 4,798 7,397 - 7,397
Utilities 5,288 - 5,288 6,685 - 6,685
Management Fees 528 1,070 (A) 1,598 1,163 955 (A) 2,118
Real Estate Taxes 21,299 - 21,299 28,309 - 28,309
General and Administrative 379 - 379 1,359 - 1,359
Bad Debt Expense 1,214 - 1,214 2,015 - 2,015
Insurance Expense 398 - 398 582 - 582
---------- ----------- ---------- ---------- ----------- ----------
Total Operating 37,162 1,070 38,232 51,568 955 52,523
OTHER EXPENSES:
Depreciation and - 15,111 (B) 15,111 - 18,900 (B) 18,900
Amortization
Interest Expense - 26,101 (C) 26,101 - 33,545 (C) 33,545
----------- -------- -------- ----------- -------- --------
Total Other Expenses - 41,212 41,212 - 52,446 52,446
----------- -------- -------- ----------- -------- --------
NET INCOME(LOSS) $54,241 ($42,282) $11,959 $70,461 ($53,401) $17,060
-------- --------- -------- -------- --------- --------
</TABLE>
15
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<PAGE>
<TABLE>
<S> <C>
(A) Reflects the following activity in management fees:
For the period January 1, 1996 to October 10, 1996: Reflects pro forma
adjusted management fees pursuant to the Asset Management Agreement
and the Property Management Agreements
$1,598
Reflects historical management fee (528)
-------------------
$1,070
===================
-------------------
For the year ended December 31, 1995:
Reflects pro forma adjusted management fees pursuant to the Asset
Management Agreement and the Property Management Agreements
$2,118
Reflects historical management fee
(1,163)
-------------------
$955
===================
(B) Reflects the following activity in depreciation and amortization:
For the period January 1, 1996 to October 10, 1996:
Reflects pro forma adjusted depreciation and amortization of the
Company's Properties including capitalized financing costs $15,111
===================
-------------------
For the year ended December 31, 1995:
Reflects pro forma adjusted depreciation and amortization of the
Company's Properties including capitalized financing costs $18,900
===================
-------------------
(C) Reflects the following activity in interest expense:
For the period January 1, 1996 to October 10, 1996:
Reflects interest costs associated with the Secured Notes $26,101
===================
For the year ended December 31, 1995:
Reflects interest costs associated with the Secured Notes $33,545
===================
</TABLE>
16
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<PAGE>
CONSOLIDATED BALANCE SHEET
October 10, 1996
($000's Omitted)
ASSETS
Rental property $656,945
Cash and cash equivalents 38,999
Escrow deposits 21,934
Tenant security deposits 553
Accounts receivable -trade 6,305
Deferred financing costs 10,406
Real estate tax refunds 14,088
Notes receivable 8,849
Prepaid expenses and other assets 4,241
TOTAL ASSETS $ 762,320
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Secured Notes $ 420,000
Accounts payable and accrued expenses 16,121
Unearned revenue 5,646
Security Deposit Payable 553
-----------
Total Liabilities 442,320
Stockholders' Equity
Par value 129,620
Paid in capital 190,380
Total Stockholders' Equity 320,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 762,320
=========
17
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<PAGE>
<TABLE>
PURCHASED PROPERTIES
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
Period January 1, to October 10, 1996 and
For the Years Ended December 31, 1995 and 1994
($000's Omitted)
<CAPTION>
Period Year Ended Year Ended
January 1, December December
to October 31, 1995 31, 1994
10, 1996
-------------- ------------- -------------
<S> <C> <C> <C>
REVENUES:
Rental Income $90,993 $121,209 $132,460
Interest Income 410 820 123
-------------- ------------- -------------
Total Revenues 91,403 122,029 132,583
CERTAIN EXPENSES:
Payroll and Benefits 3,258 4,058 3,711
Operating and Maintenance 4,798 7,397 7,742
Utilities 5,288 6,685 6,414
Management Fees 528 1,163 1,633
Real Estate Taxes 21,299 28,309 28,822
General and Administrative 379 1,359 694
Bad Debt Expense 1,214 2,015 3,342
Insurance Expense 398 582 577
-------------- ------------- -------------
Total Certain Expenses 37,162 51,568 52,935
-------------- ------------- -------------
REVENUES IN EXCESS OF CERTAIN EXPENSES
$54,241 $70,461 $79,648
============== ============= =============
</TABLE>
18
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
The following discussion should be read in conjunction with Selected Financial
Data and the financial statements appearing elsewhere in this Registration
Statement. The Company receives income primarily from rental revenue (including
tenant reimbursements) from the Properties.
Historical - Twelve Months Ended December 31, 1995 and
December 31, 1994
The Company's revenues, which consist of rental income, tenant expense
reimbursements, interest income and other income were $122,029,000 in 1995,
compared to $132,583,000 in 1994, a decrease of $10,554,000 or 8.0%.
Rental income was $121,209,000 in 1995, compared to $132,460,000 in 1994, a
decrease of $11,257,000 or 8.5%. The change is primarily due to lease
expirations during 1995.
Interest income was $820,000 in 1995, compared to $123,000 in 1994, an increase
of $697,000 or 566.7%, reflecting a short term increase in cash and cash
equivalents due to the receipt of a lease termination payment in late 1994.
Payroll & benefits expenses was $4,058,000 in 1995, compared to $3,711,000 in
1994, an increase of $347,000 or 9.4%. Operating and maintenance expense was
$7,397,000, compared to $7,742,000, a decrease of $345,000 or 4.5%. Utilities
expense was $6,685,000 in 1995, compared to $6,414,000, an increase of $271,000
or 4.2%. Management fees were $1,163,000 in 1995 compared to $1,633,000 in 1994,
a decrease of $470,000 or 28.8%, reflecting a reduction in cash receipts of
rental income. Real estate taxes were $28,309,000 in 1995 compared to
$28,822,000, reflecting a reduction of $513,000 or 1.8% primarily caused by a
reduction in the assessed value of the properties. General and administrative
expense was $1,359,000 in 1995 compared to $694,000 in 1994, an increase of
$665,000 or 95.8%. The increase is caused primarily by an increase in legal and
professional fees associated with the litigation of a delinquent tenant lease in
1995. Bad debt expense in 1995 was $2,015,000 compared to $3,342,000 in 1994; a
decrease of $1,327,000 or 39.7%. The decrease is caused primarily by the
resolution of certain delinquent tenant leases in 1995. Insurance expense was
$582,000 in 1995 compared to $577,000 in 1994, an increase of $5,000 or 0.9%.
Historical - Period January 1, 1996 to October 10, 1996
and Twelve months ended December 31, 1995
Variations between the period January 1, 1996 to October 10, 1996 and the twelve
months ended December 31, 1995 are generally, the result of the shorter 1996
period.
Management fees decreased by $482,000 or 41.4% on an annualized basis from the
year end December 31, 1995 to the period ending October 10, 1996. The decrease
is caused by a reduction in the cash receipts of rental income due to the
commencement of significant leases in 1996.
General and administrative expense decreased by $870,000 or 56.2% on an
annualized basis due to higher legal and professional fees associated with the
costly litigation of a delinquent tenant lease in 1995.
19
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<PAGE>
Bad debt expense decreased by $449,000 or 22.2% on an annualized basis due to
the resolution of matterw with certain delinquent tenants in 1995 and 1996.
Liquidity and Capital Resources
At October 10, 1996, the Company had unrestricted cash on hand of approximately
$39,000,000. On October 10, 1996, the Property Owning Partnerships borrowed
$420,000,000 secured by the 1290 Property and the 237 Property. The Loan is
crossed-collaterized by the Properties and prohibits the Property Owning
Partnerships from incurring any additional indebtedness. The Company believes
that cash on hand and existing cash flow from operations are sufficient to
satisfy the Company's foreseeable cash requirements; principally property
operating expenses, real estate taxes, capital expenditures, debt service on the
Loan and distributions necessary to enable the Company to continue to qualify as
a REIT. The Loan matures on October 10, 2001. The Property Owning Partnerships
will be required to refinance the Loan on that date. There can be no assurance,
however, that the Company will be able to refinance the Loan on that date or
what the terms of any refinancing will be.
20
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<PAGE>
DESCRIPTION OF CHASE FINANCING AND MORTGAGE
Credit Agreement
The following description of the Credit Agreement and the Loan
does not purport to be complete and is qualified in its entirety by reference to
the Credit Agreement and other Loan Documents which have been filed as exhibits
to this Registration Statement.
Pursuant to the Credit Agreement, dated as of the Effective Date
(the "Credit Agreement"), among the Property Owning Partnerships, the lenders
listed therein (the "Lenders") and Chase, as agent, the Lenders made a loan (the
"Loan") to the Property Owning Partnerships in the principal amount of
$420,000,000, of which $250,000,000 was allocated to the 1290 Property (the
"1290 Allocated Loan Amount") and $170,000,000 was allocated to the 237 Property
(the "237 Allocated Loan Amount"). The aggregate amount of closing costs and
escrows funded from the Loan was approximately $21,000,000. The Property Owning
Partnerships executed promissory notes (the "Notes") payable to the Lenders
evidencing their obligation to repay the Loan.
The Property Owning Partnerships and Chase entered into an
Interest Rate Exchange Agreement dated as of the Effective Date pursuant to
which the Property Owning Partnerships entered into an interest rate swap
arrangement. Such agreement provides for an effective interest rate on the Loan
of 7.987% per annum for a term of five years from the Effective Date.
The Loan is scheduled to mature on October 10, 2001 (the
"Termination Date"). The Loan requires the Property Owning Partnerships to make
aggregate amortization payments beginning in the second year in the following
amounts: $7,500,000, $7,500,000, $10,000,000 and $15,000,000, respectively, for
years 2 through 5 of the Loan. Such payments for each such year shall be made in
equal monthly installments. However, if any such scheduled payments would cause
the Company to fail to comply with any income test requirements necessary for
the Company to maintain its status as a REIT, then the Property Owning
Partnerships may, in lieu of such payment, post an irrevocable letter of credit
in the amount of such payment. If the Loan is outstanding on the Termination
Date, such outstanding amount will be due and payable (together with accrued
interest thereon) on such date.
Pursuant to the Credit Agreement, the Property Owning
Partnerships entered into lock box agreements for the collection of rents and
established escrow accounts for real estate taxes, insurance and the completion
of the 1290 Property's lobby renovation project, which is expected to be
completed in late December 1996. Commencing 36 months after the Effective Date,
each of the Property Owning Partnerships will also be required to establish a
reserve account pursuant to which each of the Property Owning Partnerships will
deposit 50% of its monthly net cash flow into such reserve account until the
combined balance of the reserve accounts is equal to $15,000,000. The Property
Owning Partnerships may draw upon such reserves to pay for the costs of
re-tenanting space currently demised to tenants with leases expiring from
January 1, 2001 through January 1, 2003. In lieu of any payment to such reserve
account and in substitution for any amounts in such reserve account, the
Property Owning Partnerships may post an irrevocable letter of credit. In
addition, on the Effective Date, reserves were funded for the remaining costs of
completing the renovation of the 1290 Property's lobby and for the remaining
balance of the tenant work allowance under the Warner Communications Inc. lease
at the 1290 Property. Such accounts and letters of credit were pledged as
additional security for the Loan.
The Credit Agreement requires the consent of Chase to the
transfer of any direct or indirect interest in the Property Owning Partnerships,
except with respect to the transfer (pursuant to the terms of the Partnership
Agreements) of all or any portion of the interest owned by JMB LP in the Upper
Tier Limited Partnership or of interests within JMB LP as to which transfer no
consent is required. Transfers of Common
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Stock will be subject to the following restriction: at all times, not less than
30% of the Common Stock of the Company will be held by "Permitted Owners." Chase
has preapproved as Permitted Owners, (i) any investment fund managed by, or
other entity controlled by, (A) Apollo Real Estate Advisors, L.P. (which fund or
entity would include, without limitation, Apollo Real Estate Investment Fund,
L.P.), (B) Whitehall (which fund or entity would include, without limitation,
WSB Realty, LLC), (C) Oaktree (which fund or entity would include, without
limitation, TCW Special Credits Fund and other related funds thereof), or (D)
Tishman Speyer, and (ii) Nyprop, L.L.C., so long as Tishman family members,
Crown family members and/or senior management or senior employees of Tishman
Speyer Crown Equities or Tishman Speyer Properties, Inc. own directly or
indirectly more than 50% of the interests therein. Permitted Owners may also
include such stockholders as are either, in each case as certified to by
Property Owning Partnerships: (A) investors (or entities controlled by
investors) having, as of the date such investor or entity is proposed as a
Permitted Owner, (x) investment management experience in commercial real estate,
(y) a current net worth, as determined in accordance with generally accepted
accounting principles ("GAAP") (exclusive of goodwill) or on an audited tax
basis if GAAP is not available, of no less than $100,000,000, exclusive of its
interest in the Company, and (z) ownership of assets and/or assets under
management with an aggregate fair market value of no less than $200,000,000,
exclusive of its interest in the Company, (B) an investment vehicle advised by
an investment manager or advisor, which investment manager or advisor has, as of
the date such investor or entity is proposed as a Permitted Owner, (x)
investment management experience in commercial real estate, (y) a current net
worth and/or investment vehicles under management having a current net worth, as
determined in accordance with GAAP (exclusive of good will) or on an audited tax
basis if GAAP is not available, of no less than $100,000,000, exclusive of its
interest in the Company, and (z) ownership of assets and/or assets under
management with an aggregate fair market value of no less than $200,000,000,
exclusive of its interest in the Company, (C) a pension fund, account or trust,
commercial bank, investment bank, savings and loan, savings bank or REIT or an
investment vehicle established by such an entity, which pension fund, account or
trust, commercial bank, investment bank, savings and loan, savings bank or REIT
or investment vehicle has, as of the date such investor or entity is proposed as
a Permitted Owner, (y) a current net worth, as determined in accordance with
GAAP (exclusive of good will) or on an audited tax basis if GAAP is not
available, of no less than $100,000,000, exclusive of its interest in the
Company, in the aggregate, and (z) ownership of assets and/or assets under
management with an aggregate fair market value of no less than $200,000,000,
exclusive of its interest in the Company; provided that, in each such case, such
proposed Permitted Owners are approved as a Permitted Owner by Chase and the
Lenders holding Notes evidencing at least 66 2/3% of the aggregate unpaid
principal amount of the Notes held by Lenders which are entitled to vote under
the Credit Agreement (the "Super Required Lenders"), which consent will not be
unreasonably withheld or delayed, and (iv) such other Company stockholders as
are approved as a Permitted Owner by Chase and the Super Required Lenders in
their sole and absolute discretion.
If at any time Permitted Owners own, in the aggregate, less than
30% of the total outstanding shares of Common Stock of the Company, then upon
notice of such event by Chase upon the written direction of the Lenders holding
Notes evidencing at least 51% of the aggregate unpaid principal amount of the
Notes held by Lenders (the "Required Lenders"), the Loan will be accelerated and
the Property Owning Partnerships will be required to pay the outstanding amount
of the Loan along with accrued interest thereon (such event being a "Mandatory
Prepayment Event") on the date that is 180 days after such notice (the
"Mandatory Prepayment Date"). However, if such condition did not occur more than
one time within the 18 month period prior to Chase's notice, then the Loan will
not be accelerated if Permitted Owners do not own less than 30% of the total
outstanding shares of the Company at any time prior to the expiration of such
180 day period following the date of such notice. The Mandatory Prepayment Date
will be extended for a period of 90 days ("Extended Prepayment Date") if the
Property Owning Partnerships obtain a commitment for refinancing the Loan in its
entirety, provided, that such commitment is satisfactory to Chase in its sole
discretion.
An "Event of Default" under the Credit Agreement includes: (i)
failure to pay within three business days after the same is due and telephonic
notice has been delivered (a) any payment of principal or interest on the Loan,
or (b) any reserve amounts, fees or other amounts payable under the Credit
Agreement or
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any other Loan Document (as defined in the Credit Agreement), (ii) occurrence
and continuation of an Event of Default (as defined therein) under the Mortgage,
(iii) failure to maintain certain insurance as provided in the Mortgage, (iv)
sale of the Properties except as permitted under the Credit Agreement, (v)
subject to the right to contest as provided in the Mortgage, failure to cause,
within 45 days after notice thereof, any mechanic's, public improvement,
laborer's or materialmen's lien filed against the Properties to be discharged,
(vi) failure to observe or perform certain covenants (including covenants
relating to certain leases, the Management and Leasing Agreements and the Asset
Management Agreement, and retaining an asset manager and property
manager/leasing agent as described below) and such failure continues for 10
business days after notice is given by Chase, (vii) occurrence of certain events
related to liabilities under ERISA; (viii) the entrance by a court of competent
jurisdiction of one or more final non-appealable judgments or decrees in an
aggregate amount of $5,000,000 or more if such judgments or decrees have not
been stayed, discharged, paid or vacated within 10 days after such entry of
filing, (ix) (a) the institution of an action with respect to any Environmental
Claim (as defined in the Credit Agreement) with respect to the Properties if
such action has not been dismissed within 90 days, (b) any release, emission,
discharge or disposal of a Hazardous Substance (as defined in the Credit
Agreement) that is likely to form the basis of an Environmental Claim, or (c)
failure to obtain any permit, license or other authorization under any laws
relating to the environment necessary for the operation of the Properties; in
the case of any of the events described in (b) and (c), if such event has not
been remedied within 30 days (which period may be extended to 120 days) and in
the case of any of the events described in (a), (b) and (c), if the existence of
such condition has had or is likely to have a Material Adverse Effect; (x) the
occurrence of any event which results in a Material Adverse Effect, as
reasonably determined by Chase; and (xi) other customary loan defaults.
"Material Adverse Effect" as defined in the Credit Agreement means a material
adverse affect upon (i) the business, operations, financial conditions,
properties or assets of either or both of the Property Owning Partnerships, (ii)
the operation or condition of either or both of the Properties, or (iii) the
ability of the Property Owning Partnerships to pay interest and principal on the
Loan when due.
Upon the occurrence of certain bankruptcy-related defaults or the
occurrence of a Mandatory Prepayment Event beyond the Mandatory Prepayment Date
or Extended Prepayment Date, as applicable, the unpaid principal amount of, and
any and all accrued interest on the Loan, and any other fees or obligations
under the Credit Agreement will automatically become immediately due and
payable. Upon the occurrence and during the continuance of any other Event of
Default, Chase may and, upon the written direction of the Required Lenders will,
give notice to the Property Owning Partnerships declaring the entire outstanding
principal balance of the Loan, together with accrued interest thereon and any
and all accrued fees and other obligations, immediately due and payable. To the
extent permitted by law, any overdue payment of principal or interest on the
Loan will bear interest at a rate equal to the 3% plus the rate per annum equal
to the higher of (x) the rate of interest publicly announced by Chase in New
York City from time to time as its prime rate, and (y) the sum of 1.565% plus
the Federal Funds Rate, as published by the Federal Reserve Bank.
Under the Credit Agreement, the Property Owning Partnerships are
required to cause the Company's transfer agent to provide to Chase, monthly, a
list of the then current stockholders of the Company, indicating, with respect
to each stockholder, the number of shares of Common Stock owned by it.
The Property Owning Partnerships covenant in the Credit Agreement
that they will not, among other things, (i) create, assume or suffer to exist
any lien on the Properties or any other assets owned or acquired by the Property
Owning Partnerships or the GP Corps, except for certain permitted liens, (ii)
incur, create or assume any debt for borrowed money other than unsecured loans
from partners, (iii) liquidate, windup or dissolve (or suffer any liquidation or
dissolution), discontinue its business or otherwise dispose of, in one
transaction or a series of transactions, all or any substantial part of its
business or property, (iv) amend their partnership agreements or other
organizational documents in any "material manner" nor permit the partnership
agreements of the Lower Tier Limited Partnership or the Upper Tier Limited
Partnership nor the organizational documents of the Company to be amended in any
"material manner" without the consent of Chase, (v) subject to certain
exceptions, permit any transfer of any direct or indirect beneficial ownership
interest in (a) either Property Owning Partnership, (b) either GP Corp., (c) any
of the partners of the Upper Tier Limited
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Partnership or (d) the Company, for such entity as such entity existed as of the
Effective Date, without the consent of the Super Required Lenders
(notwithstanding the foregoing, no consent will be required to transfer (A) all
or a portion of the limited partnership interests of the Upper Tier Limited
Partnership owned by JMB LP or any interest therein, (B) any stockholder
interests in the Company (subject to the requirement that Permitted Owners own
at least 30% of the total outstanding shares of Common Stock of the Company) or
(C) the interests of the Upper Tier Limited Partnership in the Lower Tier
Limited Partnership as provided in the Lower Tier Partnership Agreement or a
similar transfer of such interest at the direction of the Company), (vi)
undertake any "major alterations" of the Properties without the consent of
Chase, and with respect to any "major alteration" in which the aggregate cost
equals or exceeds $10,000,000, the consent of the Required Lenders, (vii) enter
into, renew, terminate or amend in any material respect any lease at a Property
demising in the aggregate of all such leases with a tenant no less than 40,000
rentable square feet without obtaining the prior written consent of the Required
Lenders, (viii) retain any property manager or leasing agent for the Properties
other than Tishman Speyer or any asset manager for the Properties other than 970
Management, LLC without the written consent of the Required Lenders; (ix) modify
or renew (other than in accordance with the terms thereof) the Management and
Leasing Agreements and the Asset Management Agreement without the prior written
consent of Chase if such modification or renewal would cause a Material Adverse
Effect, and (x) other customary loan affirmative and negative covenants.
"Material Manner" as defined in the Credit Agreement means any amendment or
modification to any such partnership agreement or other organizational document
which would have a Material Adverse Effect. "Major Alteration" as defined in the
Credit Agreement means an Alteration or series of Alterations which affects the
structural portion, the building systems, the lobby, the facade, the plaza or
the elevators of either Property excluding (i) normal and customary tenant work
primarily within the demised space under the Leases, (ii) repair and
maintenance, (iii) replacements of equal or greater utility for building systems
and equipment only, (iv) work which is decorative or cosmetic in nature and (v)
work on the 1290 Property lobby. "Alteration" as defined in the Mortgage means
any alteration, improvement, demolition or removal of the Properties.
The Property Owning Partnerships may, upon at least 5 days notice
to Chase, prepay without premium or penalty, the Loan in whole at any time, or
from time to time in part, in amounts aggregating at least $500,000. The
Property Owning Partnerships may obtain the release (in whole, but not in part)
of one of the Properties from the lien of the Mortgage upon satisfaction of
certain conditions which include the following: (i) immediately prior to and
after giving effect to the proposed release, no Event of Default or Mandatory
Prepayment Event has occurred or is continuing, (ii) not later than 12:00 Noon
New York City time on the date of such release, the Property Owning Partnerships
deliver to Chase the applicable "Release Price" together with all interest
accrued and unpaid thereon, (iii) not later than 15 business days prior to the
date of such release, the Property Owning Partnerships deliver a notice to Chase
specifying (a) the Property to be released, (b) the Release Price, (c) the date
of the release (the "Release Date"), (d) an officer's certificate certifying
that the conditions to such release specified under the Credit Agreement have
been satisfied, and (e) all other documentation required to be delivered by the
Credit Agreement to Chase to effect the release together with certain officer's
certificates, and (iv) the Property Owning Partnerships deliver to Chase a paid
endorsement to the title policy confirming (in Chase's sole satisfaction) that
the release of the Released Property will not affect the lien of the Mortgage on
the Property which is not released.
"Release Price" as defined in the Credit Agreement means as of
the applicable Release Date (i) with respect to the 237 Property, an amount
equal to 1.10 times the 237 Allocated Loan Amount, less amortization applied to
that portion of the Loan, and (ii) with respect to the 1290 Property, an amount
equal to 1.10 times the 1290 Allocated Loan Amount, less amortization applied to
that portion of the Loan.
In the event the Released Property is the 1290 Property, in
addition to releasing the lien of the Mortgage and the Assignment of Leases with
respect to the 1290 Property, Chase will also release (i) the 1290 Property
Owning Partnership with respect to the Notes and the other Loan Documents other
than matters relating to the 1290 Property stated in the Credit Agreement and
other Loan Documents to survive the repayment of the Loan, (ii) the lien of the
note pledge with respect to the Robinson Silverman Note (and Chase
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<PAGE>
will return the Robinson Silverman Note to the 1290 Property Owning
Partnership), (iii) any funds held in the Expiring Lease Costs Reserve
Sub-Account (as defined in the Credit Agreement) (or letters of credit, if any,
held in lieu of such funds) in excess of $6,000,000, other than any Reserve
Portion (as such term is defined in the Credit Agreement) to be held in
accordance with Section 2.9(e) of the Credit Agreement and (iv) any funds held
in the Imposition Sub-Account and the Insurance Sub-Account (as such terms are
defined in the Cash Collateral Agreement) relating to the 1290 Property.
In the event the Released Property is the 237 Property, in
addition to releasing the lien of the Mortgage and the Assignment of Leases with
respect to the 237 Property, Chase shall also release (i) the 237 Property
Owning Partnership with respect to the Notes and the other Loan Documents other
than matters relating to the 237 Property stated in the Credit Agreement and the
other Loan Documents to survive the repayment of the Loan, (ii) the lien of the
note pledge with respect to the Warburg Pincus Note (and Chase will return the
Warburg Pincus Note to the 237 Property Owning Partnership), (iii) any funds
held in the Expiring Lease Costs Reserve Sub-Account (or letters of credit, if
any, held in lieu of such funds) in excess of $9,000,000 and (iv) any funds held
in the Imposition Sub-Account and the Insurance Sub-Account relating to the 237
Property.
In the event of a release of a Property, the Release Price will
be applied as follows: (i) notwithstanding anything to the contrary contained in
the Credit Agreement, in the event the 1290 Property is the Property that is
released from the lien of the Mortgage, Chase with the consent of the Required
Lenders will have the option, exercisable on the date of such release, to
require that up to $10,000,000 of the Release Price (such amount being the
"Reserve Portion") be deposited into the Expiring Lease Costs Reserve
Sub-Account of the Cash Collateral Account as additional collateral for the
Loan, to be disbursed pursuant to the terms of the Cash Collateral Agreement (as
defined in the Credit Agreement) (notwithstanding the foregoing, in the event
(A) such release is consummated either (x) prior to the third anniversary of the
Effective Date or (y) subsequent to the date that the Expiring Lease Costs (as
such term is defined in the Credit Agreement) have been fully funded (as
determined by Chase in its sole discretion) or (B) at any time after such
release, the Expiring Lease Costs have been fully funded (as determined by Chase
in its sole discretion), provided no Event of Default has occurred and is then
continuing, the remaining Reserve Portion will be applied to the then
outstanding principal amount of the Loan); and (ii) provided no Event of Default
has occurred and is then continuing, the remaining Release Price (less the
Reserve Portion, if any) will be applied by Chase to reduce the outstanding
principal amount of the Loan. Any amounts so prepaid may not be reborrowed or
reinstated.
Mortgage Modification, Restatement and Security Agreement
The payment and performance by the Property Owning Partnerships
of all covenants, conditions, liabilities and obligations contained in the Note,
the Credit Agreement and in each of the other loan documents are secured by the
Mortgage Modification, Restatement and Security Agreement, dated as of the
Effective Date, made by the Property Owning Partnerships to Chase, in its
capacity as agent for the Lenders (the "Mortgage"). The Mortgage grants the
Lenders a security interest in, among other things, (i) the land and
improvements on the Properties, (ii) rents, leases, and security deposits, (iii)
all personal and intangible property and equipment utilized in connection with
the Properties, (iv) all rights and interests of the Property Owning
Partnerships in and under (a) all contracts, including the Management and
Leasing Agreements, the Asset Management Agreement and other agreements relating
to the Properties, (b) all consents, licenses, warranties, guaranties and
building and other permits required or useful for the construction, occupancy
and operation of the Properties, and (c) all plans and specifications,
engineering reports, maps, surveys and any other reports, exhibits or plans and
specifications used in connection with the construction, operation or
maintenance of the Properties, (v) the Property Owning Partnerships' interests
in the Tenant Notes, and (vi) the Property Owning Partnerships' right, title and
interest in all proceeds, both cash and non-cash, of the foregoing.
An "Event of Default" under the Mortgage includes (i) failure to
pay any amounts payable under the Mortgage where such failure continues for 3
business days after Chase delivers notice thereof,
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(ii) cancellation of the insurance required under the Mortgage without
substitution of replacement coverage meeting the requirements set forth therein,
(iii) subject to the right to contest (as provided in the Mortgage), failure to
pay all Impositions (as defined in the Mortgage, such term includes taxes and
all other governmental charges) prior to the date such Impositions become
delinquent or late charges may be imposed thereon, (iv) subject to the right to
contest (as provided in the Mortgage), failure to (a) keep the Properties and
the equipment located on the Properties free from all liens (other than the
Mortgage and certain permitted liens), (b) pay when due all claims and demands
of mechanics, materialmen, laborers and others which, if unpaid, might result in
or permit the creation of a lien on the Properties and equipment, and (c) cause
the discharge of all liens imposed on or against the Property and equipment
within 45 days after the Property Owning Partnership receives notice thereof,
(v) except as permitted under the Credit Agreement and the Mortgage, (a)
transfer of the Properties, (b) transfer of ownership interest of either
Property Owning Partnership, either GP Corp, any of the partners of the Upper
Tier Limited Partnership or Lower Tier Limited Partnership, or the Company as
the same exists as of the Effective Date without the consent of the Super
Required Lenders or (c) compliance with Sections 5.9 and 5.10 of the Credit
Agreement, (vi) an Event of Default under the Credit Agreement or any other Loan
Documents, (vii) the occurrence of any other default in the performance, or
breach, of any material covenant, representation or warranty of either Property
Owning Partnership or in any other Loan Document and the continuance of such
default or breach for 30 days (which period may be extended to 120 days) after
written notice thereof from Chase, and (viii) other customary mortgage defaults.
Upon the occurrence and continuation of an Event of Default under
the Mortgage, Chase may, among other things, (i) subject to any applicable
provisions of the Notes, the Credit Agreement and the other Loan Documents,
declare all or any portion of the unpaid principal balance of the Loan, together
with all accrued and unpaid interest, immediately payable, (ii) enter into all
or any part of the Properties and may operate and control the Properties, (iii)
sell the Properties, to the extent permitted by law, or (iv) institute
proceedings for the complete or partial foreclosure of the Mortgage.
The Property Owning Partnerships covenant in the Mortgage that
they will, among other things, keep in full force and effect insurance of the
type and with the minimum limits as set forth in the Mortgage. The Property
Owning Partnerships covenant in the Mortgage that they will not, among other
things, (i) partition the Properties, (ii) transfer all or a portion of the
Properties other than in accordance with the terms of the Credit Agreement and
the Mortgage, (iii) file a petition for voluntary bankruptcy, (iv) dissolve,
terminate, liquidate or consolidate with another person, or (v) engage in any
activity that would subject them to ERISA, other than with respect to plans or
benefit arrangements sponsored or contributed to on the Effective Date.
DESCRIPTION OF THE LIMITED PARTNERSHIP AGREEMENTS OF THE PARTNERSHIPS
The certificate of limited partnership of the Upper Tier Limited
Partnership was filed with the Office of the Secretary of State of the State of
Delaware on October 7, 1996. Prior to the merger of the Debtors into the Upper
Tier Limited Partnership, O&Y NY Building Corp. ("Building Corp."), an affiliate
of O&Y that held equity interests in the Debtors, as general partner, and
237/1290 Upper Tier GP Corp., a Delaware corporation and wholly owned subsidiary
of the Company (the "Upper Tier GP Corp.") pursuant to an initial limited
partnership agreement and an initial certificate of limited partnership. After
the merger such initial agreement was amended to provide that all items of
income, gain, loss or deduction attributable to the assumption or reduction of
the 237 Excess Amount (as hereinafter defined) and the 1290 Excess Amount
occurring on or about the date of such amendment will be allocated solely to O&Y
Equity Company L.P., an affiliate of O&Y that held equity interests in the
Debtors ("Equityco"), and Building Corp. in such manner as they shall agree (as
hereinafter defined) (See "BACKGROUND -- Summary of the Plan").
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The certificate of limited partnership of the Lower Tier Limited
Partnership was filed with the office of the Secretary of State of the State of
Delaware on September 30, 1996. On the Effective Date, the limited partnership
agreement of the Lower Tier Limited Partnership (the "Lower Tier Limited
Partnership Agreement") became effective, with the Company holding a 95%
partnership interest, as general partner, and the Upper Tier Limited Partnership
holding a 5% partnership interest, as limited partner, therein.
The certificates of limited partnership of the Property Owning
Partnerships were filed with the Office of the Secretary of State of the State
of Delaware on September 30, 1996. On the Effective Date, the limited
partnership agreements of the Property Owning Partnerships (the "Property Owning
Partnership Agreements") became effective, with the Lower Tier Limited
Partnership holding a 99% interest, as limited partner, and each of the GP Corps
holding a 1% interest, as general partner, in the respective Property Owning
Partnership.
The Lower Tier Limited Partnership Agreement
The description of the Lower Tier Limited Partnership Agreement
set forth below does not purport to be complete and is qualified in its entirety
by reference to the Lower Tier Limited Partnership Agreement, a copy of which
has been filed as an exhibit to this Registration Statement.
Pursuant to the Plan and the various Contribution Agreements, on
the Effective Date, (i) the Lower Tier Limited Partnership received the
Contributed Debt (as hereinafter defined) as a capital contribution from the
Company, as general partner, and as a capital contribution from the Debtors, as
limited partners, the Properties and certain related personalty, subject to the
lien of the Indenture (as hereinafter defined), were transferred at the
direction of the Lower Tier Limited Partnership to the Property Owning
Partnerships. The Lower Tier Limited Partnership Agreement does not require
either the Upper Tier Limited Partnership, as limited partner, or the Company,
as general partner, to make additional capital contributions. The Company has
overall management responsibilities and powers, as the general partner, of the
Lower Tier Limited Partnership. The Company, as general partner, is required to
use its best efforts to cause the Lower Tier Limited Partnership to make
adequate distributions to the Company in order to enable the Company to pay
dividends so as to satisfy the Internal Revenue Code requirements for qualifying
as a REIT. See "BUSINESS AND PROPERTIES -- Qualification as a REIT. "
The Lower Tier Limited Partnership Agreement provides that the
aggregate Available cash (as defined in the Lower Tier Limited Partnership
Agreement), from distributions from the Property Owning Partnerships will be
distributed no less frequently than quarterly to the partners of the Lower Tier
Limited Partnership as follows:
(i) 100% to the Company, as general partner, until it has
received, together with all prior distributions pursuant to this clause and
clauses (i) and (iv) of the succeeding paragraph, aggregate distributions equal
to a cumulative compounded return, commencing on the Effective Date (or with
respect to capital contributions made after the Effective Date, the date of such
capital contributions), of 12% per annum on the sum of (x) the Contributed Debt,
(y) any additional capital contributions made by the Company, as general
partner, to the Lower Tier Limited Partnership, and (z) a $100,000,000
preference amount (the "Preference Amount") (the amounts in (x), (y) and (z), as
reduced by distributions in respect of such amounts referred to herein as the
"Adjusted GP Contribution");
(ii) 100% to the Company, as general partner, until it has
received in total, taking into account distributions made to it from Available
cash and sale or refinancing proceeds, the Adjusted GP Contribution; and
(iii) the balance, 95% to the Company, as general partner, and 5%
to the Upper Tier Limited Partnership.
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Net proceeds from any distributions from the Property Owning
Partnerships related to any sale, refinancing, condemnation or insurance
recovery of the Properties or any loan made to the Partnership will be
distributed by the Lower Tier Limited Partnership to its partners as follows:
(i) 100% to the Company, as general partner, until it has
received, together with all prior distributions pursuant to this clause (i) and
clause (i) of the immediately preceding paragraph, aggregate distributions equal
to the product of (x) 0.5 and (y) a 12% per annum cumulative compounded return
on the Adjusted GP Contribution from the Effective Date (or with respect to
capital contributions made after the Effective Date, the date of such capital
contributions);
(ii) 100% to the Company, as general partner, until it has
received, together with all prior distributions pursuant to this clause (ii) and
clause (ii) of the immediately preceding paragraph, aggregate distributions
equal to the product of (x) .75 and (y) the Adjusted GP Contribution;
(iii) from the next $500,000, 90% to the Upper Tier Limited
Partnership and 10% to the Company, as general partner;
(iv) 100% to the Company, as general partner, until it has
received, together with all prior distributions pursuant to this clause (iv),
clause (i) of this paragraph and clause (i) of the immediately preceding
paragraph, a 12% per annum cumulative compounded return on the Adjusted GP
Contribution commencing with respect to each capital contribution, on the date
such Capital Contribution was made;
(v) 100% to the Company, as general partner, until it has
received, together with all prior distributions pursuant to this clause (v),
clause (ii) of this paragraph and clause (ii) of the immediately preceding
paragraph, aggregate distributions equal to the Adjusted GP Contribution; and
(vi) 95% to the Company, as general partner, and 5% to the Upper
Tier Limited Partnership.
The Lower Tier Limited Partnership Agreement provides that the
Upper Tier Limited Partnership may transfer its interests in the Lower Tier
Limited Partnership, as limited partner, only with the written consent of the
Company, which consent may be withheld in the sole and absolute discretion of
the Company. Any attempted or actual transfer by the Upper Tier Limited
Partnership to any person without the approval of the Company will be null and
void ab initio and of no force and effect.
The Company has the right (the "Purchase Right"), exercisable on
or after the earliest of (i) the Default Date (as hereinafter defined), (ii)
January 2, 2001 and (iii) the date on which JMB LP no longer holds any
partnership interest in the Upper Tier Limited Partnership, to acquire or cause
its designee to acquire the partnership interest of the Upper Tier Limited
Partnership, as limited partner, in the Lower Tier Limited Partnership, for an
amount (the "Upper Tier Partnership Purchase Price") equal to the greater of (x)
the amount that would be distributed to the Upper Tier Limited Partnership
(after taking into account existing partnership debt and the distribution
priorities of the Company, as general partner) if the Properties held by the
Property Owning Partnerships were sold (and the proceeds therefrom distributed
in accordance with the Lower Tier Limited Partnership Agreement and the Property
Owning Partnership Agreements) for an amount equal to (a) the product of two
times the Properties' net operating income (excluding extraordinary items) for
the period January 1, 2000 through June 30, 2000, (b) divided by 0.12, and (y)
$100.
The Upper Tier Limited Partnership has the right, exercisable at
any time after the Effective Date, to require the Company to acquire the
partnership interests of the Upper Tier Limited Partnership in the Lower Tier
Limited Partnership (the "Put Right") based on the same formula described in the
immediately preceding paragraph, except that the Properties' net operating
income shall be for the immediately preceding calendar year and such amount
shall not be multiplied by two (the "Put Price"). Pursuant to the Upper Tier
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Limited Partnership Agreement, JMB LP has the right (the "JMB Put Right") to
cause the Upper Tier Limited Partnership to exercise the Put Right. In each
case, JMB LP will be responsible for any transfer taxes, gains taxes and other
similar costs incurred in connection with the exercise of such rights and also
including any additional transfer taxes and transfer gains taxes which would be
retroactively assessed with respect to the transfer of the Properties to the
Property Owning Partnerships pursuant to the Plan by reason of the exercise of
such rights.
Pursuant to the Upper Tier Limited Partnership Agreement, JMB LP
covenants that neither it nor any of its affiliates will intentionally interfere
with (i) the exercise by the Company of the Purchase Right, (ii) any
disposition, mortgage, pledge, encumbrance, hypothecation or exchange (a) of the
LP Interest by the Upper Tier Limited Partnership, (b) of the Lower Tier Limited
Partnership's interest in the Property Owning Partnerships by the Lower Tier
Limited Partnership or (c) of the Properties by either Property Owning
Partnership or (iii) the merger or other combination of the Lower Tier Limited
Partnership or the Property Owning Partnerships with or into another entity, in
each case, in accordance with the terms of the Upper Tier Limited Partnership
Agreement, the Lower Tier Limited Partnership Agreement or the Property Owning
Partnership Agreements.
Pursuant to the Lower Tier Limited Partnership Agreement, JMB LP
delivered to the Company (i) stripped United States Treasury Notes with a face
value of $10,175,000 and a maturity date of February 15, 2001 (the "JMB
Collateral"), and (ii) an Indemnity Agreement (the "JMB Indemnity") from
JMB/Manhattan Associates, Ltd., Carlyle Real Estate Limited Partnership - XIII
and Carlyle Real Estate Limited Partnership - XIV, the constituent partners of
JMB LP (collectively, the "JMB Indemnitors"). If JMB LP breaches its obligation
not to engage in the acts described in the preceding paragraph beyond the
expiration of applicable notice and cure periods, (i) the Company may liquidate
the JMB Collateral and distribute such proceeds free and clear of all
encumbrances, and (ii) the JMB Indemnitors will be obligated to pay the Company
an amount equal to $25,000,000 less any amounts realized by the Company upon
liquidation of the JMB Collateral. There can be no assurance that the JMB
Indemnitors will have sufficient funds available to make such payment if
required to do so. Furthermore, the Company's recourse under the JMB Indemnity
is limited to the assets of the JMB Indemnitors and the Company will not have
recourse against the partners of the JMB Indemnitors.
After the expiration of the Preference Period under section 547
of the Bankruptcy Code and upon the completion of (i) any transfer of
partnership interests resulting from JMB LP's exercise of the JMB Put Right, the
Upper Tier Limited Partnership's exercise of the Put Right or the Company's
exercise of the Purchase Right, (ii) a permitted sale of the Properties, or
(iii) a permitted transfer of the Lower Tier Limited Partnership's partnership
interest in the Property Owning Partnerships, the Company will release its
security interest in and return the JMB Collateral to JMB LP provided, however,
that JMB LP did not interfere with the completion of such transfers or sale.
The Lower Tier Limited Partnership Agreement provides that,
subject to certain limitations described below, the Company, as general partner,
has full power and authority to do all things deemed necessary or desirable by
it to conduct the business of the Lower Tier Limited Partnership, including,
without limitation, (i) the lending or borrowing of money, (ii) the acquisition
or disposition of any assets of the Lower Tier Limited Partnership, and (iii)
the issuance of additional partnership interests to additional limited partners.
The Lower Tier Limited Partnership Agreement also provides that the Company may
transfer all or any part of its partnership interest, as general partner, in its
sole discretion and without the consent of the limited partners.
The Lower Tier Limited Partnership Agreement also provides that
until the earliest of (i) January 2, 2001, (ii) the date on which the Upper Tier
Limited Partnership no longer holds partnership interests in the Lower Tier
Limited Partnership as a result of the authorized exercise of the Purchase Right
or the Put Right or as otherwise permitted pursuant to the Upper Tier Limited
Partnership Agreement, (iii) the date on which the Lower Tier Limited
Partnership no longer holds partnership interests in the Property Owning
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Partnerships to the extent permitted by the Lower Tier Limited Partnership
Agreement, (iv) the date on which JMB LP no longer holds a partnership interest
in the Upper Tier Limited Partnership as a result of the authorized exercise of
the JMB Put Right or as otherwise permitted pursuant to the Upper Tier Limited
Partnership Agreement, and (v) the Default Date (the earliest such date, the
"Approval Right Termination Date"), the Company, as general partner, will not,
without the prior written consent of the Upper Tier Limited Partnership (which,
in turn, will be subject to the prior written consent of JMB LP), cause or
permit (to the extent within the Company's reasonable control) any Adverse
Transaction, provided, however, that the Company will be under no obligation to
commence litigation or to incur any expense (unless JMB LP funds such expense)
in order to avoid or prevent an Adverse Transaction. Under the Upper Tier
Limited Partnership Agreement, the Lower Tier Limited Partnership Agreement and
the Property Owning Partnership Agreement, "Adverse Transaction" means (i) any
sale, disposition, transfer or exchange of the Properties (or the interests of
the Lower Tier Limited Partnership in the Property Owning Partnerships and the
interests of the Upper Tier Limited Partnership in the Lower Tier Limited
Partnership), (ii) any release, discharge or reduction of the non-recourse
indebtedness of the Property Owning Partnerships (other than through payment of
scheduled amortization, actions taken by a secured lender, such as application
of insurance proceeds or condemnation awards or the exercise of remedies, or
where the released indebtedness is concurrently being replaced with other
non-recourse indebtedness complying with the last sentence of this paragraph),
(iii) any distribution of the applicable Partnership assets (other than the
distribution of cash and other distributions by the Upper Tier Limited
Partnership, the Lower Tier Limited Partnership and the Property Owning
Partnerships, in each case, in the ordinary course of business), or (iv) any
other transaction or agreement to which any of the Upper Tier Limited
Partnership, the Lower Tier Limited Partnership or the Property Owning
Partnerships is a party, if as a result of any such transaction or agreement
described in (i), (ii), (iii) or (iv), JMB LP would be required to recognize a
material amount of taxable income or gain prior to the Approval Right
Termination Date. Adverse Transactions specifically exclude (A) Partnership
income derived in the ordinary course of the Upper Tier Limited Partnership's,
the Lower Tier Limited Partnership's or the Property Owning Partnerships'
business, (B) non-recourse refinancing of the Properties on commercially
reasonable terms in an aggregate amount equal to not less than the lesser of
$325,000,000 and the amortized balance of the then existing non-recourse
financing encumbering the Properties (utilizing an amortization schedule no
shorter than twenty (20) years), (C) payment of amortization on non-recourse
financing encumbering the Properties, provided that the outstanding balance of
such financing is not reduced below $325,000,000, in the aggregate, as such
amount would be reduced between the Effective Date and the Approval Right
Termination Date based on a twenty (20) year amortization schedule and except as
otherwise provided in clause (ii) above, (D) the consummation of the
transactions contemplated by the Plan (i.e., the property transfers and the
issuance of the securities provided therein), (E) a transfer of the Properties
pursuant to an involuntary foreclosure or similar action arising from a default
by the Property Owning Partnerships with respect to their obligations under
their indebtedness, and (F) a transfer of the Properties pursuant to a
consensual foreclosure or similar action (including, without limitation, a deed
in lieu of foreclosure) arising from a default by the Property Owning
Partnerships with respect to their obligations under their indebtedness.
The Upper Tier Limited Partnership Agreement
The descriptions of the Upper Tier Limited Partnership Agreement
set forth below does not purport to be complete and is qualified in its entirety
by reference to the Upper Tier Limited Partnership Agreement, a copy of which
has been filed as an exhibit to this Registration Statement.
Initially, Building Corp., as general partner, and Upper Tier GP
Corp., as limited partner, formed the Upper Tier Limited Partnership pursuant to
an initial limited partnership agreement and an initial certificate of limited
partnership. After the merger of 237 LLC and 1290 LLC into the Upper Tier
Limited Partnership, such initial agreement was amended to provide that all
items of income, gain, loss or deduction attributable to the assumption or
reduction of the 237 Excess Amount and the 1290 Excess Amount occurring on or
about the date of such amendment will be allocated solely to Equityco and
Building Corp. in such manner as they shall agree. After consummation of the
transactions contemplated by the Redemption and Substitution
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<PAGE>
Agreement (as hereinafter defined), the limited partnership agreement was
amended and restated in its entirety (as so amended and restated, the "Upper
Tier Limited Partnership Agreement").
Pursuant to the Upper Tier Limited Partnership Agreement, all
distributions of net cash flow will be distributed in accordance with the
respective ownership interests of the partners, except that all distributions
payable to JMB LP will be applied first to the prepayment of the JMB Notes and
will be distributed to the Company or its designee as participant in the JMB
Notes with any remainder payable to the other participant therein (subject to
the JMB Note Participation Agreement). See "BUSINESS AND PROPERTIES --Other
Assets -- JMB Notes" for a description of the JMB Notes. Until the Approval
Right Termination Date, the Upper Tier GP Corp. as general partner of the Upper
Tier Limited Partnership, may not, on behalf of the Upper Tier Limited
Partnership as a limited partner of the Lower Tier Limited Partnership, take the
following actions without the consent of JMB LP: (i) consent to any Adverse
Transaction pursuant to the Lower Tier Limited Partnership Agreement and the
Property Owning Partnership Agreements, (ii) exercise the Upper Tier Limited
Partnership's Put Right, (iii) effect a sale of the Upper Tier Limited
Partnership's interest in the Lower Tier Limited Partnership if such transaction
would constitute an Adverse Transaction, (iv) consent to certain amendments of
the Lower Tier Limited Partnership Agreement or the Property Owning Partnership
Agreements, (v) consent to the dissolution of the Lower Tier Limited Partnership
or the Property Owning Partnerships pursuant to the Lower Tier Limited
Partnership Agreement, or (vi) cause or permit (to the extent within the Upper
Tier GP Corp's reasonable control) any Adverse Transaction; provided, however,
that the Upper Tier GP Corp. will be under no obligation to commence litigation
or to incur any expense (unless JMB LP funds such expense) in order to avoid or
prevent an Adverse Transaction.
Subject to the provisions described below, the Upper Tier Limited
Partnership Agreement provides that limited partners may not transfer their
interests in the Upper Tier Limited Partnership without the prior written
consent of the Upper Tier GP Corp. Such consent may be granted or withheld by
the Upper Tier GP Corp. in its sole discretion. Notwithstanding the foregoing,
at any time after the Effective Date JMB LP will have the right to cause the
Upper Tier GP Corp. to purchase or designate an entity to purchase JMB LP's
partnership interest, as a limited partner, in the Upper Tier Limited
Partnership, for a cash amount calculated in the same manner as the Put Price.
The Upper Tier Limited Partnership Agreement also provides that the Upper Tier
GP Corp. will, at the request of JMB LP, cause the Upper Tier Limited
Partnership to exercise its right under the Lower Tier Limited Partnership
Agreement to cause the Company to purchase or designate an entity to purchase
the Upper Tier Limited Partnership's interest in the Lower Tier Limited
Partnership. JMB LP will pay all transfer taxes, gains taxes and similar costs
incurred in connection with the exercise of such rights, including any
additional transfer taxes and transfer gains taxes which would be retroactively
assessed with respect to the transfer of the Properties by the Debtors to the
Property Owning Partnerships pursuant to the Plan by reason of the exercise of
such rights.
Property Owning Partnership Agreements
The description of the Property Owning Partnership Agreements set
forth below does not purport to be complete and is qualified in its entirety by
reference to the Property Owning Partnership Agreements, copies of which have
been filed as exhibits to this Registration Statement.
Pursuant to the Debt Contribution Agreement and the Property
Contribution Agreements (as such terms are hereinafter defined), on the
Effective Date (i) the Lower Tier Limited Partnership contributed to the 1290
Property Owning Partnership $160,059,084 of the Contributed Debt and the 1290
Property as a capital contribution in exchange for a 99% partnership interest,
as limited partner, and (ii) the Lower Tier Limited Partnership contributed to
the 237 Property Owning Partnership $119,940,916 of the Contributed Debt and the
237 Property as a capital contribution in exchange for a 99% partnership
interest, as limited partner. The Property Owning Partnership Agreements do not
require either the Lower Tier Limited Partnership, as limited partner, or the GP
Corps, as general partner, to make additional capital contributions. The GP
Corps, as general partners of the Property Owning Partnerships are required to
use their best efforts to cause the Property
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<PAGE>
Owning Partnership to make adequate distributions to the Lower Tier Limited
Partnership so that the Lower Tier Limited Partnership may, in turn, make
adequate distributions to the Company in order to enable the Company to pay
dividends so as to satisfy the Internal Revenue Code requirements for qualifying
as a REIT.
See "BUSINESS AND PROPERTIES -- Qualification as a REIT".
The Property Owning Partnership Agreements provide that, except
with respect to Adverse Transactions, in exercising its authority as general
partners, the GP Corps may, but will be under no obligation to, take into
account the tax consequences to any limited partners (and any partners thereof)
of any action taken by the GP Corps, provided, that, if the GP Corps decide to
refinance any outstanding indebtedness of the Property Owning Partnerships, the
GP Corps will, until the Approval Right Termination Date, use commercially
reasonable efforts to structure such refinancing in a manner that allows all of
the Property Owning Partnership's non-recourse indebtedness to be included in
the tax basis of the limited partners' partnership interests.
Pursuant to the Property Owning Partnership Agreements, all
distributions of net cash flow will be distributed in accordance with the
respective ownership interests of the partners and will be made from time to
time as determined by the GP Corps but in any event not less frequently than
quarterly. The Property Owning Partnership Agreements may not be amended without
the written consent of both the general partner and limited partner. Until the
Approval Right Termination Date, the GP Corps, as general partners of the
Property Owning Partnerships, may not, without the written consent of the Lower
Tier Limited Partnership, cause or permit (to the extent within the GP Corps'
reasonable control) any Adverse Transaction, provided, however, that the GP
Corps will be under no obligation to commence litigation or to incur any expense
(unless JMB LP funds such expense) in order to avoid or prevent an Adverse
Transaction from occurring. All consents of the Lower Tier Limited Partnership,
described in this paragraph, may only be granted with the consent of JMB LP
pursuant to the Upper Tier Limited Partnership Agreement.
The Property Owning Partnership Agreements provide that, subject
to certain limitations relating to Adverse Transactions, the GP Corps, as
general partners, have full power and authority to do all things deemed
necessary or desirable by them to conduct the business of the respective
Property Owning Partnerships, including, without limitation, (i) the lending or
borrowing of money, (ii) the acquisition or disposition of any assets of the
Property Owning Partnerships, and (ii) the issuance of additional partnership
interests to additional limited partners. The Property Owning Partnership
Agreements also provide that the GP Corps may transfer all or any part of their
partnership interest, as general partner, in their sole discretion and without
the consent of the limited partners.
The Property Owning Partnership Agreements provide that the
limited partners may not transfer their interests in the Property Owning
Partnerships without the prior written consent of the respective GP Corps. Such
consent may be granted or withheld by the GP Corps in their sole discretion.
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<PAGE>
MANAGEMENT OF THE COMPANY
Directors and Officers
The current directors and executive officers of the Company are
as follows:
Name Age Position
William M. Mack.......... 56 Director and Chairman of the Board
Lee S. Neibart........... 46 Director and President
W. Edward Scheetz........ 31 Director and Vice President
Bruce H. Spector......... 54 Director
John R. Klopp............ 42 Director
Russel S. Bernard........ 38 Director
Ralph F. Rosenberg....... 32 Director
David A. Strumwasser..... 45 Director
David Roberts............ 34 Director
Each of the officers and directors listed above has served in the
positions listed for the Company, the GP Corps and the Upper Tier GP Corp. above
since September 1996. Such officers and directors have served in the positions
listed above for the GP Corps and the Upper Tier GP Corp. since September 1996.
William M. Mack has been a limited partner of Apollo Real Estate
Advisors, L.P. since its inception in 1993 and serves as President of its
corporate general partner. Mr. Mack is President and a Senior Partner of the
Mack Organization, a national owner and developer of and investor in office and
industrial buildings and other income-producing real estate investments. Mr.
Mack is also the controlling stockholder of Patriot American, an owner and
manager of office buildings in the Southwest and West. Mr. Mack is a director of
Calton, Inc., a home-building company in northeastern U.S.; Gillett Holdings,
Inc., the owner and operator of the Vail and Beaver Creek ski areas; and Koger
Equities Inc., a REIT that owns and operates office parks in the Southeastern
and Southwestern regions of the United States. Mr. Mack also serves as a
director of the New York State Urban Development Corporation, as Chairman of the
Undergraduate Executive Board of the University of Pennsylvania's Wharton School
of Business and as Chairman Emeritus of the Board of Trustees of the Long Island
Jewish Center. Mr. Mack is Chairman of the Board of Directors of the Jacob K.
Javits Convention Center Development Corporation of New York and the New York
Convention Center Operating Corporation. Mr. Mack received a BS in Business
Administration from the New York University School of Business.
Lee S. Neibart is a limited partner of Apollo Real Estate
Advisors, L.P., with which he has been associated since 1994, and directs
portfolio and asset management. From 1979 to 1993, he was Executive Vice
President and Chief Operating Officer of the Robert Martin Company, a private
real estate development and management firm which owns and manages approximately
seven million square feet of commercial real estate and with which he was
associated for over fourteen years. Mr. Neibart is a director of Roland
International, Inc., a land development company; Allright Corporation, an owner
and operator of parking
33
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<PAGE>
facilities throughout the United States; Koger Equities, Inc., a REIT that owns
and operates office parks in the Southeastern and Southwestern regions of the
United States; and NextHealth, Inc., an owner and operator of spa and wellness
facilities. He is also a past president of the New York Chapter of the National
Associate of Industrial and Office Parks. Mr. Neibart received a BA from the
University of Wisconsin and an MBA from New York University.
W. Edward Scheetz is a principal of Apollo Real Estate Advisors,
L.P., with which he has been associated since 1993 and has been responsible for
directing the evaluation and completion of all new investments made by Apollo
Real Estate Advisors, L.P. since such time. From 1989 to 1993, Mr. Scheetz was a
principal with Trammell Crow Ventures, where he was responsible for investment
activities relating to public and private syndicated partnerships, REIT,
developer recapitalizations and corporate real estate portfolios. Prior to 1989,
Mr. Scheetz was associated with various Trammell Crow Company affiliates,
including Trammell Crow Medical, Wyndham Hotel Co. and Trammell Crow Interests,
and acted as assistant to the Chief Financial Officer during the firm's
reorganization and recapitalization. Mr. Scheetz is a director of Roland
International, Inc., a land development company; NextHealth, Inc., an owner and
operator of spa and wellness facilities; and Koger Equity, Inc., a REIT that
owns and operates office parks in the Southeastern and Southwestern regions of
the United States. Mr. Scheetz serves on the compensation committee of Koger
Equity, Inc. Mr. Scheetz received an AB in Economics from Princeton University.
Bruce H. Spector is a partner of the Apollo organization, a group
of entities affiliated with Apollo Real Estate Advisors, L.P. and engaged in
corporate investment activities which includes Apollo Advisors, L.P. Mr. Spector
has been a senior consultant to Apollo since 1993, advising on matters of
reorganization strategy. From 1967 to 1992, Mr. Spector was a member of the law
firm of Stutman, Treister and Glatt, spending a substantial amount of that time
as senior partner and head of the firm's executive committee. Mr. Spector serves
on the boards of United International Holdings, Inc., a designer and owner of
cable and telephone systems outside of North America; Telemundo Group, Inc., a
national Spanish-language oriented television producer; and Nexthealth, Inc., an
owner and operator of spa and wellness facilities. Mr. Spector graduated Phi
Beta Kappa from the University of Southern California with a degree in economics
and from the UCLA School of Law with a JD.
John R. Klopp is a Managing Partner of VCG. VCG served as
financial advisor to the ad hoc committee of Noteholders in the Debtors' Chapter
11 case. VCG is a private real estate merchant banking firm which was formed in
1989 and is based in New York City. From 1978 to 1989, Mr. Klopp was a Managing
Director and co-head of Chemical Realty Corporation ("Chemical Realty"), the
real estate investment banking affiliate of Chemical Bank. Prior to founding
Chemical Realty, he held various positions in Chemical Bank's closing and
monitoring portfolios of construction and interim loans. He received a B.A. from
Tufts University in 1976 with a major in economics, and an M.B.A. in 1978 from
the Wharton School at the University of Pennsylvania with a major in real estate
and finance.
Russel S. Bernard is a principal of Oaktree Capital Management,
LLC and is portfolio manager of Oaktree's real estate and mortgage fund. Prior
to joining Oaktree, in 1994 and 1995, Mr. Bernard was a Managing Director of
Trust Company of the West (TCW). Under subadvisory relationships with Oaktree,
Mr. Bernard continues to serve as portfolio manager for the TCW special credits
distressed mortgage funds. From 1986 to 1994, Mr. Bernard was a partner in Win
Properties, Inc., a national real estate investment company, where he was
responsible for the acquisition, financing and operation of a national real
estate portfolio. Mr. Bernard holds a B.S. in Business Management and Marketing
from Cornell University.
Ralph F. Rosenberg has been a Vice President in the Investment
Banking Division at Goldman, Sachs & Co. since 1994. Prior to that he was in the
Real Estate Principalling Department from 1992 to 1994, and he served as an
Associate from 1990 to 1992. Mr. Rosenberg was a Financial Analyst at Goldman,
Sachs & Co. from 1986 until 1988. Mr. Rosenberg is a director of Cadillac
Fairview, Inc. and
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<PAGE>
Rockefeller Center Properties, Inc. He received a B.A. from Brown University in
1986, and an M.B.A. from the Stanford Graduate School of Business in 1990.
David A. Strumwasser has been a Managing Director and General
Counsel of Whippoorwill Associates, Incorporated, since 1993. Prior to that, he
was a Partner and co-head of the Bankruptcy and Reorganization Practice at
Berlack, Israels & Liberman from 1984 to 1993. Prior to that, he practiced
bankruptcy law at Anderson Kill & Olick, from 1981 to 1984, and at Weil, Gotshal
& Manges LLP from 1976 to 1979. From 1979 to 1981, Mr. Strumwasser was an
Assistant Vice President at Citicorp Industrial Credit Inc. Mr. Strumwasser
received a B.A. in political science from the State University of New York at
Buffalo in 1973, and a J.D. from Boston College Law School in 1976.
David Roberts has been a Managing Director of Angelo, Gordon &
Co., L.P. ("Angelo, Gordon") an investment management firm, since 1993, where he
oversees the firm's real estate investment activities. From 1988 until 1993, Mr.
Roberts was a principal of Gordon Investment Corporation, a Canadian merchant
bank, where he participated in a wide variety of principal transactions
including investments in the real estate and mortgage banking industries. Prior
to that, Mr. Roberts worked in the Corporate Finance Department of L.F.
Rothschild & Co. Incorporated, an investment bank, as a Senior Vice President
specializing in mergers and acquisitions. Mr. Roberts has a B.S. in Economics
from the Wharton School of the University of Pennsylvania.
Compensation of Directors
The members of the Board of Directors will each receive as an
annual retainer (i) $10,000 which will be paid in cash, and (ii) 400 shares of
Common Stock to be issued under the Stock Plan. Such stock and cash will be paid
to the current Board of Directors at the 1997 annual meeting of directors.
Directors will receive an additional payment of $750 for each Board of Directors
meeting attended. Upon election to the Board of Directors, each Director
received options to purchase 3,000 shares of the Company's common stock which
will vest over two years and will be exercisable at $25.00 per share. See
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Description
of the Company's Stock Plan."
The Company has purchased a directors' and officers' liability
insurance policy in the amount of $10,000,000.
The Directors and officers of the Company, the Upper Tier GP
Corp. and the GP Corps are identical. The officers of the Company will not
receive any compensation from the Company, other than any compensation they may
receive as Directors. The Directors and officers of the Upper Tier GP Corp. and
the GP Corps will not receive any compensation from the Upper Tier GP Corp. or
the GP Corps.
Asset Management Agreement
The following descriptions of the Asset Management Agreement and
the Subordination Agreement (as hereinafter defined) do not purport to be
complete and are qualified in their entirety by reference to the Asset
Management Agreement and Consent and Subordination of Asset Management Agreement
which have been filed as exhibits to this Registration Statement.
The Company and the Asset Manager entered into an Asset
Management Agreement, dated as of the Effective Date (the "Asset Management
Agreement"). Pursuant to the Asset Management Agreement, the Asset Manager will
act as the Company's advisor and consultant with respect to the management of
the Properties and the Company's interests in the Property Owning Partnerships
and Lower Tier Limited Partnership (collectively, the "Existing Assets"). The
Asset Management Agreement provides that the Asset Manager will, among other
things, (i) advise the Company regarding the employment of and will monitor the
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<PAGE>
performance of the property manager and leasing agent for each Property, (ii)
review and make recommendations to the Company with respect to annual budgets
for the Properties proposed by the Property Manager/Leasing Agent, (iii) review
and advise the Company with respect to any capital projects proposed by the
property manager, (iv) coordinate with the property manager and the Company's
lawyers the tax planning for the Properties and the Company's interests in the
Properties and will assist the Company and its accountants in developing cash
management and dividend policies to satisfy requirements for the maintenance of
the Company's status as a REIT; (v) assist the Company in maintaining records,
preparing reports and holding stockholder meetings; (vi) be the Company's
liaison with the holder of any mortgage encumbering the Properties, and (viii)
make recommendations to the Company concerning the hiring of professionals to
perform services with respect to the Existing Assets.
The Asset Management Agreement has an initial term of one year,
which term will be automatically extended for consecutive one year periods
thereafter unless the Company or the Asset Manager notify the other at least 30
days before the then current term would otherwise terminate, of its election not
to extend the term.
The Company may terminate the Asset Management Agreement (i)
after the expiration of a cure period, by notice to the Asset Manager if the
Asset Manager defaults in any material respect in its performance under the
Asset Management Agreement, and (ii) immediately upon notice to the Asset
Manager if the Properties are sold or if there is a change in control of the
Asset Manager. The Asset Manager may terminate the Asset Management Agreement if
the Company defaults in the payment of any amount due and payable to the Asset
Manager and such failure continues for 30 days after the Asset Manager's written
notice of such failure. Either party may terminate the Asset Management
Agreement by giving notice to the other upon the occurrence of certain events
relating to the bankruptcy or insolvency of the other party.
The Company will pay the Asset Manager a fee (the "Asset
Management Fee") in an amount equal to $25,000 per month. In addition to the
payment of the Asset Management Fee, the Company will reimburse the Asset
Manager for certain expenses. If the Company sells or disposes of one but not
both of the Properties, the Company and the Asset Manager will review whether an
adjustment to the Asset Management Fee is appropriate. If the Company believes
that the Asset Management Fee should be reduced and the parties are unable in
good faith to agree upon a reduced fee, the Asset Management Agreement will be
terminable by either party upon 90 days notice to the other.
In connection with the Loan, the Company, the Property Owning
Partnerships, the Asset Manager and Chase entered into a Consent and
Subordination Agreement, dated as of the Effective Date (the "Subordination
Agreement"). Under the Subordination Agreement, the Asset Manager agreed, among
other things, (i) not to terminate the Asset Management Agreement without first
obtaining Chase's consent, provided, that if Chase denies its consent to any
such termination, Chase will cure any monetary default by the Company which is
the basis for such termination, (ii) that any and all liens, rights and interest
held by the Asset Manager in and to the Properties will be subordinate to the
liens and security interests of the Lenders under the Credit Agreement, (iii)
that upon the occurrence of an event of default under the Credit Agreement or
any other Loan Documents, the Asset Manager will, at the request of Chase,
continue performance of all of the Asset Manager's obligations under the terms
of the Asset Management Agreement to the extent so requested by Chase, provided,
that Chase performs or causes to be performed the obligations of the Company
under the Asset Management Agreement, and (iv) not to materially modify or amend
any material term of or renew the Asset Management Agreement without the prior
written consent of Chase.
Management and Leasing Agreements
The following description of the Management and Leasing
Agreements does not purport to be complete and is qualified in its entirety by
reference to the Management and Leasing Agreements which have been filed as
exhibits to this Registration Statement.
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<PAGE>
Each of the Property Owning Partnerships entered into a
Management and Leasing Agreement, dated as of the Effective Date (the "Property
Management Agreements") with the Property Manager/Leasing Agent. Pursuant to the
Property Management Agreements, the Property Manager/Leasing Agent will perform
all supervisory, management and leasing services and functions reasonably
necessary or incidental to the leasing, management and operations of the
Properties. The Property Management Agreements provide that the Property
Manager/Leasing Agent will, among other things, (i) prepare and submit to the
Property Owning Partnerships for approval annual budgets for the Properties,
(ii) use reasonable efforts to cause the actual costs of operating and
maintaining the Properties not to exceed the annual budgets and will not,
without the Property Owning Partnerships' prior approval, incur operating
expenses or make capital expenditures for each Property in excess of (x) 110% of
the amount set forth in the respective annual budget or (y) 105% of the total
amount of the respective annual budget; and (iii) prepare and submit to the
Property Owning Partnerships for approval leasing guidelines for the Properties.
The Property Management Agreements provide that the Property
Manager/Leasing Agent may contract with any of its affiliates to provide goods,
services or supplies under the Property Management Agreements so long as (i) the
Property Manager/Leasing Agent discloses the relationship to the appropriate
Property Owning Partnership, (ii) the economic and material non-economic terms
of the contract are reasonable and no more favorable than terms generally
available from third parties of comparable experience providing similar goods,
services or supplies, (iii) such contracts otherwise conform to the requirements
under the Property Management Agreements, and (iv) the appropriate Property
Owning Partnership has given its written approval of such contract.
The Property Management Agreements have an initial term of two
years, which term will be automatically extended for additional consecutive 90
day terms until such time as a Property Owning Partnership notifies the Property
Manger/Leasing Agent in writing, at least 30 days before the then current term
would otherwise terminate, of its election not to extend the term of a Property
Management Agreement.
A Property Owning Partnership may terminate its Property
Management Agreement on 60 days notice if its Property is either sold by the
Property Owning Partnership or refinanced by the Property Owning Partnership
pursuant to a securitized financing of the Property, provided that termination
of the Property Management Agreement as a result of such financing will only be
effective if the Property Manager/Leasing Agent is not approved by the rating
agency participating in such financing. Each Property Owning Partnerships may
terminate its Property Management Agreement (i) after a certain cure period,
upon notice to the Property Manager/Leasing Agent if the Property
Manager/Leasing Agent breaches a material term of the Property Management
Agreement, and (ii) immediately upon notice to the Property Manager/Leasing
Agent if (x) the Property Manager/Leasing Agent or any principal of the Property
Manager/Leasing Agent intentionally misappropriates funds of the Property Owning
Partnership or commits fraud against the Property Owning Partnership or if there
is a change in control of the Property Manager/Leasing Agent. The Property
Manager/Leasing Agent may terminate a Property Management Agreement (i) after a
certain cure period, upon notice to the Property Owning Partnership if the
Property Owning Partnership breaches a material term of the Property Management
Agreement, and (ii) upon 60 days notice to the Property Owning Partnership if
the Property Owning Partnership fails to provide funds on a consistent basis to
operate and maintain the Property. Either party may terminate a Property
Management Agreement upon notice to the other party in the event that a petition
in bankruptcy is filed against the other party and is not dismissed within 60
days, or a trustee, receiver or other custodian is appointed for a substantial
part of the other party's assets and is not vacated within 60 days or the other
party makes an assignment for the benefit of its creditors.
On the Effective Date, each Property Owning Partnership paid the
Property Manager/Leasing Agent $50,000 per month (pro rated for any partial
month) for services provided by the Property Manager/Leasing Agent prior to the
Effective Date in connection with the transition of ownership and management of
the Properties from the Property Owning Partnerships' predecessors, for the
period commencing August 1, 1996 and ending on the Effective Date. Each Property
Owning Partnership will (i) pay the Property
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Manager/Leasing Agent a fee (a "Management Fee") in an amount equal to 1.5% of
gross revenues from the respective Property, which fee will be paid monthly, and
(ii) reimburse the Property Manager/Leasing Agent for all reasonable
out-of-pocket expenses incurred by the Property Manager/Leasing Agent related to
the performance of its responsibilities under the Property Management Agreement,
to the extent set forth in the annual budget. In addition, the Property
Manager/Leasing Agent will be entitled to receive commissions in connection with
the leasing of space at the Properties and renewals and extensions of leases.
BACKGROUND
The Debtors and Certain Affiliates
The Debtors were limited liability companies organized under the
laws of the State of New York and were two of the many companies, partnerships
and joint ventures that collectively constituted the O&Y group of companies.
On March 20, 1984, predecessors of the Debtors issued
$970,000,000 original principal amount of notes (the "Original Notes") pursuant
to that certain Mortgage Spreader and Consolidation Agreement and Trust
Indenture, dated March 20, 1984, as subsequently supplemented and amended (the
"Indenture"). The Properties, together with 2 Broadway secured the indebtedness
evidenced by the Original Notes and obligations under the Indenture.
On June 20, 1995, 2 Broadway LP filed a voluntary petition for
relief under chapter 11 of the Bankruptcy Code. Concurrently with the filing of
the petition, 2 Broadway LP filed its plan of reorganization (the "2 Broadway
Plan"). On August 28, 1995, the Bankruptcy Court confirmed the 2 Broadway Plan
and, by order dated September 6, 1995, the Bankruptcy Court authorized the sale
of 2 Broadway. Pursuant to the 2 Broadway Plan and an amendment to the
Indenture, 2 Broadway LP and its immediate predecessors were relieved of the
obligations under the Original Notes and the Indenture, and 2 Broadway was sold
and was released from the blanket mortgage lien of the Indenture. The Debtors,
however, continued to be jointly and severally obligated under the Original
Notes on a non-recourse basis, and their interests in the Properties continued
to be subject to the mortgage lien of the Indenture. The net proceeds from the
sale of 2 Broadway in the amount of $14,021,156.93 were used to pay, among other
things, debt service and certain property-related expenses of the Properties,
including capital improvement and leasing costs.
From and after January 1, 1996, combined cash flows generated
from the operations of the Properties and the proceeds from the sale of 2
Broadway were insufficient to service the obligations evidenced by the Original
Notes and to fund the costs and expenses of operating and maintaining the
Properties.
On April 23, 1996, Building Corp. and Equityco (affiliates of O&Y
that held equity interests in the Debtors) filed involuntary bankruptcy
petitions against the Debtors pursuant to section 303 of the Bankruptcy Code. On
April 25, 1996, the Debtors consented to relief under chapter 11 of the
Bankruptcy Code. As of April 23, 1996, the outstanding principal balance of the
Original Notes was $902,603,492 and interest was accrued and unpaid since
December 1, 1995.
Summary of the Plan
The following is a brief overview of the Plan which does not
purport to be complete and is qualified in its entirety by reference to the
Plan, a copy of which has been filed as an exhibit to this Registration
Statement.
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<PAGE>
Pursuant to the Plan, on the Effective Date (the date of the
consummation of the transactions contemplated by the Plan), the following
actions were taken:
1. Pursuant to a series of documents executed in accordance with
the Plan, the outstanding principal balance of the Original Notes in excess of
$700,000,000 (the "Excess Amount") was released.
2. Pursuant to the Noteholders Contribution and Participation
Agreement, dated the Effective Date, between Bankers Trust Company, in its
capacity as successor indenture trustee under the Indenture (the "Indenture
Trustee") and the Company, the Indenture Trustee, on behalf of the holders of
the Original Notes (the "Noteholders"), contributed to the Company an undivided
interest in $280,000,000 principal amount of Original Notes (the "Contributed
Debt") in exchange for 11,135,411 shares of the Company's Common Stock, issued
under the Plan.
3. Prior to the merger described in paragraph 4 below (the
"Merger"), the operating agreement for 237 LLC was modified pursuant to the
Modification of Operating Agreement of 237 LLC, dated as of the Effective Date,
among the Upper Tier Limited Partnership, Building Corp., Equityco and JMB LP,
to provide that any income arising from the release of the Excess Amount in
excess of $60,000,000 (the "237 Excess Amount") would be allocated to Building
Corp. and Equityco. In addition, prior to the Merger and pursuant to the Debt
Assumption, Release and Security Agreement, dated as of the Effective Date (the
"237 Assumption and Security Agreement"), among the Debtors, Building Corp.,
Equityco and the Indenture Trustee, (i) Building Corp. and Equityco assumed the
obligations of the Debtors to repay the 237 Excess Amount, (ii) Building Corp.
and Equityco granted to the Indenture Trustee for the benefit of the holders of
the Original Notes a first priority perfected security interest in and lien on
their interests in the Debtors securing their obligation to repay the 237 Excess
Amount, and (iii) the Indenture Trustee released the Debtors from their
obligation to repay the 237 Excess Amount.
4. Initially, Building Corp. held a 1% partnership interest in
the Upper Tier Limited Partnership, as general partner, and the Upper Tier GP
Corp. held a 99% partnership interest, as limited partner. Each of the Debtors
merged with and into the Upper Tier Limited Partnership pursuant to the
Agreement and Plan of Merger, dated the Effective Date (the "Merger Agreement"),
among the Upper Tier Limited Partnership and each of the Debtors and Building
Corp., Equityco and JMB LP received, respectively, 2.6%, 49.9%, and 46.5%
limited partnership interests therein. Upon consummation of the Merger, Upper
Tier GP Corp. withdrew as the initial limited partner of the Upper Tier Limited
Partnership, Building Corp. retained its 1% general partnership interest and the
Upper Tier Limited Partnership succeeded to the Debtor's ownership of the
Properties, subject to the obligations under the Indenture. In addition, (i)
Building Corp. and Equityco assumed the obligation of the Upper Tier Limited
Partnership to repay the difference between the Excess Amount and the 237 Excess
Amount (the "1290 Excess Amount") pursuant to the Debt Assumption, Release and
Security Agreement, dated as of the Effective Date (the "1290 Assumption and
Security Agreement"), among the Upper Tier Limited Partnership, Building Corp.,
Equityco and the Indenture Trustee, (ii) Building Corp. and Equityco granted to
the Indenture Trustee for the benefit of the Noteholders a first priority
perfected security interest in and lien on their interests in the Upper Tier
Limited Partnership (equal in priority with the security interest granted under
the 237 Assumption and Security Agreement) securing their obligations to repay
the 1290 Excess Amount, and (iii) the Indenture Trustee released the Upper Tier
Limited Partnership from its obligation to repay the 1290 Excess Amount. The
partnership agreement of the Upper Tier Limited Partnership in effect prior to
the effectiveness of the Redemption and Substitution Agreement, dated as of the
Effective Date (the "Redemption and Substitution Agreement"), among the Upper
Tier Limited Partnership, Building Corp., Equityco, JMB LP and Upper Tier GP
Corp. provided that all items of income, gain, loss or deduction attributable to
the assumption or reduction of the 237 Excess Amount and the 1290 Excess Amount
occurring on or about the date of such agreement would be allocated solely to
Equityco and Building Corp. in such manner as they agree. See "DESCRIPTION OF
THE LIMITED PARTNERSHIP AGREEMENTS OF THE PARTNERSHIPS."
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<PAGE>
5. Pursuant to the 237 Property Contribution Agreement and the
1290 Property Contribution Agreement, each dated as of the Effective Date
(collectively, the "Property Contribution Agreements"), among the Upper Tier
Limited Partnership, the Lower Tier Limited Partnership and the respective
Property Owning Partnerships and the other documents providing for the transfer
and assignment of the Properties and certain other property of the Debtors to
the Property Owning Partnerships or the Company, as the case may be, and certain
agreements related thereto (the "Conveyancing Documents"), the Lower Tier
Limited Partnership directed the Upper Tier Limited Partnership to transfer and
contribute to the Property Owning Partnerships the respective Properties and
certain related personalty, in each case, subject to the lien of the Indenture
securing the Original Notes, as reduced by the Excess Amount and the Contributed
Debt, as well as the right to pursue tax certiorari proceedings with respect to
the Properties and, in consideration therefor the Upper Tier Limited Partnership
received the LP Interest which is an aggregate 5% partnership interest, as
limited partner, in the Lower Tier Limited Partnership.
6. Pursuant to the Debt Contribution Agreement, dated as of the
Effective Date, among the Company, the Lower Tier Limited Partnership and the
Property Owning Partnerships, the Company contributed the Contributed Debt to
the Lower Tier Limited Partnership in exchange for a 95% partnership interest,
as general partner, in the Lower Tier Limited Partnership, which interest
entitles the Company to a significant priority in respect of distributions made
by the Lower Tier Limited Partnership. The Lower Tier Limited Partnership (i)
contributed the Contributed Debt (allocated approximately 57.16% to the 1290
Property Owning Partnership, and approximately 42.84% to the 237 Property Owning
Partnership) and (ii) caused the Upper Tier Limited Partnership to transfer and
contribute the Properties to the Property Owning Partnerships in exchange for a
99% partnership interest, as limited partner, in each of the Property Owning
Partnerships. The Property Owning Partnerships and the Indenture Trustee then
cancelled the Contributed Debt (resulting in an aggregate outstanding
indebtedness under the Original Notes of $420,000,000). The GP Corps hold the
remaining 1% partnership interest, as general partner, in each of the Property
Owning Partnerships. See "DESCRIPTION OF THE LIMITED PARTNERSHIP AGREEMENTS OF
THE PARTNERSHIPS."
7. Pursuant to the Redemption and Substitution Agreement (i) the
Upper Tier GP Corp. was admitted to the Upper Tier Limited Partnership as a
general partner, (ii) Building Corp. withdrew as general partner, (iii) the
Upper Tier GP Corp. received a 1% general partner interest in the Upper Tier
Limited Partnership, (iv) Equityco and Building Corp. withdrew from the Upper
Tier Limited Partnership as limited partners, and (v) JMB LP received a 99%
limited partnership interest in the Upper Tier Limited Partnership.
The foregoing description of the various transactions effectuated
pursuant to the Plan does not purport to be complete and is qualified in its
entirety by reference to the Merger Agreement, the Redemption and Substitution
Agreement and the Conveyance Documents, copies of which have been filed as
exhibits to this Registration Statement.
8. Affiliates of O&Y holding the Tenant Notes, at the direction
of the Company, assigned and delivered to the applicable Property Owning
Partnership the Tenant Notes and an amount equal to $450,000 representing all
cash paid in respect of the Tenant Notes from January 1, 1996 through the
Effective Date, net of certain payments made in connection with the consummation
of the Plan. See "BUSINESS AND PROPERTIES -- Other Assets -- Tenant Notes."
9. The JMB Notes were issued by JMB LP's predecessor in interest
to an affiliate of O&Y in 1984 in connection with the admission of JMB LP's
predecessor as a partner of the predecessors of the Debtors and an affiliate of
the Debtors which party owned 2 Broadway. On the Effective Date, the JMB Notes
and related security agreements were assigned by such O&Y affiliate to the
Company. Immediately prior to such assignment, the Company entered into a
Participation Agreement with an affiliate of JMB LP pursuant to which the
Company or its designee will receive the first $750,000 of payments made
pursuant to or in respect, of the JMB Notes and the JMB LP affiliate will
receive all further payments in respect of the JMB LP Notes.
See "BUSINESS AND PROPERTIES -- Other Assets -- JMB Notes."
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<PAGE>
10. On the Effective Date, the Indenture Trustee and the Debtors
transferred all cash then in their control to the Company and any remaining cash
in any accounts of the Debtors will be transferred to the Company as soon as
practicable.
11. Certain assets related to 2 Broadway, which were transferred
to 1290 LLC subject to the lien of the Indenture, were transferred to the
Company. See "BUSINESS AND PROPERTIES -- Other Assets -- Certain Assets Related
to 2 Broadway."
12. The Company entered into an Asset Management Agreement with
the Asset Manager, (which is an affiliate of VCG). Each of the Property Owning
Partnerships entered into a Property Management and Leasing Agreement with
Tishman-Speyer. Nyprop, LLC, an affiliate of the Property Manager/Leasing Agent,
entered into the Subscription Agreement with the Company and purchased 545,707
shares of Common Stock at a price equal to $21.6667 per share. See "MANAGEMENT
OF THE COMPANY -- Asset Management Agreement," and "-- Management and Leasing
Agreements."
13. In addition to the 545,707 shares of Common Stock sold to
Nyprop, LLC, the Company sold an aggregate of 377,228 shares of Common Stock to
the Noteholders and the Morgan Loan Lenders (as such term is defined in the
Plan) at a price equal to $21.6667 per share pursuant to a subscription rights
offering under the Plan.
14. On the Effective Date, the net proceeds of the Loan and a
portion of the proceeds received from sales of Common Stock were used to make
distributions of $400,000,000 to Noteholders and the Morgan Loan Lenders under
the Plan.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth in the following table is furnished as
of the Effective Date, with respect to any person (including, any "group," as
that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) who is known to the Company to be the beneficial
owner of more than 5% of any class of the Company's voting securities, and as to
those shares of the Company's equity securities beneficially owned by each of
its Directors, certain of its executive officers, and all of its executive
officers and Directors as a group. As of the Effective Date, there were
12,962,046 shares of Common Stock outstanding.
<TABLE>
<CAPTION>
Number of Shares Percent of Common
Beneficially Owned Stock
Principal Stockholders
<S> <C> <C> <C>
Apollo Real Estate Investment Fund, L.P. (1) 4,936,060 38.1%
Oaktree Capital Management, LLC (2) 2,117,286 16.3%
Whitehall Street Real Estate, Ltd. (3) 1,122,421 8.7%
Fernwood Associates, L.P. (4) 704,197 5.4%
Fernwood Foundation Fund LP (5) 704,197 5.4%
Directors and Executive Officers
William M. Mack (6) 4,937,060 38.1%
Lee S. Neibart (7) 4,937,060 38.1%
W. Edward Scheetz (8) 4,937,060 38.1%
Bruce H. Spector (9) 4,937,060 38.1%
John R. Klopp (10) 21,000 *
Russel S. Bernard (11) 2,118,286 16.3%
Ralph F. Rosenberg (12) 1,123,421 8.7%
David A. Strumwasser (13) 336,558 2.8%
David Roberts (14) 604,600 4.7%
</TABLE>
* Less than 1%
(1) Held of record by Atwell & Co., c/o The Chase Manhattan Bank, N.A., 4 New
York Plaza - 11th Floor, New York, NY 10004.
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<PAGE>
(2) Held of record by (i) Taylor & Co., c/o Sanwa Bank California Trust
Operations, 1977 Saturn Street, Monterey Park, CA 91754 (1,840,637 shares),
(ii) Cun & Co, c/o The Bank of New York, One Wall Street, New York, NY
10005 (176,049 shares) and (iii) Salkeld & Co., c/o Bankers Trust Company,
14 Wall Street, New York, NY 10015 (100,600 shares). Includes (i) 140,839
shares held by a limited partnership of which Oaktree is the general
partner, (ii) 35,210 shares held by a third party account for which Oaktree
is the investment manager, (iii) 1,941,237 shares held by various limited
partnerships, trusts and third party accounts for which TCW Asset
Management Company or certain of its affiliates are the general partner,
trustee or investment manager, respectively. Oaktree is a sub-advisor of
TCW Asset Management Company and acts as a fiduciary on behalf of such
funds and accounts.
(3) Held of record by J. Romeo & Co., c/o the Chase Manhattan Bank, N.A., 4 New
York Plaza - 11th Floor, New York, NY 10004.
(4) Fernwood Associates, L.P.'s address is c/o NSCC NY Window, 55 Water Street,
Concourse Level - South Bldg., New York, NY 10041. Includes the 12,574
shares of Common Stock owned by Fernwood Foundation Fund, L.P. ("Fernwood
Foundation"); Fernwood Foundation and Fernwood Associates, L.P. ("Fernwood
Associates") have the same general partner.
(5) Fernwood Foundation Fund LP's address is NSCC NY Window, 55 Water Street,
Concourse Level - South Bldg., New York, NY 10041. Includes the 691,623
shares of Common Stock owned by Fernwood Associates; Fernwood Foundation
and Fernwood Associates have the same general partner.
(6) Includes all shares owned by Apollo and 1,000 shares of Common Stock
issuable upon the exercise of options granted to Mr. Mack on the Effective
Date under the Company's Stock Plan. Mr. Mack is a limited partner of
Apollo Real Estate Advisors, L.P. and the President of its corporate
general partner. Mr. Mack disclaims beneficial ownership of the shares of
Common Stock owned by Apollo.
(7) Includes all shares owned by Apollo and 1,000 shares of Common Stock
issuable upon the exercise of options granted to Mr. Neibart on the
Effective Date under the Company's Stock Plan. Mr. Neibart is a limited
partner of Apollo Real Estate Advisors, L.P. Mr. Neibart disclaims
beneficial ownership of the shares of Common Stock owned by Apollo.
(8) Includes all shares owned by Apollo and 1,000 shares of Common Stock
issuable upon the exercise of options granted to Mr. Scheetz on the
Effective Date under the Company's Stock Plan. Mr. Scheetz is a limited
partner of Apollo Real Estate Advisors, L.P. Mr. Scheetz disclaims
beneficial ownership of the Common Stock owned by Apollo.
(9) Includes all shares owned by Apollo and 1,000 shares of Common Stock
issuable upon the exercise of options granted to Mr. Spector on the
Effective Date under the Company's Stock Plan. Mr. Spector is a partner of
the Apollo organization. Mr. Spector disclaims beneficial ownership of the
shares of Common Stock owned by Apollo.
(10) Includes 1,000 shares of Common Stock issuable upon the exercise of options
granted to Mr. Klopp on the Effective Date under the Company's Stock Plan.
(11) Includes all shares owned by Oaktree and 1,000 shares of Common Stock
issuable upon the exercise of options granted to Mr. Bernard on the
Effective Date under the Company's Stock Plan. Mr. Bernard is a principal
of Oaktree. Mr. Bernard disclaims beneficial ownership of the shares of
Common Stock owned by funds and accounts managed by Oaktree. Mr. Bernard
has declined the Company's grant of stock options to him and has requested
that the Company grant such stock options to the funds and accounts managed
by Oaktree.
(12) Includes all shares owned by Whitehall and 1,000 shares of Common Stock
issuable upon the exercise of options granted to Mr. Rosenberg on the
Effective Date under the Company's Stock Plan. Mr. Rosenberg disclaims
beneficial ownership of the shares of Common Stock owned by Whitehall. Mr.
Rosenberg is a Vice President of Goldman Sachs & Co. Pursuant to Mr.
Rosenberg's employment arrangements with Goldman Sachs, Mr. Rosenberg is
required to transfer to Goldman Sachs any shares of Common Stock he
receives either directly under the Company's Stock Plan or purchases upon
an exercise of options granted under the Company's Stock Plan.
(13) Includes all shares held by Whippoorwill Associates, Inc. as agent and/or
general partner of various discretionary accounts and 1,000 shares of
Common Stock issuable upon the exercise of options granted to Mr.
Strumwasser on the Effective Date under the Company's Stock Plan. Mr.
Strumwasser is a Managing Director and General Counsel of Whippoorwill
Associates. Mr. Strumwasser disclaims beneficial ownership of the shares of
Common Stock held by Whippoorwill Associates as set forth above.
(14) Includes all shares owned by Angelo Gordon and 1,000 shares of Common Stock
issuable upon the exercise of options granted to Mr. Roberts on the
Effective Date under the Company's Stock Plan. Mr. Roberts is a Managing
Director of Angelo Gordon. Mr. Roberts disclaims beneficial ownership of
the shares of Common Stock owned by Angelo Gordon.
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Related Party Transactions
The Company has entered into an Asset Management Agreement with
the Asset Manager which is directly affiliated with one of the Company's
Directors and a stockholder of the Company. The Asset Manager provides asset
advisory, consultation and management services for the Company. See "MANAGEMENT
OF THE COMPANY -- Asset Management Agreement."
The Company has also entered into Management and Leasing
Agreements with the Property Manager/Leasing Agent which is an affiliate of a
stockholder of the Company. The Property Manager/Leasing Agent manages and
operates the Properties and provides all supervisory, management and leasing
services. See "MANAGEMENT OF THE COMPANY -- Management and Leasing Agreements."
Description of Registration Rights Agreement
The description of the Registration Rights Agreement set forth
below does not purport to be complete and is qualified in its entirety by
reference to the Registration Rights Agreement, a copy of which has been filed
as an exhibit to this Registration Statement.
The Registration Rights Agreement, between the Company and the
holders of Common Stock distributed under the Plan, became effective on the
Effective Date. Pursuant to the Registration Rights Agreement, Apollo has the
right to "demand" on three occasions that the Company register its Common Stock
for sale; and Oaktree, Whitehall and any other stockholder from whom a Director
of the Company receives compensation have the right to demand such registration
on one occasion. These rights will become effective on January 1, 1997. If a
holder of Registrable Securities (as defined on the Registration Rights
Agreement) making a "demand" cannot dispose of at least 75% of its Registrable
Securities in such registered offering, such holder's demand right will be
reinstated. A holder of Registrable Securities that has been granted demand
rights may not exercise such rights within the 12 month period immediately
following the sale of Registrable Securities pursuant to a previously exercised
demand if such holder did not exercise its right to cause all of its Registrable
Securities to be included in such prior registered offering. Other holders of
Registrable Securities are granted "piggy-back" registration rights in
connection with the sale by the Company of its securities in a registered
offering. "Registrable Securities" means (i) the shares of Common Stock issued
pursuant to the Plan to the stockholders of the Company and (ii) any securities
issued or issuable with respect to such shares of Common Stock by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. Any particular
Registrable Securities will cease to be such when (y) a registration statement
under the Registration Rights Agreement covering such Registrable Securities has
been declared effective and such Registrable Securities have been disposed of
pursuant to such effective registration statement, or (z) such Registrable
Securities have been distributed to the public pursuant to Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Securities Act"). Holders of
Registrable Securities will be subject to customary pro rata cutbacks on the
number of shares they intend to sell, if, in the opinion of the underwriter, the
sale of all such shares would adversely affect the offering. Expenses in
connection with an offering will be paid pro rata by the holders of Registrable
Securities participating in the offering.
Description of Stock Plan
The description of the Stock Plan set forth below does not
purport to be complete and is qualified in its entirety by reference to the
Stock Plan, a copy of which has been filed as an exhibit to this Registration
Statement.
The Board of Directors adopted the Stock Plan on the Effective
Date. The purpose of the Stock Plan is to attract and retain qualified persons
as Directors. Pursuant to the Stock Plan, the Board of
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<PAGE>
Directors of the Company has the authority to issue to members of the Company's
Board of Directors options to purchase, in the aggregate, 100,000 shares of
Common Stock. Pursuant to the Plan and the Stock Plan, on the Effective Date,
the initial members of the Company's Board of Directors were granted options
entitling each director to purchase an aggregate of 3,000 shares of Common Stock
at an exercise price of $25.00 per share. Thereafter, each Director who is
elected or appointed after the Effective Date will be granted options to
purchase 3,000 shares of Common Stock on the date of the meeting of the
Company's stockholders at which such Director is first elected to the Board of
Directors or the date of the Board of Directors meeting at which such Director
is first appointed to the Board of Directors to fill a vacancy on the Board of
Directors. Each holder of an option issued under the Stock Plan will be entitled
to exercise the option to purchase one-third of the shares of Common Stock
covered by such option on the date of original issuance thereof, one-third on
the first anniversary of such date and one-third on the second anniversary of
such date, in each case, any time prior to the tenth anniversary of the
Effective Date (the "Expiration Date"). Pursuant to the Stock Plan, Directors
will receive 400 shares of Common Stock on the date of each annual meeting of
the Company's stockholders beginning with the annual meeting of stockholders in
1997.
If the holder of an option ceases to serve as a Director of the
Company for any reason, options that have been previously granted to such holder
and that have not been vested will be forfeited and options that are vested as
of the date of such cessation may be exercised by such holder in accordance with
and subject to the Stock Plan. If the holder of an option dies while serving as
a Director of the Company, options that have been previously granted to such
holder and that are vested as of the date of such holder's death may be
exercised by such holder's legal representative in accordance with and subject
to the Stock Plan.
DESCRIPTION OF STOCK OF THE COMPANY
The following description of the Company's stock does not purport
to be complete and is subject to and qualified in its entirety by reference to
the Company's Charter and Bylaws, copies of which have been filed as exhibits to
this Registration Statement.
General
Under the Charter, the Company has authority to issue up to
60,000,000 shares of stock, consisting of 50,000,000 shares of common stock, par
value $10.00 per share (the "Common Stock"), and 10,000,000 shares of preferred
stock, par value $10.00 per share (the "Preferred Stock"). The Company did not
issue any shares of Common Stock or Preferred Stock prior to the Effective Date,
and no Preferred Stock is issued or outstanding. On the Effective Date, the
Company issued an aggregate of 12,949,472 shares of Common Stock to (i) the
Morgan Loan Lenders and the Noteholders electing to receive or otherwise
receiving Common Stock under the Plan, and (ii) Nyprop, LLC, an affiliate of the
Property Manager/Leasing Agent (as hereinafter defined) pursuant to a
Subscription Agreement between the Company and Nyprop, LLC. The Company has also
(i) reserved for issuance 100,000 shares of its Common Stock for issuance to its
Directors pursuant to the Company's 1996 Director Stock Plan (the "Stock Plan")
and (ii) issued 40,000 shares of its Common Stock to the managing partners of
VCG as part of a fee paid by the Company to VCG pursuant to the Plan.
Approximately 1,000 shares of Common Stock will be issued to charitable
institutions in accordance with the Plan.
The Common Stock is not listed on any exchange, the Company does
not intend to list the Common Stock on any exchange in the near term, there is
not currently a public market for the Common Stock and there can be no assurance
that an active trading market for the Common Stock will develop or be sustained.
The Charter authorizes the Directors to classify or reclassify
any unissued shares of stock by setting or changing the preferences, conversion
or other rights, voting powers, restrictions, limitations as to
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dividends and other distributions, qualifications, or terms or conditions of
redemption of such stock; provided, however, that the Charter prohibits the
issuance of nonvoting equity securities and provides that as to the several
classes of common or preferred stock possessing voting power, an appropriate
distribution of such power among such classes, including, in the case of any
class of stock having a preference over another class of stock with respect to
dividends, adequate provisions for the election of directors representing such
preferred class in the event of default in the payment of such dividends.
Common Stock
Pursuant to the Charter, until the occurrence of a Simplification
Event, the Common Stock is divided into Class A Common Stock, Class B Common
Stock, and Class C Common Stock; provided, that, if a "Class C Conversion Date"
(as hereinafter defined) occurs prior to the occurrence of a "Simplification
Event" (as hereinafter defined), from the date of the Class C Conversion Date,
the Common Stock will be divided into Class A Common Stock and Class B Common
Stock. The Class A Common Stock, the Class B Common Stock and the Class C Common
Stock have identical rights and privileges, and are treated as a single class,
with respect to all matters (other than certain voting rights described below)
including, without limitation, the payment of distributions and upon
liquidation. On the Effective Date, (i) Apollo received 4,936,060 shares of
Class B Common Stock and is the sole holder of all of the outstanding shares of
Class B Common Stock, (ii) all other holders of the Original Notes and all the
Morgan Loan Lenders (other than Apollo) received an aggregate of 7,973,412
shares of Class A Common Stock, and (iii) John R. Klopp, and Craig M. Hatkoff,
the managing partners of VCG, received an aggregate of 40,000 shares of Class C
Common Stock and are the sole holders of all of the outstanding shares of Class
C Common Stock.
Pursuant to the Charter, until the occurrence of a Simplification
Event, the Company's nine-member Board of Directors will be divided into five
classes. The Class I Director, Lee S. Neibart, was designated by Apollo, (and
after the Effective Date, by the holders of Class B Common Stock); the Class II
Directors consist of Bruce Spector, a director designated by Apollo (and, after
the Effective Date, by the holders of the Class B Common Stock) and David
Roberts, a director reasonably acceptable to Apollo designated by Noteholders
other than Apollo, Whitehall Street Real Estate, Ltd. ("Whitehall") and Oaktree
Capital Management, LLC ("Oaktree") (and, after the Effective Date, by the
holders of the Class A Common Stock); the Class III Directors consist of W.
Edward Scheetz, a director designated by Apollo (and, after the Effective Date,
by the holders of Class B Common Stock) and David Strumwasser, a director
reasonably acceptable to Apollo designated by Noteholders other than Apollo,
Whitehall and Oaktree (and, after the Effective Date, by the holders of Class A
Common Stock); the Class IV Directors consist of William Mack, a director
designated by Apollo (and, after the Effective Date, by the holders of Class B
Common Stock) and Ralph Rosenberg, a director reasonably acceptable to Apollo
designated by Whitehall (the "Whitehall Director"); and the Class V Directors
consist of Russel Bernard, a director designated by Oaktree (the "Oaktree
Director") and John R. Klopp, a director designated by Noteholders (other than
Apollo, Whitehall and Oaktree).
The term of the initial Class I Director will terminate on the
date of the 1997 annual meeting of stockholders; the term of the initial Class
II Directors will terminate on the date of the 1998 annual meeting of
stockholders; the term of the initial Class III Directors will terminate on the
date of the 1999 annual meeting of stockholders; the term of the initial Class
IV Directors will terminate on the date of the 2000 annual meeting of
stockholders; and the term of the initial Class V Directors will terminate on
the date of the 2001 annual meeting of stockholders. At the 1997 annual meeting
of stockholders, the successor to the initial Class I Director will be elected
for a four-year term; at the 1998 annual meeting of stockholders, the successors
to the initial Class II Directors shall be elected for a three-year term; at the
1999 annual meeting of stockholders, the successors to the initial Class III
Directors will be elected for a two-year term; at the 2000 annual meeting of
stockholders, the successors to the initial Class IV Directors shall be elected
for a one-year term; at the 2001 annual meeting of stockholders, the successors
to the Class I, Class II, Class III, Class IV and Class V Directors will be
elected for a one year term. Directors will hold office until the annual meeting
for the year in which their terms expire and until their successors shall be
elected and qualify, subject, however, to prior death,
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resignation, retirement, disqualification or removal from office. The terms of
the Initial Directors will commence on the Effective Date. The Charter provides
that the Company will at all times have at least two directors that are not
affiliated with Apollo, any Transferee (as hereinafter defined) or any other
stockholder of more than 10% of the stock of the Company.
For so long as any shares of Class C Common Stock are outstanding
as Class C Common Stock (i.e., until a Class C Conversion Date), holders of
Class C Common Stock will not be permitted to vote in any election of Directors.
"Simplification Event" means the earliest to occur of (i) the
date on which Apollo and its affiliates (taken together) or any Transferee and
its affiliates (taken together) no longer hold a number of shares of Common
Stock representing at least 30% of the combined voting power of all outstanding
shares of stock of the Company; (ii) the date on which Apollo and its affiliates
(taken together) or any Transferee and its affiliates (taken together) or any
other person or entity and its affiliates (taken together) holds a number of
shares of Common Stock representing at least 75% of the combined voting power of
all outstanding shares of stock of the Company; (iii) the fifth anniversary of
the Effective Date; and (iv) the date of the annual meeting of stockholders in
2001.
Upon the occurrence of a Simplification Event, notwithstanding
any provision of the Charter or Bylaws to the contrary, the provisions of the
Charter with respect to the classification of the Board of Directors and the
division of Common Stock into Class A Common Stock and Class B Common Stock
(and, if applicable, Class C Common Stock) will terminate and will be of no
further force and effect and, thereafter, the term of each Director will expire
on the date of the annual meeting of stockholders immediately following or
concurrent with such Simplification Event, all Directors then or thereafter
elected will serve one-year terms and voting for the election of Directors will
be in the manner set forth in the Bylaws.
Upon a transfer of shares of Class B Common Stock so that such
shares are not beneficially owned by Apollo, a Transferee or their respective
affiliates, such shares shall be automatically converted into shares of Class A
Common Stock. Shares of Class C Common Stock may be converted into shares of
Class A Common Stock, (i) at any time, by the Company upon written notice (the
"Company Notice") by the Company to the holders of Class C Common Stock, and
(ii) at any time after the first anniversary of Effective Date, by the holders
of Class C Common Stock upon written notice (the "Class C Holders Notice") by
the holders of Class C Common Stock to the Company (the earlier of the date of
the Company Notice and the Class C Holders Notice, the "Class C Conversion
Date"). On the Class C Conversion Date, shares of Class C Common Stock will
automatically and without any action on the part of the holder thereof be
converted into the same number of shares of Class A Common Stock. Except as
described in the immediately preceding two sentences, holders of Common Stock
have no conversion, sinking fund or redemption rights, or preemptive rights to
subscribe for any securities of the Company.
"Transferee" means any Person to whom Apollo, its affiliates, or
any Transferee shall transfer shares of Class B Common Stock representing at
least 30% of the aggregate number of shares of Class A and Class B Common Stock
then outstanding.
All shares of Common Stock issued in accordance with the terms
and conditions of the Plan are duly authorized, fully paid and nonassessable.
Subject to the preferential rights of any other shares or series of shares and
to the provisions of the Charter regarding shares of Common Stock held by any
person in excess of the Ownership Limit (as hereinafter defined), holders of
Common Stock will be entitled to receive distributions on Common Stock if, as
and when authorized and declared by the Board of Directors of the Company out of
assets legally available therefor and to share ratably in the assets of the
Company legally available for distribution to its stockholders in the event of
its liquidation, dissolution or winding-up after payment of, or adequate
provision for, all known debts and liabilities of the Company.
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Subject to the provisions of the Charter regarding shares of
Common Stock held by any person in excess of the Ownership Limit and the
restrictions on voting set forth in the Charter and Bylaws, each outstanding
share of Common Stock (except shares of Class C Common Stock while they are
outstanding, which have no voting rights in the election of directors) entitles
the holder thereof to one vote on all matters submitted to a vote of
stockholders. There is no cumulative voting in the election of directors, which
means that the holders of a majority of the outstanding shares of Class A Common
Stock or Class B Common Stock can elect all of the directors then standing for
election by such Class, and the holders of the remaining Common Stock of such
Class may not be able to elect any director.
Pursuant to the Maryland General Corporation Law (the "MGCL"), a
corporation generally cannot dissolve, amend its charter, merge, sell all or
substantially all of its assets or engage in a share exchange unless approved by
the affirmative vote of stockholders holding at least two-thirds of the shares
entitled to vote on the matter, unless a lesser percentage (but not less than a
majority of all of the votes to be cast on the matter) is set forth in the
charter of the corporation. The Charter does not provide for a lesser percentage
in such situations. See "CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE COMPANY'S
CHARTER AND BYLAWS."
Preferred Stock
Preferred Stock may be issued from time to time, in one or more
series, as authorized by the Board of Directors. Prior to the issuance of shares
of each series, the Board of Directors is required by the MGCL and the Charter
to fix for each series, subject to the provisions of the Charter regarding
shares of stock held by any Person in excess of the Ownership Limit, such terms,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms or
conditions of redemption, as are permitted by Maryland law. Such rights, powers,
restrictions and provisions could include the right to receive specified
dividend payments and payments on liquidation prior to any such payments being
made to the holders of some, or a majority, of the shares of Common Stock. The
Board of Directors could authorize the issuance of Preferred Stock with terms
and conditions that could have the effect of discouraging a takeover or any
other transaction that holders of Common Stock might believe to be in their best
interests or in which holders of some, or a majority, of the shares of Common
Stock might receive a premium for their shares over the then-current market
price of such shares. See "CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE
COMPANY'S CHARTER AND BYLAWS." As of the date hereof, no shares of Preferred
Stock are outstanding, and the Company has no present plans to issue any
Preferred Stock.
Restrictions on Transfer
In order for the Company to qualify as a REIT under the Internal
Revenue Code, among other things, the Company is required to satisfy the Five or
Fewer Requirement at any time during the last half of a taxable year (other than
the first year), and such shares of stock must be beneficially owned by one
hundred (100) or more persons during at least 335 days of a taxable year of 12
months (other than the first year) or during a proportionate part of a shorter
taxable year. See "BUSINESS AND PROPERTIES -- Qualification as a REIT." In order
to protect the Company against the risk of losing its status as a REIT on
account of a concentration of ownership among its stockholders, the Charter,
subject to certain exceptions, provides that no Person (as defined in the
Charter) may beneficially own, or be deemed to own by virtue of the attribution
provisions of the Internal Revenue Code, more than the Ownership Limit of the
aggregate value of the Company's shares of stock. Pursuant to the Internal
Revenue Code, stock held by certain types of entities, such as pension trusts
qualifying under Section 401(a) of the Internal Revenue Code, United States
investment companies registered under the Investment Company Act of 1940, as
amended, partnerships, trusts and corporations, will be attributed to the
beneficial owners of such entities for purposes of the Five or Fewer Requirement
(i.e., the beneficial owners of such entities will be counted as holders).
Pursuant to the Charter, no person (other than Apollo or a transferee of at
least 30% of the aggregate number of shares of Class A Common Stock or Class B
Common Stock) may acquire any shares of Common Stock if, as a result of such
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acquisition, the fair market value of shares of stock of the Company owned
directly or indirectly by Non U.S. Persons (as defined in the Charter) would
exceed 50% of the fair market value of all issued and outstanding shares of
stock of the Company. Any acquisition of shares of stock or of any security
convertible into shares of stock that would result in the disqualification of
the Company as a REIT, including any transfer that results in the Company being
"closely held" within the meaning of Section 856(h) of the Internal Revenue
Code, shall be null and void, and the intended transferee will acquire no rights
to the shares of stock. The foregoing restrictions on transferability and
ownership will not apply if the Board of Directors determines that it is no
longer in the best interests of the Company to attempt to qualify, or to
continue to qualify, as a REIT. The Board of Directors may, in its sole
discretion, waive the Ownership Limit if evidence satisfactory to the Board of
Directors and the Company's tax counsel is presented that the changes in
ownership will not then or in the future jeopardize the Company's status as a
REIT and the Board of Directors otherwise decides that such action is in the
best interest of the Company.
The Charter excludes from the foregoing ownership restriction
persons designated by Apollo (or another person designated by Apollo to
designate such persons) to exceed the Ownership Limit; provided that no
Individual (as defined in the Charter) shall be permitted, by designation, to
exceed the Ownership Limit by more than 10% (i.e., own more than 17.9% of the
aggregate value of outstanding stock of the Company), and the aggregate
percentage by which all Individuals permitted, by designation, to exceed the
Ownership Limit shall not be greater than 10%.
Shares of Common Stock owned, or deemed to be owned, or acquired
by a stockholder (other than an Individual permitted, by designation, to exceed
the Ownership Limit) (a "Prohibited Owner") in violation of the above transfer
and ownership limitations and shares acquired by a person that would cause more
than 50% in value of the outstanding shares of the Common Stock to be owned by
Non U.S. Persons (as defined in the Charter), will automatically be transferred
to a trustee, in his capacity as trustee of a trust for the exclusive benefit of
one or more charitable beneficiaries (the "Charitable Beneficiaries"). Such
stock held by the trustee will be issued and outstanding stock of the Company.
The Prohibited Owner shall not benefit economically from ownership of any shares
of stock held in the Trust, shall have no rights to dividends and shall not
possess any rights to vote or other rights attributable to the shares of stock
held in the Trust. The trustee of the Trust (the "Trustee") shall have all
voting rights and rights to dividends or other distributions with respect to
shares of stock held in the Trust, which rights shall be exercised for the
exclusive benefit of the Charitable Beneficiary. Any dividend or other
distribution paid prior to the discovery by the Company that shares of stock
have been transferred to the Trustee shall be paid by the recipient of such
dividend or distribution to the Trustee upon demand, and any dividend or other
distribution authorized but unpaid shall be paid when due to the Trustee. Any
dividend or distribution so paid to the Trustee shall be held in trust for the
Charitable Beneficiaries. Any distribution paid to the Prohibited Owner of such
stock prior to the discovery by the Company that stock has been transferred in
violation of the provisions of the Charter will be repaid to the trustee upon
demand. Within 20 days after receiving notice from the Company that stock has
been transferred to the trust, the trustee will sell such stock to a person
designated by the trustee whose ownership of the shares of stock will not
violate the Ownership Limit. Upon such sale, the interest of the Charitable
Beneficiaries will terminate and the trustee will distribute the net proceeds of
such sale to the Prohibited Owner and the Charitable Beneficiaries as set forth
in the Charter. The Charter provides that the Prohibited Owner will receive the
lesser of (i) the price paid by the Prohibited Owner for the shares of stock
that were transferred to the trust, or if the Prohibited Owner did not give
value for such shares (e.g., such stock was received through a gift, devise or
other transaction), the Market Price (as defined in the Charter) of such shares
on the day of the event causing such shares to be held in trust, and (ii) the
price received by the trustee from the sale of such shares. Any net sales
proceeds in excess of the amount payable to the Prohibited Owner will be
immediately paid to the Charitable Beneficiaries, together with any dividends or
other distributions thereon. If, prior to the discovery by the Company that
stock had been transferred to the trustee, such shares are sold by the
Prohibited Owner then (X) such shares will be deemed to have been sold on behalf
of the trust, (Y) the proceeds of such sale will be deemed to be held by such
Prohibited Owner as an agent for the trustee and (Z) to the extent that the
Prohibited Owner received an amount for such shares that exceeds the amount that
such Prohibited Owner was
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entitled to receive pursuant to the Charter, such excess will be paid to the
trustee upon demand. Stock transferred to the trustee will be deemed to have
been offered for sale to the Company, or its designee, at a price per share
equal to the Market Price on the date the Company, or its designee, accepts such
offer. The Company will have the right to accept such offer until the trustee
has sold the shares held in the trust pursuant to the Charter. Upon such a sale
to the Company, the interest of the Charitable Beneficiaries in the shares sold
will terminate and the trustee will distribute the net proceeds of the sale to
the Prohibited Owner and to the Charitable Beneficiaries in the manner described
above. If the foregoing transfer restrictions are determined to be void or
invalid by virtue of any legal decision, statute, rule or regulations, then the
transfer of such stock will be void ab initio.
Each stockholder will upon demand be required to disclose to the
Company in writing any information with respect to its direct, indirect and
constructive ownership of stock as the Board of Directors deems reasonably
necessary to comply with the provisions of the Internal Revenue Code applicable
to the Company, to comply with the requirements of any taxing authority or
governmental agency or to determine any such compliance.
The Ownership Limit may have the effect of precluding acquisition
of control of the Company unless the Board of Directors determines that
maintenance of REIT status is no longer in the best interests of the Company.
All certificates representing shares of Common Stock bear a
legend referring to the restrictions described above.
CERTAIN PROVISIONS OF MARYLAND LAW
AND OF THE COMPANY'S CHARTER AND BYLAWS
The following summary of certain provisions of Maryland law and
the Charter and Bylaws does not purport to be complete and is subject to and
qualified in its entirety by reference to Maryland law and the Charter and
Bylaws, copies of which have been filed as exhibits to this Registration
Statement.
Affiliate Transactions
The Bylaws provide that the Company shall not engage in any
transaction (other than transactions entered into in the ordinary course of
business, including payments of dividends, salaries or directors compensation)
with any stockholder holding more than 10% of the outstanding shares of the
Common Stock without the approval of a majority of the Company's disinterested
Directors. A Director shall be "disinterested" for the purposes of the Bylaws if
such director is unaffiliated (which shall be determined by the Board of
Directors, which determination shall be final) with, and does not receive
compensation from the stockholder with whom the transaction is to be effected or
any subsidiaries thereof.
The Bylaws provide that, to the extent the Company requires
investment banking services and so long as Whitehall remains a significant
stockholder of the Company, the Board of Directors will, in good faith in light
of all appropriate considerations, consider engaging Goldman Sachs & Company
(among any other investment banking firms it considers) to provide investment
banking services to the Company on terms customary for such services.
Notwithstanding the preceding paragraph, any Director affiliated with Whitehall
may vote upon any engagement of investment bankers, including Goldman Sachs &
Company.
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Business Combinations
Under the MGCL, certain "business combinations" (including a
merger, consolidation, share exchange, or, in certain circumstances, an asset
transfer or issuance or reclassification of equity securities) between a
Maryland corporation and any person who beneficially owns 10% or more of the
voting power of the corporation's shares or an affiliate of the corporation who,
at any time within the two-year period prior to the date in question, was the
beneficial owner of 10% or more of the voting power of the then-outstanding
voting stock of the corporation (an "Interested Stockholder") or an affiliate
thereof are prohibited for five years after the most recent date on which the
Interested Stockholder becomes an Interested Stockholder. Thereafter, any such
business combination must be recommended by the board of directors of the
corporation and approved by the affirmative vote of at least (a) 80% of the
votes entitled to be cast by holders of outstanding voting shares of the
corporation and (b) two-thirds of the votes entitled to be cast by holders of
outstanding voting shares of the corporation other than shares held by the
Interested Stockholder with whom (or with whose affiliate) the business
combination is to be effected, unless, among other conditions, the corporation's
common stockholders receive a minimum price (as defined in the MGCL) for their
shares and the consideration is received in cash or in the same form as
previously paid by the Interested Stockholder for its shares. These provisions
of the MGCL do not apply, however, to business combinations that are approved or
exempted by the board of directors of the corporation prior to the time that the
Interested Stockholder becomes an Interested Stockholder. The Charter exempts
from the provisions of Maryland law all business combinations involving the
Company.
The Charter provides, however, that any Business Combination (as
used in Section 3-601(e)(1) and (e)(2) of the MGCL) with, or involving, an
Interested Stockholder (as hereinafter defined) will require the affirmative
vote of not less than 662/3% of the votes entitled to be cast by the holders of
all the then outstanding shares of Common Stock, voting together as a single
class, excluding Common Stock beneficially owned by such Interested Stockholder
or by any Person having more than 50% beneficial ownership of the Interested
Stockholder or of whom the Interested Stockholder has more than 50% beneficial
ownership.
"Interested Stockholder" is defined in the Charter to mean any
person (other than an Exempt Person (as hereinafter defined)) that (a) is the
beneficial owner of Common Stock representing 20% or more of the votes entitled
to be cast by the holders of all then outstanding shares of Common Stock (or an
affiliate of such person) and (b) has held such Common Stock for less than five
years.
"Exempt Person" means (a) (i) Apollo, its partners, Affiliates
and Associates (as such terms are defined in Rule 12b-2 under the Exchange Act,
as in effect on May 20, 1996 and including without limiting the generality of
the foregoing any investment fund under common control with Apollo), (ii) any
Transferee or Person that would be a Transferee, but for the occurrence of a
Simplification Event, (iii) with respect to the interest so transferred and so
long as no Simplification Event shall have occurred, any other transferee of any
part of Apollo's interest in the Company and (iv) any such Transferee's or
Transferee's partners, stockholders, Affiliates and Associates, and (b) any
person that prior to the acquisition of beneficial ownership of Common Stock
representing 20% or more of the votes entitled to be cast by the holders of all
then outstanding shares of Common Stock obtained the approval of a majority of
Directors of the Company to exempt such person from the provisions of the
Charter related to Business Combinations; provided, however, that a Director of
the Company shall not vote in any such determination if such Director has been
appointed by the acquiror or any person acting together with the acquiror in
connection with such transaction as part of a "group" (as such term is used in
Rule 13d-5 under the Exchange Act or if such person is affiliated with the
selling stockholder in the transaction in which the acquiror exceeds the 20%
threshold referred to above (other than in the case of a tender offer or other
transaction in which there are a substantial number of selling stockholders)).
This provision could have the effect of delaying, deferring or
preventing a change in control, or discouraging others from acquiring shares of
Common Stock and increase the difficulty of consummating any offer to acquire
such shares.
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Certain Voting Provisions
In addition to any vote required by law, the Company will not
take any action regarding the following matters without the affirmative vote of
the holders of at least 662/3% of the outstanding shares of stock (including,
solely with respect to the matters set forth in items (a), (b) and (c) below,
the holders of Class C Common Stock) voting as a single class:
(a) any merger or consolidation of the Company (other than
any merger between the Company and any direct or indirect wholly owned
subsidiary of the Company);
(b) any sale or transfer of either of the real properties
owned by the Company and its subsidiaries (but excluding any pledge,
hypothecation or encumbrance of such assets to provide security for any bona
fide debt); (c) any dissolution or liquidation of the Company; or
(d) any acquisition in excess of $25,000,000 (other than
in connection with the leasing, improvement and other operations of the
Company's properties or as contemplated by the annual budget with respect to
such properties, such exclusion to include, without limitation, any acquisition
of, any providers of services to such properties and any easements, air rights
or appurtenances, necessary or desirable for the operation of the properties).
Control Share Acquisitions
The MGCL provides that "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no voting rights except to the
extent approved by a vote of two-thirds of the votes entitled to be cast on the
matter, excluding shares of stock owned by the acquiror or by officers or by
directors who are employees of the corporation. "Control shares" are voting
shares of stock that, if aggregated with all other shares of stock previously
acquired by that person or in respect of which the acquiror is able to exercise
or direct the exercise of voting power (except solely by virtue of a revocable
proxy), would entitle the acquiror to exercise voting power in electing
directors within one of the following ranges of voting power: (i) one-fifth or
more but less than one-third, (ii) one-third or more but less than a majority,
or (iii) a majority of all voting power. Control Shares do not include shares
the acquiring person is then entitled to vote as a result of having previously
obtained stockholder approval. A "control share acquisition" means the
acquisition of control shares, subject to certain exceptions.
A person who has made or proposes to make a control share
acquisition, upon satisfaction of certain conditions (including an undertaking
to pay expenses), may compel the board of directors to call a special meeting of
stockholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the corporation may itself
present the question at any stockholders' meeting.
If voting rights are not approved at the meeting or if the
acquiring person does not deliver an acquiring person statement as required by
the statute, then, subject to certain conditions and limitations, the
corporation may redeem any or all of the control shares (except those for which
voting rights have previously been approved) for fair value determined, without
regard to the absence of voting rights for the control shares, as of the date of
the last control share acquisition or of any meeting of stockholders at which
the voting rights of such shares are considered and not approved. If voting
rights for control shares are approved at a stockholders meeting and the
acquiror becomes entitled to vote a majority of the shares entitled to vote, all
other stockholders may exercise appraisal rights. The fair value of the shares
as determined for purposes of the appraisal rights referred to in the preceding
sentence may not be less than the highest price per share paid in the control
share acquisition, and certain limitations and restrictions otherwise applicable
to the exercise of dissenter's rights do not apply in the context of a control
share acquisition.
52
C/M: 11764.0009 421963.11
<PAGE>
The control share acquisition statute does not apply to certain
shares, including shares acquired in a merger, consolidation or share exchange
if the corporation is a party to the transaction, or to acquisitions approved or
exempted by the corporation's charter or bylaws. The Charter contains provisions
which exempt from the control shares acquisition statute the issuance of Common
Stock on the Effective Date and any and all future acquisitions by any person of
shares of the Company's stock. There can be no assurance that such provisions
will not be eliminated at any point in the future.
If the Charter were amended to subject the Company to the control
share acquisition statute, such amendment could have the effect of delaying,
deferring or preventing a change in control, or discouraging others from
acquiring shares of Common Stock and increase the difficulty of consummating any
offer to acquire such shares.
Reference is made to the full text of the foregoing statutes for
their entire terms, and the partial summary contained herein is not intended to
be complete.
Amendment of Charter and Bylaws
The provisions of the Charter relating to (a) the Board of
Directors, (b) the division of Common Stock into Class A Common Stock, Class B
Common Stock and Class C Common Stock, and (c) voting rights (other than
super-majority voting rights), dividend rights, rights upon liquidation and
conversion rights of stockholders, the effect of a Simplification Event and the
definition of a Transferee may be amended, prior to the occurrence of a
Simplification Event, by the affirmative vote of two-thirds of the outstanding
shares of each of Class A Common Stock and Class B Common Stock, voting
separately as a class. The provisions of the Charter relating to (a) the
super-majority voting rights of stockholders and (b) the substantive provisions
related to the Ownership Limit and ownership by Non U.S. Persons, may be amended
by two-thirds of the outstanding shares of Class A Common Stock and Class B
Common Stock, voting together as a single class. Provisions of the Charter
relating specifically to Apollo, Transferees (as such term is defined in the
Charter) or transferees of Apollo or the Affiliates or Associates of any such
Person may not be amended or modified without the written consent thereto of
Apollo. Provisions of the Charter relating specifically to the Class C
Conversion Date may not be amended or modified without the affirmative vote of
holders of 66 2/3% of the outstanding shares of Class C Common Stock voting
together as a single class. The stockholders may amend the Company's Bylaws,
except for its provisions relating to indemnification of officers and directors
and the right of the Board of Directors and the stockholders to amend the
Bylaws, by the affirmative vote of the holders of two thirds of the outstanding
shares of stock of the Company entitled to vote. Subject to such stockholder
rights, a majority of the Board of Directors may amend the Bylaws, except that
provisions relating to 662/3% and 75% super-majority voting of the Board and
powers delegated to committees may only be amended by the affirmative vote of
not less than 662/3% and 75%, respectively, of Directors then in office.
Dissolution of the Company
The MGCL permits the dissolution of the Company by (i) the
adoption of a resolution by a majority of the entire Board of Directors, and
(ii) upon proper notice, approval by the stockholders by the affirmative vote of
two-thirds of all the votes entitled to be cast on the matter.
Meetings of Stockholders
The Company's Bylaws provide for annual meetings of stockholders
to be held during the month of August in each year or at such other time and/or
date as the Board of Directors shall determine. Special meetings of stockholders
may be called by (i) the Chairman of the Board or the President, or (ii) the
Board of Directors, and must be called upon the written request of stockholders
entitled to cast at least 25% of all the votes entitled to be cast at the
meeting.
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<PAGE>
The Company's Bylaws provide that any stockholder of record
wishing to nominate a Director or to propose any new business at an annual or
special meeting of stockholders must provide written notice to the Company
relating to the nomination or proposal not less than 60 days nor more than 90
days prior to the anniversary date of the prior year's annual meeting or special
meeting in lieu thereof.
The purpose of requiring stockholders to give the Company advance
notice of nominations and other business is to afford the Board of Directors a
meaningful opportunity to consider the qualifications of the proposed nominees
or the advisability of the other proposed business and, to the extent deemed
necessary or desirable by the Board of Directors, to inform stockholders and
make recommendations about the qualifications or business, as well as to provide
a more orderly procedure for conducting meetings of stockholders. Although the
Company's Bylaws do not give the Board of Directors any power to disapprove
stockholder nominations for the election of Directors or proposals for action,
they may have the effect of precluding a contest for the election of Directors
or the consideration of stockholder proposals if the proper procedures are not
followed, and of discouraging or deterring a third party from conducting a
solicitation of proxies to elect its own slate of Directors or to approve its
own proposal, without regard to whether consideration of the nominees or
proposals might be harmful or beneficial to the Company and its stockholders.
Additional Provisions Related to The Board of Directors
The Charter provides that the number of Directors initially will
be nine, and, after the occurrence of a Simplification Event, may be increased
or decreased from time to time by a vote of the majority of the Directors then
in office; provided, however, that the total number of Directors shall not be
fewer than the minimum number permitted by the MGCL nor more than nine. No
reduction in the number of Directors shall cause the removal of any Director
from office prior to the removal of such Director in accordance with the Charter
or the expiration of his or her term.
Any Director may resign from the Board of Directors or any
committee thereof at any time by written notice to the Board of Directors,
effective upon execution and delivery to the Company of such notice or upon any
future date specified in the notice. A Director may be removed from office, but
only for cause and only at a meeting of the stockholders called for that
purpose, by the affirmative vote of the holders of not less than two-thirds of
the Common Stock then outstanding and entitled to vote in the election of
Directors (or, at any time prior to the occurrence of a Simplification Event, by
the affirmative vote of the holders of not less than two-thirds of the same
class of Common Stock as elected such Director). Any vacancy created by the
resignation, removal or death of a Director (other than the Whitehall Director
and the Oaktree Director) shall be filled by the remaining Directors (or, at any
time prior to the occurrence of a Simplification Event, by the remaining
Directors elected, or entitled to be elected, by the same class of Common Stock
as such Director). Any vacancy created by the resignation, removal or death of a
Whitehall Director or an Oaktree Director, as the case may be, prior to the
expiration of the initial term of such Director and prior to the occurrence of a
Simplification Event will be filled by the remaining Directors elected, or
entitled to be elected, by the same class of Common Stock as such Director who
will elect the nominee of Whitehall or Oaktree, as the case may be. For purposes
of the Charter, the sale, transfer or other disposition by a stockholder of more
than 80% of the shares of Common Stock distributed to such stockholder pursuant
to the Plan will, among other things, constitute cause for removing a Director
that receives compensation directly or indirectly from such stockholder unless
after giving effect to such sale, the stockholder will continue to hold shares
of Common Stock representing at least 5% of the combined voting power of all of
the outstanding shares of Common Stock.
The Company's Bylaws provide that prior to the occurrence of a
Simplification Event, the Company may not take (or agree to take), and the Board
of Directors shall not authorize the Company to take (or agree to take), any
action regarding the following matters without the affirmative vote of 66 2/3%
of the entire Board of Directors:
54
C/M: 11764.0009 421963.11
<PAGE>
(a) approval of the annual budget of the Company, provided
that, if, with respect to a proposed budget for any fiscal year, the requisite
vote of Directors is not obtained, the annual budget for the immediately
preceding fiscal year, increased (but in no event decreased) on a line-by-line
basis by the increase in the Consumer Price Index for all Urban Consumers
(1982-1984 = 100 relating to New York-Northern New Jersey-Long Island Region and
issued by the Bureau of Labor Statistics of the United States Department of
Labor or if no longer published, or such publication is temporarily or
indefinitely suspended, then any comparable index issued by the Bureau of Labor
Statistics of the United States Department of Labor or by any successor agency
of the United States, or any other generally recognized and accepted index for
similar determinations of the cost of living, in lieu of such index) for the
period beginning in January and ending in December of the immediately preceding
fiscal year, shall be the annual budget for such fiscal year;
(b) other than expenditures for tenant improvements and
building improvements in connection with any lease, any individual capital
expenditure in excess of $1,500,000 or aggregate capital expenditures for any
fiscal year in excess of $3,500,000, in each case, not provided for in the
Company's annual budget;
(c) any amendment to, modification of, or expenditure
(other than capital expenditures not requiring approval pursuant to paragraph
(b) above) in excess of 110% of, any amounts included in an annual budget;
provided that expenditures in excess of 110% of budgeted amounts may be made in
order to comply with the provisions of any laws, leases or other agreements to
which the Company or its properties are subject or to pay operating expenses in
the ordinary course including, without limitation, debt service, real estate
taxes, utilities and insurance, or to effect repairs or maintenance in an
emergency and prompt notification thereof shall be given to the Board;
(d) authorization, declaration or payment of any
distributions with respect to shares of stock in the form of properties or
assets of the Company other than cash or stock;
(e) any adoption or modification of significant accounting
policies or practices or any change in the Company's independent auditors;
(f) termination of any property management contract
between the Company and a property management company;
(g) refinancing of the indebtedness of the Company or its
properties (other than the Chase Financing);
(h) settlement of any litigation or consent to the entry
of any order, in either case requiring the payment by the Company of an
uninsured amount greater than $2,500,000;
(i) entering into any lease with respect to an amount of
rentable square feet of space established by the affirmative vote of 75% of the
Directors; provided, that, if 75% of the Directors shall fail to establish such
amount, such amount shall be 150,000 or more rentable square feet of space; or
(j) any acquisition in excess of $2,500,000 (other than in
connection with the leasing, improvement and other operations of the Company's
properties or as contemplated by the annual budget with respect to such
properties including, without limitation, any acquisition of, or investment in,
any providers of services to such properties and any easements, air rights or
appurtenances, necessary or desirable for the operation of the properties) and
not subject to approval of stockholders.
In addition, the Bylaws provide that prior to the
occurrence of a Simplification Event, the Company shall not take (or agree to
take), and the Board of Directors shall not authorize the Company to take (or
agree to take), without the affirmative vote of 75% of the Directors, any action
regarding any offering by
55
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<PAGE>
the Company of new equity interests in the Company pursuant to a single
transaction or series of related transactions, whether public or private, if the
aggregate equity interest offered thereby exceeds 25% of the equity of the
Company.
Pursuant to the Bylaws, the Board of Directors has established an
Executive Committee to oversee the day-to-day operations of the Company and its
properties. The Executive Committee is comprised of Messrs. W. Edward Scheetz,
Lee S. Neibart and Mr. John Klopp. Until the occurrence of a Simplification
Event, Directors appointed by holders of Class B Common Stock will annually
elect two members of the Executive Committee and Directors appointed by holders
of Class A Common Stock will elect one member thereof. The duties and powers of
the Executive Committee will be established by the vote of 75% of the entire
Board. The members of the Executive Committee will serve one-year terms. See
"MANAGEMENT OF THE COMPANY."
Limitation of Liability and Indemnification
The MGCL permits a Maryland corporation to include in its charter
a provision limiting the liability of its directors and officers to the
corporation or its stockholders for money damages, except (i) to the extent that
it is determined that the person actually received an improper benefit or profit
in money, property or services, or (ii) to the extent that a judgment or other
final adjudication adverse to the person is entered in a proceeding finding that
the person's action or failure to act was the result of active and deliberate
dishonesty material to the cause of action adjudicated in the proceeding. The
Charter contains a provision which eliminates such liability to the fullest
extent permitted from time to time by Maryland law. This provision does not
limit the ability of the Company or its stockholders to obtain other relief,
such as an injunction or rescission.
The Company's Bylaws require the Company to indemnify and to
advance expenses to its Directors, officers and certain other parties to the
fullest extent permitted from time to time by Maryland law. The MGCL permits a
corporation to indemnify its directors, officers and certain other parties
against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they may be
made a party by reason of their service to or at the request of the corporation,
unless it is established that the act or omission of the indemnified party was
material to the matter giving rise to the proceeding and (i) the act or omission
was committed in bad faith or was the result of active and deliberate
dishonesty, (ii) the indemnified party actually received an improper personal
benefit, or (iii) in the case of any criminal proceeding, the indemnified party
had reasonable cause to believe that the act or omission was unlawful.
Indemnification Agreements
Pursuant to the Plan, the Company entered into indemnification
agreements with its initial officers and Directors. The indemnification
agreements require, among other things, that the Company indemnify its officers
and Directors to the fullest extent permitted by law and advance to the
executive officers and Directors all related expenses, subject to reimbursement
if it is subsequently determined that indemnification is not permitted. Under
these agreements, the Company must also indemnify and advance all expenses
incurred by officers and Directors seeking to enforce their rights under the
indemnification agreements and may cover officers and Directors under the
Company's Directors' and officers' liability insurance. Although the
indemnification agreements offer substantially the same scope of coverage
afforded by law, they provide greater assurance to Directors and officers that
indemnification will be available, because, as a contract, they cannot be
modified unilaterally in the future by the Board of Directors or the
stockholders to eliminate the rights they provide.
56
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<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES
The shares of Common Stock issued pursuant to the Plan were not
registered under the Securities Act. With respect to the issuance of shares of
Common Stock to Noteholders, the Company relied upon an exemption from the
registration requirements of the Securities Act provided by section 1145(a)(1)
of the Bankruptcy Code. With respect to the issuance of shares of Common Stock
to the Morgan Loan Lenders, VCG and Nyprop, LLC, the Company, in each case,
relied upon the exemption provided by section 4(2) of the Securities Act.
AUDITORS
The Company's Board of Directors has designated Deloitte & Touche LLP as
the Company's independent auditors for the fiscal year 1996-1997. This firm has
audited the Company's financial statements since its inception.
57
C/M: 11764.0009 421963.11
<PAGE>
METROPOLIS REALTY TRUST, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PRO FORMA (Unaudited)
Consolidated Condensed Statements of Income for the period January 1,
1996 to October 10, 1996 and for the year ended
December 31, 1995............................................................. F-2
HISTORICAL FINANCIAL STATEMENTS
Report of Independent Accountants............................................. F-4
Consolidated Balance Sheet as of October 10, 1996............................. F-5
Notes to Consolidated Balance Sheet........................................... F-6
PURCHASED PROPERTIES
Report of Independent Accountants............................................. F-10
Combined Balance Sheet as of December 31, 1995................................ F-11
Combined Statements of Revenues and Certain Expenses for the period
January 1, 1996 to October 10, 1996 and for the years ended
December 31, 1995 and 1994.................................................... F-12
Notes to Combined Balance Sheet and Statements of Revenues
and Certain Expenses.......................................................... F-13
</TABLE>
F-1
C/M: 11764.0009 421963.11
<PAGE>
METROPOLIS REALTY TRUST, INC.
PRO-FORMA CONSOLIDATED CONDENSED STATEMENTS OF INCOME
For the period January 1, 1996 to October 10, 1996 (Unaudited)
and
For the year ended December 31, 1995 (Unaudited)
The following unaudited Pro Forma Consolidated Condensed Statements of Income
have been presented as if the transactions described under the heading captioned
"BACKGROUND" had been consummated on January 1, 1995. The unaudited Pro Forma
Consolidated Condensed Statements of Income should be read in conjunction with
the Combined Statements of Revenue and Certain Expenses for the period January
1, 1996 to October 10, 1996 and for the year ended December 31, 1995 included
elsewhere herein. The unaudited Pro Forma Consolidated Condensed Statements of
Income are not necessarily indicative of what actual results of operations of
Metropolis Realty Trust, Inc. would have been had this transaction actually
occurred as of January 1, 1995, nor do they purport to represent the results of
operations of Metropolis Realty Trust, Inc. for future periods.
<TABLE>
<CAPTION>
For the Period January 1, 1996 to For the Year Ended
October 10, 1996 (Unaudited) December 31, 1995 (Unaudited)
---------------------------------------------------------------------------------------------
Historical Historical
Consolidated Metropolis Consolidated Pro Forma Metropolis
Statement of Pro Forma Realty Trust Statement of Adjustments Realty Trust
Income Adjustments Pro Forma Income Pro Forma
---------------------------------------------------------------------------------------------
($000's Omitted)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental Income $90,993 - $90,993 $121,209 - $121,209
Interest Income 410 - 410 820 - 820
---------- ---------- ---------- ----------
Total Revenue 91,403 - 91,403 122,029 - 122,029
OPERATING EXPENSES
Payroll & Benefits 3,258 - 3,258 4,058 - 4,058
Operating and Maintenance 4,798 - 4,798 7,397 - 7,397
Utilities 5,288 - 5,288 6,685 - 6,685
Management Fees 528 1,070 (A) 1,598 1,163 955 (A) 2,118
Real Estate Taxes 21,299 - 21,299 28,309 - 28,309
General and Administrative 379 - 379 1,359 - 1,359
Bad Debt Expense 1,214 - 1,214 2,015 - 2,015
Insurance Expense 398 - 398 582 - 582
---------- ----------- ---------- ---------- ----------- ----------
Total Operating 37,162 1,070 38,232 51,568 955 52,523
OTHER EXPENSES:
Depreciation and - 15,111 (B) 15,111 - 18,900 (B) 18,900
Amortization
Interest Expense - 26,101 (C) 26,101 - 33,545 (C) 33,545
----------- -------- -------- ----------- -------- --------
Total Other Expenses - 41,212 41,212 - 52,446 52,446
----------- -------- -------- ----------- -------- --------
NET INCOME(LOSS) $54,241 ($42,282) $11,959 $70,461 ($53,401) $17,060
-------- --------- -------- -------- --------- --------
</TABLE>
F-2
C/M: 11764.0009 421963.11
<PAGE>
<TABLE>
<S> <C>
(A) Reflects the following activity in management fees
For the period January 1, 1996 to October 10, 1996 Reflects pro-forma
adjusted management fees pursuant to the Asset Management Agreement
and the Property Management Agreements
$1,598
Reflects historical management fee (528)
-----------------------
$1,070
=======================
-----------------------
For the year ended December 31, 1995
Reflects pro-forma adjusted management fees pursuant to the Asset
Management Agreement and the Property Management Agreements
$2,118
Reflects historical management fee
(1,163)
-----------------------
$955
=======================
(B) Reflects the following activity in depreciation and amortization:
For the period January 1, 1996 to October 10, 1996 Reflects pro forma
adjusted depreciation and amortization of the
Company's Properties including capitalized financing costs $15,111
=======================
-----------------------
For the year ended December 31, 1995
Reflects pro forma adjusted depreciation and amortization of the
Company's Properties including capitalized financing costs $18,900
=======================
-----------------------
(C) Reflects the following activity in interest expense:
For the period January 1, 1996 to October 10, 1996
Reflects interest costs associated with the Secured Notes $26,101
=======================
For the year ended December 31, 1995
Reflects interest costs associated with the Secured Notes $33,545
=======================
</TABLE>
F-3
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<PAGE>
INDEPENDENT ACCOUNTANT'S REPORT
To the Stockholders of Metropolis Realty Trust, Inc.:
We have audited the accompanying consolidated balance sheet of Metropolis Realty
Trust, Inc. as of October 10, 1996. This consolidated balance sheet is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated balance sheet presents fairly, in all material
respects, the financial position of Metropolis Realty Trust, Inc. as of October
10, 1996 in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
December 5, 1996
F-4
C/M: 11764.0009 421963.11
<PAGE>
METROPOLIS REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEET
October 10, 1996
($000's Omitted)
ASSETS
Rental property $656,945
Cash and cash equivalents 38,999
Escrow deposits 21,934
Tenant security deposits 553
Accounts receivable -trade 6,305
Deferred financing costs 10,406
Real estate tax refunds 14,088
Notes receivable 8,849
Prepaid expenses and other assets 4,241
TOTAL ASSETS $ 762,320
===========
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities
Secured Notes $ 420,000
Accounts payable and accrued expenses 16,121
Unearned revenue 5,646
Security Deposit Payable 553
-----------
Total Liabilities 442,320
Stockholders' Equity
Par value 129,620
Paid in capital 190,380
Total Stockholders' Equity 320,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 762,320
=========
See notes to consolidated balance sheet.
F-5
C/M: 11764.0009 421963.11
<PAGE>
METROPOLIS REALTY TRUST, INC.
NOTES TO CONSOLIDATED BALANCE SHEET
October 10, 1996
($000's omitted)
1. BACKGROUND BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Organization - Metropolis Realty Trust, Inc., a Maryland corporation
("Metropolis" or the Company"), was formed on May 13, 1996 to facilitate
the consummation of the Second Amended Joint Plan of Reorganization of
237 Park Avenue Associates, L.L.C. ("237 LLC") and 1290 Associates,
L.L.C. ("1290 LLC" and together with 237 LLC, the "Predecessors"), dated
September 20, 1996 (the "Plan"). Pursuant to the Plan, on October 10,
1996 (the "Effective Date") the Company acquired the interests of 237
LLC and 1290 LLC in the properties located at 237 Park Avenue (the "237
Property") and 1290 Avenue of the Americas (the "1290 Property," and
together with the 237 Property, the "Properties"). The Company owns a
95% interest, as general partner, in 237/1290 Lower Tier Associates,
L.P., a Delaware limited partnership (the "Lower Tier Limited
Partnership") which owns a 99% partnership interest, as limited partner
in each of 237 Park Partners, L.P., a Delaware limited partnership (the
"237 Property Owning Partnership") and 1290 Partners, L.P., a Delaware
limited partnership (the "1290 Property Owning Partnership," and
together with the 237 Property Owning Partnership, the "Property Owning
Partnerships"). The Property Owning Partnerships were formed to own the
Properties. The remaining 1% interest in each of the Property Owning
Partnerships is owned by one of two wholly-owned subsidiaries of the
Company.
Basis of Presentation - The consolidated balance sheet includes
Metropolis, the Lower Tier Limited Partnership and the Property Owning
Partnerships. The consolidated balance sheet has been presented using
the purchase method of accounting as specified by APB #16 based upon the
reorganization value specified in the Plan. The reorganization value
approximates fair value.
The presentation of the consolidated balance sheet requires estimates
and assumptions that affect the reported amounts of assets and
liabilities at the balance sheet date. Actual results could differ from
those estimates.
Rental Property - Rental Property includes land, land improvements,
building, tenant improvements and building equipment recorded at the
reorganization value described above.
Cash and cash equivalents - Cash and cash equivalents includes
investments purchased with an original maturity of three months or less.
Escrow Deposits - Escrow deposits includes reserves for certain claims
made in conjunction with the Plan and escrow deposits for building and
tenant improvements, insurance and real estate taxes.
Income Taxes - The Company intends to qualify as a REIT under the
Internal Revenue Code, as amended, and will generally not be taxed at
the corporate level on income it currently distributes to its
stockholders so long as it distributes at least 95% of its REIT taxable
income.
F-6
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<PAGE>
2. REAL ESTATE TAX REFUNDS
Real estate tax refunds represent real estate tax proceeds expected to
be recovered by the Company as a result of real estate tax certiorari
proceedings commenced by the Predecessors, net of any fees and expenses
incurred to collect such proceeds (the "Tax Proceeds"). The Company has
reserved approximately $6,156 for tenant claims against the Tax
Proceeds. This reserve is included in accounts payable and accrued
expenses on the accompanying balance sheet.
3. NOTES RECEIVABLE
Included in Notes Receivable is the estimated fair value of two tenant
notes aggregating approximately $8,849. The first note, dated April 1,
1989 with a face amount of $6,500 and a maturity date of September 1,
1999, has been valued at $5,444, based on certain payment terms. Such
payment terms include a stated interest rate of 10% and concessions
claimed by the tenant including a level monthly payment of $75 to be
applied first to interest with the remainder to principal (versus
constant payments calculated to liquidate the note by the maturity date
stated in the original note). The Company has not agreed to such
concessions claimed by the tenant and may contest them. The second note
dated August 20, 1985, has been valued at $3,405. The second note does
not bear interest and is payable on October 31, 1999.
4. SECURED NOTES
Secured Notes consist of promissory notes ("Loan") issued by the
Property Owning Partnerships in the original principal amount of
$420,000 ("notional amount") pursuant to a Credit Agreement
("Agreement") among the Property Owning Partnerships, the lenders
signatories thereto and the lead lender. Of the aggregate principal
amount of the loan, $250,000 of the Loan is allocated to the 1290
Property and $170,000 is allocated to the 237 Property. The Loan is
cross collateralized by the Properties. The Loan is scheduled to mature
on October 10, 2001. The Loan requires the Property Owning Partnerships
to make interest only payments during the first year of the loan and
then make principal payments of $7,500, $7,500, $10,000 and $15,000 in
each of the second, third, fourth and fifth years, respectively, of the
Loan. If any such scheduled principal payments would cause the Company
to fail to comply with any income test requirements necessary for the
Company to maintain its status as a REIT, then the Property Owning
Partnerships may, in lieu of such principal payment, post an irrevocable
letter of credit in the amount of such payment. The costs associated
with securing the Loan are included in deferred financing costs on the
accompanying balance sheet and will be amortized over the term of the
Loan. The Property Owning Partnerships have also entered into lock box
agreements for the collection of rents and have established escrow
accounts for real estate taxes and insurance.
The Property Owning Partnerships and the lead lender entered into an
Interest Rate Exchange Agreement dated as of October 10, 1996 (the "Swap
Agreement"). The Swap Agreement has a term of 5 years and provides that
the Property Owning Partnerships will pay interest at an effective rate
of 7.987% per annum of the notional amount.
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses include funded reserves held by
the Company for utility tax claims, certain claims related to the Plan,
tenant claims against Tax Proceeds and property operating expenses
payable. The utility tax claims of $4,427 include approximately $2,677
of claims pertaining to a property owned by an affiliate of the
Predecessors which was disposed of prior to October 10, 1996.
F-7
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<PAGE>
6. STOCKHOLDERS' EQUITY
The Company has the authority to issue 50,000,000 shares of common
stock, par value $10 per share (the "Common Stock"), and 10,000,000
shares of Preferred Stock, par value $10 per share. Stockholders equity
consists of 12,949,000 shares of Common Stock issued and outstanding. Of
the 12,949,000 shares issued and outstanding, 7,973,000 represent shares
of Class A Common Stock, 4,936,000 represent shares of Class B Common
Stock, and 40,000 represent shares of Class C Commons Stock which were
issued to affiliates of the Company's Asset Manager. Of the 7,973,000 of
Class A Common Stock issued and outstanding, 923,000 shares were issued
as part of a subscription rights offering under the Plan. All of such
shares were issued on the effective date pursuant to the Plan.
7. STOCK PLAN AND REGISTRATION RIGHTS
The Board of Directors of the Company adopted a Directors' Stock Plan
effective October 10, 1996. Pursuant to the Stock Plan, the Board of
Directors of the Company has the authority to issue to members of the
Company's Board of Directors options to purchase, in the aggregate,
100,000 shares of Common Stock. On the effective date, the initial
members of the Company's Board of Directors were granted options
entitling each Director to purchase an aggregate of 3,000 shares of
Common Stock at an exercise price of $25 per share in accordance with
the Plan. Each Director will receive an additional 400 shares of Common
Stock at the 1997 annual meeting and each subsequent annual meeting.
Total outstanding options at October 10, 1996 aggregated 27,000, of
which 9,000 are exercisable currently and 9,000 are exercisable on
October 10, 1997 and October 10, 1998.
The Company has entered into a Registration Rights Agreement between the
Company and the holders of Common Stock. The Registration Rights
Agreement permits certain of the Company's stockholders to demand,
subject to certain conditions, that the Company register their Common
Stock for sale and provides all of the Company's stockholders with the
right to participate proportionally in any public offering of the
Company's securities.
8. RELATED PARTY TRANSACTIONS
Asset Management - The Company has entered into an Asset Management
Agreement with a company ("Asset Manager") that is directly affiliated
with two of Metropolis' shareholders. One of these shareholders is a
also a Director of the Company. The Asset Manager provides asset
advisory, consultation and management services for the Company. Fees for
such services are payable in arrears, on a monthly basis of twenty-five
thousand dollars. The Asset Management Agreement also provides for
reimbursement for costs and expenses for contractors and professional
fees, payable as incurred.
Property Management - The Company has also entered into a Management and
Leasing Agreement with a company ("Property Manager") that is an
affiliate of a shareholder. The Property Manager is to manage and
operate the property and provide all supervisory, management and leasing
services. The Management and Leasing Agreement provides for a management
fee of 1.5 percent of Gross Revenues, payable monthly, and reimbursement
for overhead and all reasonable out-pocket-expenses incurred. The
Management and Leasing Agreement also provides for leasing commissions
to be calculated on a sliding scale percentage basis of the lease's base
rent.
F-8
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<PAGE>
9. LEASES
Minimum future rents due under noncancelable leases as of October 10,
1996 are as follows:
1996 $ 23,466
1997 107,513
1998 107,901
1999 103,383
2000 103,333
Thereafter 743,970
$1,189,566
F-9
C/M: 11764.0009 421963.11
<PAGE>
INDEPENDENT ACCOUNTANT'S REPORT
To the Stockholders of Metropolis Realty Trust, Inc.:
We have audited the combined balance sheet of the Purchased Properties owned
indirectly by Metropolis Realty Trust, Inc. as described in Note 1 as of
December 31, 1995 and the combined statements of revenues and certain expenses
as described in Note 1 for the period January 1, 1996 to October 10, 1996 and
for the years ended December 31, 1995 and 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying combined statements of revenue and certain expenses were
prepared in compliance with the rules and regulations of the Securities and
Exchange Commission (for inclusion in the registration statement on Form 10 of
Metropolis Realty Trust, Inc.) and as described in Note 1, are not intended to
be a complete presentation of the Purchased Properties' revenue and expenses.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of the Purchased
Properties owned indirectly by Metropolis Realty Trust, Inc. as described in
Note 1 as of December 31, 1995 and the statements of combined revenues and
certain expenses as described in Note 1 for the period January 1, 1996 to
October 10, 1996 and for the years ended December 31, 1995 and 1994 in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
December 5, 1996
F-10
C/M: 11764.0009 421963.11
<PAGE>
PURCHASED PROPERTIES
COMBINED BALANCE SHEET
December 31, 1995
($000's Omitted)
ASSETS
Rental property $ 645,235
Cash and restricted cash 7,218
Escrow deposits 493
Rent receivables 54,573
Deferred expenses 18,169
Other assets 1,024
----------
TOTAL ASSETS $ 726,712
LIABILITIES & CUMULATIVE DEFICIT
Liabilities
Long-term debt $ 902,603
Deferred rent 20,706
Accounts payable and accrued expenses 11,280
Security deposit payable 493
----------
Total Liabilities 935,082
Cumulative Deficit (208,370)
TOTAL LIABILITIES AND CUMULATIVE DEFICIT $ 726,712
=========
See notes to combined balance sheet.
F-11
C/M: 11764.0009 421963.11
<PAGE>
<TABLE>
PURCHASED PROPERTIES
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
Period January 1, to October 10, 1996 and
For the Years Ended December 31, 1995 and 1994
($000's Omitted)
<CAPTION>
Period Year Ended Year Ended
January 1, December December
to October 31, 1995 31, 1994
10, 1996
-------------- ------------- -------------
<S> <C> <C> <C>
REVENUES:
Rental Income $90,993 $121,209 $132,460
Interest Income 410 820 123
-------------- ------------- -------------
Total Revenues 91,403 122,029 132,583
CERTAIN EXPENSES:
Payroll and Benefits 3,258 4,058 3,711
Operating and Maintenance 4,798 7,397 7,742
Utilities 5,288 6,685 6,414
Management Fees 528 1,163 1,633
Real Estate Taxes 21,299 28,309 28,822
General and Administrative 379 1,359 694
Bad Debt Expense 1,214 2,015 3,342
Insurance Expense 398 582 577
-------------- ------------- -------------
Total Certain Expenses 37,162 51,568 52,935
-------------- ------------- -------------
REVENUES IN EXCESS OF CERTAIN EXPENSES
$54,241 $70,461 $79,648
============== ============= =============
</TABLE>
See notes to Combined Statements of Revenues and Certain Expenses.
F-12
C/M: 11764.0009 421963.11
<PAGE>
PURCHASED PROPERTIES
NOTES TO COMBINED BALANCE SHEET
As of December 31, 1995
AND NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN
EXPENSES For the period January 1, 1996 to October 10, 1996
and
For the years ended December 31, 1995 and 1994
($000's Omitted)
1. BACKGROUND, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Organization - Metropolis Realty Trust, Inc., a Maryland corporation
("Metropolis" or the Company"), was formed on May 13, 1996 to facilitate
the consummation of the Second Amended Joint Plan of Reorganization of
237 Park Avenue Associates, L.L.C. ("237 LLC") and 1290 Associates,
L.L.C. ("1290 LLC" and together with 237 LLC, the "Predecessors"), dated
September 20, 1996 (the "Plan"). Pursuant to the Plan, on October 10,
1996 ( the "Effective Date") the Company acquired the interests of 237
LLC and 1290 LLC in the office properties located at 237 Park Avenue
(the "237 Property") and 1290 Avenue of the Americas (the "1290
Property," and together with the 237 Property, the "Properties"). The
Company owns a 95% interest, as general partner, in 237/1290 Lower Tier
Associates, L.P., a Delaware limited partnership (the "Lower Tier
Limited Partnership") which owns a 99% partnership interest, as limited
partner in each of 237 Park Partners, L.P., a Delaware limited
partnership (the "237 Property Owning Partnership") and 1290 Partners,
L.P., a Delaware limited partnership (the "1290 Property Owning
Partnership," and together with the 237 Property Owning Partnership, the
"Property Owning Partnerships"). The Property Owning Partnerships were
formed to own the Properties. The remaining 1% interest in each of the
Property Owning Partnerships is owned by one of two wholly-owned
subsidiaries of the Company
Basis of Presentation - The combined statements relate to the operations
of the Properties (the "Purchased Properties"). The Purchased Properties
have a combined net leasable area of approximately 3,103,000 square
feet. As of October 10, 1996, the Purchased Properties are encumbered
with less debt and related interest; the asset base and related
depreciation is significantly different; one of the Predecessor's equity
holders has a remaining subordinated 5% indirect interest; and the
properties are managed by an affiliated property manager with a
different management structure. Accordingly, Management believes the
combined statements are the most meaningful presentation as they present
the Purchased Properties' operations in a manner which excludes
variables associated with the ownership and management of the
Predecessors.
Combined Statements of Revenue and Certain Expenses:
The accompanying combined statements of revenue and certain expenses are
presented in conformity with Rule 3-14 of Regulation S-X of the
Securities and Exchange Commission. Accordingly, the statements are not
representative of the actual operations for the period January 1, 1996
to October 10, 1996 and for the years ended December 31, 1995 and 1994
as certain expenses which may not be comparable to the expenses expected
to be incurred in the proposed future operations of the Purchased
Properties have been excluded. Expenses excluded consist of interest,
depreciation and amortization and other costs not directly related to
the future operations of the Purchased Properties.
Rental income is recognized on a straight line basis over the term of
the related leases.
F-13
C/M: 11764.0009 421963.11
<PAGE>
Combined Balance Sheet:
The accompanying combined balance sheet of the Purchased Properties
include the separate balance sheets of each of the Properties.
The presentation of the accompanying combined balance sheet in
accordance with generally accepted accounting principles requires the
management of the Purchased Properties to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date
of the balance sheet.
Actual results could differ from those estimates.
In conjunction with the negotiations with representatives of the first
mortgage lender regarding a loan restructure, affiliates of the
Predecessors reached an agreement with the first mortgage lender whereby
effective January 1, 1993, the affiliates of the Purchased Properties
were limited to taking distributions of $250 on a monthly basis from the
Purchased Properties reserving the remaining excess cash flow in a
separate interest-bearing account to be used exclusively to meet the
obligations of the Purchased Properties. Such reserved amounts, of
approximately $6,576 in the aggregate at December 31, 1995, are
classified as restricted funds in the accompanying combined balance
sheet.
Provisions for value impairment are recorded with respect to the
investment properties whenever the estimated future cash flows from a
property's operations and projected sale are less than the property's
net carry value. The investment properties are carried at historical
cost on the accompanying balance sheet.
Deferred expenses are comprised of leasing and renting costs which are
amortized using the straight-line method over the terms of the related
leases.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the Purchased Properties' owners.
Depreciation on the investment properties has been provided over the
estimated useful lives of 5 to 39 years using the straight-line method.
Although certain leases of the Purchased Properties provide for tenant
occupancy during periods for which no rent is due, the Purchased
Properties accrue prorated rental income for the full period of
occupancy. In addition, although certain leases provide for step
increases in rent during the lease term, the Purchased Properties
recognize the total rents receivable on a straight-line basis. Such
amounts are included in accrued rents receivable in the accompanying
combined balance sheet.
Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives. An affiliate of the Predecessor
Owners of the Purchased Properties' performs certain maintenance and
repair work and construction of certain tenant improvements.
2. LONG TERM DEBT
Long term debt consists of a first mortgage loan of $902,603 bearing
interest at the short-term U.S. Treasury obligation note rate plus
1-3/4% with a minimum rate on the loan of 7% per annum; allocated among
and cross-collaterally secured by the Properties. Monthly payments of
principal and interest are based upon a 30-year amortization schedule.
The loan is in technical default at December 31, 1995. The terms of
default were subsequently cured through the Plan. The stated maturity of
the principal plus accrued interest is due March 1999.
F-14
C/M: 11764.0009 421963.11
<PAGE>
3. LEASES
At December 31, 1995, all leases relating to the properties are properly
classified as operating leases. Leases with commercial tenants range in
term from 1 to 17 years and provide for fixed minimum rent and partial
to full reimbursement of operating costs. Affiliates of the Predecessor
Owner of the Purchased Properties have lease agreements and occupy
approximately 95,000 square feet of space at 237 Park Avenue at rental
rates which approximate market.
Deferred rent represents the unearned portion of lease termination fees
paid by certain tenants of the 1290 Avenue of America's property. The
lease termination fees are being amortized over the remaining terms of
the tenant and sub-tenant leases.
Minimum future rents due under noncancelable leases as of December 31,
1995 are as follows:
1996 $ 104,453
1997 107,513
1998 107,901
1999 103,383
2000 103,333
Thereafter 743,970
$1,270,553
4. CAPITAL EXPENDITURES
For the period from January 1, 1996 to October 10, 1996 and for the
years ended December 31, 1995 and 1994, capital expenditures related to
the rental property aggregated $4,048, $4,142 and $107, respectively.
F-15
C/M: 11764.0009 421963.11
<PAGE>
<TABLE>
Exhibits
<S> <C>
2.1 Second Amended Joint Plan of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290
Associates, L.L.C.
2.2 Technical Amendment to Second Amended Joint Plan of Reorganization of 237 Park Avenue
Associates, L.L.C. and 1290 Associates, L.L.C.
2.3 Second Technical Amendment to Second Amended Joint Plan of Reorganization of 237 Park
Avenue Associates, L.L.C. and 1290 Associates, L.L.C.
3.1 Articles of Amendment and Restatement of Metropolis Realty, Trust, Inc., dated October 7,
1996.
3.2 Amended and Restated By-Laws of Metropolis Realty Trust, Inc.
10.1 Agreement and Plan of Merger among 1290 Associates, L.L.C., 237 Park Avenue Associates,
L.L.C. and 237/1290 Upper Tier Associates, L.P., as of October 10, 1996.
10.2 Limited Partnership Agreement of 237 Park Partners, L.P.
10.3 Limited Partnership Agreement of 1290 Partners, L.P.
10.4 Agreement of Limited Partnership of 237/1290 Lower Tier Associates, L.P.
10.5 Amended and Restated Limited Partnership Agreement of 237/1290 Upper Tier Associates, L.P.
10.6 Redemption and Substitution Agreement among JMB/NYC Office
Building Associates, L.P., O&Y Equity Company, L.P., O&Y NY
Building Corp., 237/1290 Upper Tier GP Corp., and 237/1290 Upper
Tier Associates, L.P., dated October 10, 1996.
10.7 Metropolis Realty Trust, Inc. 1996 Directors' Stock Plan.
10.8 Form of Metropolis Realty Trust, Inc. Stock Option Agreement for Directors.
10.9 Form of Indemnification Agreement, dated as of October 10, 1996.
10.10 Registration Rights Agreement, dated as of October 10, 1996.
10.11 Participation Agreement (JMB Notes) between Metropolis Realty Trust, Inc. and Michigan
Avenue L.L.C., dated as of October 10, 1996.
10.12 Indemnification Agreement given by Property Partners, L.P., Carlyle-XIII Associates, L.P., and
Carlyle-XIV Associates, L.P. to Metropolis Realty Trust, Inc., dated as of October 10, 1996.
10.13 Modification of Operating Agreement of 237 Park Avenue Associates, L.L.C., dated as of
October 10, 1996.
10.14 Noteholders Contribution and Participation Agreement between Metropolis Realty Trust, Inc.
and Bankers Trust Company, dated as of October 10, 1996.
10.15 Debt Contribution Agreement, dated as of October 10, 1996, among
Metropolis Realty Trust, Inc., 237/1290 Lower Tier Associates,
L.P., 237 Park Partners, L.P., and 1290 Partners, L.P.
10.16 Debt Assumption, Release and Security Agreement (237 Excess amount) dated October 10,
1996.
F-16
C/M: 11764.0009 421963.11
<PAGE>
10.17 Debt Assumption, Release and Security Agreement (1290 Excess amount) dated October 10,
1996.
10.18 Release of Assumed Debt and Termination of Security Interest by
Bankers Trust Company for the benefit of O&Y NY Building Corp. and
O&Y Equity Company, L.P., dated as of October 10, 1996.
10.19 237 Property Contribution Agreement between 237/1290 Upper Tier Associates, L.P., 237/1290
Lower Tier Associates, L.P. and 237 Park Partners, L.P. dated as of October 10, 1996.
10.20 1290 Property Contribution Agreement among 237/1290 Upper Tier Associates, L.P., 237/1290
Lower Tier Associates, L.P. and 1290 Partners, L.P. dated as of October 10, 1996.
10.21 Credit Agreement among 1290 Partners, L.P., 237 Park Partners,
L.P., the lenders listed herein and the Chase Manhattan Bank,
dated as of October 10, 1996.
10.22 Consolidated, Amended and Restated Promissory Note in the amount of $420,000,000 from
1290 Partners, L.P., and 237 Park Partners, L.P. to Chase Manhattan Bank, dated October 10,
1996.
10.23 Mortgage Modification, Restatement and Security Agreement from
1290 Partners, L.P., and 237 Park Partners, L.P., to the Chase
Manhattan Bank, dated as of October 10, 1996.
10.24 Master Agreement among the Chase Manhattan Bank, 1290 Partners, L.P. and 237 Park
Partners, L.P., dated as of October 10, 1996.
10.25 Schedule to the Master Agreement between The Chase Manhattan Bank and 1290 Partners, L.P.
and 237 Park Partners, L.P., dated as of October 10, 1996.
10.26 Interest Rate Agreement Pledge, and Security Agreement among 1290
Partners, L.P., 237 Park Partners, L.P., and the Chase Manhattan
Bank, dated as of October 10, 1996.
10.27 Assignment of Leases, Rents and Security Deposits, dated October 10, 1996, by 1290 Partners,
L.P. and 237 Park Partners L.P. to the Chase Manhattan Bank.
10.28 Note Pledge and Security Agreement among 1290 Partners, L.P., 237 Park Partners, L.P. and
the Chase Manhattan Bank, dated as of October 10, 1996.
10.29 Consent and Subordination of Property Management Agreement, dated as of October 10, 1996.
10.30 Cash and Collateral Account Security, Pledge and Assignment
Agreement among 1290 Partners, L.P., 237 park partners, L.P., and
the Chase Manhattan Bank, dated as of October 10, 1996.
10.31 Management and Leasing Agreement between 237 Park Partners, L.P. and Tishman Speyer
Properties, L.P.
10.32 Management and Leasing Agreement between 1290 Partners, L.P. and Tishman Speyer
Properties, L.P.
10.33 Asset Management Agreement between Metropolis Realty Trust, Inc. and 970 Management,
L.L.C., dated as of October 10, 1996.
</TABLE>
F-17
C/M: 11764.0009 421963.11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
METROPOLIS REALTY TRUST, INC.
Date: December 9, 1996 By: /s/ Lee S. Neibart
Name: Lee S. Neibart
Title: President
S-1
C/M: 11764.0009 421963.11
<PAGE>
<TABLE>
Exhibit Index
<S> <C>
2.1 Second Amended Joint Plan of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290
Associates, L.L.C.
2.2 Technical Amendment to Second Amended Joint Plan of Reorganization of 237 Park Avenue
Associates, L.L.C. and 1290 Associates, L.L.C.
2.3 Second Technical Amendment to Second Amended Joint Plan of Reorganization of 237 Park
Avenue Associates, L.L.C. and 1290 Associates, L.L.C.
3.1 Articles of Amendment and Restatement of Metropolis Realty, Trust, Inc., dated October 7,
1996.
3.2 Amended and Restated By-Laws of Metropolis Realty Trust, Inc.
10.1 Agreement and Plan of Merger among 1290 Associates, L.L.C., 237 Park Avenue Associates,
L.L.C. and 237/1290 Upper Tier Associates, L.P., as of October 10, 1996.
10.2 Limited Partnership Agreement of 237 Park Partners, L.P.
10.3 Limited Partnership Agreement of 1290 Partners, L.P.
10.4 Agreement of Limited Partnership of 237/1290 Lower Tier Associates, L.P.
10.5 Amended and Restated Limited Partnership Agreement of 237/1290 Upper Tier Associates, L.P.
10.6 Redemption and Substitution Agreement among JMB/NYC Office
Building Associates, L.P., O&Y Equity Company, L.P., O&Y NY
Building Corp., 237/1290 Upper Tier GP Corp., and 237/1290 Upper
Tier Associates, L.P., dated October 10, 1996.
10.7 Metropolis Realty Trust, Inc. 1996 Directors' Stock Plan.
10.8 Form of Metropolis Realty Trust, Inc. Stock Option Agreement for Directors.
10.9 Form of Indemnification Agreement, dated as of October 10, 1996.
10.10 Registration Rights Agreement, dated as of October 10, 1996.
10.11 Participation Agreement (JMB Notes) between Metropolis Realty Trust, Inc. and Michigan
Avenue L.L.C., dated as of October 10, 1996.
10.12 Indemnification Agreement given by Property Partners, L.P., Carlyle-XIII Associates, L.P., and
Carlyle-XIV Associates, L.P. to Metropolis Realty Trust, Inc., dated as of October 10, 1996.
10.13 Modification of Operating Agreement of 237 Park Avenue Associates, L.L.C., dated as of
October 10, 1996.
10.14 Noteholders Contribution and Participation Agreement between Metropolis Realty Trust, Inc.
and Bankers Trust Company, dated as of October 10, 1996.
10.15 Debt Contribution Agreement, dated as of October 10, 1996, among
Metropolis Realty Trust, Inc., 237/1290 Lower Tier Associates,
L.P., 237 Park Partners, L.P., and 1290 Partners, L.P.
10.16 Debt Assumption, Release and Security Agreement (237 Excess amount) dated October 10,
1996.
C/M: 11764.0009 421963.11
<PAGE>
10.17 Debt Assumption, Release and Security Agreement (1290 Excess amount) dated October 10,
1996.
10.18 Release of Assumed Debt and Termination of Security Interest by
Bankers Trust Company for the benefit of O&Y NY Building Corp. and
O&Y Equity Company, L.P., dated as of October 10, 1996.
10.19 237 Property Contribution Agreement between 237/1290 Upper Tier Associates, L.P., 237/1290
Lower Tier Associates, L.P. and 237 Park Partners, L.P. dated as of October 10, 1996.
10.20 1290 Property Contribution Agreement among 237/1290 Upper Tier Associates, L.P., 237/1290
Lower Tier Associates, L.P. and 1290 Partners, L.P. dated as of October 10, 1996.
10.21 Credit Agreement among 1290 Partners, L.P., 237 Park Partners,
L.P., the lenders listed herein and the Chase Manhattan Bank,
dated as of October 10, 1996.
10.22 Consolidated, Amended and Restated Promissory Note in the amount of $420,000,000 from
1290 Partners, L.P., and 237 Park Partners, L.P. to Chase Manhattan Bank, dated October 10,
1996.
10.23 Mortgage Modification, Restatement and Security Agreement from
1290 Partners, L.P., and 237 Park Partners, L.P., to the Chase
Manhattan Bank, dated as of October 10, 1996.
10.24 Master Agreement among the Chase Manhattan Bank, 1290 Partners, L.P. and 237 Park
Partners, L.P., dated as of October 10, 1996.
10.25 Schedule to the Master Agreement between The Chase Manhattan Bank and 1290 Partners, L.P.
and 237 Park Partners, L.P., dated as of October 10, 1996.
10.26 Interest Rate Agreement Pledge, and Security Agreement among 1290
Partners, L.P., 237 Park Partners, L.P., and the Chase Manhattan
Bank, dated as of October 10, 1996.
10.27 Assignment of Leases, Rents and Security Deposits, dated October 10, 1996, by 1290 Partners,
L.P. and 237 Park Partners L.P. to the Chase Manhattan Bank.
10.28 Note Pledge and Security Agreement among 1290 Partners, L.P., 237 Park Partners, L.P. and
the Chase Manhattan Bank, dated as of October 10, 1996.
10.29 Consent and Subordination of Property Management Agreement, dated as of October 10, 1996.
10.30 Cash and Collateral Account Security, Pledge and Assignment
Agreement among 1290 Partners, L.P., 237 park partners, L.P., and
the Chase Manhattan Bank, dated as of October 10, 1996.
10.31 Management and Leasing Agreement between 237 Park Partners, L.P. and Tishman Speyer
Properties, L.P.
10.32 Management and Leasing Agreement between 1290 Partners, L.P. and Tishman Speyer
Properties, L.P.
10.33 Asset Management Agreement between Metropolis Realty Trust, Inc. and 970 Management,
L.L.C., dated as of October 10, 1996.
</TABLE>
C/M: 11764.0009 421963.11
<PAGE>
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors
in Possession
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Brian S. Rosen, Esq. (BR 0571)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - -X
In re :
Chapter 11 Case Nos.
237 PARK AVENUE ASSOCIATES, L.L.C. :
and 1290 ASSOCIATES, L.L.C.,
: 96 B 42177 (JLG)
Debtors. 96 B 42178 (JLG)
- - - - - - - - - - - - - - - - - - -X (Jointly Administered)
SECOND AMENDED JOINT PLAN OF REORGANIZATION
OF 237 PARK AVENUE ASSOCIATES, L.L.C.
AND 1290 ASSOCIATES, L.L.C.
237 Park Avenue Associates, L.L.C. and 1290 Associates,
L.L.C. hereby propose the following joint plan of reorganization
pursuant to sections 1121(a) and (c) of title 11 of the United
States Code.
334901.29
<PAGE>
ARTICLE I
DEFINITIONS
As used in the Plan, each of the following terms shall have
the respective meaning specified below and such meaning shall be equally
applicable to the singular and plural forms of the terms defined. All of the
definitions and provisions contained in this Article I are and shall be regarded
as integral, substantive and operative provisions of the Plan.
1.1 2 Broadway L.P.: 2 Broadway Associates, L.P., a
Delaware limited partnership.
1.2 2 Broadway Plan: The Plan of Reorganization of 2 Broadway
Associates, L.P., dated June 20, 1995, in Case No. 95 B 42724 (JLG), and
confirmed by order of the Bankruptcy Court, dated August 28, 1995.
1.3 2 Broadway Tax Certiorari Proceeds: The Net Tax Proceeds
remaining after payment of Allowed Tenant Reimbursement Claims, both as defined
in the 2 Broadway Plan, pursuant to the 2 Broadway Plan.
1.4 2 Broadway Utility Tax Reserve: The reserve established
pursuant to Section 9.7 of the 2 Broadway Plan for the payment of Priority
Utility Tax Claims, as defined in the 2 Broadway Plan.
1.5 237 Assumption and Security Agreement: The Debt
Assumption, Release and Security Agreement, dated as of the Effective Date, by
and among the Debtors, Building Corp.,
-2-
334901.29
<PAGE>
Equityco and the Indenture Trustee, substantially in the form contained in the
Plan Supplement.
1.6 237 Corp.: 237 GP Corp., a Delaware corporation and a
wholly-owned subsidiary of the REIT.
1.7 237 Excess Amount: A portion of the Excess Amount
equal to Sixty Million Dollars ($60,000,000).
1.8 237 L.L.C.: 237 Park Avenue Associates, L.L.C., a New York
limited liability company, formerly 237 Park Avenue Associates, a New York
general partnership.
1.9 237 Operating Agreement Modification: The Modification of
Operating Agreement of 237 L.L.C., dated as of the Effective Date, by and among
the JMB LP, Equityco and Building Corp., substantially in the form contained in
the Plan Supplement.
1.10 237 Park Partners, L.P.: 237 Park Partners, L.P., a
Delaware limited partnership.
1.11 237 Property: The real property and improvements commonly
referred to as 237 Park Avenue, New York, New York.
1.12 1290 Assumption and Security Agreement: The Debt
Assumption, Release and Security Agreement, dated as of the Effective Date, by
and among the Upper Tier Limited Partnership, Building Corp., Equityco and the
Indenture Trustee, substantially in the form contained in the Plan Supplement.
1.13 1290 Corp.: 1290 GP Corp., a Delaware corporation and a
wholly-owned subsidiary of the REIT.
-3-
334901.29
<PAGE>
1.14 1290 Excess Amount: The difference between the Excess
Amount and the 237 Excess Amount.
1.15 1290 Ground Lease: That certain Lease, dated February 25,
1959, between Martha F. Keeping, as landlord, and 91078 Corporation, as tenant,
recorded in the Office of the Register of The City of New York, New York County
in Liber 5068, cp. 489, as modified and amended by certain agreements recorded
in the Office of the Register of the City of New York, New York County in Liber
5122, cp. 139 and Liber 5122, cp. 584 and by certain unrecorded Lease Extension
Agreements, dated February 25, 1994, January 1, 1995, August 31, 1995, January
31, 1996 and March 14, 1996, and as to which the interests of landlord and
tenant were assigned (following mesne assignments) to 1290 L.L.C.
1.16 1290 L.L.C.: 1290 Associates, L.L.C., a New York
limited liability company, formerly 1290 Associates, a New York
general partnership.
1.17 1290 Partners, L.P.: 1290 Partners, L.P., a Delaware
limited partnership.
1.18 1290 Property: The real property and improvements
commonly referred to as 1290 Avenue of the Americas, New York, New York.
1.19 Administrative Claims Bar Date: 4:00 p.m., New York City
time, on the ninetieth (90th) day following the Effective Date.
1.20 Administrative Expense Claim: Any claim constituting a
cost or expense of administration of the
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Reorganization Cases asserted under section 503(b) of the Bankruptcy Code,
including, without limitation, (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 in Possession, (c) any
indebtedness or obligations incurred or assumed by the Debtors in Possession in
connection with the conduct of their businesses or for the acquisition or lease
of property or the rendition of services, (d) any costs and expenses of the
Debtors in Possession for the management, maintenance, preservation, sale or
other disposition of any assets, the administration and implementation of the
Plan, and the prosecution or defense of claims by or against the Debtors, (e)
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
arising before or after the Effective Date and (f) any fees or charges assessed
against the estate of either Debtor under section 1930, chapter 123, title 28,
United States Code.
1.21 Affiliate: 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.
1.22 Affiliate Unsecured Claim: Any Unsecured Claim against
either of the Debtors held by an O&Y Affiliate, other
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than a Qualifying Affiliate Unsecured Claim and a Tenant Reimbursement Claim.
1.23 Allowed: With reference to any Claim or Equity Interest,
(i) any Claim against or Equity Interest in either Debtor allowed hereunder,
(ii) any Claim against or Equity Interest in either Debtor, proof of which was
filed on or before the date designated by the Bankruptcy Court in accordance
with Rule 3003(c)(3) of the Bankruptcy Rules as the last date for filing proofs
of claim against the Debtors or such other date as has been authorized by an
order of the Bankruptcy Court, or (iii) if no proof of claim was so filed, any
Claim against or Equity Interest in either Debtor which has been listed by such
Debtor in its Schedules, as such Schedules may be amended from time to time in
accordance with Rule 1009 of the Bankruptcy Rules, as liquidated in amount and
not disputed or contingent; provided, however, that with respect to the
preceding clauses (ii) and (iii) no objection to the allowance thereof has been
interposed within the applicable period of limitation fixed by the Plan, the
Bankruptcy Code, the Bankruptcy Rules or a Final Order or as to which an
objection has been interposed, to the extent such Claim or Equity Interest has
been allowed, in whole or in part, by a Final Order. For purposes of determining
the amount of an "Allowed Claim", there shall be deducted therefrom an amount
equal to the amount of any claim which a Debtor may hold against the holder
thereof, to the extent such claim may be set off pursuant to section 553 of the
Bankruptcy Code.
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1.24 Asset Management Agreement: An agreement between the REIT
and the Asset Manager, executed on or before the Effective Date, upon Noteholder
Consent, providing for the general oversight of the assets of the REIT from and
after the Effective Date and otherwise on terms no less favorable to the REIT
than those set forth in the Disclosure Statement.
1.25 Asset Manager: VCG.
1.26 Assignment of the Remaining 2 Broadway Assets: The
Assignment of Remaining 2 Broadway Assets, dated as of the Effective Date, by
and among 1290 L.L.C., 2 Broadway L.P., 2 Broadway Associates and 2 Broadway
Land Company, substantially in the form contained in the Plan Supplement.
1.27 Ballot: 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 the Plan and, to the extent applicable, the election of
distributions and the subscription of additional shares of REIT Stock contained
in Article XII hereof.
1.28 Ballot Agent: The Entity designated by the Debtors and
approved by the Bankruptcy Court to, among other things, receive and tabulate
acceptances and rejections of the Plan and the election of distributions and the
subscriptions of additional shares of REIT Stock hereunder.
1.29 Ballot Date: The date set by the Bankruptcy Court by
which all Ballots for acceptance or rejection of the Plan and, to the extent
applicable, the election of distributions and the subscription for additional
shares of REIT Stock
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contained in Article XII hereof, must be received by the Ballot Agent.
1.30 Bankruptcy Code: The Bankruptcy Reform Act of 1978, as
codified under title 11 of the United States Code and as in effect on the
Confirmation Date.
1.31 Bankruptcy Court: The United States Bankruptcy Court for
the Southern District of New York having jurisdiction over the Reorganization
Cases.
1.32 Bankruptcy Rules: The Federal Rules of Bankruptcy
Procedure as in effect on the Confirmation Date.
1.33 Bar Date: May 15, 1996, the date established by the
Bankruptcy Court as the last date for filing proofs of claim, other than proofs
of claim with respect to Administrative Expense Claims, in the Reorganization
Cases.
1.34 Building Corp.: O&Y NY Building Corp., a Delaware
corporation.
1.35 Business Day: Any day other than (i) a Saturday, (ii) a
Sunday, (iii) any other day on which banking institutions in New York, New York
are required or authorized to be closed by law or executive order or (iv) Rosh
Hashanah (first day), Yom Kippur and the Friday after Thanksgiving.
1.36 Cash: Legal tender of the United States of America.
1.37 Cash Collateral Stipulation: That certain Stipulation
and Order Pursuant to Sections 361 and 363 of the Bankruptcy Code and Fed. R.
Bankr. P. 2002 and 4001 Authorizing
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Debtors to Use Cash Collateral, dated April 25, 1996, by and among the Indenture
Trustee, the Debtors and O&Y Management Corp., as amended or modified.
1.38 Cash Management Agreement: That certain Cash Management
Agreement, dated June 20, 1995, by and among 1290 Associates, 237 Park Avenue
Associates, NationsBank of Tennessee, N.A., as Indenture Trustee, and O&Y
Management Corp., together with that certain letter agreement, dated September
18, 1995, by and among 1290 Associates, 237 Park Avenue Associates and
NationsBank of Tennessee, N.A., as Indenture Trustee, as each of the foregoing
has been amended to date.
1.39 Causes of Action: Any and all actions, liabilities,
obligations, rights, suits, debts, sums, of money, damages, judgments, claims
and demands whatsoever, whether known or unknown, in law, equity or otherwise.
1.40 CIBC: The Canadian Imperial Bank of Commerce.
1.41 CIBC Settlement: An agreement, to be entered into upon
Noteholder Consent, providing for a settlement by and among 237 L.L.C., CIBC and
Devco of all claims relating to or arising out of CIBC's lease of space at the
237 Property, including payment by CIBC to 237 L.L.C. of Four Million Five
Hundred Thousand Dollars ($4,500,000).
1.42 Citibank Release: A release of the lien on and any claim
to the JMB Notes to be executed and delivered by Citibank, N.A., on or prior to
the Effective Date, such release
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in form and substance satisfactory to the Indenture Trustee in the exercise
of its reasonable discretion.
1.43 Claim: Any right to payment from either Debtor, whether
or not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured,
or unsecured, known or unknown or any right to an equitable remedy for breach of
performance if such breach gives rise to a right of payment from either Debtor,
whether or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.
1.44 Claims Reserve: One or more segregated accounts
in which Closing Cash shall be held for distribution in accordance with
Section 16.3 hereof.
1.45 Class: A category of holders of Claims or Equity
Interests as set forth in Article III of the Plan.
1.46 Closing Cash: The amount of Cash to be determined by the
Debtors, with the consent of the Indenture Trustee, which consent shall not be
unreasonably withheld or delayed, to be the amount necessary to pay all Claims
and fund all reserves required to be funded on the Effective Date pursuant to
the Plan.
1.47 Collateral: Any property or interest in property of the
estate of either Debtor subject to an unavoidable Lien to secure the payment or
performance of a Claim.
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1.48 Confirmation Date: The date upon which the Clerk
of the Bankruptcy Court enters the Confirmation Order.
1.49 Confirmation Hearing: The hearing held by the Bankruptcy
Court to consider confirmation of the Plan in accordance with section 1129 of
the Bankruptcy Code, as such hearing may be adjourned or continued from time to
time.
1.50 Confirmation Order: The order of the Bankruptcy Court
confirming the Plan in accordance with the provisions of chapter 11 of the
Bankruptcy Code and Section 18.1 hereof.
1.51 Contributed Debt: An undivided Three Hundred Million
Dollars ($300,000,000) in outstanding principal amount of Existing Notes, or, if
the Conventional Financing Alternative is consummated in an amount in excess of
Four Hundred Million Dollars ($400,000,000), an undivided outstanding amount of
Existing Notes equal to Three Hundred Million Dollars ($300,000,000) minus such
excess, in either case (a) to be contributed by the Indenture Trustee, on behalf
of the Noteholders, to the REIT pursuant to the Noteholders Contribution and
Participation Agreement, (b) to be contributed by the REIT to the Lower Tier
Limited Partnership and (c) to be contributed by the Lower Tier Limited
Partnership to the Property Owning Partnerships and allocated between 237 Park
Partners, L.P. and 1290 Partners, L.P. as set forth in the Debt Contribution
Agreement.
1.52 Conventional Financing Alternative: The mortgage
loan financing which may be consummated by the Property Owning
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Partnerships pursuant to Section 13.2 hereof, the net proceeds of which would be
distributed in lieu of New Notes.
1.53 Conventional Financing Cash Distribution: A distribution
of Cash in accordance with Section 13.2 hereof, which distribution shall be in
an amount equal to the net proceeds from the consummation of the Conventional
Financing Alternative available for distribution after payment of all commitment
or financing fees, legal fees, customary closing costs, recording fees and
similar charges but in no event greater than Four Hundred Million Dollars
($400,000,000).
1.54 Conveyancing Documents: The documents, substantially in
the forms contained in the Plan Supplement or as Exhibits to the Property
Contribution Agreements, each dated as of the Effective Date, providing for the
transfer and assignment of the Properties and certain other property of the
Debtors to the Property Owning Partnerships or the REIT, as the case may be, and
certain agreements related thereto.
1.55 Creditors' Committee: Any statutory unsecured creditors'
Committee which may be appointed by the Bankruptcy Court and the United States
Trustee in the Reorganization Cases pursuant to section 1102 of the Bankruptcy
Code.
1.56 Debt Contribution Agreement: The Debt Contribution
Agreement, dated as of the Effective Date, by and among the REIT, the Lower Tier
Limited Partnership and the Property Owning Partnerships, substantially in the
form contained in the Plan Supplement.
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1.57 Debtors: 237 L.L.C. and 1290 L.L.C., the debtors in the
Reorganization Cases.
1.58 Debtors in Possession: The Debtors in their capacity as
debtors in possession under sections 1107(a) and 1108 of the Bankruptcy Code.
1.59 Devco: O&Y (U.S.) Development Company, L.P., a
Delaware limited partnership.
1.60 Disbursing Agent: The Indenture Trustee and/or such other
Entity as may be designated by the Property Owning Partnerships, serving in the
capacity of disbursing agent. References in the Plan or any Plan Document to the
Indenture Trustee in its capacity as, or in discharging the functions of, the
Disbursing Agent shall be construed as references to the Indenture Trustee or
such other Entity as may be acting in the capacity of disbursing agent in such
context.
1.61 Disclosure Statement: The disclosure statement related to
the Plan, dated as of the date hereof, including the exhibits thereto, as the
same may be amended, modified or supplemented from time to time and approved by
the Bankruptcy Court in accordance with section 1125 of the Bankruptcy Code.
1.62 Disputed Claim: A Claim against either of the Debtors
which has not been Allowed hereunder, to the extent that the allowance of such
Claim is the subject of a timely objection or request for estimation in
accordance with the Plan, the Bankruptcy Code, or the Bankruptcy Rules or is
otherwise disputed in accordance with applicable law, which objection, request
for
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estimation or dispute has not been withdrawn or determined by Final Order;
provided, however, that, for purposes of determining the aggregate amount of
Disputed Claims against the Debtors' chapter 11 estates, "Disputed Claims" shall
mean the lesser of (a) Disputed Claims as filed with the Bankruptcy Court, or
(b) Disputed Claims as estimated by the Bankruptcy Court pursuant to section
502(c) of the Bankruptcy Code; and provided, further, that, in the event that
the Bankruptcy Court shall estimate a Disputed Claim pursuant to section 502(c)
of the Bankruptcy Code, such estimation shall constitute and represent the
maximum amount in which such Claim may ultimately become an Allowed Claim.
1.63 Distributable Cash: All Cash owned by (i) the Debtors on
the Effective Date, including, without limitation, amounts held by the Indenture
Trustee pursuant to the Indenture, the Cash Management Agreement or the Cash
Collateral Stipulation, net of Closing Cash and (ii) the Limited Partner
Entities from and after the Effective Date (other than partnership distributions
from the respective Property Owning Partnerships).
1.64 Distributees: The holders of Senior Claims and
the Morgan Loan Lenders.
1.65 Effective Date: The later to occur of (a) the first
Business Day which is no less than eleven (11) days (calculated under Rule 9006
of the Bankruptcy Rules) after the Confirmation Date, or (b) such other date as
is fixed from time to time by the Debtors, upon Noteholder Consent, by filing a
notice thereof with the Bankruptcy Court, but in no event shall
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the Effective Date occur earlier than the date on which each of the conditions
precedent to the occurrence of the Effective Date contained in Section 18.2
hereof has been satisfied or waived in accordance with Section 18.3 hereof.
1.66 Election Amount: The Nine Hundred Two Million
Six Hundred Three Thousand Four Hundred Ninety Two Dollars ($902,603,492) of
aggregate unpaid principal in respect of the Existing Notes.
1.67 Entity: An individual, a corporation, a partnership, a
limited liability company, an association, a joint stock company, a joint
venture, an estate, a trust, an unincorporated organization, a government or any
subdivision thereof or any other entity.
1.68 Equityco: O&Y Equity Company L.P., a Delaware
limited partnership.
1.69 Equity Election Ratio: The fraction set forth in
Section 12.4(a)(ii) hereof.
1.70 Equity Interest: Any equity interest in either of the
Debtors or any interest or a right to convert into an interest or acquire any
equity interest which was in existence immediately prior to the Petition Date.
1.71 Excess Amount: The excess of (i) the full amount in the
aggregate of all principal, interest, fees and charges due and owing as of the
Petition Date under the Indenture, the Existing Notes and all documents and
instruments related thereto, over (ii) Seven Hundred Million Dollars
($700,000,000).
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1.72 Excess Amount Release: The Release of Assumed Debt and
Termination of Security Agreement, dated as of the Effective Date, by the
Indenture Trustee in favor of Building Corp. and Equityco, substantially in the
form contained in the Plan Supplement; provided, however, that such agreement
shall not in any way impair the right of the Indenture Trustee to receive
payment in full for its fees and charges as Administrative Expense Claims under
the Plan.
1.73 Exchange Act: The Securities Exchange Act of
1934, as amended.
1.74 Existing Notes: The notes in the aggregate original
principal amount of Nine Hundred Seventy Million Dollars ($970,000,000) issued
under the Indenture, the outstanding principal amount of which, as of the
Petition Date, was approximately Nine Hundred Two Million Six Hundred Three
Thousand Four Hundred Ninety Two Dollars ($902,603,492).
1.75 Final Order: 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; and if an appeal,
writ of certiorari, reargument or rehearing thereof has been 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
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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 of Civil Procedure, or any
analogous rule under the Bankruptcy Rules, may be but has not then been filed
with respect to such order, shall not cause such order not to be a Final Order.
1.76 General Unsecured Claim: An Unsecured Claim (including
any Qualifying Affiliate Unsecured Claim), other than an Administrative Expense
Claim, a Priority Non-Tax Claim, a Priority Tax Claim, an Insured Claim, a
Tenant Reimbursement Claim or an Affiliate Unsecured Claim.
1.77 GP Corps: 237 Corp. and 1290 Corp., collectively.
1.78 GP Corp. Documents: The certificates of incorporation and
by-laws of the GP Corps, substantially in the forms contained in the Plan
Supplement.
1.79 GP Interest: A ninety five percent (95%) interest, as a
general partner, in the Lower Tier Limited Partnership.
1.80 Indemnification Agreement: The Indemnification Agreement,
dated as of the Effective Date, by and among the REIT and its initial officers
and directors, substantially in the form contained in the Plan Supplement.
1.81 Indenture: That certain Mortgage Spreader and
Consolidation Agreement and Trust Indenture, dated as of
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March 20, 1984, by and among O&Y Equity Corp., OYHC, FAME Associates, Olympia &
York 2 Broadway Land Company, Olympia & York 2 Broadway Company and
Manufacturers Hanover Trust Company, as Trustee, as supplemented by that certain
(i) Supplemental Indenture No. 1, dated as of March 20, 1984, (ii) Supplemental
Indenture No. 2, dated as of December 30, 1986, (iii) Supplemental Indenture No.
3, dated as of March 30, 1988, (iv) Instrument of Resignation, Appointment and
Acceptance, dated as of October 28, 1992, by and among 2 Broadway Associates, 2
Broadway Land Company, 237 Park Avenue Associates, 1290 Associates, NationsBank
of Tennessee, N.A., and Manufacturers Hanover Trust Company, (v) Supplemental
Indenture No. 4, dated as of August 17, 1995, (vi) Supplemental Indenture No. 5,
dated as of September 18, 1995, and (vii) Instrument of Resignation, Appointment
and Acceptance, dated as of March 29, 1996, by and among the Debtors,
NationsBank of Tennessee, N.A., and the Indenture Trustee, as the same may be
further supplemented from time to time in accordance with the terms thereof
prior to the Effective Date.
1.82 Indenture Trustee: Bankers Trust Company, in its capacity
as successor indenture trustee under the Indenture, or any successor indenture
trustee to Bankers Trust Company, appointed in accordance with the terms of the
Indenture.
1.83 Initial Upper Tier LP Documents: The agreement of limited
partnership and certificate of limited partnership for
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the Upper Tier Limited Partnership, substantially in the forms contained in
the Plan Supplement.
1.84 Insured Claim: Any Claim based on the alleged tort
liability of either Debtor arising out of or in connection with events allegedly
causing personal injury or property damage, which events are alleged to have
occurred at or on either Property prior to the Effective Date, to the extent
that such Claim is covered by an insurance policy or policies for, covering or
issued to or on behalf of either Debtor.
1.85 JMB: JMB/NYC Office Building Associates, an Illinois
general partnership.
1.86 JMB Collateral: A marketable security, acceptable upon
Noteholder Consent, having a market value as of January 2, 2001 of Ten Million
Dollars ($10,000,000), guaranteed by the full faith and credit of the United
States of America, and to be held by the REIT to secure the obligations of JMB
LP under the Lower Tier Limited Partner Documents.
1.87 JMB Indemnitors: JMB/Manhattan Associates, Ltd.,
Carlyle Real Estate Limited Partnership-XIII and Carlyle Real Estate Limited
Partnership-XIV, the constituent partners of JMB LP.
1.88 JMB Indemnity: The Indemnification Agreement to be
executed by the JMB Indemnitors, dated as of the Effective Date, substantially
in the form contained in the Plan Supplement.
1.89 JMB Equity Interest: Any Equity Interest held by
JMB LP or any of its Affiliates.
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1.90 JMB LP: JMB/NYC Office Building Associates, L.P., an
Illinois limited partnership.
1.91 JMB Note Assignment: The Assignment of Promissory Notes
and Security Agreements, dated as of the Effective Date, substantially in the
form contained in the Plan Supplement.
1.92 JMB Notes: The (i) Promissory Note, dated July 27, 1984,
reissued July 25, 1985, made by JMB to O&Y DFC in the original principal amount
of $9,758,363 and the Security Agreement, dated July 27, 1984, between JMB and
OYHC, as assigned by O&Y DFC to O&Y MFC pursuant to that certain Assignment and
Assumption Agreement, dated September 28, 1987; (ii) Promissory Note, dated
August 14, 1984, reissued July 25, 1985, made by JMB to O&Y DFC in the original
principal amount of $4,514,229 and the Security Agreement, dated August 14,
1984, between JMB and OYHC, as assigned by O&Y DFC to O&Y MFC pursuant to that
certain Assignment and Assumption Agreement, dated September 28, 1987; and (iii)
Amended, Restated and Consolidated Promissory Note, dated May 31, 1995, between
JMB LP and O&Y MFC in the original principal amount of $78,605,779 and the
Amended, Restated and Consolidated Security Agreement, dated May 31, 1995,
between JMB LP and O&Y MFC.
1.93 JMB Note Participation Agreement: The Participation
Agreement, substantially in the form contained in the Plan Supplement, dated as
of the Effective Date, between the REIT or its designee and an Affiliate of JMB
LP or another Entity
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upon Noteholder Consent, which, in this instance, will not be unreasonably
withheld or delayed.
1.94 JMB Note Restatement Documents: The Second Amended,
Restated and Consolidated Promissory Note and the Second Amended, Restated and
Consolidated Security Agreement, each dated as of the Effective Date,
substantially in the form contained in the Plan Supplement.
1.95 Liabilities: 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.
1.96 Lien: Any charge against or interest in property
to secure payment of a debt or performance of an obligation.
1.97 Limited Partner Entities: The Upper Tier Limited
Partnership and the Lower Tier Limited Partnership, collectively.
1.98 Lower Tier Limited Partner Documents: The agreement of
limited partnership and certificate of limited partnership for the Lower Tier
Limited Partnership, substantially in the form contained in the Plan Supplement.
1.99 Lower Tier Limited Partnership: 237/1290 Lower
Tier Associates, L.P., a Delaware limited partnership.
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1.100 LP Interest: A five percent (5%) limited partnership
interest in the Lower Tier Limited Partnership.
1.101 Master Cash Flow Agreement: The Master Cash Flow
Agreement, dated as of March 20, 1984, by and among O&Y Equity Corp., FAME
Associates, OYHC, Olympia & York 2 Broadway Land Company, Olympia & York 2
Broadway Company and Manufacturers Hanover Trust Company, as Trustee.
1.102 Merger Agreement: The Agreement and Plan of Merger,
dated as of the Effective Date, among the Debtors and the Upper Tier Limited
Partnership, substantially in the form contained in the Plan Supplement.
1.103 Morgan Loan: The obligations of Devco and other O&Y
(U.S.) Affiliates under, pursuant to or in connection with the Revolving Credit
Agreement, dated as of June 21, 1991, by and among Devco, Morgan Guaranty Trust
Co. of New York, as Agent, and the banks parties thereto, or their respective
successors and assigns, and other related documents, instruments and agreements,
each as from time to time amended, modified or supplemented.
1.104 Morgan Loan Agent: Apollo Real Estate Investment Fund,
L.P., in its capacity as agent for the Morgan Loan Lenders or any successor.
1.105 Morgan Loan Lenders: Apollo Real Estate Investment Fund,
L.P., Westdeustsche Landesbank Girozentrale, New York Branch, TCW Special
Credits Fund IV, TCW Special Credits Plus Fund, TCW Special Credits Trust IV and
TCW Special Credits Trust IVA, or such transferees, successors or assigns as
provide
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notice of any transfer or assignment to the parties set forth in Section 22.9
hereof, in their capacity as holders of a portion of the Morgan Loan.
1.106 Net Tax Proceeds: The proceeds, if any, of any tax
certiorari proceedings which have been commenced by 1290 L.L.C. for the fiscal
tax years ending June 30, 1991 through June 30, 1996 and by 237 L.L.C. for the
fiscal tax year ending June 30, 1996 and, if the Effective Date is after tax
certiorari proceedings have begun for fiscal tax year July 1, 1996 through June
30, 1997, such year as well, net of any amounts required to pay or reimburse the
customary and reasonable third-party attorneys' fees and other reasonable
out-of-pocket expenses incurred in collecting such proceeds (including such fees
and expenses incurred to prepare for, institute and prosecute tax certiorari
proceedings).
1.107 New Notes: The Amended and Restated Mortgage Notes to be
issued by the Property Owning Partnerships on the Effective Date in the
aggregate original principal amount of Four Hundred Million Dollars
($400,000,000), substantially in the form contained in the Plan Supplement.
1.108 Non-Standard Election: An election of a Distributee
pursuant to Section 12.4 hereof.
1.109 Noteholder: Any holder of an Existing Note.
1.110 Noteholder Consent: The written consent delivered by the
holders of a majority in principal amount of the Existing Notes (excluding
Existing Notes held by O&Y Affiliates),
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which consent may be given or withheld in the sole and absolute discretion of
each holder of Existing Notes.
1.111 Noteholders Contribution and Participation
Agreement: The Noteholders Contribution and Participation Agreement, dated as of
the Effective Date, between the Indenture Trustee and the REIT, substantially in
the form contained in the Plan Supplement.
1.112 O&Y Administrative Expense Claim: A Three
Hundred Thousand Dollar ($300,000) Administrative Expense Claim in favor of
Devco or its designee.
1.113 O&Y Affiliate: Each of the Entities identified
on Schedule 1 hereto.
1.114 O&Y DFC: O&Y (Delaware) Finance Corp., a Delaware
corporation.
1.115 O&Y Equity Interest: An Equity Interest held by
Building Corp. and Equityco or any other O&Y Affiliate.
1.116 O&Y Lease: The Lease, dated November 17, 1983, between
O&Y Equity Corp., OYHC and FAME Associates, as landlord, and O&Y Equity Corp.,
as tenant, as amended by Amendment of Lease, dated August 19, 1991, letter,
dated March 1, 1993 and the O&Y Lease Agreement.
1.117 O&Y Lease Agreement: The Agreement, dated as of the
Effective Date, and effective as of September 1, 1994, by and between 237
L.L.C., as Landlord, and Devco, as Tenant, substantially in the form contained
in the Plan Supplement.
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1.118 O&Y MFC: Olympia & York Massachusetts Financial
Company, a Massachusetts general partnership.
1.119 O&Y Releasees: Collectively, (a) the Debtors and Debtors
in Possession, (b) the O&Y Affiliates, (c) the respective successors,
predecessors, assignors or assignees of any of the foregoing, (d) all current or
former partners or owners of any of the foregoing (including JMB and JMB LP and
all current or former owners of any direct or indirect interest in any of the
foregoing) and (e) all current and former officers, directors, trustees,
employees, agents, attorneys, accountants, financial advisors, investment
bankers, appraisers and engineers of any of the foregoing.
1.120 O&Y (U.S.): Any or all of the O&Y Affiliates named on
the signature page of the Settlement Agreement or any Entity controlled by such
signatories.
1.121 Offered Shares: The number of shares of REIT Stock to be
distributed in accordance with Section 12.5 of the Plan, which number of shares
shall be computed as follows: 12,000,000 shares of REIT Stock multiplied by a
fraction, the numerator of which shall be $20,000,000 and the denominator of
which shall be $660,000,000 minus the lesser of $400,000,000 and the gross
proceeds derived from the consummation of the Conventional Financing Alternative
or, if no Conventional Financing Alternative is consummated, $400,000,000.
1.122 Offering Memorandum: That certain offering
memorandum, dated as of February 6, 1984, pursuant to which the
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Existing Notes were offered for sale, as the same may have been amended,
modified or supplemented.
1.123 Other Secured Claim: Any Secured Claim, other
than a Senior Claim.
1.124 OYHC: Olympia & York Holdings Corporation.
1.125 Petition Date: April 23, 1996, the date on which
Equityco and Building Corp. filed involuntary petitions for relief under chapter
11 of the Bankruptcy Code against each of the Debtors.
1.126 Plan: This Second Amended Joint Plan of Reorganization
of 237 Park Avenue Associates, L.L.C. and 1290 Associates, L.L.C., including the
exhibits and schedules hereto, either in their present form or as the same may
be amended, modified or supplemented from time to time in accordance with the
terms and provisions hereof.
1.127 Plan Assets: All of the property of the Debtors, whether
real or personal, including, without limitation, the Properties and the 2
Broadway Tax Certiorari Proceeds.
1.128 Plan Documents: The documents listed on the Schedule of
Documents attached to the Disclosure Statement.
1.129 Plan Releasees: Collectively, (a) the Indenture Trustee,
the holders of the Existing Notes, the members of the Creditors' Committee, any
informal group of holders of Existing Notes as from time to time constituted,
the Morgan Loan Lenders and the Limited Partner Entities (b) the respective
successors, predecessors, assignors or assignees of any of the foregoing,
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(c) all current or former partners or owners of any of the foregoing (including
current or former owners of any direct or indirect interest in any of the
foregoing) and (d) all current and former officers, directors, trustees,
employees, agents, attorneys, accountants, financial advisors, investment
bankers, appraisers and engineers of any of the foregoing.
1.130 Plan Releases: The releases granted pursuant to
Sections 20.1 and 20.2 hereof.
1.131 Plan Securities: The REIT Stock, the New Notes
and the Subscription Rights.
1.132 Plan Supplement: A separate volume of agreements,
exhibits and schedules to be filed with the Bankruptcy Court not later than
twenty (20) days prior to the commencement of the Confirmation Hearing.
1.133 POP LP Interests: Ninety-nine percent (99%) limited
partnership interests in each of the Property Owning Partnerships.
1.134 Priority Non-Tax Claim: Any Claim against the Debtors of
a kind specified in section 507(a)(3), (4), (5), (6), (7) or (9) of the
Bankruptcy Code.
1.135 Priority Tax Claim: Any Claim against the Debtors of a
governmental unit of the kind specified in section 507(a)(8) of the Bankruptcy
Code.
1.136 Priority Utility Tax Claim: A Priority Tax Claim arising
from the nonpayment by either of the Debtors of New York State or New York City
utility taxes.
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1.137 Priority Utility Tax Excess: The excess of (a) the
Closing Cash held in the Claims Reserve on account of Priority Utility Tax
Claims over (b) the aggregate amount of Allowed Priority Utility Tax Claims.
1.138 Property: The 237 Property and/or the 1290 Property, as
the case may be.
1.139 Property Contribution Agreements: The 237 Property
Contribution Agreement and the 1290 Property Contribution Agreement, each dated
as of the Effective Date, by and among the Upper Tier Limited Partnership, the
Lower Tier Limited Partnership and the respective Property Owning Partnership,
substantially in the forms contained in the Plan Supplement.
1.140 Property Management and Leasing Agreements: Agreements,
dated as of the Effective Date, between the Property Owning Partnerships and the
Property Manager/Leasing Agent, entered into upon Noteholder Consent, providing
for the day-to-day management by the Property Manager/Leasing Agent of the
Properties and its services as leasing agent, for a term not to exceed two years
and otherwise on terms no less favorable to the Property Owning Partnerships
than those set forth in the Disclosure Statement.
1.141 Property Manager/Leasing Agent: Tishman-Speyer
Properties, L.P. or such other professional property manager designated upon
Noteholder Consent.
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1.142 Property Manager Subscription Agreement: A Subscription
Agreement, dated as of the Effective Date, between the REIT and the Property
Manager/Leasing Agent, substantially in the form contained in the Plan
Supplement.
1.143 Property Owning Partnership Documents: The Agreement of
Limited Partnership and Certificate of Limited Partnership for each of the
Property Owning Partnerships, substantially in the forms contained in the Plan
Supplement.
1.144 Property Owning Partnerships: 237 Park Partners, L.P.
and 1290 Partners, L.P.
1.145 Pro Rata: With respect to holders of Senior Claims, the
proportion that the amount of Senior Claims held by any holder of Senior Claims
bears to the aggregate amount of Senior Claims held by all holders of Senior
Claims.
1.146 Qualifying Affiliate Unsecured Claim: An Unsecured Claim
against either of the Debtors held by an O&Y Affiliate which would be permitted
to be paid under the Cash Collateral Stipulation if such Claim had arisen after
the Petition Date.
1.147 Redemption and Substitution Agreement: The Redemption
and Substitution Agreement, dated as of the Effective Date, by and among the
Upper Tier Limited Partnership, Building Corp., Equityco, JMB LP and the Upper
Tier GP Corp., substantially in the form contained in the Plan Supplement.
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1.148 Registration Rights Agreement: The Registration Rights
Agreement, dated as of the Effective Date, substantially in the form contained
in the Plan Supplement.
1.149 REIT: Metropolis Realty Trust, Inc., a Maryland
corporation, which intends to qualify as a real estate investment trust for
federal income tax purposes and which is the general partner of the Lower Tier
Limited Partnership.
1.150 REIT Documents: The certificate of incorporation and
by-laws of the REIT, substantially in the forms contained in the Plan
Supplement.
1.151 REIT Stock: The shares of common stock, par value $10.00
per share, of the REIT to be issued on the Effective Date pursuant to the Plan.
1.152 REIT Stock Option Plan: The 1996 Directors' Stock Option
Plan, dated as of the Effective Date, of the REIT, substantially in the form
contained in the Plan Supplement.
1.153 Remaining 2 Broadway Assets: The meaning given
to such term in the Indenture.
1.154 Reorganization Cases: The Debtors' cases under
chapter 11 of the Bankruptcy Code.
1.155 Restated Indenture: That certain Amended and Restated
Trust Indenture, dated as of the Effective Date, by and among the Property
Owning Partnerships and the Indenture Trustee, substantially in the form
contained in the Plan Supplement.
1.156 Restated Mortgage: The Amended and Restated
Mortgage and Security Agreement, dated as of the Effective Date,
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from the Property Owning Partnerships to the Indenture Trustee, substantially in
the form contained in the Plan Supplement.
1.157 Robinson Silverman Note: That certain promissory note in
the face amount of $6,500,000, dated as of March 1, 1989, made by Robinson,
Silverman, Pearce & Berman in connection with its lease of space at the 1290
Property.
1.158 Schedules: The respective 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.
1.159 Secured Claim: A Claim against either Debtor secured by
a Lien on Collateral to the extent of the value of the Collateral or that is
entitled to the benefit of setoff under section 553 of the Bankruptcy Code, as
applicable, as determined in accordance with section 506(a) of the Bankruptcy
Code.
1.160 Security: The meaning ascribed to such term in section
101(49) of the Bankruptcy Code.
1.161 Senior Claim: Any Claim against the Debtors governed by,
arising under or related to the Indenture or evidenced by any of the Existing
Notes.
1.162 Senior Claim Equity Cap: Eleven Million One Hundred
Sixty Thousand (11,160,000) shares of REIT Stock.
1.163 Senior Claim Note Cap: Three Hundred Ninety One Million
Dollars ($391,000,000).
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1.164 Settlement Agreement: The Settlement Agreement, dated
January 12, 1996, by and among Carena Bancorp U.S., Inc., Canadian Imperial Bank
of Commerce, Citibank, N.A., Battery Park Holdings, Inc., Apollo Real Estate
Investment Fund, L.P. and certain O&Y Affiliates, as the same has been or may be
amended from time to time.
1.165 Standard Election: An election of a holder of a
Senior Claim pursuant to Section 12.3 of the Plan to receive a
Standard Note Distribution and a Standard Stock Distribution.
1.166 Standard Note Distribution: With respect to each holder
of a Senior Claim making a Standard Election in accordance with Section 12.3 of
the Plan, subject to Section 13.2 hereof, for each One Million Dollars
($1,000,000) of such holder's Pro Rata share of the Election Amount, Four
Hundred Thirty Three Thousand One Hundred Ninety One Dollars and Thirty Two
Cents ($433,191.32) of New Notes.
1.167 Standard Stock Distribution: With respect to each holder
of a Senior Claim making a Standard Election in accordance with Section 12.3 of
the Plan, subject to Sections 13.2 and 13.9 hereof, for each One Million Dollars
($1,000,000) of such holder's Pro Rata share of the Election Amount, Twelve
Thousand Three Hundred Sixty-Four and Twenty-Three One-Hundredths (12,364.23)
shares of REIT Stock.
1.168 State: The meaning ascribed to such term in
section 101(52) of the Bankruptcy Code.
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1.169 Subscription Agreement: The Subscription Agreement
relating to the exercise by Distributees of subscription rights and the purchase
of REIT Stock pursuant to Section 12.5 of the Plan, substantially in the form
contained in the Plan Supplement.
1.170 Subscription Price: The price per share of Offered
Shares expressed in dollars and cents, rounded to the nearest cent, equal to a
fraction, the numerator of which is Twenty Million Dollars ($20,000,000) and the
denominator of which is the number of Offered Shares.
1.171 Subscription Proceeds: Twenty Million Dollars
($20,000,000), which represents the aggregate proceeds from the sale of REIT
Stock pursuant to the Subscription Agreements and the Property Manager
Subscription Agreement.
1.172 Subscription Right: An uncertificated right that
entitles the holder thereof to purchase one share of REIT Stock at the
Subscription Price on the terms and subject to the conditions of Section 12.5
hereof, the aggregate amount of which shall be the same as the number of Offered
Shares.
1.173 Tenant Note Assignments: Collectively, (a) the
Assignment of Promissory Note, dated as of the Effective Date, by Baden Real
Estate Corp. to 237 Partners, L.P. with respect to the Warburg Pincus Note and
(b) the Assignment of Promissory Note, dated as of the Effective Date, by O&Y
Financial Company to 1290 Partners, L.P. with respect to the Robinson Silverman
Note.
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1.174 Tenant Notes: The Robinson Silverman Note and
the Warburg Pincus Note.
1.175 Tenant Reimbursement Claim: Any Unsecured Claim against
the Debtors held by a current or former tenant of either Property based upon a
right to payment provided in the lease of such tenant contingent upon the
realization by one of the Property Owning Partnerships of Net Tax Proceeds.
1.176 Transfer Taxes: Any and all transfer, stamp, sales or
similar taxes including any interest, penalties and additions to the tax that
may be required to be paid in connection with the transactions contemplated by
the Plan, which taxes shall include the New York State Real Estate Transfer
Taxes imposed under Article 31 of the New York State Tax Law, the New York City
Real Property Transfer Taxes imposed under Title 11, Chapter 21 of the New York
City Administrative Code and any mortgage recording tax imposed under Section
250 et seq. of the New York State Tax Law and Section 11-2601 of the New York
City Administrative Code.
1.177 Unimpaired Unsecured Claim: Any Insured Claim or Tenant
Reimbursement Claim.
1.178 Unsecured Claim: Any Claim against either of the Debtors
that is not an Other Secured Claim or a Senior Claim.
1.179 Unsubscribed Shares: Offered Shares (i) for which
Subscription Rights have not been exercised or which have not been purchased
pursuant to the Subscription Agreements and
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(ii) which will be purchased by the Property Manager/Leasing Agent pursuant to
the Property Manager Subscription Agreement.
1.180 Upper Tier GP Corp.: 237/1290 Upper Tier GP Corp., a
Delaware corporation and a wholly-owned subsidiary of the REIT.
1.181 Upper Tier GP Corp. Documents: The certificate of
incorporation and by-laws of the Upper Tier GP Corp., substantially in the forms
contained in the Plan Documents.
1.182 Upper Tier Limited Partner Documents: The amended and
restated agreement of limited partnership and amendment to certificate of
limited partnership for the Upper Tier Limited Partnership, substantially in the
forms contained in the Plan Supplement.
1.183 Upper Tier Limited Partnership: 237/1290 Upper
Tier Associates, L.P., a Delaware limited partnership.
1.184 U.S. Trustee: The United States Trustee appointed under
section 581, title 28, United States Code to serve in the Southern District of
New York.
1.185 VCG: The Victor Capital Group, L.P., a New York
limited partnership.
1.186 Waived Payments: All leasing commissions relating to the
Properties and payments characterized as asset management fees in the Cash
Management Agreement, in each case, earned by any O&Y Affiliate prior to the
Effective Date and remaining unpaid as of the Effective Date.
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1.187 Warburg Pincus Note: That certain non-interest bearing
promissory note, dated August 20, 1985, made by E.M. Warburg Pincus & Co., Inc.
providing for the payment of $4,354,758.09 on October 31, 1999.
1.188 Other Terms: Any term that is used in the Plan and not
defined herein, but that is defined in the Bankruptcy Code or in the Bankruptcy
Rules, shall have the meaning set forth therein as of the Petition Date. Any
reference contained in the Plan to a particular exhibit, paragraph or article
shall be deemed to be a reference to an exhibit, paragraph or article of the
Plan.
1.189 Rules of Construction: The rules of construction set
forth in section 102 of the Bankruptcy Code shall be applicable to all of the
provisions of the Plan. Without in any way limiting the foregoing, as used in
the Plan, the words "includes" and "including" are without limitation. The words
"herein," "hereof," "hereto," "hereunder," and other words of similar import
refer to the Plan as a whole and not to any particular section, subsection or
clause contained in the Plan. Any reference to a document, agreement or
instrument means such document, agreement or instrument as from time to time
amended, modified or supplemented in accordance with its terms.
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ARTICLE II
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
2.1 Expenses of Administration. On the Effective Date, the
Disbursing Agent shall pay to each holder of an Allowed Administrative Expense
Claim, in Cash, from Closing Cash, the full amount of such Allowed
Administrative Expense Claim, or upon such other terms as may be agreed upon by
and between the holder of any Administrative Expense Claim and the Debtors;
provided, however, that Administrative Expense Claims incurred or assumed by the
Debtors in Possession in the ordinary course of business in accordance with the
Cash Collateral Stipulation and not theretofore paid pursuant to the Cash
Collateral Stipulation shall be paid by the appropriate Property Owning
Partnership in accordance with the terms and conditions relating thereto; and
provided, further, that Administrative Expense Claims, other than those referred
to above and in Section 2.3 hereof, asserted after the Administrative Claims Bar
Date shall not be paid and none of the Debtors, the Property Owning
Partnerships, the REIT and the Limited Partner Entities shall be liable
therefor.
2.2 Priority Tax Claims. On the Effective Date, each holder of
an Allowed Priority Tax Claim shall be distributed on account of such Allowed
Priority Tax Claim by the Disbursing Agent from Closing Cash an amount, in Cash,
equal to the amount of such Allowed Priority Tax Claim.
2.3 Professional Fees. All Entities that are awarded
allowance of compensation or reimbursement of expenses by the
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Bankruptcy Court under sections 330, 503(b)(2), 503(b)(3), 503(b)(4) or
503(b)(5) of the Bankruptcy Code shall be paid by the Disbursing Agent from
Closing Cash, in full, or by the Property Owning Partnerships if Closing Cash is
insufficient, in such amounts as are allowed by the Bankruptcy Court (a) upon
the later of (i) the Effective Date and (ii) the date upon which the Bankruptcy
Court enters an order allowing any such Administrative Expense Claim or (b) upon
such other terms as may be mutually agreed upon between such holder of an
Administrative Expense Claim and the Debtors.
ARTICLE III
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
3.1 Classification. Claims and Equity Interests are
classified as follows:
Class 1 -- Priority Non-Tax Claims
Class 2 -- Senior Claims
Class 3 -- Other Secured Claims
Class 4 -- Unimpaired Unsecured Claims
Subclass 4A -- Insured Claims
Subclass 4B -- Tenant Reimbursement Claims
Class 5 -- General Unsecured Claims
Class 6 -- Affiliate Unsecured Claims
Class 7 -- Equity Interests
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Subclass 7A -- O&Y Equity Interests
Subclass 7B -- JMB Equity Interests
3.2 Voting.
(a) Claims Not Entitled to Vote. The Claims in Class
4 of the Plan are not impaired within the meaning of section 1124 of
the Bankruptcy Code. Pursuant to section 1126(f) of the Bankruptcy
Code, Class 4 and the holder of any Claim in such Class is and shall be
conclusively deemed to have accepted the Plan.
(b) Claims and Equity Interests Entitled to Vote. The
Claims and Equity Interests in Classes 1, 2, 3, 5, 6 and 7 are impaired
within the meaning of section 1124 of the Bankruptcy Code, and the
holders of Claims or Equity Interests in such Classes are entitled to
vote to accept or reject the Plan. Each holder of an Allowed Claim or
an Allowed Equity Interest in an impaired Class of Claims or Equity
Interests shall be entitled to vote separately to accept or reject the
Plan as provided in the order entered by the Bankruptcy Court governing
the voting and balloting procedures applicable to the Plan. For
purposes of calculating the number of Allowed Claims in a Class that
has voted to accept or reject the Plan under section 1126(c) of the
Bankruptcy Code, all Allowed Claims in such Class of which any Entity
or any Affiliate thereof acquired record ownership after the Petition
Date shall be aggregated and treated as one Allowed Claim.
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(c) 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 the Plan for
purposes of voting on acceptance or rejection of the Plan and for
purposes of determining acceptance or rejection of the Plan by such
Class pursuant to section 1129(a)(8) of the Bankruptcy Code.
ARTICLE IV
PROVISIONS FOR TREATMENT OF PRIORITY NON-TAX CLAIMS
4.1 Classification. Class 1 shall consist of all Priority
Non-Tax Claims. Claims contained in Class 1 are impaired.
4.2 Treatment. On the Effective Date, each holder of an
Allowed Priority Non-Tax Claim shall be distributed on account of such Allowed
Priority Non-Tax Claim by the Disbursing Agent from Closing Cash a payment in
Cash equal to the amount of its Allowed Priority Non-Tax Claim.
ARTICLE V
PROVISIONS FOR TREATMENT OF SENIOR CLAIMS
5.1 Classification. Class 2 shall consist of all Senior
Claims. Claims contained in Class 2 are impaired.
5.2 Allowance. On the Effective Date, the Senior
Claims shall be deemed to be Allowed in the aggregate amount of
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all principal, interest, fees and charges due and owing as of the Petition Date
under the Existing Notes and the Indenture.
5.3 Treatment. On the Effective Date, each holder of an
Allowed Senior Claim shall be entitled to receive its Pro Rata share of (a)
Eleven Million One Hundred Sixty Thousand (11,160,000) shares of REIT Stock,
subject to the provisions of Sections 13.2 and 13.9 hereof, (b) Three Hundred
Ninety One Million Dollars ($391,000,000) of New Notes, subject to the
provisions of Section 13.2 hereof, and (c) ninety three percent (93%) of the
aggregate amount of Subscription Rights issued hereunder, on account of such
Allowed Senior Claim or, upon the election made in accordance with Section 12.4
hereof, distributions in accordance with Sections 12.4 and 12.5 hereof.
ARTICLE VI
PROVISIONS FOR TREATMENT OF OTHER SECURED CLAIMS
6.1 Classification. Class 3 shall consist of all allowed Other
Secured Claims. Claims contained in Class 3 are impaired.
6.2 Treatment. On the Effective Date, each Allowed Other
Secured Claim shall be satisfied and discharged. Not later than ten (10) days
prior to the Confirmation Hearing, upon the direction of the Indenture Trustee,
given upon Noteholder Consent, the Debtors shall notify each holder of an Other
Secured Claim whether such Other Secured Claim shall be satisfied by (i) a
payment in Cash equal to the amount of its Allowed Other
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Secured Claim, (ii) distributing to the holder of such Allowed Other Secured
Claim the Collateral securing such Claim, (iii) leaving unaltered the legal,
equitable and contractual rights to which such Allowed Other Secured Claim
entitles the holder thereof in accordance with section 1124(1) of the Bankruptcy
Code or (iv) reinstating such Allowed Other Secured Claim in accordance with
section 1124(2) of the Bankruptcy Code. In the event no direction is given by
the Indenture Trustee in accordance with the preceding sentence, the Indenture
Trustee will be conclusively presumed to have directed the Debtors to reinstate
such Allowed Other Secured Claim in accordance with section 1124(2) of the
Bankruptcy Code.
ARTICLE VII
PROVISIONS FOR TREATMENT OF INSURED
CLAIMS AND TENANT REIMBURSEMENT CLAIMS
7.1 Classification. Class 4A shall consist of all Allowed
Insured Claims and Class 4B shall consist of Allowed Tenant Reimbursement
Claims. Claims contained in Classes 4A and 4B are not impaired.
7.2 Treatment.
(a) Insured Claims. On the Effective Date,
Allowed Insured Claims shall be unimpaired in accordance
with section 1124(1) of the Bankruptcy Code.
(b) Tenant Reimbursement Claims. From and after
the Effective Date, Allowed Tenant Reimbursement Claims
shall be unimpaired in accordance with section 1124(1) of
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the Bankruptcy Code and assumed by the applicable Property Owning
Partnership. The allowance and payment of Tenant Reimbursement Claims
shall be governed by the provisions of Section 16.6 hereof.
ARTICLE VIII
PROVISIONS FOR TREATMENT OF GENERAL UNSECURED CLAIMS
8.1 Classification. Class 5 shall consist of General
Unsecured Claims. Claims contained in Class 5 are impaired.
8.2 Treatment. On the Effective Date, the Disbursing Agent
shall pay to each holder of an Allowed General Unsecured Claim a payment, in
Cash, equal to the full amount of its Allowed General Unsecured Claim.
ARTICLE IX
PROVISIONS FOR TREATMENT OF AFFILIATE UNSECURED CLAIMS
9.1 Classification. Class 6 shall consist of all
Affiliate Unsecured Claims. Claims contained in Class 6 are
impaired.
9.2 Treatment. On the Effective Date, each holder of an
Allowed Affiliate Unsecured Claim shall receive $1 in respect of such Allowed
Affiliate Unsecured Claim.
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ARTICLE X
PROVISIONS FOR TREATMENT OF EQUITY INTERESTS
10.1 Classification. Class 7A shall consist of the O&Y Equity
Interests and Class 7B shall consist of the JMB Equity Interests. Equity
Interests contained in Classes 7A and 7B are impaired.
10.2 Treatment.
(a) O&Y Equity Interests. On the Effective Date, the O&Y
Equity Interests shall be cancelled and Building Corp. and Equityco shall
receive no distribution in respect of their Equity Interests.
(b) JMB Equity Interests. Subject to the provisions of 10.1(a)
hereof, on the Effective Date, after giving effect to the transactions described
in Article XIII hereof, the holder of the JMB Equity Interests shall receive a
ninety nine percent (99%) limited partnership interest in the Upper Tier Limited
Partnership and become a party to the limited partnership agreement for the
Upper Tier Limited Partnership, as set forth in the Upper Tier Limited Partner
Documents.
ARTICLE XI
DISTRIBUTIONS TO CONSUMMATE SETTLEMENT AGREEMENT
On the Effective Date, and in order to consummate the
Settlement Agreement, the Morgan Loan Agent shall be entitled to receive, for
and on behalf of the Morgan Loan Lenders for distribution in accordance with the
terms and conditions of the
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Morgan Loan, (a) Eight Hundred Forty Thousand (840,000) shares of REIT Stock,
subject to the provisions of Sections 13.2 and 13.9 hereof, (b) Nine Million
Dollars ($9,000,000) of New Notes, subject to the provisions of Section 13.2
hereof, and (c) seven percent (7%) of the aggregate amount of Subscription
Rights issued hereunder.
ARTICLE XII
OPTIONAL DISTRIBUTIONS
12.1 General Provisions Regarding Distributions to
Distributees. On the Effective Date, the Disbursing Agent shall distribute to
each Distributee such Distributee's share of New Notes, REIT Stock and
Subscription Rights in accordance with Articles V, XI and XII hereof.
Notwithstanding any other provisions hereof, distributions for the benefit of
the Morgan Loan Lenders shall be made to the Morgan Loan Agent for allocation
and distribution to the Morgan Loan Lenders in accordance with the terms and
conditions of the Morgan Loan documents. For purposes of all distributions made
under this Article XII, each holder of a Senior Claim shall be treated as
holding a Pro Rata share of the Election Amount. Except as expressly set forth
in this Plan or any document contained in the Plan Supplement, nothing contained
in this Article XII shall grant the Morgan Loan Lenders any right to vote on the
Plan or to issue any direction or consent which is to be issued by the
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holders of Existing Notes under the Plan or the Indenture (other than in its
capacity as a registered holder of an Existing Note).
12.2 Election Procedure. Each holder of a Senior Claim will
have the opportunity to indicate on a Ballot, whether such holder wishes to make
a Standard Election or a Non-Standard Election. Each holder of a Senior Claim
that does not submit a Ballot or fails to mark its distribution preference on
the Ballot on a timely basis in complete accordance with the instructions set
forth in the Ballot shall be conclusively deemed to have exercised a Standard
Election and shall receive a Standard Note Distribution and a Standard Stock
Distribution. The allocation of REIT Stock and/or New Notes that a holder of a
Senior Claim will receive will depend on whether a Conventional Financing
Alternative is consummated as well as the stated preferences of the holders of
Senior Claims on the Ballots and the proration procedures to be applied if the
number of shares of REIT Stock requested exceeds Eleven Million One Hundred
Sixty Thousand (11,160,000) shares or the principal amount of New Notes
requested exceeds Three Hundred Ninety One Million Dollars ($391,000,000).
12.3 Standard Election. Holders of Senior Claims who make a
Standard Election will receive for each One Million Dollars ($1,000,000) of such
holders' Pro Rata share of the Election Amount (i) a Standard Note Distribution
subject to the provisions of Section 13.2 hereof, and (ii) subject to the
provisions of Sections 13.2 and 13.9 hereof, a Standard Stock
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Distribution, each of the foregoing to be pro-rated if such Pro Rata share of
the Election Amount is not evenly divisible by One Million Dollars ($1,000,000).
The number of shares of REIT Stock and the amount of New Notes to be distributed
to holders of Senior Claims who make a Standard Election will not be affected in
any way by the proration procedures described in Sections 12.4(b) and (c) of the
Plan.
12.4 Non-Standard Election. (a) Procedures. Each holder of a
Senior Claim who desires to make a Non-Standard Election will indicate on its
Ballot the amount of its Pro Rata share of Election Amount which it wishes to
allocate to New Notes, if any. The balance of such holder's Pro Rata share of
Election Amount shall be deemed to be allocated to REIT Stock. Subject to the
proration procedures provided in paragraphs (b) and (c) below, each holder of a
Senior Claim who makes a NonStandard Election will receive (i) New Notes having
a principal amount equal to seventy (70%) percent of its Pro Rata share of
Election Amount allocated to New Notes on its Ballot, subject to the provisions
of Sections 13.2 hereof, and (ii) subject to the provisions of Sections 13.2 and
13.9 hereof, its portion of the Eleven Million One Hundred Sixty Thousand
(11,160,000) shares of REIT Stock (reduced by the number of shares allocated to
holders of Senior Claims making Standard Elections), based on a fraction the
numerator of which is the amount, if any, of such holder of a Senior Claim's Pro
Rata share of Election Amount not allocated to New Notes and the denominator of
which is the portion of the
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Election Amount not allocated to New Notes of all holders of Senior Claims
making Non-Standard Elections.
(b) Equity Oversubscription. In the event that there are New
Notes to be distributed to holders of Senior Claims which remain unallocated
following the allocation of New Notes to holders of Senior Claims making the
Standard Election and the Non-Standard Election (i.e., less than Three Hundred
Ninety One Million Dollars ($391,000,000) of New Notes were requested by holders
of Senior Claims), then each holder of a Senior Claim which has made a
Non-Standard Election will receive, in addition to the distributions to be made
pursuant to Section 12.4(a) hereof, its pro rata share, based on the fraction
set forth in Section 12.4(a)(ii), of the principal amount of New Notes remaining
unallocated.
(c) Debt Oversubscription. Subject to the provisions of
Section 13.2 hereof, in the event that holders of Senior Claims exercising
Non-Standard Elections elect New Notes in an aggregate principal amount in
excess of the Three Hundred Ninety One Million Dollars ($391,000,000) of New
Notes available, each holder of a Senior Claim exercising a Non-Standard
Election will receive (i) its portion of Three Hundred Ninety One Million
Dollars ($391,000,000) of New Notes (reduced by the amount of New Notes
allocated to holders of Senior Claims making Standard Elections), based on a
fraction the numerator of which is the amount, if any, of such holder's Pro Rata
share of the Election Amount allocated to New Notes and the denominator of which
is the
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aggregate portion of the Election Amount allocated to New Notes of all holders
of Senior Claims making Non-Standard Elections, and (ii) subject to the
provisions of Section 13.9 hereof, its portion of the Eleven Million One Hundred
Sixty Thousand (11,160,000) shares of REIT Stock (reduced by the number of
shares allocated to holders of Senior Claims making Standard Elections), based
on a fraction, the numerator of which is the amount of such holder's Pro Rata
share of the Election Amount minus the product of the principal amount of New
Notes allocated to such holder times 1.42857, and the denominator of which is
the portion of the Election Amount represented by holders of Senior Claims
making Non-Standard Elections minus the product of the principal amount of New
Notes issued to all such holders times 1.42857.
12.5 Subscription Rights. On the Effective Date, the REIT
shall sell the Offered Shares for an aggregate net cash price equal to the
Subscription Proceeds. Each Distributee may elect to exercise its Subscription
Rights to purchase a number of shares of REIT Stock equal to its share of the
Offered Shares as calculated below. If the Subscription Rights are not exercised
for all of the Offered Shares, the Unsubscribed Shares shall be purchased by the
Property Manager/Leasing Agent. Each election to exercise Subscription Rights
shall be made by a Distributee by returning, with its Ballot, a duly executed
Subscription Agreement indicating the number of Subscription Rights, if any,
that such Distributee elects to exercise. Each Distributee that
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does not return an executed Subscription Agreement shall be conclusively deemed
to have not exercised its Subscription Rights. Each Distributee shall have the
right to exercise Subscription Rights for a number of shares of REIT Stock equal
to the lesser of (a) the number of shares of REIT Stock such Distributee
designates in its Subscription Agreement, and (b) its Pro Rata portion of
ninety-three percent (93%) of all Offered Shares, with respect to the holders of
Senior Claims, and each Morgan Loan Lender's share (as determined by the Morgan
Loan Agent) of seven percent (7%) of all Offered Shares. As soon as practicable
after the Confirmation Date, the Debtors shall send a notice by overnight
delivery service to each Distributee that has timely executed and returned a
Subscription Agreement, setting forth the maximum amount to be paid to an escrow
agent (selected by the Debtors upon Noteholder Consent) identified in such
notice and otherwise in accordance with the instructions (approved by order of
the Bankruptcy Court) set forth in such notice, which amount shall be equal to
its Pro Rata share of ninety-three percent (93%) of $20,000,000 for holders of
Senior Claims and with respect to each Morgan Loan Lender, its share (as
determined by the Morgan Loan Agent) of seven percent (7%) of $20,000,000.
Within ten (10) days of the date of such notice, each Distributee shall deliver
the aggregate purchase price to the escrow agent. Each Distributee that fails to
timely deliver an amount of Cash provided in the instructions set forth in the
notice shall be conclusively deemed to have not purchased such Offered Shares
and
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such Offered Shares shall become Unsubscribed Shares to be purchased by the
Property Manager/Leasing Agent pursuant to the Property Manager Subscription
Agreement. Any election hereunder shall be binding on the Distributee making
such election and such Distributee's successors and assigns; provided, however,
that no Distributee may transfer Subscription Rights pending exercise thereof
other than in connection with a transfer of such Distributee's Senior Claim or
share of the Morgan Loan, as the case may be. All funds held in escrow for any
Distributee pursuant to this Section 12.5 shall be deemed held for any successor
or assign of such Distributee, if applicable.
On the Effective Date, the escrow agent shall pay to the REIT
all Cash held in the escrow account, other than amounts to be refunded to
Distributees as provided below. The REIT shall deliver to the Disbursing Agent
the number of shares for which the Subscription Price has been received by such
escrow agent for distribution to Distributees that have timely exercised their
Subscription Rights and paid for their share of Offered Shares. A number of
shares of REIT Stock equal to the difference between (x) the number of Offered
Shares and (y) the number of shares of REIT Stock which are acquired by the
Distributees pursuant to this Section 12.5 shall be purchased for Cash on the
Effective Date by the Property Manager/Leasing Agent for an amount equal to the
product of the Subscription Price times the number of Unsubscribed Shares. The
Debtors and their agents may rely upon the advice of the Morgan Loan Agent as to
the allocation of REIT
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Stock, Subscription Rights and Offered Shares among the Morgan Loan Lenders.
When the actual number of Offered Shares (and the Subscription Price therefor)
to be issued is finally determined, the escrow agent will refund to each
Distributee any excess amount deposited with the escrow agent by any Distributee
which has executed a Subscription Agreement attributable to the excess, if any,
of (x) with respect to each holder of a Senior Claim, the fraction represented
by its Pro Rata portion of the Election Amount and, with respect to each Morgan
Loan Lender, its share of the Morgan Loan as determined by the Morgan Loan
Agent, in the case of a holder of a Senior Claim, multiplied by ninety-three
percent (93%) of the number of Offered Shares and, in the case of a Morgan Loan
Lender, multiplied by seven percent (7%) of the number of Offered Shares, over
(y) the number of shares of REIT Stock such Distributee designates in its
Subscription Agreement, multiplied by the Subscription Price.
12.6 Fractional Shares. The REIT will not issue fractional
shares of REIT Stock. Each Distributee will receive a number of shares of REIT
Stock equal to the first whole number which is less than the number of shares of
REIT Stock to which such Distributee would otherwise be entitled to receive if
fractional shares of REIT Stock were to be distributed.
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ARTICLE XIII
IMPLEMENTATION OF THE PLAN
13.1 Delivery of Plan Documents. On the Effective Date, the
following actions will take place in the following order (except as specifically
set forth) to implement the Plan:
(a) Formation of Entities. To the extent not
previously formed, the REIT, the Property Owning Partnerships, the
Upper Tier Limited Partnership, the Lower Tier Limited Partnership, the
GP Corps and the Upper Tier GP Corp. shall be formed pursuant to the
REIT Documents, the Property Owning Partnership Documents, the Initial
Upper Tier Limited Partner Documents, the Lower Tier Limited Partner
Documents, the GP Corp. Documents and the Upper Tier GP Corp.
Documents, respectively.
(b) Modification of 237 Operating Agreement: Pursuant
to the 237 Operating Agreement Modification, the operating agreement
for 237 L.L.C. will be modified to provide that any income arising from
the release of the 237 Excess Amount will be allocated to Building
Corp. and Equityco.
(c) Assumption of 237 Excess Amount. Pursuant to the
237 Assumption and Security Agreement, (i) Building Corp. and Equityco
shall assume the obligations of the Debtors to repay the 237 Excess
Amount, (ii) Building Corp. and Equityco shall grant to the Indenture
Trustee for the benefit of the Noteholders a first priority perfected
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security interest in and lien on their interests in the Debtors
securing their obligation to repay the 237 Excess Amount, and (iii) the
Indenture Trustee shall release the Debtors from their obligation to
repay the 237 Excess Amount.
(d) Merger of Debtors with and into the Upper Tier
Limited Partnership and Assumption of Certain Indebtedness. The Debtors
will merge with and into the Upper Tier Limited Partnership pursuant to
the Merger Agreement and Building Corp. shall be the initial general
partner of the Upper Tier Limited Partnership. Each of the Debtors and
the Upper Tier Limited Partnership will file Certificates of Merger
with the Secretary of State of the State of Delaware. Upon consummation
of the mergers, the Upper Tier Limited Partnership will succeed to all
of the remaining assets of the Debtors. Pursuant to the 1290 Assumption
and Security Agreement, (i) Building Corp. and Equityco shall assume
the obligation of the Upper Tier Limited Partnership to repay the 1290
Excess Amount, (ii) Building Corp. and Equityco shall grant to the
Indenture Trustee for the benefit of the Noteholders a first priority
perfected security interest in and lien on their interests in the Upper
Tier Limited Partnership (equal in priority with the security interest
granted under the 237 Assumption and Security Agreement) securing its
obligation to repay the 1290 Excess Amount, and (iii) the Indenture
Trustee shall
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release the Upper Tier Limited Partnership from its obligation to repay
the 1290 Excess Amount. The initial limited partnership agreement for
the Upper Tier Limited Partnership will provide that any income arising
from the release of the 1290 Excess Amount will be allocated to
Building Corp. and Equityco.
(e) Contribution of the Properties to Property Owning
Partnerships. Pursuant to the Property Contribution Agreements and the
Conveyancing Documents, the Lower Tier Limited Partnership will direct
the Upper Tier Limited Partnership to transfer and contribute the
Properties and certain other property to the Property Owning
Partnerships subject to the lien of the Indenture securing the Existing
Notes and, in consideration therefor (i) the Upper Tier Limited
Partnership will receive the LP Interest and (ii) the Lower Tier
Limited Partnership will receive the POP LP Interests (which also
reflects the contribution to the Property Owning Partnerships of the
Contributed Debt as provided for in Section 13.1(f) hereof).
(f) Contribution by Holders of Existing Notes to
REIT. Pursuant to the terms of the Noteholders Contribution and
Participation Agreement, the Indenture Trustee, acting on behalf of the
holders of the Existing Notes, will contribute to the REIT, on a pro
rata basis, an undivided interest in Three Hundred Million Dollars
($300,000,000) of Existing Notes and will receive shares of REIT Stock
to be
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distributed to the holders of Senior Claims by the Disbursing Agent in
accordance with Articles V and XII hereof.
(g) Contribution of the Contributed Debt to Property
Owning Partnerships. Pursuant to the terms of the Debt Contribution
Agreement, (i) the REIT will contribute the Contributed Debt to the
Lower Tier Limited Partnership and will receive the GP Interest in
consideration therefor and (ii) the Lower Tier Limited Partnership will
contribute such Contributed Debt to the Property Owning Partnerships.
Upon receipt of the Contributed Debt by the Property Owning
Partnerships, the Contributed Debt will be extinguished. In
consideration for agreeing to serve as the general partner of 237 Park
Partners, L.P. and exposing its assets to the liabilities thereof, 237
Corp. will receive a one percent (1%) interest as general partner in
237 Park Partners, L.P. In consideration for agreeing to serve as the
general partner of 1290 Partners, L.P. and exposing its assets to the
liabilities thereof, 1290 Corp. will receive a one percent (1%)
interest as general partner in 1290 Partners, L.P.
(h) Cancellation of Excess Amount. Pursuant to the
Excess Amount Release, the Indenture Trustee shall forgive the
obligation of Building Corp. and Equityco to repay the Excess Amount
and release such parties and their interests in the Upper Tier Limited
Partnership from the
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security interests granted to the Indenture Trustee under the 237
Assumption and Security Agreement and the 1290 Assumption and Security
Agreement.
(i) Redemption of O&Y, Substitution of General
Partners and Restatement of Upper Tier Limited Partnership Agreement.
Pursuant to the Redemption and Substitution Agreement, and subject to
the provisions of Section 10.2 hereof, (i) the Upper Tier GP Corp will
be admitted to the Upper Tier Limited Partnership as a general partner,
(ii) Building Corp. will withdraw as general partner, (iii) the Upper
Tier GP Corp. will receive a one percent (1%) general partnership
interest in the Upper Tier Limited Partnership, (iv) Equityco's and
Building Corp.'s limited partner interests will be redeemed and Equity
Co. and Building Corp. will withdraw from the Upper Tier Limited
Partnership as limited partners, and (v) JMB LP will receive a
ninety-nine percent (99%) limited partnership interest. Thereafter, the
Upper Tier GP Corp. and JMB LP will enter into the Upper Tier Limited
Partner Documents.
(j) Delivery of JMB Indemnity and JMB Collateral to
the REIT. The JMB Indemnity will be executed by the JMB Indemnitors and
delivered to the REIT and JMB LP will deliver the JMB Collateral to the
REIT.
(k) Restatement of Existing Notes and
Indenture/Issuance of New Notes. Subject to Section 13.2 hereof, the
Indenture will be amended and restated by the
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Property Owning Partnerships and the Indenture Trustee as the Restated
Indenture and the Restated Mortgage. Subject to Section 13.2 hereof,
the Existing Notes will be amended and restated by the Property Owning
Partnerships and the Indenture Trustee in the aggregate principal
amount of Four Hundred Million Dollars ($400,000,000) as the New Notes.
(l) Treatment of Other Assets and Liabilities.
(i) Assignment of Tenant Notes. Pursuant to
the Settlement Agreement, the O&Y Affiliates holding the
Tenant Notes will, at the REIT's direction, assign and deliver
to the applicable Property Owning Partnership, pursuant to the
Tenant Note Assignments, the Tenant Notes and an amount equal
to all Cash paid in respect of the Tenant Notes from and after
January 1, 1996; provided, however, that the O&Y
Administrative Expense Claim may constitute a setoff against
such Cash payment.
(ii) Assignment and Amendment of JMB Notes.
Citibank, N.A. will release its lien on the JMB Notes. O&Y MFC
will assign to the REIT or its designee the JMB Notes and
security agreements pursuant to the JMB Note Assignment.
Immediately prior to such assignments, the REIT (or its
designee) and the other party thereto will enter into the Note
Participation Agreement. The REIT (or its designee) and JMB LP
will thereafter enter into the JMB Note Restatement Documents.
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(iii) Transfer of Distributable Cash. The
Indenture Trustee and the Debtors will transfer, convey and
assign all Distributable Cash then in their control to the
REIT. Prior to such transfer, the Indenture Trustee may deduct
an amount equal to any reasonable fees, costs and expenses due
and owing to the Indenture Trustee under the Indenture.
(m) Contribution of Subscription Proceeds. On the
Effective Date, Distributees that have entered into a Subscription
Agreement and, to the extent applicable, the Property Manager/Leasing
Agent shall be issued in accordance with Section 12.5 hereof the
Offered Shares against the payment to the REIT by the escrow agent
referenced in Section 12.5 and the Property Manager/Leasing Agent of an
aggregate amount of Cash equal to the Subscription Proceeds.
(n) Management of REIT and the Properties. The REIT
will enter into the Asset Management Agreement with the Asset Manager.
Each of the Property Owning Partnerships will enter into a Property
Management and Leasing Agreement with the Property Manager/Leasing
Agent.
(o) Remaining 2 Broadway Assets. Prior to the merger
described in paragraph 13.1(d) above, the Assignment of the Remaining 2
Broadway Assets shall be executed and delivered by the parties thereto.
The Indenture Trustee shall take all actions necessary, including
executing UCC-3's and a release of such assets from the lien of the
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Indenture, to release any Lien held by it on the Remaining 2 Broadway
Assets.
13.2 Cash Distribution in Lieu of New Notes. The holders of a
majority in principal amount of Existing Notes (excluding Existing Notes held by
O&Y Affiliates) may obtain a commitment for non-participating mortgage loan
financing to be consummated on the Effective Date on terms acceptable to such
holders from a bank, insurance company or other financial institution or
pursuant to a securitized financing transaction, in either case secured by the
Properties, in an amount not less than Three Hundred Twenty Five Million Dollars
($325,000,000) in lieu of issuing New Notes and on terms otherwise not less
favorable than those set forth in the Disclosure Statement.
(a) Gross Proceeds Less than $400,000,000. If the Conventional
Financing Alternative is consummated on the Effective Date and the gross
proceeds from the consummation of the Conventional Financing Alternative are
less than $400,000,000, (x) the Senior Claim Note Cap will be adjusted to an
amount (as so adjusted, the "Adjusted Note Cap") equal to 97.75% of the gross
proceeds from the consummation of the Conventional Financing Alternative and (y)
the Senior Claim Equity Cap will be adjusted to an amount (as so adjusted, the
"Adjusted Equity Cap") equal to 12,000,000 shares less the MLL Equity
Allocation. For purposes of the Plan, "MLL Equity Allocation" shall mean the
number of shares calculated by multiplying 12,000,000 shares times a fraction,
(x) the numerator
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of which shall be $30,000,000 less 2.25% of the Conventional Financing
Alternative, and (y) the denominator of which is (i) $700,000,000 less (ii) the
gross proceeds from the consummation of the Conventional Financing Alternative
plus (iii) the net proceeds, if any, from such Conventional Financing
Alternative above $400,000,000. In such event, (a) the Standard Note
Distribution shall be recalculated to equal the product of Four Hundred Thirty
Three Thousand One Hundred Ninety One Dollars and Thirty-Two Cents ($433,191.32)
times a fraction, the numerator of which will be the Adjusted Note Cap and the
denominator of which will be the Senior Claim Note Cap, (b) the Standard Stock
Distribution shall be recalculated to equal the product of Twelve Thousand Three
Hundred Sixty Four and Twenty-Three Hundredths (12,364.23) shares of REIT Stock
times a fraction, the numerator of which will be the Adjusted Equity Cap and the
denominator of which will be the Senior Claim Equity Cap and (c) the amount of
New Notes and REIT Stock to be distributed to any holder of an Allowed Senior
Claim electing a Non-Standard Election shall be recalculated using the Adjusted
Note Cap in lieu of the Senior Claim Note Cap and the Adjusted Equity Cap in
lieu of the Senior Claim Equity Cap, wherever the Senior Claim Note Cap and
Senior Claim Equity Cap, respectively, are used in calculating distributions to
holders of Senior Claims electing Non-Standard Elections. Upon such
recalculation, the holders of Allowed Senior Claims otherwise entitled to
receive New Notes (whether pursuant to a Standard Election or a Non-Standard
Election) will
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receive, in lieu of New Notes, an amount, in Cash, equal to (A) 97.75% of the
Conventional Financing Cash Distribution, multiplied by (B) a fraction, the
numerator of which shall be the amount of New Notes which would otherwise be
distributed to such holder (after any recalculation described above) and the
denominator of which shall be the Adjusted Note Cap. The Morgan Loan Lenders
will be entitled to receive, in lieu of New Notes, an aggregate amount, in Cash,
equal to 2.25% of the Conventional Financing Cash Distribution and in lieu of
the distribution of 840,000 shares of REIT Stock, a number of shares of REIT
Stock equal to the MLL Equity Allocation.
(b) Gross Proceeds Greater Than or Equal to $400,000,000. If
the Conventional Financing Alternative is consummated, and the gross proceeds
derived therefrom are greater than or equal to Four Hundred Million Dollars
($400,000,000), then (A) each holder of an Allowed Senior Claim who is otherwise
entitled to receive New Notes and each Morgan Loan Lender will receive, in lieu
of the New Notes they would otherwise be entitled to receive, a Cash
distribution in an amount equal to the product of (i) the principal amount of
New Notes it would have otherwise received multiplied by (ii) a fraction, the
numerator of which will be the lesser of Four Hundred Million Dollars
($400,000,000) and the Conventional Financing Cash Distribution and the
denominator of which is Four Hundred Million Dollars ($400,000,000), (B) the
Standard Stock Distribution shall be recalculated to equal the product of Twelve
Thousand Three
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Hundred Sixty Four and Twenty-Three Hundredths shares of REIT Stock (12,364.23)
multiplied by a fraction, the numerator of which will be the Adjusted Equity Cap
and the denominator of which will be the Senior Claim Equity Cap, (C) the amount
of REIT Stock to be distributed to any holder of an Allowed Senior Claim
electing a Non-Standard Election shall be recalculated using the Adjusted Equity
Cap in lieu of the Senior Claim Equity Cap wherever the Senior Claim Equity Cap
is used in calculating distributions to holders of Senior Claims electing
Non-Standard Distributions, and (D) the amount of REIT Stock to be distributed
to the Morgan Loan Lenders will be changed from 840,000 shares of REIT Stock to
the MLL Equity Allocation. If the net proceeds of any mortgage loan financing
consummated pursuant to the Conventional Financing Alternative are greater than
Four Hundred Million Dollars ($400,000,000), such excess will be held by the
Property Owning Partnerships and/or distributed in accordance with the Property
Owning Partnership Documents.
In connection with the consummation of any Conventional
Financing Alternative, the Debtors and the Indenture Trustee shall take such
actions and shall execute and deliver such documents and instruments as may be
reasonably required to effect an assignment of the Indenture and the Existing
Notes to a successor mortgagee in accordance with the provisions of the
Indenture relating thereto. In the event that a Conventional Financing
Alternative is consummated, VCG shall be paid a fee of
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One Million Dollars ($1,000,000) by the REIT on the Effective Date.
13.3 Certain Other Agreements. On the Effective Date, (1) the
Registration Rights Agreement shall become effective in accordance with its
terms, (2) the REIT Stock Option Plan will become effective in accordance with
its terms, (3) the REIT will execute and deliver the Indemnification Agreement
to its officers and directors and (4) in accordance with the REIT Stock Option
Plan, the REIT will issue stock options entitling each director to purchase
shares of REIT Stock.
13.4 Issuance of Securities. On the Effective Date, (i) the
REIT will issue and deliver to the Disbursing Agent certificates representing
the shares of REIT Stock to be issued hereunder; (ii) unless the financing
contemplated by the Conventional Financing Alternative is consummated, the
Property Owning Partnerships will issue and the Indenture Trustee will
authenticate and deliver to the Disbursing Agent for distribution to the
Distributees, New Notes in an aggregate principal amount of Four Hundred Million
Dollars ($400,000,000), (iii) the Debtors will deliver the portion of the
Closing Cash not then held by the Indenture Trustee to the Disbursing Agent, and
(iv) the Indenture Trustee, if not the Disbursing Agent, will deliver to the
Disbursing Agent the Closing Cash then held by the Indenture Trustee. The
Disbursing Agent will distribute the shares of REIT Stock, Closing Cash and New
Notes (or if the Conventional
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Financing Alternative is consummated, the Conventional Financing Cash
Distribution) to be distributed in accordance with the Plan.
13.5 Distributions to Indenture Trustee and Security
Holders.
(a) For purposes of any distribution to holders of Allowed
Senior Claims under the Plan, the Indenture Trustee shall be deemed to be the
sole holder of all Allowed Claims in respect of an Existing Note issued under
the Indenture.
(b) The Disbursing Agent will receive the REIT Stock and the
New Notes on behalf of the Distributees and will, as soon as practicable,
economically and administratively, in accordance with the Indenture or
applicable law and the Plan, deliver such REIT Stock or New Notes to the
Distributees as provided in Articles V, XI and XII of the Plan; provided,
however, that the Disbursing Agent will not deliver any REIT Stock or New Notes
to any holder of an Allowed Senior Claim until such Distributee shall have
complied with the provisions of Section 13.6 hereof. The Property Owning
Partnerships will, promptly after being billed therefor, pay the reasonable
fees, costs and expenses of the Disbursing Agent incurred in connection with the
distribution made by such Disbursing Agent in accordance with this Article XIII.
13.6 Surrender of Securities.
(a) Each holder of Existing Notes will surrender
instruments representing such Existing Notes held by it to the
Indenture Trustee in accordance with the instructions to be
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provided by the Indenture Trustee as soon as practicable after the Effective
Date. Upon surrender of Existing Notes to the Indenture Trustee, the Indenture
Trustee shall cancel such Existing Notes. On and after the Effective Date, the
Indenture Trustee shall make a distribution to holders of Existing Notes only if
they have surrendered or are deemed to have surrendered such instruments or such
certificates in accordance with the instruction provided pursuant to this
Section 13.6(a).
(b) Until the fifth (5th) year after the
Effective Date, any property not distributed to holders of an Allowed Senior
Claim will be held by the Indenture Trustee in trust for the benefit of the
holders of such Allowed Senior Claim entitled to receive such property.
(c) Any holder of an Allowed Senior Claim that
does not surrender or is not deemed to have surrendered instruments or
certificates representing its Existing Notes in accordance with the instructions
for surrender of Existing Notes within five (5) years after the Effective Date
shall receive no distributions on account of such Claim under the Plan and shall
be forever barred from asserting any claim thereon. In such case, the Indenture
Trustee for the holders of such Claims shall return the New Note, and shares of
REIT Stock that otherwise would have been distributed to such holder of Existing
Notes as well as any property being held for the benefit of such holder of
Existing Notes to the REIT.
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13.7 Withholding of Taxes. The Disbursing Agent shall withhold
from any property distributed under the Plan, in accordance with the express
instructions of the Debtors, any property which must be withheld for taxes
payable by the Person entitled to such property to the extent required by
applicable law. In the absence of instructions, the Disbursing Agent may
conclusively presume that no property need be withheld.
13.8 Boards of Directors of REIT, GP Corps. and Upper
Tier GP Corp.. On the Effective Date, the Boards of Directors of
the REIT, the GP Corps. and the Upper Tier GP Corp. shall consist
of the individuals designated on or prior to the Confirmation
Date in a notice filed with the Bankruptcy Court by the Debtors
upon Noteholder Consent.
13.9 Qualification as REIT. The aggregate number of shares of
REIT Stock otherwise distributable to Distributees pursuant to the Plan will be
reduced by five hundred (500) shares (with distributions to each Distributee
reduced on a pro rata basis) and, as soon as practicable after the Effective
Date, the Board of Directors of the REIT will cause donations of ten (10) shares
of REIT Stock to be made to fifty (50) Entities qualifying under section
501(c)(3) of the United States Internal Revenue Code with the number of Entities
to receive such donations to be determined by the Board of Directors.
13.10 Registration Statement. The REIT will file with the
Securities and Exchange Commission on or before the date which is sixty (60)
days after the Effective Date, a Registration
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Statement on Form 10 with respect to the REIT Stock pursuant to which, among
other things, the REIT will become subject to the periodic reporting
requirements of the Exchange Act.
ARTICLE XIV
PROVISIONS GOVERNING DISTRIBUTIONS
14.1 Date of Distributions. Except as expressly provided
herein, 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 the 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. Distributions made within thirty (30)
days of the Effective Date shall be deemed made as of the Effective Date.
14.2 Disbursing Agent. All distributions under the Plan in
respect of Classes 1, 2, 3, 4 and 5 shall be made by the Disbursing Agent. In
making distributions hereunder, the Disbursing Agent shall (i) make payments and
fund reserves in accordance with the instructions of the Debtors and (ii) shall
distribute New Notes, or the Conventional Financing Cash Distribution, as the
case may be, and REIT Stock in accordance with the instructions of the REIT. The
Disbursing Agent shall not be required to give any bond or surety or other
security for the performance of its duties unless otherwise ordered by the
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Bankruptcy Court; if so otherwise ordered, all costs and expenses of procuring
any such bond or surety shall be paid from the Distributable Cash.
14.3 Source of Distributions. All Cash distributions required
to be made under the Plan on and after the Effective Date shall be made from
Closing Cash; provided, however, that if Closing Cash is insufficient to pay all
Allowed Administrative Expenses Claims, in full, such deficiency amount shall be
paid by the applicable Property Owning Partnership. On the Effective Date,
Closing Cash sufficient to fully fund the Claims Reserve as provided in Section
16.3 hereof shall be transferred to the Claims Reserve. The Claims Reserve shall
be maintained by the Disbursing Agent in a separate account.
14.4 Delivery of Distributions. Subject to Bankruptcy Rule
9010, 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
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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 Effective Date. After such date, all unclaimed property shall be
delivered to the REIT and the claims of any holders to such property shall be
discharged and forever barred. This Section 14.4 shall not apply to
distributions to Distributees.
14.5 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. Requests
for reissuance of any check shall be made 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 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.
14.6 Manner of Payment Under the Plan. At the option
of the Debtors, any Cash payment to be made by the Debtors
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pursuant to the Plan may be made by a check or wire transfer or as otherwise
required or provided in applicable agreements.
ARTICLE XV
RIGHTS AND POWERS OF DISBURSING AGENT
15.1 Exculpation. The Disbursing Agent, from and after the
Effective Date, is hereby exculpated by all Entities, including all holders of
Claims and Equity Interests and other parties in interest, from any and all
claims, causes of action and other assertions of liability (including breach of
fiduciary duty) arising out of the discharge by the Disbursing Agent of the
powers and duties conferred upon it by the Plan or any order of the Bankruptcy
Court entered pursuant to or in furtherance of the Plan, or applicable law,
except solely for actions or omissions arising out of the gross negligence or
willful misconduct of the Disbursing Agent. No holder of a Claim or an Equity
Interest or other party in interest shall have or pursue any claim or cause of
action against the Disbursing Agent for making distributions in accordance with
the Plan or for implementing the provisions of the Plan.
15.2 Powers of the Disbursing Agent. The Disbursing Agent
shall be empowered to (a) effect all actions and execute all instruments and
documents necessary to perform its duties under the Plan, (b) make all
distributions contemplated by the Plan, (c) comply with the Plan and the
obligations thereunder, (d) employ professionals to represent it with respect to
its
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responsibilities and (e) exercise such other powers as may be vested in the
Disbursing Agent pursuant to an order of the Bankruptcy Court, pursuant to the
Plan, or as deemed by the Disbursing Agent to be necessary and proper to
implement the provisions of the Plan.
ARTICLE XVI
PROCEDURE FOR RESOLVING AND TREATING
DISPUTED CLAIMS UNDER THE PLAN
16.1 Prosecution of Objections. Objections to Claims, other
than Administrative Expense Claims, Tenant Reimbursement Claims and Insured
Claims, must be filed on or before the Effective Date. From and after the
Confirmation Date, the Property Owning Partnerships, or such other Entity as
they direct, may prosecute any objections to the allowance of any Claim which
may be then pending. Objections to Tenant Reimbursement Claims and Priority
Utility Tax Claims shall be governed by the provisions of Sections 16.7 and 16.8
hereof. Objections to Insured Claims may be interposed by the appropriate Upper
Tier Limited Partnership in accordance with applicable non- bankruptcy law.
Objections to Administrative Expense Claims under Bankruptcy Code sections 330,
331 and 503(b) may be filed by the United States Trustee and any party within
the deadlines to be established by order of the Court. Claims for which no
objection is filed within the time so limited, and Senior Claims, shall be
deemed Allowed Claims, not subject to set-off, avoidance, subordination or
disallowance, entitled to receive and
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retain distributions in respect of the full amount set forth in proofs of claim
filed with the Bankruptcy Court, or, if less, as listed in the Schedules and not
identified as disputed, contingent or unliquidated as to amount.
16.2 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.
16.3 Claims Reserve. On the Effective Date, the Disbursing
Agent shall transfer to one or more segregated accounts as the Claims Reserve an
amount of Closing Cash held by the Indenture Trustee or transferred to the
Disbursing Agent and required to pay or projected to be required to pay in Cash,
in full, to the extent the same are not paid on the Effective Date, all
Administrative Expense Claims, Priority Tax Claims (other than Priority Utility
Tax Claims), Priority Non-Tax Claims, General Unsecured Claims and Other Secured
Claims that are either Allowed Claims or are Disputed Claims, as if such
Disputed Claims were Allowed Claims, on the Effective Date. The Cash held in the
Claims Reserve shall be held in trust for the benefit of holders of such Claims
pending determination of their entitlement thereto. The Disbursing Agent shall
also hold in the Claims Reserve (a) the Net Tax Proceeds, if any, transferred to
the Disbursing Agent in accordance with Section 16.6 hereof and
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(b) Distributable Cash on account of Priority Utility Tax Claims in accordance
with Section 16.7 hereof.
16.4 Distributions After Allowance. Payments and distributions
to each holder of a Disputed Claim, to the extent that such Claim ultimately
becomes an Allowed Claim, in whole or in part, shall be made in accordance with
the provisions of the Plan 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 holders of such Claim any payment or property that would have been
distributed to such holder if the Claim had been allowed on the Effective Date,
without any interest thereon, which in the case of Cash distributions shall be
made from Closing Cash held in the Claims Reserve.
16.5 Remaining Funds. In the event that any Cash held in the
Claims Reserve remains after all Claims have been allowed or disallowed and
distributions have been made in accordance with this Article XVI, such Cash
shall be transferred to the REIT.
16.6 Allowance and Objection to Allowance of Tenant
Reimbursement Claims. Upon realization of the Net Tax Proceeds, the Property
Owning Partnership receiving such Net Tax Proceeds shall cause an amount of such
funds necessary, in its sole determination, to reserve in full for all Tenant
Reimbursement Claims to be transferred to the Disbursing Agent for deposit in
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the Claims Reserve. Within thirty (30) days after the date of such deposit, such
Property Owning Partnership shall determine the entitlement of holders of Tenant
Reimbursement Claims to payment of such Tenant Reimbursement Claims by reason of
the receipt of such Net Tax Proceeds and, in making such determination, shall be
entitled to give effect to any rights of setoff, recoupment or other claims that
such Property Owning Partnership or any predecessor-in-interest may have against
the holders of such Tenant Reimbursement Claims. Thereafter, such Property
Owning Partnership shall transmit a copy of such determination to each holder of
a Tenant Reimbursement Claim. Each holder of a Tenant Reimbursement Claim shall
have thirty (30) days from the date of transmission of such determination to
object to the determination by such Property Owning Partnership of the amount to
which such holder of a Tenant Reimbursement Claim is entitled. If the holder of
a Tenant Reimbursement Claim does not object on a timely basis to any
determination by such Property Owning Partnership of the entitlement of such
holder to a payment from such Net Tax Proceeds, then, with respect to such Net
Tax Proceeds, such Tenant Reimbursement Claim shall be an Allowed Tenant
Reimbursement Claim in the amount so determined and shall then be paid from the
Claims Reserve at the request of the Property Owning Partnership, without the
necessity of further Bankruptcy Court approval. If the holder of a Tenant
Reimbursement Claim objects on a timely basis to the determination by such
Property Owning Partnership of the
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entitlement of such holder to a payment from such Net Tax Proceeds, then, with
respect to such Net Tax Proceeds, such Tenant Reimbursement Claim shall be a
Disputed Claim and no distribution shall be made on account of such Tenant
Reimbursement Claim until such Claim becomes an Allowed Claim, in whole or in
part, by a Final Order. All remaining Net Tax Proceeds realized shall be
transferred by the applicable Property Owning Partnership to the Lower Tier
Limited Partnership which will in turn transfer such Net Tax Proceeds to the
REIT; provided, however, that such Property Owning Partnership shall retain
sufficient Cash to pay all disputed Tenant Reimbursement Claims until such
Claims have been allowed or disallowed.
16.7 Allowance and Objection to Allowance of Priority Utility
Tax Claims. On the Effective Date, the Disbursing Agent shall deposit in the
Claims Reserve an amount of Closing Cash equal to the amount claimed in any
proof or proofs of claim on account of Priority Utility Tax Claims or, if no
such proof or proofs of claim have been filed on the Effective Date or if proofs
of claim have been filed by some but not all of the potential holders of
Priority Utility Tax Claims, an amount determined by the Debtors, with the
consent of the Indenture Trustee, which consent shall not be unreasonably
withheld or delayed, to be sufficient to pay in full any Priority Utility Tax
Claims on account of which proofs of claim may be filed after the Effective
Date. The Debtors shall be deemed to have objected to all Priority Utility Tax
Claims evidenced by a filed proof of
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claim. From and after the Effective Date, the Upper Tier Limited Partnership
shall have the exclusive right to prosecute any objection to Priority Utility
Tax Claims, any litigation related to any objection to Priority Utility Tax
Claims and to compromise or settle any such objection or litigation. In the
event that the Upper Tier Limited Partnership compromises any objection to any
Priority Utility Tax Claim, the Property Owning Partnership owning the Property
in question shall be deemed to have indemnified the holders of Equity Interests
in the Debtor which had formerly owned the Property in question (and their
successors and assigns) from all claims which may be made by the City or State
of New York in respect of utility taxes, interest and penalties in connection
with such Property unless such compromise includes a release of such holders
from all such claims. At such time as the Priority Utility Tax Claims are
disallowed or allowed, the Disbursing Agent shall determine the amount of the
Priority Utility Tax Claim Excess, if any. Allowed Priority Tax Claims shall be
paid in Cash by the Disbursing Agent from Closing Cash held in the Claims
Reserve. After determining such amount, the Disbursing Agent shall distribute
such Priority Utility Tax Excess to the REIT.
16.8 Distributions After Effective Date. Distributions made
after the Effective Date to holders of Claims that are not Allowed Claims as of
the Effective Date but which later become Allowed Claims shall be made without
interest and shall be deemed to have been made on the Effective Date.
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ARTICLE XVII
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
17.1 General Treatment. On the Effective Date, all executory
contracts and unexpired leases to which either Debtor is a party, except for any
executory contract or unexpired lease that (a) has been assumed pursuant to
Final Order of the Bankruptcy Court prior to the Effective Date, or (b) is
specifically listed on the Schedule of Executory Contracts to Be Assumed
attached to the Disclosure Statement hereto shall be deemed rejected; provided,
however, that (x) 1290 L.L.C. shall neither assume nor reject the 1290 Ground
Lease which shall expire of its own terms and the attornment provisions
contained in all then unexpired leases and related non-disturbance agreements
with 1290 L.L.C. or its predecessors in interest as fee owner of the 1290
Property which are not rejected shall be deemed to be effective, and (y) all
unexpired leases with tenants of either Property shall be assumed. For purposes
hereof, each executory contract and unexpired lease listed on the Schedule of
Executory Contracts to Be Assumed attached to the Disclosure Statement that
relates to the use or occupancy of real property shall include (a)
modifications, amendments, supplements, restatements, or other agreements made
directly or indirectly by any agreement, instrument, or other document that
affect such executory contract or unexpired lease and (b) executory contracts or
unexpired leases appurtenant to the premises including easements, licenses,
permits, rights, privileges, immunities,
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options, rights of first refusal, powers, uses, usufructs, reciprocal easement
agreements, vault, tunnel or bridge agreements or franchises, and any other
interests in real estate or rights in rem relating to such premises to the
extent any of the foregoing items described in this clause (b) are (i) executory
contracts or unexpired leases, and (ii) are listed on the Schedule of Executory
Contracts to Be Assumed to be attached as an Exhibit to the Disclosure
Statement.
17.2 Amendments to Schedule; Effect of Amendments. On the
Effective Date, each of the Debtors shall assume and, as applicable, assign to
one of the Property Owning Partnerships each of the executory contracts and
unexpired leases listed on the Schedule of Executory Contracts to Be Assumed
attached to the Disclosure Statement; provided, however, that, either Debtor may
at any time on or before five (5) Business Days prior to the Confirmation Date
amend the Schedule of Executory Contracts to Be Assumed attached to the
Disclosure Statement to delete therefrom or add thereto any executory contract
or unexpired lease thereto, in which event such executory contract or unexpired
lease shall be deemed to be rejected or assumed, respectively, as of the
Effective Date; and provided, further, that any such amendment shall be subject
to Noteholder Consent. The Debtors shall provide notice of any such amendments
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 listed on the
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Schedule of Executory Contracts to Be Assumed attached to the Disclosure
Statement shall not constitute or be construed to constitute an admission by
either Debtor that such contract or lease (including related things and rights)
is an executory contract or unexpired lease within the meaning of section 365 of
the Bankruptcy Code or that any Debtor or Limited Partner Entity has any
liability thereunder.
17.3 Bar to Rejection Damages. If the rejection of an
executory contract or unexpired lease by either Debtor results in damages to the
other party or parties to such contract or lease, a Claim for such damages shall
be forever barred and shall not be enforceable against the Debtor, or its
properties or its interests in property or agents, successors, partners, members
or assigns, unless a proof of claim is filed with the Bankruptcy Court and
served upon counsel for the Debtors and the Indenture Trustee on or before the
date of the Confirmation Hearing.
ARTICLE XVIII
CONDITIONS PRECEDENT TO CONFIRMATION OF PLAN
AND TO EFFECTIVE DATE
18.1 Conditions Precedent to Confirmation of the Plan.
Confirmation of the Plan is subject to satisfaction of the
following conditions precedent:
(a) Form of Confirmation Order. The Clerk of the Bankruptcy
Court shall have entered the Confirmation Order either substantially in a form
to be filed by the Debtors, upon
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Noteholder Consent, with the Bankruptcy Court not later than five (5) days prior
to the commencement of the Confirmation Hearing or in such other form that does
not materially and adversely affect the benefits to be received by the holders
of Senior Claims, as determined by Noteholder Consent. Notwithstanding the
preceding sentence, such Confirmation Order shall not modify the rights of the
Morgan Loan Lenders in a manner which materially and adversely affects the
Morgan Loan Lenders disproportionately (in relation to the amount of their
respective distributions to be received under the Plan) to its impact on other
Distributees, unless the consent of the Morgan Loan Agent with respect thereto
has been obtained in the exercise of its sole and absolute discretion.
(b) Confirmation Date. The Confirmation Date shall be no later
than September 15, 1996.
18.2 Conditions Precedent to Effective Date of the Plan. The
occurrence of the Effective Date of the Plan is subject to satisfaction of the
following conditions precedent:
(a) Finality of Confirmation Order. The Confirmation Order
shall have become a Final Order.
(b) Plan Documents. All Plan Documents shall have been
executed and delivered in accordance with the Plan.
(c) JMB Collateral. The JMB Collateral shall have been
delivered to the REIT.
(d) Tenant Notes. The holders of the Tenant Notes shall have
endorsed and assigned such notes, pursuant to the
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Tenant Note Assignments, to the applicable Property Owning Partnership free and
clear of any interest of third parties and delivered to the applicable Property
Owning Partnership an amount of Cash equal to all payments made in respect of
the Tenant Notes from and after January 1, 1996; provided, however, that the O&Y
Administrative Expense Claim may constitute a setoff against such Cash payment.
(e) Bankruptcy Court Approvals. The Bankruptcy Court shall
have entered a Final Order or Final Orders reasonably satisfactory to the
holders of a majority in principal amount of the Existing Notes (excluding
Existing Notes held by O&Y Affiliates), and in the case of item 1 below
reasonably satisfactory to the Morgan Loan Agent, on notice to all parties in
interest who have filed requests for notice in the chapter 11 cases of the
relevant O&Y (U.S.) Entities, the creditors' committee in those cases and the
Office of the United States Trustee approving:
(1) the Settlement Agreement;
(2) the delivery of the Tenant Notes to the
applicable Property Owning Partnership;
(3) the assignment by Equityco to the REIT or its
designee of all of its right, title and interest in and to the 2
Broadway Utility Tax Reserve;
(4) the forgiveness by Equityco and Devco of all
Waived Payments;
(5) the CIBC Settlement;
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(6) the assignment by 2 Broadway Associates and 2
Broadway Land Company of all of their interests, if any, in the
Remaining 2 Broadway Assets (as defined in the Indenture) to the REIT;
(7) the O&Y Lease Agreement; and
(8) the assignment by O&Y MFC of the JMB Notes to the
REIT or its designee.
(f) Delivery of JMB Notes. O&Y MFC shall have endorsed and/or
assigned the JMB Notes and the related security agreements to the REIT or its
designee free and clear of liens or interests of third parties, including,
without limitation, Citibank, N.A. which shall have delivered the Citibank, N.A.
Release, duly executed, to the REIT or its designee.
(g) Execution of Documents. All other actions, documents,
financing statements and instruments necessary to implement the provisions of
the Plan having been, respectively, effected or executed and delivered.
(h) Conditions to Closing in Property Contribution Agreements.
The conditions to closing set forth in paragraph 2.2 of the Property
Contribution Agreements shall have been satisfied.
(i) Consummation of Transactions. The parties to the
Settlement Agreement shall have notified the Debtors that the transactions
contemplated by the Settlement Agreement to be consummated on or before the
Effective Date have been consummated.
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(j) Consummation of CIBC Settlement. The CIBC Settlement shall
have been consummated.
(k) Effective Date. The Effective Date shall be not later than
September 30, 1996.
(l) Cap on General Unsecured Claims. Allowed Class 5 Claims
(General Unsecured Claims) shall not exceed an amount equal to the amount of all
Allowed General Unsecured Claims relating to or arising from the operation of
the Properties in the ordinary course of business, plus One Hundred Thousand
Dollars ($100,000).
18.3 Waiver of Conditions Precedent.
The conditions precedent contained in Sections 18.1 and
18.2 hereof may be waived by Noteholder Consent. Notwithstanding the preceding
sentence, in order to be effective, any waiver of a condition precedent
contained in Sections 18.2(a), 18.2(e)(l) or 18.2(i) or any other condition
precedent contained in either Section 18.1 or 18.2 hereof which would materially
and adversely affect the Morgan Loan Lenders in amounts disproportionate (in
relation to the amount of their respective distributions to be received under
the Plan) to its impact on other Distributees must also be waived by the Morgan
Loan Agent in the exercise of its sole and absolute discretion. Further, in
order to be effective, any waiver of the conditions precedent contained in
Sections 18.1 or 18.2(2) (to the extent applicable to the Debtors or any O&Y
(U.S.) Entity), (e)(1),(2),(3),(5),(7) and (8),(g) (to the extent applicable to
the Debtors or any O&Y (U.S.) Entity), (i) and (j)
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hereof must also be waived by the Debtors in the exercise of their sole and
absolute discretion. Any waiver contemplated by this Section 18.3 may be
effected at any time, without leave or order of the Bankruptcy Court and without
any formal action.
ARTICLE XIX
EFFECT OF CONFIRMATION
19.1 Jurisdiction. 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 their interests in property and their operations shall be
released from the custody and jurisdiction of the Bankruptcy Court, except as
provided in Article XXI hereof.
19.2 Vesting and Liens. On the Effective Date, the Property
Owning Partnerships or the REIT, as applicable, shall be vested with all of the
Plan Assets in accordance with the Plan Documents. On the Effective Date, all
Liens against any Plan Asset, except to the extent provided in the Plan
Documents, shall be deemed extinguished and discharged.
19.3 Equityco Claims. On the Effective Date, any Claim against
Equityco or its general partners asserted by any holder of Existing Notes
arising out of the Master Cash Flow Agreement, the Existing Notes, the Indenture
or instruments entered into in connection therewith shall be deemed withdrawn
with prejudice upon the receipt of the Plan Securities (or Cash
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in the event of consummation of the Conventional Financing Alternative) by
the Indenture Trustee.
19.4 2 Broadway Plan.
(a) Notwithstanding the provisions of the 2 Broadway Plan, all
Cash to be paid to the "Trustee's Account" pursuant to Sections 9.5 and 9.7 of
the 2 Broadway Plan shall be distributed to the REIT at the same time as such
Cash would have been paid to the "Trustee's Account" in accordance with the 2
Broadway Plan.
(b) The REIT shall have all of the rights of 2 Broadway, L.P.
pursuant to Sections 9.6 and 9.7 of the 2 Broadway Plan. In the event that the
REIT compromises any objection to any Priority Utility Tax Claim (as defined in
the 2 Broadway Plan), the REIT shall be deemed to have indemnified the holders
of Equity Interests (as defined in the 2 Broadway Plan) in 2 Broadway L.P. and
their successors and assigns from all claims which may be made by the City or
State of New York in respect of utility taxes, interest and penalties in
connection with the real property located at 2 Broadway, New York, New York
unless such compromise includes a release of such holders from such claims.
(c) The REIT will assume all of the obligations of 2
Broadway, L.P. and O&Y NY Building Corp. under Section 9.6 of the 2 Broadway
Plan and 2 Broadway, L.P. and O&Y NY Building Corp. shall have no further
obligations thereunder.
19.5 Binding Effect. On the Effective Date, the Plan
shall become binding upon parties in interest in accordance with its terms
and conditions.
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ARTICLE XX
RELEASES, INJUNCTIONS AND WAIVER OF CLAIMS
20.1 Release of the O&Y Releasees.
(a) General Release. As of the Effective Date, the Debtors are
released from all Liabilities from the beginning of time. Notwithstanding the
provisions of this Section 20.1 or any release contained in Section 20.2 of the
Plan, the Plan does not release the Upper Tier Limited Partnership or any other
Entity from any obligations arising under the Plan or the Plan Documents which
are expressly stated to survive the Effective Date or which by the nature of
their terms are to be performed after the Effective Date.
(b) O&Y Releases. Without limiting the release provided in
Section 20.1(a) hereof, as of the Effective Date, the O&Y Releasees are released
from all Liabilities in any way relating to either Debtor, either Debtor in
Possession, each predecessor in interest of either Debtor, the Reorganization
Cases, the Plan, either Property, the Existing Notes, the Indenture or the
Offering Memorandum. The release of the O&Y Releasees provided in this Section
20.2(b) includes a release from all Liabilities from the beginning of time
relating to:
(1) the offer, sale, purchase, resale or ownership of the
Existing Notes (including any previously issued notes which were
replaced by Existing Notes), the Offering Memorandum, any sales
brochure, registration statement, preliminary prospectus, prospectus,
appraisal, report or
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inspection, or any disclosure or omission related to any of the
foregoing, and any engagement, underwriting, placement agency or other
role of, or services rendered by, any Entity in connection with any of
the foregoing;
(2) the involvement of any of the O&Y Releasees in or with the
sale of the Existing Notes (including any previously issued notes which
were replaced by Existing Notes);
(3) the ownership, management and operation of the
Properties by any of the O&Y Releasees;
(4) the preparation by any of the O&Y Releasees of financial
statements in respect of either Debtor or any predecessor in interest
of either Debtor or any entity obligated under the Master Cash Flow
Agreement;
(5) the actions, payments and obligations required of any of
the O&Y Releasees under, among other things, the Indenture, the Cash
Management Agreement, the Existing Notes (including any previously
issued notes which were replaced by Existing Notes), the Master Cash
Flow Agreement, the 1290 Ground Lease and all agreements, instruments
and documents executed and delivered in connection with any of the
foregoing or the 2 Broadway Plan;
(6) the use of proceeds by any of the O&Y Releasees from
the Existing Notes or revenues of the Property;
(7) the obligations under leases, subleases, licenses
or other agreement regarding use and occupancy of all or any
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portion of the Properties whether, as landlord, sublandlord, licensor,
tenant, subtenant, licensee or otherwise other than obligations of
Devco under the O&Y Lease Amendment, but only to the extent not then
performed;
(8) the undertaking by the O&Y Releasees to restructure the
obligations governed by the Indenture and evidenced by the Existing
Notes and to restructure the obligations of the partners/members of the
Debtors among themselves, including any actions taken or not taken in
respect of formulating, negotiating and implementing the Plan;
(9) all obligations or liabilities of the O&Y Releasees
relating to Building Corp. being the initial general partner of the
Upper Tier Limited Partnership;
(10) all claims and causes of action arising out of the
Limited Liability Company Agreement for either Debtor or the
Partnership Agreements for the Debtors' predecessors in interest or any
liabilities as direct or indirect partners or members thereof; and
(11) all claims and causes of action held by parties in
interest in the Reorganization Cases in their capacity as such arising
out of the O&Y Releasees' acts, omissions or status as parties in
interest in the chapter 11 cases of O&Y (U.S.) or as a participant in
the restructuring of O&Y (U.S.), including, without limitation, claims
and causes of action based upon the attempted proposal (alone or with
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others) of a plan of reorganization for O&Y (U.S.) and all matters
raised in pleadings filed with the Bankruptcy Court or exchanged among
parties in interest with respect to O&Y (U.S.)'s exclusive right to
file a plan of reorganization.
20.2 Release of the Plan Releasees. As of the Effective Date,
the Plan Releasees shall be released from all Liabilities from the beginning of
time in any way relating to (a) either Debtor, either Debtor in Possession, each
predecessor in interest of either Debtor, the Reorganization Cases, the Plan or
either Property, or (b) the Existing Notes (including any previously issued
notes which were replaced by Existing Notes), the Indenture or the Offering
Memorandum. Without limiting the generality of the foregoing, the release of the
Plan Releasees provided herein includes a release from Liabilities from the
beginning of time relating to:
(a) the undertaking by the Plan Releasees to restructure the
obligations governed by the Indenture and evidenced by the Existing
Notes (including any previously issued notes which were replaced by
Existing Notes), including any actions taken or not taken in respect of
formulating, negotiating and implementing the Plan;
(b) all actions taken or not taken, at any time, by any Plan
Releasee under or in connection with the Existing Notes (including any
previously issued notes which were replaced by Existing Notes), the
Indenture, the Master Cash
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Flow Agreement or the Cash Management Agreement or the 2
Broadway Plan;
(c) all claims and causes of action held by parties in
interest in the Reorganization Cases in their capacity as such arising
out of the Plan Releasees' acts, omissions or status as parties in
interest in the chapter 11 cases of O&Y (U.S.) or as a participant in
the restructuring of O&Y (U.S.), including, without limitation, claims
and causes of action based upon the attempted proposal (alone or with
others) of a plan of reorganization for O&Y (U.S.) and all matters
raised in pleadings filed with the Bankruptcy Court or exchanged among
parties in interest with respect to O&Y (U.S.)'s exclusive right to
file a plan of reorganization; and
(d) all waivers or releases of debt and withdrawals of
claims effected pursuant to the Plan and the Settlement
Agreement.
20.3 Injunction. The Confirmation Order shall be an injunction
to permanently enjoin and restrain all Entities from asserting against the O&Y
Releasees or the Plan Releasees, or their respective properties or interests in
property, any Liabilities that are released by the Plan Releases, or from taking
any of the following actions against such Entities in respect of any such
Liabilities to the extent so released:
(a) the commencement or continuation of any action or
proceeding;
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(b) the enforcement, attachment, collection or recovery by any
manner or means of any judgment, award, decree or order;
(c) creating, perfecting, or enforcing any encumbrance of any
kind; and
(d) asserting any right of setoff, subrogation, or recoupment
of any kind against any obligation due from any such Entity.
20.4 Avoidance and Recovery Actions. Effective as of the
Effective Date, the Debtors waive the right to prosecute and release any
avoidance, subordination or recovery actions under sections 510, 544, 545, 547,
548, 549, 550, 551 and 553 of the Bankruptcy Code or any other causes of action,
or rights to payments of claims, that belong to the Debtors or Debtors in
Possession, other than any such actions that may be pending on such date or that
the Debtors may have on the Effective Date against the holder of a Tenant
Reimbursement Claim (but in such case only with respect to any right of setoff
that would exist against the holder of such Tenant Reimbursement Claim). The
Upper Tier Limited Partnership shall retain and may prosecute any such actions
that may be pending on such date.
ARTICLE XXI
RETENTION OF JURISDICTION
21.1 Retention of Jurisdiction. The Bankruptcy Court
may retain jurisdiction, and if the Bankruptcy Court exercises
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its retained jurisdiction, shall have exclusive jurisdiction, of all matters
arising out of, and related to, the Reorganization Cases and the 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:
(a) 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;
(b) To determine any and all adversary proceedings,
applications and contested matters;
(c) To ensure that distributions to holders of Allowed Claims
are accomplished as provided herein;
(d) To hear and determine any timely objections to
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;
(e) 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;
(f) To issue such orders in aid of execution of the Plan, to
the extent authorized by section 1142 of the Bankruptcy Code;
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(g) To consider any modifications of the Plan, to cure any
defect or omission, or reconcile any inconsistency in any order of the
Bankruptcy Court, including the Confirmation Order;
(h) To hear and determine all applications for awards of
compensation for services rendered and reimbursement of expenses
related to implementation and consummation of the Plan;
(i) To hear and determine disputes arising in connection with
the interpretation, implementation, or enforcement of the Plan;
(j) To hear and determine matters concerning state, local and
federal taxes in accordance with sections 346, 505 and 1146 of the
Bankruptcy Code including, without limitation, the New York Real
Property Transfer Gains Tax, Article 31-B of the New York Tax Law; and
(k) To enter a final decree closing the Reorganization Cases.
21.2 Modification of Plan. Modifications of the Plan may be
proposed in writing by the Debtors at any time before confirmation, provided
that (x) the Debtors have obtained Noteholder Consent, and (y) this Plan, as
modified, satisfies the requirements of sections 1122 and 1123 of the Bankruptcy
Code and (z) the Debtors have complied with section 1125 of the Bankruptcy Code.
The Plan may be modified at any time after confirmation hereof and before
substantial consummation hereof, provided that
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(x) the Debtors shall have obtained Noteholder Consent and (y) the Plan, as
modified, satisfies the requirements of sections 1122 and 1123 of the Bankruptcy
Code and the Bankruptcy Court, after notice and a hearing, confirms this Plan as
modified under section 1129 of the Bankruptcy Code and the circumstances warrant
such modifications. A holder of a Claim or Equity Interest that has accepted the
Plan shall be deemed to have accepted the Plan as modified in accordance with
the foregoing if the proposed modification does not materially and adversely
change the treatment of the Claim or Equity Interest of such holder.
Notwithstanding the foregoing, the Plan may not be amended, modified or
supplemented if the proposed amendment, modification or supplement would
materially and adversely affect the Morgan Loan Lenders in a manner
disproportionate (in relation to the amount of their respective distributions to
be received under the Plan) to its impact on other Distributees, unless the
consent of the Morgan Loan Agent shall have been given in the exercise of its
sole and absolute discretion.
ARTICLE XXII
MISCELLANEOUS PROVISIONS
22.1 Payment of Statutory Fees. All fees payable pursuant to
section 1930, title 28, United States Code shall be paid on the Effective Date.
22.2 Retiree Benefits. On and after the Effective Date,
pursuant to section 1129(a)(13) of the Bankruptcy Code, the
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Property Owning Partnerships or their successors and assigns 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 duration of the period the Debtors have obligated themselves to
provide such benefits; provided, however, that nothing herein or elsewhere in
this Plan shall be construed as an undertaking on the part of the Property
Owning Partnerships, the Limited Partner Entities or the REIT to assume any
obligation relating to properties other than the Properties with respect to
retiree benefits.
22.3 Dissolution of Creditors' Committee. The Creditors'
Committee, if any, shall be dissolved on the Effective Date.
22.4 Post-Effective Date Fees and Expenses. Except as may
otherwise be or have been ordered by the Bankruptcy Court, the Indenture
Trustee, the Disbursing Agent and all professionals seeking payment from the
Upper Tier Limited Partnership, the REIT or the Property Owning Partnerships for
reasonable fees and expenses incurred after the Effective Date in connection
with the implementation of the Plan shall transmit a written invoice of such
request to the Property Owning Partnerships and the Disbursing Agent. If no
written objection to the payment of such fees and expenses is received by the
Disbursing Agent within ten (10) days of the transmission of such request, the
Disbursing
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Agent shall pay from the Closing Cash held in the Claims Reserve or if Closing
Cash is insufficient the Property Owning Partnership shall pay such fees and
expenses. If an objection to the payment of such fees and expenses is received
by the Disbursing Agent within such 10-day period, the Disbursing Agent shall
pay such fees and expenses only upon order of the Bankruptcy Court or the
withdrawal of such objection.
22.5 Severability of Plan Provisions. If, prior to the
Confirmation Date, any term or provision of the Plan is held by the Bankruptcy
Court to be invalid, void or unenforceable, the Bankruptcy Court shall have the
power to alter and interpret such term or provision 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 altered or interpreted;
provided, however, that the Bankruptcy Court shall not have the power to alter
the Plan in a manner which (a) materially and adversely affects the benefits to
be received by holders of Existing Notes without Noteholder Consent, or (b)
materially and adversely affect the benefits to be received by the Morgan Loan
Lenders in a manner disproportionate (in relation to the amount of their
respective distributions to be received under the Plan) to its impact on other
Distributees, unless the consent of the Morgan Loan Agent has been obtained in
the exercise of its sole and absolute discretion. Notwithstanding any such
holding, alteration or interpretation,
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the remainder of the terms and provisions of the Plan shall remain in full force
and effect and shall in no way be affected, impaired or invalidated by such
holding, alteration or interpretation. The Confirmation Order shall constitute a
judicial determination and shall provide that each term and provision of the
Plan, as it may have been altered or interpreted in accordance with the
foregoing, is valid and enforceable pursuant to its terms.
22.6 Governing Law. Except to the extent that the Bankruptcy
Code or other federal law is applicable, or to the extent an Exhibit hereto
provides otherwise, the rights, duties and obligations arising under the Plan
shall be governed by, and construed and enforced in accordance with, the laws of
the State of New York.
22.7 Time of the Essence. Time shall be of the essence with
respect to all dates and deadlines set forth herein.
22.8 Reasonable Cooperation. On and after the Effective Date,
each of the Debtors and their Affiliates shall, at the sole expense of the
Property Owning Partnerships, reasonably cooperate with the GP Corps., the Upper
Tier GP Corp., the Upper Tier Limited Partnership, the Lower Tier Limited
Partnership, the Property Owning Partnerships, the REIT, the Property
Manager/Leasing Agent and the Asset Manager (i) to assure the consummation of
the Plan, (ii) to assist with objections to claims, (iii) to facilitate the
transfer of the Properties to the Property Owning Partnerships without
disruption
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to any tenants of the Properties, and (iv) to enable the REIT to prepare the
Registration Statement provided for in Section 13.10 above, including, without
limitation, the preparation of audited financial statements which may be
required in connection therewith. Such cooperation shall include delivery to the
Property Owning Partnerships of (X) all leases and executory contracts assumed
pursuant to Article XVII hereof and (Y) all of the books and records of the
Debtors and 2 Broadway Associates, L.P. and their affiliated predecessors in
interest in each case, then in such Debtor's or such Affiliate's possession,
custody or control.
22.9 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:
If to the Debtor:
237 Park Avenue Associates, L.L.C.
1290 Associates, L.L.C.
c/o 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) 850-9872
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<PAGE>
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Brian S. Rosen, Esq.
Telephone: (212) 310-8000
Telecopier: (212) 310-8007
and
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attn: Joshua Mermelstein, Esq.
Joel London, Esq.
Telephone: (212) 859-8000
Telecopier: (212) 859-4000
If to the Indenture Trustee:
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attn: Stanley Burg
Corporate Market Services
Telephone: 250-6526
Telecopier: 250-0392
and
Kelley, Drye & Warren LLP
101 Park Avenue
New York, New York 10178
Attn: David Retter, Esq.
Susan Carney, Esq.
Telephone: 808-7576
Telecopier: 808-7897
If to the Limited Partner Entities, the Property Owning
Partnerships or the REIT:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Douglas L. Furth, Esq.
Kenneth J. Friedman, Esq.
Telephone: (212) 856-7000
Telecopier: (212) 856-7807 and
(212) 856-7802
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<PAGE>
and
Victor Capital Group
885 Third Avenue, Suite 1240
New York, New York 10022
Attn: John Klopp
Jeremy FitzGerald
Telephone: (212) 593-5400
Telecopier: (212) 593-0316
All notices, requests, and demands to be provided to any
Creditors' Committee that may be appointed in the Reorganization Cases shall be
made to the attorneys of record for such Creditors' Committee).
22.10 Action By Indenture Trustee. Whenever the provisions of
the Plan grants the Indenture Trustee the discretion to take any action or give
any consent or direction, the Trustee shall act in accordance with Noteholder
Consent and, in the absence of such instruction, may act in accordance with its
own discretion; provided, however, that, in the event and to the extent that
this Section 22.10 conflicts with the provisions of Section 7.9 of the
Indenture, the provisions of Section 7.9 of the Indenture shall govern; and
provided, further, that wherever the Plan expressly requires the Trustee to act
reasonably, the Trustee shall so act notwithstanding any contrary direction from
any Noteholders.
22.11 O&Y Administrative Expense Claim. On the Effective Date,
the O&Y Administrative Expense Claim shall be deemed Allowed and paid in full or
pursuant to the terms of Sections 13.1(l) and 18.2(d) hereof.
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22.12 VCG Fees. On the Effective Date, the REIT shall
distribute to VCG Five Hundred Thousand Dollars ($500,000), in Cash and Forty
Thousand (40,000) shares of REIT stock. If the Conventional Financing
Alternative is consummated, VCG shall also receive the Cash fee referenced in
Section 13.2 hereof. In the event that (i) a Conventional Financing Alternative
is not consummated and (ii) the New Notes are refinanced on or before eighteen
(18) months after the Effective Date, the REIT shall pay VCG a fee of One
Million Dollars ($1,000,000); provided, however, that, if the New Notes are
partially redeemed during such period in an amount less than Three Hundred
Twenty Five Million Dollars ($325,000,000) as part of the refinancing of one
Property, the REIT shall pay VCG an amount to be agreed upon between the REIT
and VCG. VCG will receive fees in accordance with the Asset Management
Agreement.
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<PAGE>
22.13 Confirmation Request. The Debtors reserve the right to
request confirmation of the Plan under section 1129(b) of the Bankruptcy Code if
any impaired Class does not accept the Plan.
Dated: August 9, 1996
New York, New York
Respectfully submitted,
237 Park Avenue Associates, L.L.C.
By: O&Y NY Building Corp., its
Authorized Member
By: /s/ John A. Moore
Name: John A. Moore
Title: Authorized
Representative
1290 ASSOCIATES, L.L.C.
By: O&Y NY Building Corp., its
Authorized Member
By: /s/ John A. Moore
Name: John A. Moore
Title: Authorized
Representative
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors
in Possession
767 Fifth Avenue
New York, New York
(212) 310-8000
Brian S. Rosen, Esq. (BR 0571)
<PAGE>
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors
in Possession
767 Fifth Avenue
New York, New York
(212) 310-8000
Brian S. Rosen, Esq. (BR 0571)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - -X
In re :
Chapter 11 Case Nos.
237 PARK AVENUE ASSOCIATES, L.L.C. :
and 1290 ASSOCIATES, L.L.C.,
: 96 B 42177 (JLG)
Debtors. 96 B 42178 (JLG)
: (Jointly Administered)
- - - - - - - - - - -- - - - - - - - X
SECOND AMENDED JOINT PLAN OF REORGANIZATION
OF 237 PARK AVENUE ASSOCIATES, L.L.C.
AND 1290 ASSOCIATES, L.L.C.
334901.29
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS............................................... 2
ARTICLE II PROVISIONS FOR PAYMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS................. 37
2.1 Expenses of Administration................................ 37
2.2 Priority Tax Claims....................................... 37
2.3 Professional Fees......................................... 37
ARTICLE III CLASSIFICATION OF CLAIMS AND EQUITY
INTERESTS.............................................. 38
3.1 Classification............................................ 38
3.2 Voting.................................................... 39
ARTICLE IV PROVISIONS FOR TREATMENT OF PRIORITY NON-TAX
CLAIMS................................................. 40
4.1 Classification............................................ 40
4.2 Treatment................................................. 40
ARTICLE V PROVISIONS FOR TREATMENT OF SENIOR CLAIMS................. 40
5.1 Classification............................................ 40
5.2 Allowance................................................. 40
5.3 Treatment................................................. 41
ARTICLE VI PROVISIONS FOR TREATMENT OF OTHER SECURED
CLAIMS................................................. 41
6.1 Classification............................................ 41
6.2 Treatment................................................. 41
ARTICLE VII PROVISIONS FOR TREATMENT OF INSURED CLAIMS
AND TENANT REIMBURSEMENT CLAIMS........................ 42
7.1 Classification............................................ 42
7.2 Treatment................................................. 42
ARTICLE VIII PROVISIONS FOR TREATMENT OF GENERAL UNSECURED
CLAIMS................................................. 43
8.1 Classification............................................ 43
8.2 Treatment................................................. 43
ARTICLE IX PROVISIONS FOR TREATMENT OF AFFILIATE
UNSECURED CLAIMS....................................... 43
9.1 Classification............................................ 43
9.2 Treatment................................................. 43
ARTICLE X PROVISIONS FOR TREATMENT OF EQUITY INTERESTS.............. 44
10.1 Classification............................................ 44
10.2 Treatment................................................. 44
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Page
ARTICLE XI DISTRIBUTIONS TO CONSUMMATE SETTLEMENT
AGREEMENT.............................................. 44
ARTICLE XII OPTIONAL DISTRIBUTIONS.................................... 45
12.1 General Provisions Regarding Distributions to
Distributees........................................... 45
12.2 Election Procedure........................................ 46
12.3 Standard Election......................................... 46
12.4 Non-Standard Election..................................... 47
12.5 Subscription Rights....................................... 49
12.6 Fractional Shares......................................... 52
ARTICLE XIII IMPLEMENTATION OF THE PLAN................................ 53
13.1 Delivery of Plan Documents................................ 53
13.2 Cash Distribution in Lieu of New Notes.................... 60
13.3 Certain Other Agreements.................................. 64
13.4 Issuance of Securities.................................... 64
13.5 Distributions to Indenture Trustee and
Security Holders....................................... 65
13.6 Surrender of Securities................................... 65
13.7 Withholding of Taxes...................................... 67
13.8 Boards of Directors of REIT, GP Corps. and
Upper Tier GP Corp..................................... 67
13.9 Qualification as REIT..................................... 67
13.10 Registration Statement.................................... 67
ARTICLE XIV PROVISIONS GOVERNING DISTRIBUTIONS........................ 68
14.1 Date of Distributions..................................... 68
14.2 Disbursing Agent.......................................... 68
14.3 Source of Distributions................................... 69
14.4 Delivery of Distributions................................. 69
14.5 Time Bar to Cash Payments................................. 70
14.6 Manner of Payment Under the Plan.......................... 70
ARTICLE XV RIGHTS AND POWERS OF DISBURSING AGENT..................... 71
15.1 Exculpation............................................... 71
15.2 Powers of the Disbursing Agent............................ 71
ARTICLE XVI PROCEDURE FOR RESOLVING AND TREATING DISPUTED
CLAIMS UNDER THE PLAN.................................. 72
16.1 Prosecution of Objections................................. 72
16.2 No Distributions Pending Allowance........................ 73
16.3 Claims Reserve............................................ 73
16.4 Distributions After Allowance............................. 74
16.5 Remaining Funds........................................... 74
16.6 Allowance and Objection to Allowance of
Tenant Reimbursement Claims............................ 74
16.7 Allowance and Objection to Allowance of
Priority Utility Tax Claims............................ 76
16.8 Distributions After Effective Date........................ 77
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<PAGE>
Page
ARTICLE XVII EXECUTORY CONTRACTS AND UNEXPIRED LEASES.................. 78
17.1 General Treatment......................................... 78
17.2 Amendments to Schedule; Effect of Amendments.............. 79
17.3 Bar to Rejection Damages.................................. 80
ARTICLE XVIII CONDITIONS PRECEDENT TO CONFIRMATION OF PLAN
AND TO EFFECTIVE DATE ................................ 80
18.1 Conditions Precedent to Confirmation of the
Plan................................................... 80
18.2 Conditions Precedent to Effective Date of the
Plan................................................... 81
18.3 Waiver of Conditions Precedent............................ 84
ARTICLE XIX EFFECT OF CONFIRMATION.................................... 85
19.1 Jurisdiction.............................................. 85
19.2 Vesting and Liens......................................... 85
19.3 Equityco Claims........................................... 85
19.4 2 Broadway Plan........................................... 86
19.5 Binding Effect............................................ 86
ARTICLE XX RELEASES, INJUNCTIONS AND WAIVER OF CLAIMS................ 87
20.1 Release of the O&Y Releasees.............................. 87
20.2 Release of the Plan Releasees............................. 90
20.3 Injunction................................................ 91
20.4 Avoidance and Recovery Actions............................ 92
ARTICLE XXI RETENTION OF JURISDICTION................................. 92
21.1 Retention of Jurisdiction................................. 92
21.2 Modification of Plan...................................... 94
ARTICLE XXII MISCELLANEOUS PROVISIONS.................................. 95
22.1 Payment of Statutory Fees................................. 95
22.2 Retiree Benefits.......................................... 95
22.3 Dissolution of Creditors' Committee....................... 96
22.4 Post-Effective Date Fees and Expenses..................... 96
22.5 Severability of Plan Provisions........................... 97
22.6 Governing Law............................................. 98
22.7 Time of the Essence....................................... 98
22.8 Reasonable Cooperation.................................... 98
22.9 Notices................................................... 99
22.10 Action By Indenture Trustee...............................101
22.11 O&Y Administrative Expense Claim..........................101
22.12 VCG Fees..................................................101
22.13 Confirmation Request......................................103
334901.29
Brian S. Rosen, Esq. (BSR 0571)
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Attorney for the Debtors and
the Debtors in Possession
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - -- - - - - - - - -X
In re :
Chapter 11 Case Nos.
237 PARK AVENUE ASSOCIATES, L.L.C. : 96 B 42177 (JLG)
and 1290 ASSOCIATES, L.L.C., 96 B 42178 (JLG)
: (Jointly Administered)
Debtors.
- - - - - - - - - - -- - - - - - - - X
TECHNICAL AMENDMENT TO SECOND AMENDED
JOINT PLAN OF REORGANIZATION
OF 237 PARK AVENUE ASSOCIATES, L.L.C.
AND 1290 ASSOCIATES, L.L.C.
237 Park Avenue Associates, L.L.C. and 1290 Associates,
L.L.C., debtors and debtors in possession in the above-captioned jointly
administered chapter 11 cases, hereby submit the following technical amendments
to the Second Amended Joint Plan of Reorganization of 237 Park Avenue
Associates, L.L.C. and 1290 Associates, L.L.C., dated August
9, 1996 (the "Plan"):1
- --------
1 Unless otherwise defined herein, capitalized terms used in this Technical
Amendment shall have the meaning ascribed to them in the Plan.
1
NYFS04...:\32\66232\0011\183\PLN9086K.50A
<PAGE>
1. Section 1.25 of the Plan is hereby amended by inserting "or an
Affiliate thereof" following the term "VCG".
2. Section 1.122 of the Plan is hereby amended by deleting from such
section "the lesser of $400,000,000 and".
3. Section 1.143 of the Plan is hereby amended by inserting "or an
Affiliate thereof" following the term"Property Manager/Leasing Agent".
4. Clause (x) of Section 13.2(a) of the Plan is hereby amended by
deleting from such clause "Conventional Financing Alternative" and inserting in
lieu thereof "Conventional Financing Cash Distribution."
5. The Schedule of Executory Contracts to Be Assumed, filed in
accordance with Section 17.1 of the Plan, is hereby amended to include that
certain Letter Agreement, dated August 14, 1996, The Chase Manhattan Bank,
Olympia & York Noteholders Ad Hoc Committee, 237 L.L.C., 1290 L.L.C., Victor
Capital Group, L.P. and Apollo Real Estate Advisors, L.P.
2
NYFS04...:\32\66232\0011\183\PLN9086K.50A
<PAGE>
6. The remainder of the terms and provisions of the Plan shall remain
in full force and effect.
Dated: New York, New York
September 10, 1996
Respectfully submitted,
237 PARK AVENUE ASSOCIATES, L.L.C.
By: O&Y NY Building Corp., its
Authorized Member
By: /s/ John A. Moore
Name: John A. Moore
Title: Authorized Representative
1290 ASSOCIATES, L.L.C.
By: O&Y NY Building Corp., its
Authorized Member
By: /s/ John A. Moore
Name: John A. Moore
Title: Authorized Representative
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors in
Possession
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Brian S. Rosen, Esq. (BSR 0571)
3
NYFS04...:\32\66232\0011\183\PLN9086K.50A
Brian S. Rosen, Esq. (BSR 0571)
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Attorney for the Debtors and
the Debtors in Possession
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - -X
In re :
Chapter 11 Case Nos.
237 PARK AVENUE ASSOCIATES, L.L.C. : 96 B 42177 (JLG)
and 1290 ASSOCIATES, L.L.C., 96 B 42178 (JLG)
: (Jointly Administered)
Debtors.
- - - - - - - - - - -- - - - - - - - X
SECOND TECHNICAL AMENDMENT TO SECOND AMENDED
JOINT PLAN OF REORGANIZATION
OF 237 PARK AVENUE ASSOCIATES, L.L.C.
AND 1290 ASSOCIATES, L.L.C.
237 Park Avenue Associates, L.L.C. and 1290 Associates, L.L.C., debtors and
debtors in possession in the above-captioned jointly administered chapter 11
cases, hereby submit the following technical amendment to the Second Amended
Joint Plan of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290
Associates, L.L.C., dated
1
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<PAGE>
August 9, 1996, as technically amended on September 10, 1996 (the "Plan"):
1
1. Section 13.6(a) of the Plan is hereby amended
by deleting such section in its entirety and inserting in
lieu thereof the following:
"(a) Each holder of Existing Notes will surrender instruments
representing such Existing Notes held by it to the Indenture
Trustee in accordance with the instructions to be provided by
the Indenture Trustee as soon as practicable after the
Confirmation Date. Upon surrender of Existing Notes to the
Indenture Trustee, on the Effective Date, such Existing Notes
(x) shall be amended, restated and re-issued in reduced
principal amount as the New Notes or (y) in the case of a
Conventional Financing Alternative, endorsed by the Indenture
Trustee, as attorney-in-fact for the Existing Noteholders, to
the party providing the Conventional Financing Alternative in
a reduced principal amount equal to the amount of such
financing together with an assignment of the Indenture to such
party. Any Existing Note not surrendered to the Indenture
Trustee on or prior to the Effective Date shall be deemed as
"lost Note" under the Indenture and the Debtors shall execute
and the Indenture Trustee shall authenticate and deliver a
substituted Existing Note therefor (and the Existing Note not
surrendered shall no longer be deemed to be outstanding and
all indebtedness which was evidenced by such Existing Note
shall no longer be evidenced thereby and will be deemed
evidenced instead by such substituted Existing Note) and, in
the case of a Conventional Financing Alternative, the
Indenture Trustee shall
- --------
1 Unless otherwise defined herein, capitalized terms used in this Technical
Amendment shall have the meaning ascribed to them in the Plan.
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<PAGE>
endorse such substituted Existing Note as aforesaid. The
provisions of Article XX of the Plan shall be applicable to
any substituted Existing Note issued as aforesaid and the same
shall be deemed an Existing Note hereunder. The Debtors and
the Indenture Trustee shall have no further obligation or
liability to the holder of any Existing Note not surrendered
except for the Indenture Trustee's obligations to such holder
pursuant to Section 13.6(b) hereof. On and after the Effective
Date, the Indenture Trustee shall make a distribution to
holders of Existing Notes only if they have surrendered such
instruments or such certificates in accordance with the
instruction provided pursuant to this Section 13.6(a)."
2. Section 13.6(c) of the Plan is hereby amended by deleting from the first
sentence thereof the phrase "or is not deemed to have surrendered".
3. Section 13.9 of the Plan is hereby amended by (a) deleting from such
section "five hundred (500) shares" and inserting in lieu thereof "up to one
thousand (1,000) shares" and (b) deleting from such section "fifty (50)
Entities" and inserting in lieu thereof "up to one hundred (100) Entities".
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<PAGE>
4. The remainder of the terms and provisions of the Plan shall remain in
full force and effect.
Dated: New York, New York
September 18, 1996
Respectfully submitted,
237 PARK AVENUE ASSOCIATES, L.L.C.
By: O&Y NY Building Corp., its
Authorized Member
By: /s/ John A. Moore
Name: John A. Moore
Title: Authorized Representative
1290 ASSOCIATES, L.L.C.
By: O&Y NY Building Corp., its
Authorized Member
By: /s/ John A. Moore
Name: John A. Moore
Title: Authorized Representative
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors in
Possession
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Brian S. Rosen, Esq. (BSR 0571)
4
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ARTICLES OF AMENDMENT AND RESTATEMENT
OF
METROPOLIS REALTY TRUST, INC.
TRUST, INC.
Dated: October 7, 1996
C/M 11764.0004 435121.1
<PAGE>
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
METROPOLIS REALTY TRUST, INC.
1. The name of the Corporation is Metropolis Realty Trust.
2. The Corporation's original Articles of Incorporation was filed
with the Department of Assessments and Taxation of the State of Maryland on May
13, 1996 under the name Metropolis Realty Trust, Inc.
3. These Articles of Amendment and Restatement (the "Charter") have
been duly approved by the Board of Directors of the Corporation and executed by
the officers of the Corporation in accordance with the applicable provisions of
Section 2-603(c) of the General Corporation Law of the State of Maryland (the
"MGCL"). No stock entitled to be voted on the matter was outstanding or
subscribed for at the time of the approval of the Charter.
4. The current address of the principal office of the Corporation is
as set forth in Article II of the Charter set forth below.
5. The name and address of the Corporation's current resident agent
is as set forth in Article II of the Charter set forth below.
6. The number of directors of the Corporation and the names of those
currently in office are as set forth in Article IV of the Charter set forth
below.
7. The total number of shares of stock which the Corporation had
authority to issue immediately prior to this amendment and restatement of the
charter of the Corporation was One Thousand (1,000) shares of Common Stock, $.01
par value per share, having an aggregate par value of Ten Dollars ($10.00).
8. The total number of shares of stock which the Corporation has
authority to issue, pursuant to the charter of the Corporation as hereby amended
and restated, is sixty million shares (60,000,000), initially consisting of (i)
ten million (10,000,000) shares of Preferred Stock, par value $10.00 per share;
and (ii) fifty million (50,000,000) shares of Common Stock, par value $10.00 per
share. The aggregate par value of all the shares of all classes of stock is
$600,000,000.
9. The Articles of Incorporation of the Corporation is hereby
amended and restated in its entirety as follows:
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C/M 11764.0004 435121.1
<PAGE>
ARTICLE I.
NAME
The name of the corporation (the "Corporation") is:
Metropolis Realty Trust, Inc.
ARTICLE II.
PRINCIPAL OFFICE; RESIDENT AGENT
The address of the principal office of the Corporation in this State
is c/o Ballard Spahr Andrews & Ingersoll, 300 East Lombard Street, Baltimore,
Maryland 21202, Attention: James J.
Hanks, Jr.
The name of the resident agent of the Corporation is James J. Hanks,
Jr., c/o Ballard Spahr Andrews & Ingersoll, 300 East Lombard Street, Baltimore,
Maryland 21202. The resident agent is a citizen of and resides in the State of
Maryland.
ARTICLE III.
PURPOSES
3.1 Purpose and Powers. The Corporation is formed to engage in any
lawful act or activity for which corporations may be organized under the general
laws of the State of Maryland. The foregoing purposes shall be in no way limited
or restricted by reference to, or inference from, the terms of any other clause
of this Charter. The foregoing purposes are also to be construed as powers of
the Corporation, and shall be in addition to and not in limitation of the
general powers of corporations under the laws of the State of Maryland.
3.2 Real Estate Investment Trust. Without limiting the generality of
the foregoing purpose, business and objects, at such time or times as the Board
of Directors of the Corporation determines that it is in the interest of the
Corporation and its stockholders that the Corporation engage in the business of,
and conduct its business and affairs so as to qualify as, a real estate
investment trust (as that phrase is defined under Section 856 of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code")), the purpose of
the Corporation shall include engaging in the business of a real estate
investment trust (a "REIT"). This reference to such purpose shall not make
unlawful or unauthorized any otherwise lawful act or activity that the
Corporation may take that is inconsistent with such purpose.
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C/M 11764.0004 435121.1
<PAGE>
ARTICLE IV.
BOARD OF DIRECTORS
4.1 Number. The number of Directors initially shall be nine,
effective as of the Effective Date (as hereinafter defined) of the Plan (as
hereinafter defined) and, after the occurrence of a simplification Event (as
hereinafter defined), may be increased or decreased from time to time by a vote
of the majority of the Directors then in office; provided, however, that the
total number of Directors shall be not fewer than the minimum number permitted
by the Maryland General Corporation Law nor more than nine. No reduction in the
number of Directors shall cause the removal of any Director from office prior to
the removal of such director in accordance with the Charter or the expiration of
his or her term.
4.2 Initial Board; Classification. The initial Directors (the
"Initial Directors") shall be divided into five classes. The classes, names and
addresses of the Initial Directors are:
Class of Common
Stock Designating
Class Name Directors
----- ---- ---------
I Lee S. Neibart Class B Common Stock
II Bruce Spector Class B Common Stock
II David Roberts Class A Common Stock
III W. Edward Scheetz Class B Common Stock
III David A. Strumwasser Class A Common Stock
IV William M. Mack Class B Common Stock
IV Ralph F. Rosenberg Class A Common Stock
V Russell S. Bernard Class A Common Stock
V John Klopp Class A Common Stock
The holders of Class B Common Stock have designated the initial
Class I Director, one of the initial Class II Directors, one of the initial
Class III Directors and one of the initial Class IV Directors. The holders of
Class A Common Stock have designated one of the initial Class II Directors, one
of the initial Class III Directors and one of the initial Class V Directors.
Whitehall Real Estate Limited Partnership V ("Whitehall") has designated one of
the initial Class IV Directors (the "Whitehall Director"). Oaktree Capital
Management, LLC ("Oaktree") has designated one of the initial Class V Directors
(the "Oaktree Director"). The terms of the Initial Directors shall commence on
the Effective Date.
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C/M 11764.0004 435121.1
<PAGE>
Subject to the second sentence of Section 4.5:
(a) the term of the initial Class I Director shall terminate on the
date of the 1997 annual meeting of stockholders; the term of the initial Class
II Directors shall terminate on the date of the 1998 annual meeting of
stockholders; the term of the initial Class III Directors shall terminate on the
date of the 1999 annual meeting of stockholders; the term of the initial Class
IV Directors shall terminate on the date of the 2000 annual meeting of
stockholders; and the term of the initial Class V Directors shall terminate on
the date of the 2001 annual meeting of stockholders;
(b) At the 1997 annual meeting of stockholders, the successor to the
Class I Director shall be elected for a four-year term by holders of Class B
Common Stock; at the 1998 annual meeting of stockholders, the successors to the
Class II Directors shall be elected for a three-year term by the holders of
Class A and Class B Common Stock; at the 1999 annual meeting of stockholders,
the successors to the Class III Directors shall be elected for a two-year term;
at the 2000 annual meeting of stockholders, the successors to the Class IV
Directors shall be elected for a one-year term by the holders of Class A and
Class B Common Stock; at the 2001 annual meeting of stockholders, the successors
to the Class I, Class II, Class III, Class IV and Class V Directors shall be
elected for a one-year term; and
(c) Directors shall hold office until the annual meeting for the
year in which their terms expire and until their successors shall be elected and
qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office.
As Class C Common Stock (i.e., until a Class C Conversion Date (as
hereinafter defined)), holders of Class C Common Stock shall not be permitted to
vote in any election of directors.
4.3 Resignation, Removal or Death. Any Director may resign from the
Board of Directors or any committee thereof at any time by written notice to the
Board of Directors, effective upon execution and delivery to the Corporation of
such notice or upon any future date specified in the notice. A Director may be
removed from office, but only for cause and only at a meeting of the
Stockholders called for that purpose, by the affirmative vote of the holders of
not less than two-thirds of the Stock then outstanding and entitled to vote in
the election of Directors (or, at any time prior to the occurrence of a
Simplification Event, by the affirmative vote of the holders of not less than
two-thirds of the same class of Common Stock as elected such Director). Any
vacancy created by the resignation, removal or death of a Director (other than
the Whitehall Director and the TCW Director) shall be filled by the remaining
Directors (or, at any time prior to the occurrence of a Simplification Event, by
the remaining Directors elected, or entitled to be elected, by the same class of
Common
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C/M 11764.0004 435121.1
<PAGE>
Stock as elected such Director). Any vacancy created by the resignation, removal
or death of a Whitehall Director or a TCW Director, as the case may be, prior to
the expiration of the initial term of such Director and prior to the occurrence
of a Simplification Event (other than in accordance with the immediately
succeeding sentence) shall be filled by the remaining Directors elected, or
entitled to be elected, by the same class of Common Stock as elected such
Director; such director to be elected from among any nominee or nominees
proposed by Whitehall or Oaktree, as the case may be. For purposes of the
Charter, the sale, transfer or other disposition by a stockholder of more than
80% of the shares of Common Stock distributed to such stockholder pursuant to
the Plan shall, among other things, constitute cause for removing a Director
that receives compensation directly or indirectly from such stockholder unless,
after giving effect to such sale, the stockholder shall continue to hold shares
of Common Stock representing at least 5% of the combined voting power of all of
the outstanding shares of Common Stock.
4.4 Powers. Subject to the express limitations herein or in the
Bylaws, the business and affairs of the Corporation shall be managed under the
direction of the Board of Directors. The Charter, as amended or supplemented
from time to time, shall be construed with a presumption in favor of the grant
of power and authority to the Directors.
4.5 Simplification Event. For purposes of this Charter,
"Simplification Event" means, the earliest to occur of (i) the date on which
Apollo (as hereinafter defined) and its affiliates (taken together) or any
Transferee (as hereinafter defined) and its affiliates (taken together), no
longer holds a number of shares of Common Stock representing at least 30% of the
combined voting power of all outstanding shares of stock of the Corporation;
(ii) the date on which Apollo and its affiliates (taken together) or any
Transferee and its affiliates (taken together) or any other person or entity and
its affiliates (taken together) holds a number of shares of Common Stock
representing at least 75% of the combined voting power of all outstanding shares
of stock of the Corporation; (iii) the fifth anniversary of the Effective Date
of the Plan; and (iv) the date of the annual meeting of stockholders in 2001.
Upon the occurrence of a Simplification Event, notwithstanding any
provision of this Charter or the Bylaws of the Corporation to the contrary, the
provisions of this Article VI with respect to the classification of the Board of
Directors shall terminate and shall be of no further force and effect and,
thereafter, the term of each Director shall expire on the date of the annual
meeting of stockholders immediately following or concurrent with such
Simplification Event, all Directors then or thereafter elected shall serve
one-year terms and voting for the election of Directors shall be in the manner
set forth in the Bylaws.
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<PAGE>
4.6 Independent Directors. The Corporation shall at all times have
at least two directors who are not affiliates of Apollo or any Transferee or any
stockholder holding 10% or more of the stock of the Corporation.
ARTICLE V.
STOCK
5.1 Authorized Stock.
(a) The total number of shares of stock which the Corporation
has authority to issue (the "Stock") is sixty million (60,000,000) shares,
initially consisting of (i) ten million (10,000,000) shares of preferred stock,
par value $10.00 per share ("Preferred Stock"); and (ii) fifty million
(50,000,000) shares of common stock, par value $10.00 per share ("Common
Stock"). The aggregate par value of all the shares of all classes of stock is
$600,000,000. Until the occurrence of a Simplification Event, the Common Stock
shall be divided into Class A Common Stock, Class B Common Stock and Class C
Common Stock; provided that if a Class C Conversion Date occurs prior to the
occurrence of a Simple Event from the time of the Class C Conversion Date, the
Common Stock shall be divided into Class A Common Stock and Class B Common
Stock. The Class A Common Stock, the Class B Common Stock and the Class C Common
Stock shall have identical rights and privileges, and shall be treated as a
single class, with respect to all matters other than voting, including, without
limitation, the payment of distributions and upon liquidation.
(b) The Corporation shall not issue any non-voting equity
securities; provided that this provision, included in this Charter in compliance
with Section 1123(a)(6) of the United States Bankruptcy Code of 1978, as amended
(the "Bankruptcy Code"), shall have no force and effect beyond that required by
Section 1123(a)(6) of the Bankruptcy Code and shall be effective only for so
long as Section 1123(a)(6) of the Bankruptcy Code is in effect and is applicable
to the Corporation and requires such effectiveness.
5.2 Preferred Stock. The Board of Directors may issue Preferred
Stock in one or more series consisting of such numbers of shares and having such
preferences, conversion and other rights, voting powers, restrictions and
limitations as to dividends, qualifications and terms and conditions of
redemption of stock as the Board of Directors may from time to time determine
when designating such series.
5.3 Common Stock.
(a) Voting Rights. Each share of Common Stock shall have one
vote and, except as provided below in this Section
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C/M 11764.0004 435121.1
<PAGE>
5.3(a) with respect to the election of Directors of the Corporation and in
Section 7.3(b) with respect to certain matters, the Common Stock shall vote
together as a single class on all matters submitted to the holders of Common
Stock for a vote. Until the occurrence of a Simplification Event, the holders of
the Class A Common Stock shall have the right, voting separately as a class, to
elect five Directors, and the holders of the Class B Common Stock, voting
separately as a class, shall have the right to elect four Directors. For so long
as any shares of Class C Common Stock are outstanding as shares of Class C
Common Stock (i.e., until the occurrence of a Class Conversion Date), holders of
Class C Common Stock shall not be permitted to vote in any election of
directors. All shares issued to Apollo under the Plan shall be shares of Class B
Common Stock, all shares issued to Victor Capital Group, L.P. shall be shares of
Class C Common Stock (in each case, subject to Section 5.3(e)), and all other
shares of Common Stock shall be shares of Class A Common Stock.
(b) Super-Majority Voting Rights.
In addition to any vote required by law, the Corporation
shall not take any action regarding the following matters without the
affirmative vote of the holders of at least 66-2/3% of the outstanding shares of
Stock (including, solely with respect to the matters set forth in items (i),
(ii) and (iii) below, the holders of Class C Common Stock, who shall not be
entitled to vote with respect to item (iv) below voting as a single class):
(i) any merger or consolidation of the Corporation (other
than any merger between the Corporation and any direct or indirect wholly owned
subsidiary or the Corporation);
(ii) any sale or transfer of either of the real properties
owned by the Corporation and its subsidiaries (but excluding any pledge,
hypothecation or encumbrance of such assets to provide security for any bona
fide debt);
(iii) any dissolution or liquidation of the Corporation;
or
(iv) any acquisition in excess of $25 million (other than
in connection with the leasing, improvement and other operations of the
Corporation's properties or as contemplated by the annual budget with respect to
such properties, including, without limitation, any acquisition of, or
investment in, any providers of services to such properties and any easements,
air rights or appurtenances, necessary or desirable for the operation of the
properties).
(c) Dividend Rights. Subject to the preferential distribution
rights of Preferred Stock, if any, as may be
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C/M 11764.0004 435121.1
<PAGE>
determined by the Board of Directors, the holders of shares of Common Stock
shall be entitled to receive such distributions as may be declared by the Board
of Directors out of assets legally available therefor.
(d) Rights Upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, each holder of shares of Common Stock shall be
entitled to receive, ratably with each other holder of shares of Common Stock,
that portion of the assets of the Corporation available for distribution to the
holders of its Common Stock as the number of shares of Common Stock held by such
holder bears to the total number of shares of Common Stock then outstanding.
(e) Conversion. Upon a transfer of shares of Class B Common
Stock so that such shares are no longer beneficially owned by Apollo, its
affiliates or a Transferee or its affiliates, such shares shall automatically
and without any action on the part of the holder thereof be converted into the
same number of shares of Class A Common Stock, and the certificates representing
such transferred shares shall thereafter represent the right to receive the same
number of shares of Class A Common Stock. Except as otherwise specified herein,
shares of one class of Common Stock shall not be convertible hereunder into
shares of another class of Common Stock.
Shares of Class C Common Stock may be converted into shares of
Class A Common Stock, (i) at any time, by the Corporation upon written notice
(the "Corporation Notice") by the Corporation to the holders of Class C Common
Stock, and (ii) at any time after the first anniversary of the Effective Date,
by the holders of Class C Common Stock upon written notice (the "Class C Holders
Notice") by the holders of Class C Common Stock to the Corporation (the earlier
of the date of the Corporation Notice and the Class C Holders Notice, the "Class
C Conversion Date"). On the Class C Conversion Date, shares of Class C Common
Stock shall automatically and without any action on the part of the holder
thereof be converted into the same number of shares of Class A Common Stock, and
the certificates representing such converted shares shall thereafter represent
the right to receive the same number of shares of Class A Common Stock.
(f) Simplification Event. Upon the occurrence of a
Simplification Event, the classification of the Common Stock into Class A Common
Stock and Class B Common Stock (and if applicable, Class C Common Stock) shall
terminate and the Corporation shall have authorized only one class of Common
Stock. All shares of Class A Common Stock and all shares of Class B Common Stock
(and if applicable, Class C Common Stock) then outstanding shall automatically
and without any action on the part of the holders thereof be converted into
shares of Common Stock, and the
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C/M 11764.0004 435121.1
<PAGE>
certificates representing shares of Class A Common Stock or Class B Common Stock
(and if applicable, Class C Common Stock) shall thereafter represent the right
to receive the same number of shares of Common Stock.
(g) Transferee. "Transferee" means any Person to whom Apollo,
its affiliates, or any Transferee shall Transfer shares of Class B Common Stock
representing at least 30% of the aggregate number of shares of Class A and Class
B Common Stock then outstanding.
5.4 Classification of Stock. The Board of Directors may classify or
reclassify any unissued shares of Stock from time to time by setting or changing
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms
and conditions of redemption of those shares of Stock, including, but not
limited to, the reclassification of unissued shares of Common Stock to shares of
Preferred Stock or unissued shares of Preferred Stock to shares of Common Stock
or the issuance of any rights plan or similar plan.
5.5 Issuance of Stock. The Board of Directors may authorize the
issuance from time to time of shares of Stock of any class or series, whether
now or hereafter authorized, or securities or rights convertible into shares of
Stock, for such consideration as the Board of Directors may deem advisable (or
without consideration in the case of a share split or dividend), subject to such
restrictions or limitations, if any, as may be set forth in the Charter or
Bylaws of the Corporation.
5.6 Distributions. Subject to Article III, Section 4(2)(d) of the
Corporation's Bylaws, the Directors may from time to time authorize the payment
to Stockholders of such distributions in cash, property or other assets of the
Corporation or in securities of the Corporation or from any other source as the
Directors in their discretion shall determine.
ARTICLE VI.
LIMITATION ON PREEMPTIVE RIGHTS
No holder of any Stock or any other securities of the Corporation,
whether now or hereafter authorized, shall have any preferential or preemptive
rights to subscribe for or purchase any Stock or any other securities of the
Corporation other than such rights, if any, as the Board of Directors, in its
sole discretion, may fix; and any Stock or other securities which the Board of
Directors may determine to offer for subscription may, within the Board of
Directors' sole discretion, be offered to the holders of any class, series or
type of Stock or other securities at the time outstanding to the exclusion of
holders of any or all other
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C/M 11764.0004 435121.1
<PAGE>
classes, series or types of Stock or other securities at the time
outstanding.
ARTICLE VII.
LIMITATIONS ON TRANSFER AND OWNERSHIP
7.1 REIT-Related Restrictions and Limitations on Stock.
(a) Definitions. As used in this Charter, the following terms
shall have the indicated meanings:
"Acquire" means the acquisition of Beneficial Ownership or
Constructive Ownership of Stock by any means, including, without limitation, a
Transfer, the exercise of or right to exercise any rights under any option,
warrant, convertible security, pledge or other security interest or similar
right to acquire Stock, but shall not include the acquisition of any such rights
unless, as a result, the acquiror would be considered a Beneficial Owner or
Constructive Owner, as defined below. The term "Acquisition" shall have the
correlative meaning.
"Apollo" means Apollo Real Estate Investment Fund,
L.P., a Delaware limited partnership.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
codified under title 11 of the United States Code and in effect on the
Confirmation Date.
"Bankruptcy Court" means the District Court of the United
States District Court for the Southern District of New York having jurisdiction
over the reorganization cases of 237 Park Avenue Associates, L.L.C. and 1290
Associates, L.L.C. and, to the extent of having reference under section 157,
title 28, United States Code, the unit of such District Court constituted under
section 151, title 28, United States Code.
"Beneficial Ownership" means ownership of Stock by a Person
who is or would be treated as an owner of such Stock either directly or
indirectly pursuant to Section 542(a)(2) of the Internal Revenue Code, taking
into account, for this purpose, constructive ownership determined under Section
544 of the Internal Revenue Code, as modified by Section 856(h)(i)(B) of the
Internal Revenue Code. The terms "Beneficially Own," "Beneficially Owned" and
"Beneficial Owner" shall have the correlative meanings.
"Board" means the Board of Directors of the
Corporation.
"Business Day" means any day, other than a Saturday
or Sunday, that is neither a legal holiday nor a day on which
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C/M 11764.0004 435121.1
<PAGE>
banking institutions in New York City are authorized or required by law,
regulation or executive order to close.
"Charitable Beneficiary" means one or more beneficiaries of
the Trust as determined pursuant to Section 7.1(e)(vi) of this Article VII, each
of which shall be an organization described in Sections 170(b)(1)(A), 170(c)(2)
and 501(c)(3) of the Internal Revenue Code.
"Confirmation Date" means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order.
"Confirmation Order" means the order of the
Bankruptcy Court confirming the Plan.
"Constructive Ownership" means ownership of Stock, a Tenant
Interest, or any other interest in an entity by a Person who is or would be
treated as an owner thereof either actually or constructively through the
application of Section 318 of the Internal Revenue Code, as modified by Section
856(d)(5) of the Internal Revenue Code. The terms "Constructively Own,"
"Constructively Owned" and "Constructive Owner" shall have the correlative
meanings.
"Designator" means, initially, Apollo. Any Person that is then
acting as Designator may designate another Person, in a writing delivered to
such Person with a copy to the Corporation, to succeed it as Designator and such
successor shall thereafter be the Designator for all purposes hereof.
"Effective Date" shall have the meaning ascribed
thereto in the Plan.
"Individual" means an "individual" within the meaning of
Section 542(a)(2) of the Internal Revenue Code, as modified by Section
856(h)(3)(A) of the Internal Revenue Code.
"Limitation Date" means the earlier of (i) the date that is 18
months after the Effective Date and (ii) the date that is 6 months after (X) any
date of any refinancing of the New Notes (as defined in the Plan) or (Y) the
date of the Conventional Financing Alternative (as defined in the Plan).
"Market Price" means the last reported sales price, regular
way, of the Common Stock or Preferred Stock, as the case may be, on the trading
day immediately preceding the relevant date as reported on the principal
exchange or quotation system over which the Common Stock or Preferred Stock, as
the case may be, may be traded, or if not then traded over any exchange or
quotation system, then the fair market value of the Common Stock or Preferred
Stock, as the case may be, on the relevant date as determined in good faith by
the Board.
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"Non-U.S. Person" means a Person other than a U.S.
Person.
"Ownership Limit" means as to any Individual the product of
(X) the sum of (i) 7.9% and (ii) the Supplemental Limit, if any, and (Y) the
value of the outstanding shares of Stock.
"Permitted Shareholder" means Apollo, any Transferee or any
other transferee from Apollo or a transferee of Apollo of at least 30% of the
aggregate number of shares of Class A and Class B Common Stock then outstanding.
"Person" means an individual, corporation, partnership,
limited liability company, association, estate, trust (including a trust
qualified under Section 401(a) or 501(c)(17) of the Internal Revenue Code), a
portion of a trust permanently set aside for or to be used exclusively for the
purposes described in Section 642(c) of the Internal Revenue Code, association,
private foundation within the meaning of Section 509(a) of the Internal Revenue
Code, joint stock company or other entity, and also includes a "group" as that
term is used in Section 13(d)(5) of the Exchange Act; but does not include an
underwriter which participates in a public offering of the Stock for a period of
ninety days following the purchase by such underwriter of the Stock, provided
that, the ownership of Stock by such underwriter did not result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Internal Revenue Code and did not otherwise result in the Corporation failing to
qualify as a real estate investment trust.
"Petition Date" means the date on which 237 Park
Avenue Associates, L.L.C. and 1290 Associates, L.L.C. filed their
voluntary petitions under chapter 11 of the Bankruptcy Code.
"Plan" means the Second Amended Joint Plan of Reorganization
of 237 Park Avenue Associates, LLC and 1290 Associates, LLC filed under title 11
of the United States Code, 11 U.S.C. Sections 101 et seq. with the United States
Bankruptcy Court, Southern District of New York on August 9, 1996, as amended
from time to time.
"Purported Beneficial Owner" means, with respect to any
purported Acquisition, Transfer, or other event, the Person who would
Beneficially Own or Constructively Own Stock but for the limitations set forth
in Section 7.1(b)(i) of this Article VII applicable to such Acquisition,
Transfer, or other event. The Purported Beneficial Owner and the Purported
Record Owner may be the same Person.
"Purported Record Owner" means, with respect to any purported
Acquisition, Transfer, or other event, the Person who would have been the record
holder of Stock if such Acquisition,
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Transfer, or other event had not violated the provisions of Section 7.1(b)(i) of
this Article VII. The Purported Beneficial Owner and the Purported Record Owner
may be the same Person.
"Related Tenant Owner" shall mean any Constructive Owner who
also owns, directly or indirectly, an interest in a Tenant, which interest is
equal to or greater than (i) 10% of the combined voting power of all classes of
stock of such Tenant, (ii) 10% of the total number of shares in all classes of
such Tenant, or (iii) if such Tenant is not a corporation, 10% of the assets or
net profits of such Tenant.
"Related Tenant Limit" shall mean 9.8% by value of the
outstanding Capital Stock of the Corporation.
"Restriction Termination Date" means the effective date, if
any, for revocation or termination of the Corporation's REIT election pursuant
to Section 856(g) of the Internal Revenue Code, as specified in a resolution of
the Board determining that it is no longer in the best interests of the
Corporation to attempt to, or continue to, qualify as a REIT. If no such
effective date is specified in such resolution, the Restriction Termination Date
shall be the date such revocation or termination otherwise becomes effective.
"Special Triggering Event" means either (i) a redemption or
purchase by the Corporation of less than all of the outstanding Stock, or (ii)
any reorganization, recapitalization, or other corporate transaction affecting
the Stock.
"Supplemental Limit" means with respect to an Individual, a
percentage designated from time to time by the Designator, provided, however,
the aggregate of all percentages designated by the Designator and in effect
shall not at any time exceed 10. The Designator shall designate a percentage by
delivery of a writing to the Individual with a copy to the Corporation setting
forth the percentage designated and the effective time of the designation. Any
such designation may be revoked or amended by the Designator by similar notices.
"Tenant" shall mean any tenant of (i) the Corporation, (ii) a
subsidiary of the Corporation which is deemed to be a "qualified REIT
subsidiary" under Section 856(i)(2) of the Code, or (iii) a partnership in which
the Corporation or one or more of its qualified REIT subsidiaries is a partner.
"Tenant" means any Person (other than an individual) from whom
the Corporation derives (or is deemed for tax purposes to derive), directly or
indirectly, gross income.
"Tenant Interest" means an interest, expressed as a
percentage, in the total combined voting power or total number of
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shares of all classes of stock of a Tenant that is a corporation, or an
interest, expressed as a percentage, in the assets and net income (within the
meaning of Section 856(d)(2)(B) of the Internal Revenue Code) of a Tenant that
is not a corporation.
"Transfer" means any sale, transfer, gift, assignment, devise
or other disposition of Stock or the right to vote (except for a revocable proxy
for any meeting of stockholders of the Company to be held within 11 months of
the granting thereof) or receive dividends on Stock, including (i) the granting
of any option or entering into any agreement for the sale, transfer or other
disposition of Stock or the right to vote (except as aforesaid) or receive
dividends on Stock, or (ii) the sale, transfer, assignment or other disposition
of any securities or rights convertible into or exchangeable for Stock, in each
case whether voluntary or involuntary, whether of record or Beneficially Owned
or Constructively Owned, and whether by operation of law or otherwise. A
Transfer also includes any transfer of interests in other entities, and any
change in the relationship between two or more Persons, that results in a change
in Beneficial Ownership or Constructive Ownership of Stock, whether by operation
of law or otherwise. The terms "Transfers" and "Transferred" shall have the
correlative meanings.
"Trust" means the trust created pursuant to Section 7.1(e)(i)
of this Article VII.
"Trustee" means the Person that is appointed by the
Corporation pursuant to Section 7.1(e)(i) of this Article VII to serve as
trustee of the Trust, and any successor thereto.
"U.S. Person" means (a) a citizen or resident of the United
States, (b) a partnership created or organized in the United States or under the
laws of the United States or any state therein (including the District of
Columbia), (c) a corporation created or organized in the United States or under
the laws of the United States or any state therein (including the District of
Columbia), and (d) any estate or trust (other than a foreign estate or foreign
trust, within the meaning of Section 7701(a)(31) of the Internal Revenue Code).
(b) Ownership Limitation and Transfer Restrictions with
Respect to Stock.
i) Except as provided in Section 7.1(f) of this Article
VII, from the Effective Date and prior to the Restriction
Termination Date:
A) no Person shall Acquire shares of Stock if, as a
result of such Acquisition, the outstanding Stock would be
directly or indirectly owned by fewer than 100 Persons
(determined without
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reference to any rules of attribution under Section
544 of the Internal Revenue Code);
B) no Person shall Acquire shares of Stock if, as a
result of such Acquisition, the Corporation would be "closely
held" within the meaning of Section 856(h) of the Internal
Revenue Code, or would otherwise result in the Corporation
failing to qualify as a REIT; and
C) no Person (other than, after the Limitation Date, a
Permitted Shareholder) shall Acquire any shares of Stock after
the Effective Date if, as a result of such Acquisition, the
fair market value of the shares of Stock owned directly and
indirectly by Non-U.S. Persons would comprise 50% or more of
the fair market value of the issued and outstanding shares of
Stock (determined assuming that each Permitted Shareholder is
a Non- U.S. Person);
D) no Person shall Acquire any shares of Stock if, as a
result of such Acquisition, any Person who is an Individual
would be considered to Beneficially Own Stock in excess of the
Ownership Limit; and
E) no Person shall Acquire shares of Stock if, as a
result of such Acquisition, the Beneficial Ownership of shares
of Stock by a Related Tenant Owner would exceed the Related
Tenant Limit.
ii) If, from the Effective Date and prior to the
Restriction Termination Date:
A) any Transfer or Acquisition (other than an event
described in Section 7.1(b)(ii)(B) or 7.1(b)(ii)(C) of this
Article VII) (whether or not such Transfer or Acquisition is
the result of a transaction entered into through the
facilities of any national securities exchange or automated
inter-dealer quotation system or otherwise) occurs which, if
effective, would result in the violation of one or more
restrictions on ownership and transfer described in Section
7.1(b)(i), then (1) that number of shares of Stock being
Transferred or Acquired that otherwise would cause such Person
to violate Section 7.1(b)(i) (rounded up to the nearest whole
share) shall be automatically transferred to a Trust for the
benefit of a Charitable Beneficiary, as described in Section
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7.1(e)(i), effective as of the close of business on the
Business Day prior to the date of such purported Transfer or
Acquisition, and to that extent such Transfer or Acquisition
shall be void ab initio as to the intended transferee and the
intended transferee shall acquire no rights in such Stock and
(2) if clause (1) of this sentence does not apply, or if the
Transfer to the Trust described in clause (1) of this sentence
would not be effective for any reason to prevent such Person
from Beneficially Owning Stock in violation of Section
7.1(b)(i) then the Acquisition or Transfer that otherwise
would cause such Person to violate Section 7.1(b)(i) (rounded
up to the nearest whole share) shall be void ab initio to the
extent it would cause such a violation, and the intended
transferee shall acquire no rights in such Stock; and
B) A Special Triggering Event (if effective) or other
event or occurrence (if effective) (other than a Transfer or
Acquisition) would result in any violation of one or more
restrictions on ownership and transfer described in Section
7.1(b)(i), then: (1) the number of shares of Stock (rounded up
to the nearest whole share) that would (but for this Section
7.1(b)(ii)(B)) cause any Person to Beneficially Own or
Constructively Own Stock in violation of Section 7.1(b)(i)
shall, unless prohibited by law or agreement, be automatically
repurchased by the Corporation from the actual owner of such
Stock, effective as of the close of business on the Business
Day prior to the date of such Special Triggering Event or
other event or occurrence; or (2) if the automatic repurchase
described in clause (1) of this sentence would be prohibited
by law or agreement or would not be effective for any reason
to prevent any Person from Beneficially or Constructively
Owning Stock in violation of Section 7.1(b)(i), then that
number of shares of Stock (rounded up to the nearest whole
share) that otherwise would cause any Person to Beneficially
or Constructively Own Stock in violation of Section 7.1(b)(i)
shall be automatically transferred to a Trust for the benefit
of a Charitable Beneficiary, as described in Section
7.1(e)(i), effective as of the close of business on the
Business Day prior to the date of such Special Triggering
Event or other event or occurrence, and the actual owner shall
retain no rights in such Stock; or (iii) if the transfer to
the Trust described in clause (2) of
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this sentence would not be effective for any reason to prevent
any Person from Beneficially or Constructively Owning Stock in
violation of Section 7.1(b)(i), then the Special Triggering
Event or the event or occurrence that would otherwise cause
such Person to violate Section 7.1(b)(i) shall be void ab
initio. The repurchase price of each share of Stock
automatically repurchased pursuant to this Section
7.1(b)(ii)(B) shall be a price per share equal to the Market
Price on the date of the Special Triggering Event or other
event or occurrence that resulted in the repurchase. Dividends
which were accrued but unpaid with respect to the repurchased
shares as of the date of the Special Triggering Event or other
event of occurrence that resulted in the repurchase shall be
paid. Any dividend or other distribution paid after the
Special Triggering Event or other event or occurrence that
resulted in the repurchase, but prior to the discovery by the
Corporation that Stock had been automatically repurchased by
the Corporation, shall be paid to the Corporation upon demand;
and
C) any Transfer or Acquisition (whether or not such
Transfer or Acquisition is the result of a transaction entered
into through the facilities of any national securities
exchange or automated inter-dealer quotation system) occurs
which, if effective, would result in any Person beneficially
owning Stock in violation of Section 7.1(b)(i)(B) of this
Article VII, then such Transfer or Acquisition, as the case
may be, shall be void ab initio.
(c) The Corporation's Right to Redeem Shares. Except with
respect to Stock transferred to a Trust, the Corporation shall have the right to
redeem any Stock that is Acquired or Transferred, or is attempted to be Acquired
or Transferred, in violation of Section 7.1(b), at a price per share equal to
the lesser of (i) the Market Price per share of the class of Stock that created
such violation or attempted violation on the date of such violation or attempted
violation (or, in the case of a devise or gift, the Market Price at the time of
such devise or gift) and (ii) the Market Price per share of the class of Stock
to which such Stock relates on the date the Corporation, or its designee, gives
notice of such redemption. The Corporation shall have the right to redeem any
Stock described in this Section 7.1(c) for a period of 90 days after the later
of (i) the date of the Acquisition or Transfer or attempted Acquisition or
Transfer and (ii) the date the Board determines in good faith that an attempted
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Acquisition or Transfer has occurred, if the Corporation does not receive a
notice of such Transfer pursuant to Section 7.1(d).
(d) Notice Requirements and General Authority of the Board of
Directors to Implement REIT-Related Restrictions and Limitations.
i) Notice Requirements. From and after the Effective Date
and prior to the Restriction Termination Date:
A) Any Person who Acquires or attempts to Acquire Stock
in violation of Section 7.1(b)(i), and any Person who is a
Purported Record Owner or a Purported Beneficial Owner of
Stock in a manner that violates Section 7.1(b)(i), shall
immediately give written notice or, in the event of a proposed
or attempted Acquisition or other event that would give rise
to Beneficial Ownership in violation of Section 7.1(b)(i),
give at least 15 days' prior written notice to the Corporation
of such event and shall provide to the Corporation such other
information as the Corporation may request in order to
determine the effect, if any, of such Acquisition or other
event on the Corporation's status as a REIT;
B) Every Beneficial Owner or Constructive Owner of more
than 0.5% (or such higher percentage, between 0.5% and 5.0%,
as provided in the income tax regulations promulgated under
the Internal Revenue Code) of the number or value of
outstanding shares of Stock of the Corporation (determined as
provided in Section 14.3) shall, within 30 days after January
1 of each year, give written notice to the Corporation stating
the name and address of such Beneficial Owner or Constructive
Owner, the number of shares of Stock Beneficially Owned or
Constructively Owned, and a description of how such Stock is
held. Each such Beneficial Owner or Constructive Owner shall
provide to the Corporation such additional information that
the Corporation may reasonably request in order to determine
the effect, if any, of such Beneficial Ownership or
Constructive Ownership on the Corporation's status as a REIT;
and
C) Each Person who is a Beneficial Owner of Stock and
each Person (including the shareholder of record) who is
holding Stock for a Beneficial Owner or Constructive Owner
shall
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provide to the Corporation such information that the
Corporation may reasonably request in order to determine the
Corporation's status as a REIT, to comply with the
requirements of any taxing authority or governmental agency,
or to determine any such compliance.
ii) Board Authority to Prevent Violation of Section
7.1(b)(i).
If the Board or any duly authorized committee thereof shall at
any time determine in good faith that a Transfer or other event has
taken place that results in a violation of Section 7.1(b)(i) of this
Article VII or that a Person intends to Acquire or has attempted to
Acquire Beneficial Ownership or Constructive Ownership of any Stock
in violation of Section 7.1(b)(i) of this Article (whether or not
such violation is intended), the Board or a committee thereof shall
take such action as it deems advisable to refuse to give effect to
or to prevent such Acquisition, Transfer, or other event, including,
but not limited to, causing the Corporation to redeem shares,
refusing to give effect to such Acquisition, Transfer or other event
on the books of the Corporation, or instituting proceedings to
enjoin such Acquisition, Transfer, or other event; provided,
however, that any Transfer or attempted Transfer or, in the case of
an event other than a Transfer, Beneficial Ownership or Constructive
Ownership, in violation of Section 7.1(b)(i) of this Article VII
shall automatically result in the transfer to the Trust (or the
automatic repurchase as provided in Section 7.1(b)(ii)(B)) described
above where the conditions to such transfer (or repurchase) have
been satisfied, and, where applicable, such Transfer (or other
event) shall be void ab initio as provided above irrespective of any
action (or non-action) by the Board or a committee thereof.
iii) Each certificate for Common Stock shall bear
substantially the following legends (or such other legends as the
Board may determine to be appropriate):
"The Corporation is authorized to issue two classes of shares
of stock, which are designated Preferred Stock and Common Stock. The
Common Stock and the Preferred Stock may be issued in one or more
classes, and the Board of Directors is authorized to determine the
preferences, limitations and relative rights of any class of
Preferred Stock before the issuance of any such Preferred Stock, or
any class thereof. The Corporation will furnish, without charge, to
any shareholder making a written request therefor, a full statement
of the designations and any
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<PAGE>
preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms
and conditions of redemption applicable to each class of shares.
Requests for such written statement may be directed to the Secretary
of the Corporation at the principal office of the Corporation.
"The shares represented by this certificate are subject to
restrictions on Beneficial Ownership, Constructive ownership, and
Transfer for the purpose of the Corporation's maintenance of its
status as a "real estate investment trust" (a "REIT") under the
Internal Revenue Code. Subject to certain further restrictions, and
except as expressly provided in the Corporation's Charter, (i) no
Person may Acquire Stock if such Acquisition would result in the
Corporation being owned by fewer than 100 Persons (as determined for
purposes of Section 856(h)(5) of the Internal Revenue Code); (ii) no
Person (other than (after the Limitation Date) a Permitted
Shareholder may Acquire Stock, if as a result of such Acquisition,
the Corporation would fail to qualify as a "domestically controlled
REIT" within the meaning of Section 897(h)(4) of the Internal
Revenue Code (determined by assuming that each Permitted Shareholder
is a Non-U.S. Person), (iii) no Individual may Beneficially Own
shares of Stock in excess of the sum of 7.9% plus any applicable
Supplemental Limit of the value of the Stock, (iv) if such Person is
a Related Tenant Owner, such Person may not Beneficially Own shares
of Stock in excess of the Related Tenant Owner Limit, and (v) no
Person may Beneficially Own Stock that would result in the
Corporation being "closely held" under Section 856(h) of the
Internal Revenue Code or otherwise cause the Corporation to fail to
qualify as a REIT. Any Person who Beneficially Owns or attempts to
Beneficially Own Stock which cause or will cause a Person to
Beneficially Own Stock in excess of the above limitations must
immediately notify the Corporation. If any of the restrictions on
transfer or ownership are violated, the shares of Stock represented
hereby will, upon the satisfaction of certain conditions, be
automatically transferred to a Trustee of a Trust for the benefit of
one or more Charitable Beneficiaries, or in certain circumstances
such shares will automatically be repurchased by the Corporation. In
addition, the Corporation may redeem shares upon the terms and
conditions specified by the Board in its sole discretion if the
Board determines that ownership or a Transfer or other event may
violate the restrictions described above. Furthermore, upon the
occurrence of certain events, attempted Transfers in Revenue Code.
Subject to certain further violation of the restrictions described
above may
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be void ab initio. All capitalized terms in this legend have the
meanings defined in the Charter of the Corporation, as the same may
be amended from time to time, a copy of which, including the
restrictions on transfer and ownership, will be furnished, without
charge, to each holder of Stock who directs a written request to the
Secretary of the Corporation at the principal office of the
Corporation."
Instead of the legend in the preceding paragraph, the
certificate may state that the Corporation will furnish a full
statement about certain restrictions on transferability to a
stockholder on request and without charge.
iv) Absent a decision to the contrary by the Board (which
the Board may make in its sole and absolute discretion), the shares
to be affected by the remedies set forth in Sections 7.1(b)(ii) and
7.1(c) shall be as follows: (1) if a Purported Beneficial Owner
would have (but for the remedies set forth in Sections 7.1(b)(ii) or
7.1(c), as applicable) Beneficially Owned or Constructively Owned
Stock in violation of Section 7.1(b)(i), such remedies (as
applicable) shall apply first to the shares that, but for such
remedies, would have caused such violation and would have been
actually owned by such Purported Beneficial Owner, second to shares
that, but for such remedies, would have caused such violation but
which would not have been actually owned by such Purported
Beneficial Owner, pro rata among the persons who actually attempted
to acquire such shares based upon the relative value of what would
have been the Purported Beneficial Owner's Beneficial Ownership or
Constructive Ownership interest in the shares such Person attempted
to acquire, third to other shares that are actually owned by such
Purported Beneficial Owner, and fourth to shares that are actually
owned by such other Persons whose ownership of shares is attributed
to the Purported Beneficial Owner, pro rata among such Persons based
upon the relative value of the Purported Beneficial Owner's
Beneficial Ownership or Constructive Ownership interest in the
shares so owned; and (2) if a Purported Beneficial Owner would be in
violation of Section 7.1(b)(i) as a result of an event other than an
Acquisition of Stock by such Purported Beneficial Owner, the
remedies set forth in Sections 7.1(b)(ii) and 7.1(c) (as applicable)
shall apply first to shares that are actually owned by such
Purported Beneficial Owner and second to shares that are
Beneficially or Constructively Owned (but not actually owned) by
such Person, pro rata among the Persons who actually own such shares
based upon the relative value of the Purported Beneficial Owner's
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Beneficial Ownership or Constructive Ownership interest in the
shares so owned.
v) Subject to subparagraph 7.1(f) below, nothing contained
in this Article VII shall limit the authority of the Board to take
such other action as it deems necessary or advisable to protect the
Corporation and the interests of its shareholders by preserving the
Corporation's status as a REIT.
(e) Transfers of Stock in Trust
i) Ownership in Trust. Upon any purported Transfer,
Acquisition, or other event described in Section 7.1(b)(ii) that
results in a transfer of Stock to a Trust, such Stock shall be
deemed to have been transferred to the Trustee in his capacity as
trustee of a Trust for the exclusive benefit of one or more
Charitable Beneficiaries. Such transfer to the Trustee shall be
deemed to be effective as of the close of business on the Business
Day prior to the purported Transfer, Acquisition, or other event
that results in a transfer to the Trust pursuant to Section
9.1(b)(ii). The Trustee shall be appointed by the Corporation, and
shall be a person unaffiliated with the Corporation, any Purported
Beneficial Owner, or any Purported Record Owner. Each Charitable
Beneficiary shall be designated by the Corporation as provided in
Section 7.1(e)(vi). The Corporation shall notify the Trustee of a
transfer of Stock to the Trust as soon as practicable following
discovery by the Corporation of such transfer.
ii) Status of Stock Held by the Trustee. Stock held by the
Trustee shall be issued and outstanding shares of stock of the
Corporation. The Purported Beneficial Owner and Purported Record
Owner shall have no rights in the shares held by the Trustee. The
Purported Beneficial Owner or Purported Record Owner shall not
benefit economically from ownership of any shares held in trust by
the Trustee, shall have no rights to dividends and shall not possess
any rights to vote or other rights attributable to the shares held
in the Trust. The Purported Record Owners and the Purported
Beneficial Owners shall surrender to the Trustee any and all
certificates representing Stock that has been transferred to the
Trust, duly endorsed for transfer to the Trustee. The Purported
Beneficial Owner and the Purported Record Owner of shares of Stock
in violation of this Section 7.1 shall have no claim, cause of
action, or any other recourse whatsoever against the purported
transferor of such shares.
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iii) Dividend and Voting Rights; Rights upon Liquidation.
Any dividend or distribution with respect to such Stock paid prior
to the discovery by the Corporation that the Stock had been
transferred to the Trustee shall be deemed to be held by the
recipient thereof as agent for the Trustee, and shall be paid to the
Trustee upon demand, and any dividend or distribution declared but
unpaid shall be paid when due to the Trustee. Any dividends or
distributions so held by or on behalf of the Trustee shall be held
in trust for the Charitable Beneficiary. The Trustee shall have all
voting rights and rights to dividends with respect to Stock held in
the Trust, which rights shall be exercised for the exclusive benefit
of the Charitable Beneficiary. The Purported Record Owner shall have
no voting rights with respect to shares held in the Trust and any
vote cast by a Purported Record Owner prior to the discovery by the
Corporation that the Stock had been transferred to the Trustee will,
subject to applicable law, be rescinded as void and be recast in
accordance with the desires of the Trustee acting for the benefit of
the Charitable Beneficiary. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of or any
distribution of the assets of the Corporation, the Trustee shall be
entitled to receive, ratably with each other holder of Stock of the
class of Stock that is held in the Trust, that portion of the assets
of the Corporation available for distribution to the holders of such
class (determined based upon the ratio that the number of shares of
such class of Stock held by the Trustee bears to the total number of
shares of such class of Stock then outstanding). The Trustee shall
distribute any such assets received in respect of the Stock held in
the Trust in any liquidation, dissolution or winding up of, or
distribution of the assets of, the Corporation in accordance with
Section 7.1(e)(iv) below.
iv) Sale of Shares of Stock by Trustee. Within 20 days of
receiving notice from the Corporation that Stock has been
transferred to the Trust, the Trustee of the Trust shall sell the
shares of Stock held in the Trust to a person, designated by the
Trustee, whose ownership of the shares will not violate the
ownership limitations set forth in Section 7.1(b)(i) of this Article
VII. Upon such sale, the interest of the Charitable Beneficiary in
the shares sold shall terminate and the Trustee shall distribute the
net proceeds of the sale to the Purported Record Owner and to the
Charitable Beneficiary as provided in this Section 7.1(e)(iv). The
Purported Record Owner shall receive the lesser of (1) the price
paid by the Purported Record Owner for the shares or, if the
Purported Record Owner did not give
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value for the shares (through a gift, devise or other transaction),
the Market Price of the shares on the day of the event causing the
shares to be held in the Trust and (2) the price per share received
by the Trustee from the sale or other disposition of the shares held
in the Trust (net of any commissions and other expenses of sale).
Any net sales proceeds in excess of the amount payable to the
Purported Record Owner shall be immediately paid to the Charitable
Beneficiary, together with any dividends or other distributions
thereon. If, prior to the discovery by the Corporation that Stock
had been transferred to the Trustee, such shares are sold by a
Purported Record Owner, then (X) such shares shall be deemed to have
been sold on behalf of the Trust, (Y) the proceeds of such sale
shall be deemed to be held by such Purported Record Owner or
Purported Beneficial Owner as an agent for the Trustee and (Z) to
the extent that the Purported Record Owner received an amount for
such shares that exceeds the amount that such Purported Record Owner
was entitled to receive pursuant to this Section 7.1(e)(iv), such
excess shall be paid to the Trustee upon demand.
v) Purchase Right in Stock Transferred to the Trustee.
Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per
share equal to the Market Price on the date the Corporation, or its
designee, accepts such offer. The Corporation shall have the right
to accept such offer until the Trustee has sold the shares held in
the Trust pursuant to Section 7.1(e)(iv) of this Article VII. Upon
such a sale to the Corporation, the interest of the Charitable
Beneficiary in the shares sold shall terminate and the Trustee shall
distribute the net proceeds of the sale to the Purported Record
Owner and to the Charitable Beneficiary in a manner consistent with
Section 7.1(e)(iv) of this Article VII.
vi) Designation of Charitable Beneficiaries. By written
notice to the Trustee, the Corporation shall designate one or more
nonprofit organizations to be the Charitable Beneficiary(ies) of the
interest in the Trust such that (1) the Stock held in the Trust
would not violate the restrictions set forth in Section 7.1(b)(i) of
this Article VII in the hands of such Charitable Beneficiary and (2)
each Charitable Beneficiary is an organization described in Sections
170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Internal Revenue Code.
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(f) Savings Clause
Nothing in this Article VII shall preclude the settlement
of a transaction entered into through the facilities of a national
securities exchange, if the Stock is then listed on a national
securities exchange or on an automated inter-dealer quotation
system. The shares that are the subject of such transaction shall
continue to be subject to the terms of this Article VII after such
settlement.
7.2 Controlling Provision. Subject to Section 14.1, to the extent
this Article VII may be inconsistent with any other provision of these Articles
of Incorporation, this Article VII shall be controlling.
7.3 Ambiguity. In the case of an ambiguity in the application of any
of the provisions of this Article VII, including any definition contained in
Section 7.1, the Board of Directors shall have the power to determine the
application of the provisions of this Article VII with respect to any situation
based on the facts known to it.
7.4 Enforcement. The Corporation is authorized specifically to seek
equitable relief, including injunctive relief, to enforce the provisions of this
Article VII.
7.5 Non-Waiver. No delay or failure on the part of the Corporation
or the Board of Directors in exercising any right hereunder shall operate as a
waiver of any right of the Corporation or the Board of Directors, as the case
may be, except to the extent specifically waived in writing.
ARTICLE VIII.
RIGHTS AND POWERS OF CORPORATION,
BOARD OF DIRECTORS AND OFFICERS
In carrying on its business, or for the purpose of attaining or
furthering any of its objects, the Corporation shall have all of the rights,
powers and privileges granted to corporations by the laws of the State of
Maryland, as well as the power to do any and all acts and things that a natural
person or partnership could do as now or hereafter authorized by law, either
alone or in partnership or conjunction with others. In furtherance and not in
limitation of the powers conferred by statute, the powers of the Corporation and
of the Directors and stockholders shall include the following:
8.1 Amendment. The Corporation reserves the right, from time to
time, to make any amendment of its Charter now or hereafter
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authorized by law, including any amendment which alters the contract rights, as
expressly set forth in its Charter, of any outstanding Stock. Notwithstanding
the foregoing and notwithstanding Section 2-506(b) of the Maryland General
Corporation Law, in addition to such other vote as may be required by law, (a)
prior to the occurrence of a Simplification Event, the provisions of this
Article and of Article IV, the third and fourth sentences of Section 5.1(a) and
Section 5.3 of Article V (other than Section 5.3(b)) and this Section 8.1 may
only be amended by the affirmative vote of two-thirds of the outstanding shares
of each of the Class A Common Stock and the Class B Common Stock voting
separately as a class; (b) the provisions of Section 5.3(b) of Article V and the
substantive provisions of Section 7.1 of Article VII relating to Ownership
Limits and ownership by Non-U.S. Persons may only be amended by the affirmative
vote of 66-2/3% of the outstanding shares of Class A Common Stock and Class B
Common Stock voting together as a single class; (c) the provisions of this
Charter relating specifically to Apollo, Transferees or transferees of Apollo or
the Affiliates or Associates (as hereinafter defined) of any such Person may not
be amended or modified without the written consent thereto of Apollo; and (d)
the provisions of the second paragraph of Section 5.3(e) of Article V may not be
amended without the affirmative vote of holders of 66-2/3% of the outstanding
shares of Class C Common Stock voting together as a single class.
ARTICLE IX.
INDEMNIFICATION
The Corporation (which for the purpose of this Article IX shall
include predecessor entities of the Corporation as set forth in Section 2-418 of
the Maryland General Corporation Law) shall have the power (to the fullest
extent permitted by Maryland statutory or decisional law, as amended or
interpreted (but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment)) to
obligate itself, by express provision in its Bylaws, by agreement, or by
majority vote of either its stockholders or disinterested Directors, to
indemnify, and to pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to, any one or more of the following classes of
individuals from and against any claim or liability to which such person may
become subject or which such person may incur by reason of his or her position
with the Corporation: (1) present or former Directors of the Corporation, (2)
present or former officers of the Corporation, (3) present or former agents
and/or employees of the Corporation, (4) present or former administrators,
trustees or other fiduciaries under any pension, profit sharing, deferred
compensation, or other employee benefit plan maintained by the Corporation, and
(5)
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persons serving or who have served at the request of the Corporation in any of
these capacities for any other corporation, partnership, joint venture, trust or
other enterprise who is made a party to any proceeding by reason of service in
that capacity.
ARTICLE X.
LIMITATION OF LIABILITIES
To the fullest extent permitted under the Maryland General
Corporation Law as in effect on the date of filing these Articles of
Incorporation or as the Maryland General Corporation Law is thereafter amended
from time to time (but, in the case of any such amendment, only to the extent
that such amendment permits a broader limitation of liability than said law
permitted prior to such amendment), no Director or officers shall be liable to
the Corporation for money damages. Neither the amendment or the repeal of this
Article, nor the adoption of any other provision in the Charter inconsistent
with this Article, shall eliminate or reduce the protection afforded by this
Article to a Director or officer of the Corporation with respect to any matter
which occurred, nor any cause of action, suit or claim which but for this
Article would have accrued or arisen, prior to such amendment, repeal or
adoption.
ARTICLE XI.
EXEMPTION FROM BUSINESS COMBINATION STATUTE
Pursuant to Section 3-603(e)(1)(iii) of the Maryland General
Corporation Law, the Corporation expressly elects not to be governed by the
provisions of Section 3-602 of the Maryland General Corporation Law.
ARTICLE XII.
EXEMPTION FROM CONTROL SHARE ACQUISITION STATUTE
The provisions of Title 3, Subtitle 7 of the Maryland General
Corporation Law shall not apply to the issuance of Common Stock on the Effective
Date or any and all future acquisitions by any person of shares of Stock.
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ARTICLE XIII.
BUSINESS COMBINATIONS
Any proposed Business Combination (as used in Section 3-601(e)(1)
and (e)(2) of the MGCL) with or involving, an Interested Stockholder (as
hereinafter defined), shall require the affirmative vote of not less than
66-2/3% of the votes entitled to be cast by the holders of all the then
outstanding shares of Common Stock, voting together as a single class, excluding
Common Stock beneficially owned by such Interested Stockholder or by any person
having more than 50% beneficial ownership of the Interested Stockholder or of
whom the Interested Stockholder (or a Person having more than 50% beneficial
ownership of the Interested Stockholder) has more than 50% beneficial ownership.
"Interested Stockholder" means any person (other than an Exempt
Person) (as hereinafter defined)) that (a) is the beneficial owner of Common
Stock representing 20% or more of the votes entitled to be cast generally in the
election of directors by the holders of all then outstanding shares of Common
Stock (or an affiliate of such person) and (b) has held such Common Stock for
less than five years.
"Exempt Person" means (a)(i) Apollo, its partners, Affiliates and
Associates (as such terms are defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended, as in effect on May 20, 1996 and including
without limiting the generality of the foregoing any investment fund under
common control with Apollo), (ii) any Transferee or Person who would be a
Transferee but for the occurrence of a Simplification Event, (iii) with respect
to the interest so transferred and so long as no Simplification Event shall have
occurred, any other transferee of any part of Apollo's interest in the
Corporation and (iv) any such Transferee's or Transferee's partners,
stockholders, Affiliates and Associates, and (b) any person whose acquisition of
beneficial ownership of Common Stock entitled to cast 20% or more of the votes
entitled to be cast generally in the election of directors by the holders of all
then outstanding shares of Common Stock was approved by a majority of directors
of the Corporation entitled to vote on the matter to exempt such person from the
provisions of this Article XIII; provided, however, that a director of the
Corporation shall not be entitled to vote in any such determination if such
director has been appointed by the acquiror or any person acting together with
the acquiror in connection with such transaction as part of a "group" (as such
term is used in Rule 13d-5 under the Securities Exchange Act of 1934) or if such
person is affiliated with the selling stockholder in the transaction in which
the acquiror crosses the 20% threshold referred to above (other than in the case
of a tender offer or other transaction in which there are a substantial number
of selling stockholders).
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ARTICLE XIV.
MISCELLANEOUS
14.1 Provisions in Conflict with Law or Regulations.
(a) The provisions of this Charter are severable, and if the
Directors shall determine that any one or more of such provisions are in
conflict with the REIT provisions of the Internal Revenue Code, or other
applicable federal or state laws, the conflicting provisions shall be deemed
never to have constituted a part of this Charter, even without any amendment of
this Charter pursuant to Section 8.2 hereof; provided, however, that such
determination by the Directors shall not affect or impair any of the remaining
provisions of this Charter or render invalid or improper any action taken or
omitted prior to such determination. No Director shall be liable for making or
failing to make such a determination.
(b) if any provision of this Charter or any application of
such provision shall be held invalid or unenforceable by any federal or state
court having jurisdiction, such holding shall not in any manner affect or render
invalid or unenforceable such provision in any other jurisdiction, and the
validity of the remaining provisions of this Charter shall not be affected.
Other applications of such provision shall be affected only to the extent
necessary to comply with the determination of such court.
14.2 Termination of REIT Status. The Board of Directors shall take
no action to terminate the Corporation's status as a REIT or to amend the
provisions of this Article XIV until such time as (i) the Board of Directors by
the affirmative vote of not less than 66-2/3% of the entire Board of Directors
adopts a resolution recommending that the Corporation terminate its status as a
REIT or amend this Article XIV as the case may be, (ii) the Board of Directors
presents the resolution at an annual or special meeting of the stockholders and
(iii) such resolution is approved by holders of a majority of the voting power
of the issued and outstanding shares of Stock.
14.3 Percentage Ownership Determinations. For purposes of
determining any Person's proportionate ownership, by number of shares or value,
of Stock, the number of shares and value of Stock of the Corporation shall be
determined by the Board in good faith, which determination shall be conclusive
for all purposes hereof.
The undersigned President acknowledges these Articles of Amendment
and Restatement to be the corporate act of the Corporation and as to all matters
or facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts
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are true in all material respects and that this statement is made under the
penalties for perjury.
IN WITNESS WHEREOF, the President and Secretary of the Corporation
do hereby execute these Articles of Amendment and Restatement on behalf of the
Corporation as of the 4th day of October, 1996.
EMPIRE REALTY TRUST, INC.
/s/ Lee S. Neibart
Name: Lee S. Neibart
Title: President
Attest:
By: /s/ John Jacobsson
Name: John Jacobsson
Title: Secretary
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AMENDED AND RESTATED BYLAWS
OF
METROPOLIS REALTY TRUST, INC.
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE.
The principal office of the Corporation shall be located at
such place as the Board of Directors may designate.
Section 2. ADDITIONAL OFFICES.
The Corporation may have additional offices at such places
either within or without the State of Maryland 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
All meetings of stockholders shall be held at the principal
office of the Corporation or at such other place within the United States as
shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING.
An annual meeting of the stockholders for the election of
directors and the transaction of any business within the powers of the
Corporation shall be held on a date and at the time set by the Board of
Directors during the month of August in each year, or at such other time and/or
date as the Board of Directors shall determine.
Section 3. SPECIAL MEETINGS.
The President, chairman of the board or the Board of Directors
may call special meetings of the Stockholders. Special meetings of stockholders
shall also be called by the secretary upon the written request of the holders of
shares entitled to cast not less than twenty-five percent of all the votes
entitled to be cast at such meeting. Such request shall state the purpose of the
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meeting and matters proposed to be acted on at it. The secretary shall inform
such stockholders of the reasonably estimated cost of preparing and mailing
notice of the meeting and, upon such stockholders' payment to the Corporation of
such costs, the secretary shall give notice to each stockholder entitled to
notice of the meeting. Unless requested by the stockholders entitled to cast a
majority of all the votes entitled to be cast at such meeting, a special meeting
need not be called to consider any matter which is substantially the same as a
matter voted on at any special meeting of the stockholders held during the
preceding twelve months.
Section 4. NOTICE
Not less than ten nor more than 90 days before each meeting of
stockholders, the secretary shall give to each stockholder entitled to vote at
such meeting and to each stockholder not entitled to vote who is entitled to
notice of the meeting written or printed notice stating the time and place of
the meeting and, in the case of a special meeting or as otherwise may be
required by statute, the purpose for which the meeting is called, either by mail
or by presenting it to such stockholder personally or by leaving it at his
residence or usual place of business. If mailed, such notice shall be deemed to
be given when deposited in the United States mail addressed to the stockholder
at his post office address as it appears on the records of the Corporation, with
postage thereon prepaid.
Section 5. SCOPE OF NOTICE.
Any business of the Corporation may be transacted at an annual
meeting of stockholders without being specifically designated in the notice,
except such business as is required by statute to be stated in such notice. No
business shall be transacted at a special meeting of stockholders except as
specifically designated in the notice.
Section 6. QUORUM.
At any meeting of stockholders, the presence in person or by
proxy of stockholders entitled to cast a majority of all the votes entitled to
be cast at such meeting shall constitute a quorum; but this section shall not
affect any requirement under any statute or the charter of the Corporation (the
"Charter") for the vote necessary for the adoption of any measure. If, however,
such quorum shall not be present at any meeting of the stockholders, the
stockholders entitled to vote at such meeting, present in person or by proxy,
shall have power to adjourn the meeting from time to time to a date not more
than 120 days after the original record date without notice other than
announcement at the meeting. At such adjourned meeting at which a quorum shall
be present, any business
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may be transacted which might have been transacted at the meeting as
originally noticed.
Section 7. VOTING.
A plurality of all the votes (or, prior to the occurrence of a
Simplification Event (as defined in the Charter), a plurality of the votes of a
particular class of stock entitled to elect a director) cast at a meeting of
stockholders duly called and at which a quorum is present shall be sufficient to
elect a director. Each share may be voted for as many individuals as there are
directors to be elected (or, prior to the occurrence of a Simplification Event,
each share of any class may be voted for as many individuals as there are
directors to be elected by that class) and for whose election the share is
entitled to be voted. A majority of the votes cast at a meeting of stockholders
duly called and at which a quorum is present shall be sufficient to approve any
other matter which may properly come before the meeting, unless more than a
majority of the votes cast is required by statute or by the Charter. Unless
otherwise provided in the Charter, each outstanding share, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
stockholders.
Section 8. PROXIES.
A stockholder may vote the stock owned of record by him,
either in person or by proxy executed in writing by the stockholder or by his
duly authorized attorney-in-fact. Such proxy shall be filed with the secretary
of the Corporation before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided in
the proxy.
Section 9. VOTING OF STOCK BY CERTAIN HOLDERS.
Stock registered in the name of a corporation, partnership,
trust or other entity, if entitled to be voted, may be voted by the president or
a vice president, a general partner or trustee thereof, as the case may be, or a
proxy appointed by such corporation, partnership trust or other entity. Any
director or other fiduciary may vote stock registered in his name as such
fiduciary, either in person or by proxy.
Shares of stock of the Corporation directly or indirectly
owned by it shall not be voted at any meeting and shall not be counted in
determining the total number of outstanding shares entitled to be voted at any
given time, unless they are held by it in a fiduciary capacity, in which case
they may be voted and shall be counted in determining the total number of
outstanding shares at any given time.
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The Board of Directors may adopt by resolution a procedure by
which a stockholder may certify in writing to the Corporation that any shares of
stock registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth: the
class of stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date or closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the stockholder of record of
the specified stock in place of the stockholder who makes the certification.
Notwithstanding any provision of the Charter of the
Corporation or these Bylaws, Subtitle 7 of Title 3 of the Maryland General
Corporation Law ("MGCL") (as the same may hereafter be amended from time to
time), and any successor statute, shall not apply to the voting rights of any
shares of Stock of the Corporation. This section may be repealed, in whole or in
part, at any time, whether before or after an acquisition of control shares.
Section 10. INSPECTORS.
At any meeting of stockholders, the chairman of the meeting
may appoint one or more persons as inspectors for such meeting. Such inspectors
shall ascertain and report the number of shares represented at the meeting based
upon their determination of the validity and effect of proxies, count all votes,
report the results and perform such other acts as are proper to conduct the
election and voting with impartiality and fairness to all the stockholders.
Each report of an inspector shall be in writing and signed by
him or by a majority of them if there is more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
Section 11. NOMINATIONS AND STOCKHOLDER BUSINESS.
(a) Annual Meetings of Stockholders.
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(1) Nominations of persons for election to the Board
of Directors and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (i)
pursuant to the Corporation's notice of meeting; (ii) by or at the
direction of the Board of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record both at the time of giving
of notice provided for in this Section 11(a) and at the time of the
Annual Meeting, who is entitled to vote at the meeting and who complied
with the notice procedures set forth in this Section 11(a).
(2) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to clause
(iii) of paragraph (a)(1) of this Section 11, the stockholder must have
given timely notice thereof in writing to the secretary of the
Corporation. To be timely, a stockholder's notice shall be delivered to
the secretary at the principal executive offices of the Corporation not
less than 60 days nor more than 90 days prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in the
event that the date of the annual meeting is advanced by more than 30
days or delayed by more than 60 days from such anniversary date or if
the Corporation has not previously held an annual meeting, notice by
the stockholder to be timely must be so delivered not earlier than the
90th day prior to such annual meeting and not later than the close of
business on the later of the 60th day prior to such annual meeting.
Such stockholder's notice shall set forth (a) as to each person whom
the stockholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an
election contest, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Rule 14a-11 thereunder (including such
person's written consent to being named in the proxy statement as a
nominee and to serving as a director if elected); (b) as to any other
business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the nomination or proposal is
made (i) the name and address of such stockholder, as they appear on
the Corporation's books, and of such beneficial owner and (ii) the
class and number of shares of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial
owner.
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(b) Special Meetings of Stockholders. Only such business shall
be conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting. Nominations
of persons for election to the Board of Directors may be made at a special
meeting of stockholders at which directors are to be elected (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) provided that the Board of Directors has determined that
directors shall be elected at such special meeting, by any stockholder of the
Corporation who is a stockholder of record both at the time of giving of notice
provided for in this Section 11(b) and at the time of the Special Meeting, who
is entitled to vote at the meeting and who complied with the notice and
informational procedures set forth in this Section 11(b). In the event the
Corporation calls a special meeting of stockholders for the purpose of electing
one or more directors to the Board of Directors, any such stockholder may
nominate a person or persons (as the case may be) for election to such position
as specified in the Corporation's notice of meeting, if the stockholder's notice
required by Section 11(a) shall be delivered to the secretary at the principal
executive offices of the Corporation not earlier than the 90th day prior to such
special meeting and not later than the close of business on the later of the
60th day prior to such special meeting or on the tenth day following the date of
the Corporation's notice to such stockholder. Such stockholder's notice shall
set forth as to each person whom the stockholder proposes to nominate for
election or re-election as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act and Rule 14a-11 thereunder
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); and (b) as to the
stockholder giving the notice and beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and address of such stockholder, as
they appear on the Corporations's books, and of such beneficial owner and (ii)
the class and number of shares of the Corporation which are owned beneficially
and of record by such stockholder and such beneficial owner.
(c) General.
(1) Only such persons who are nominated in accordance
with the procedures set forth in this Section 11 shall be eligible to
serve as directors and only such business shall be conducted at a
meeting of stockholders as shall have been brought before the meeting
in accordance with the procedures set forth in this Section 11. The
chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the
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<PAGE>
meeting was made in accordance with the procedures set forth in this
Section 11 and, if any proposed nomination or business is not in
compliance with this Section 11, to declare that such defective
nomination or proposal be disregarded.
(2) Notwithstanding the foregoing provisions of this
Section 11, a stockholder shall also comply with all applicable
requirements of state law.
Section 12. INFORMAL ACTION BY STOCKHOLDERS.
Any action required or permitted to be taken at a meeting of
stockholders may be taken without a meeting if a consent in writing, setting
forth such action, is signed by each stockholder entitled to vote on the matter,
and each stockholder entitled to notice of a meeting of stockholders (but not to
vote thereat) has waived in writing any right to dissent from such action, and
such consent and waiver are filed with the minutes of proceedings of the
stockholders.
Section 13. VOTING BY BALLOT.
Voting on any question or in any election may be via voce
unless the presiding officer shall order that voting be by ballot.
Section 14. ORGANIZATION.
At every meeting of stockholders, the chairman of the board,
if there be one, shall conduct the meeting or, in the case of vacancy in office
or absence of the chairman of the board, one of the following officers present
shall conduct the meeting in the order stated: the vice chairman of the board,
if there be one, the president, the vice presidents in their order of rank and
seniority, or a chairman chosen by the stockholders entitled to cast a majority
of the votes which all stockholders present in person or by proxy are entitled
to case, shall act as chairman, and the secretary, or, in his absence, an
assistant secretary, or in the absence of both the secretary and assistant
secretaries, a person appointed by the chairman shall act as secretary.
ARTICLE III
DIRECTORS
Section 1. NUMBER, TENURE AND QUALIFICATIONS.
The business and affairs of the Corporation shall be managed
under the direction of its Board of Directors. Except as otherwise provided in
the Charter, at any regular meeting or at any special meeting called for that
purpose, a majority of the entire
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Board of Directors may establish, increase or decrease the number of directors,
provided that the number thereof shall never be less than the minimum number
required by the Maryland General Corporation Law, nor more than nine, and
further provided that the tenure of office of a director shall not be affected
by any decrease in the number of directors, subject to the removal of such
director in accordance with the Charter and these Bylaws. Each director shall
hold office for the term for which he is elected and until his successor is
elected and qualified, or until his resignation, removal (in accordance with the
Charter and these Bylaws) or death.
Section 2. ANNUAL AND REGULAR MEETINGS.
An annual meeting of the Board of Directors shall be held
immediately after and at the same place as the annual meeting of stockholders,
no notice other than this Bylaw being necessary. The Board of Directors may
provide, by resolution, the time and place, either within or without the State
of Maryland, for the holding of regular meetings of the Board of Directors
without other notice than such resolution.
Section 3. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by or
at the request of the chairman of the board (or any co-chairman of the board if
more than one), president or by a majority of the directors then in office. The
persons or persons authorized to call special meetings of the Board of Directors
may fix any place, either within or without the State of Maryland, as the place
for holding any special meeting of the Board of Directors called by them.
Section 4. NOTICE.
Notice of any special meeting shall be given by written notice
delivered personally, transmitted by facsimile or mailed to each director at his
business or residence address. Personally delivered, facsimile transmitted or
telegraphed notices shall be given at least two business days prior to the
meeting. Notice by mail shall be given at least five business days prior to the
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail properly addressed, with postage thereon prepaid.
Telephone notice shall be deemed to be given when the director is personally
given such notice in a telephone call to which he is a party. Facsimile
transmission notice shall be deemed to be given upon completion of the
transmission of the message to the number given to the Corporation by the
director and receipt of a completed answer-back indicating receipt. Neither the
business to be transacted at, nor the purpose of, any annual, regular or special
meeting of the Board of
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Directors need be stated in this notice, unless specifically required by statute
or these Bylaws.
Section 5. QUORUM.
A majority of the directors shall constitute a quorum for
transaction of business at any meeting of the Board of Directors, provided that,
if less than a majority of such directors are present at said meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice, and provided further that if, pursuant to the Charter or
these Bylaws, the vote of a majority of a particular group of directors is
required for action, a quorum must also include a majority of such group.
The directors present at a meeting which has been duly called
and convened may continue to transact business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.
Section 6. VOTING.
(1) The action of a majority of the directors present at a
meeting at which a quorum is present shall be the action of the Board of
Directors, unless the concurrence of a greater or lesser proportion is required
for such action by law, the Charter or these Bylaws.
(2) Notwithstanding anything to the contrary contained in
these Bylaws, prior to the occurrence of a Simplification Event, the Corporation
shall not take (or agree to take), and the Board of Directors shall not
authorize the Corporation to take (or agree to take), any action regarding the
following matters without the affirmative vote of 66-2/3% of the entire Board of
Directors:
(a) approval of the annual budget of the Corporation;
provided that, if, with respect to a proposed budget for any fiscal year, the
requisite vote of directors is not obtained, the annual budget for the
immediately preceding fiscal year, increased (but in no event decreased) on a
line-by-line basis by the increase in the Consumer Price Index for all Urban
Consumers (1982-1984 = 100 relating to New York-Northern New Jersey-Long Island
and issued by the Bureau of Labor Statistics of the United States Department of
Labor or if no longer published, or such publication is temporarily or
indefinitely suspended, then any comparable index issued by the Bureau of Labor
Statistics of the United States Department of Labor or by any successor agency
of the United States, or any other generally recognized and accepted index for
similar determinations of the cost of living, in lieu of the Index) for the
period beginning in January and ending in December
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of the immediately preceding fiscal year, shall be the annual
budget for such fiscal year;
(b) any individual capital expenditure in excess of
$1,500,000 or aggregate capital expenditures for any fiscal year in excess of
$3,500,000, in each case, not provided for in the Corporation's annual budget
(other than expenditures for tenant improvements and building improvements in
connection with any lease);
(c) any amendment to, modification of, or expenditure
(other than capital expenditures within the limits set forth in (b) above or
excluded from the limitations of paragraph (b) above) in excess of 110% of, any
amounts included in an annual budget; provided that expenditures in excess of
110% of budgeted amounts may be made in order to comply with the provisions of
any laws, leases or other agreements to which the Corporation or its properties
are subject or to pay operating expenses in the ordinary course including,
without limitation, debt service, real estate taxes, utilities and insurance, or
to effect repairs or maintenance in an emergency and prompt notification of such
expenditure shall be given to the Board of Directors;
(d) authorization, declaration or payment of any
distributions with respect to shares of stock in the form of properties or
assets of the Corporation other than cash or stock;
(e) any adoption or modification of significant
accounting policies or practices or any change in the Corporation's independent
auditors;
(f) termination of any property management contract
between the Corporation and a property management company;
(g) refinancing of the indebtedness of the
Corporation or its properties (other than pursuant to a commitment letter
entered into prior to the Effective Date in connection with a financing approved
by a majority of the Noteholders);
(h) settlement of any litigation or consent to the
entry of any order, in either case requiring the payment by the Corporation of
an uninsured amount greater than $2,500,000;
(i) entering into any lease with respect to an amount
of rentable square feet of space established by the affirmative vote of 75% of
the directors; provided, that, if 75% of the directors shall fail to establish
such amount, such amount shall be 150,000 or more rentable square feet of space;
or
(j) any acquisition in excess of $2.5 million and not
subject to approval of stockholders (other than in connection
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with the leasing, improvement and other operations of the Corporation's
properties or as contemplated by the annual budget with respect to such
properties including, without limitation, any acquisition of, or investment in,
any providers of services to such properties and any easements, air rights or
appurtenances, necessary or desirable for the operation of the properties).
(3) Notwithstanding anything to the contrary contained in
these Bylaws, prior to the occurrence of a Simplification Event, the Corporation
shall not take (or agree to take), and the Board of Directors shall not
authorize the Corporation to take (or agree to take), without the affirmative
vote of 75% of the entire Board of Directors, any action regarding any offering
by the Corporation of new equity interests in the Corporation pursuant to a
single transaction or series of related transactions, whether public or private,
if the aggregate equity interest offered thereby exceeds 25% of the equity of
the Corporation.
Section 7. AFFILIATE TRANSACTIONS
No contract or transaction between the Corporation and one or
more of its directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board of Directors or committee thereof that authorizes the contract or
transaction or solely because his or their votes are counted for such purpose,
if:
(a)(i) The material facts as to his or their interest are
disclosed or are known to the Board of Directors or the committee
thereof, and the Board of Directors or committee thereof in good faith
authorizes the contract or transaction by a vote sufficient for such
purpose without counting the vote of the interested director or
directors, even though the disinterested directors be less than a
quorum; or
(ii) The material facts as to his or their interest are
disclosed or are known to the stockholders entitled to vote thereon,
and the contract or transaction is specifically approved in good faith
by the vote of the stockholders; or
(b) The contract or transaction is fair and reasonable as to
the Corporation as of the time it is first authorized, approved, or
ratified by the Board of Directors, a committee thereof, or the
stockholders.
Notwithstanding anything to the contrary contained in
these Bylaws, the Corporation shall not engage in any transaction
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(other than transactions entered into in the ordinary course of business
including, without limitation, payment of dividends or of salaries or directors'
compensation) with any stockholder holding more than 10% of the outstanding
shares of Common Stock without the approval of a majority of the Corporation's
disinterested directors. A director shall be "disinterested" for the purposes of
this Section if such director is unaffiliated (which shall be determined by the
Board of Directors, which determination shall be final) with, and does not
receive compensation from, the stockholder with whom the transaction is to be
effected or any subsidiaries thereof.
To the extent the Corporation requires investment banking
services and so long as Whitehall Real Estate Limited Partnership V
("Whitehall") remains a significant stockholder of the Corporation, the Board of
Directors will, in good faith in light of all appropriate considerations,
consider engaging Goldman Sachs & Company (among any other investment banking
firms it considers) to provide investment banking services to the Corporation on
terms customary for such services. Notwithstanding the preceding paragraph, any
director affiliated with Whitehall may vote upon any engagement of investment
bankers pursuant to this paragraph.
Section 8. TELEPHONE MEETINGS.
Directors may participate in a meeting by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
in a meeting by these means shall constitute presence in person at the meeting.
Section 9. INFORMAL ACTION BY DIRECTORS.
Any action required or permitted to be taken at any meeting of
the Board of Directors may be taken without a meeting, if a consent in writing
to such action is signed by each director and such written consent is filed with
the minutes of proceedings of the Board of Directors.
Section 10. VACANCIES.
If for any reason any or all the directors cease to be
directors, such event shall not terminate the Corporation or affect these Bylaws
or the powers of the remaining directors hereunder (even if fewer than two
directors remain). Except as otherwise provided in the Charter, any vacancy on
the Board of Directors for any cause, other than an increase in the number of
directors shall be filled by a majority of the remaining directors, although
such majority is less than a quorum, except as otherwise provided in the
Charter. Except as otherwise provided in the Charter, any vacancy in the number
of directors created by an increase in the number of
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directors may be filled by a majority of the entire Board of Directors. Any
individual so elected as director shall hold office for the term for which he is
elected and until his successor is elected and qualified, or until his
resignation, removal (in accordance with the Charter and these Bylaws) or death.
Section 11. COMPENSATION.
Directors shall not receive any stated salary for their
service as directors but, by resolution of the Board of Directors, may receive
fixed sums per year and/or per meeting and/or per visit to real property or
other facilities owned or leased by the Corporation and for any service or
activity they performed or engaged in as directors. Directors may be reimbursed
for expenses of attendance, if any, shall be allowed to directors for attendance
at each annual, regular or special meeting of the Board of Directors or of any
committee thereof. Notwithstanding anything to the contrary, directors may serve
the Corporation in any other capacity and receive compensation therefor.
Section 12. LOSS OF DEPOSIT.
No director shall be liable for any loss which may occur by
reason of the failure of the bank, trust company, savings and loan association
or other institution with whom moneys or stock have been deposited.
Section 13. SURETY BONDS.
Unless required by law, no director shall be obligated to give
any bond or surety or other security for the performance of any of his duties.
Section 14. RELIANCE.
Each director, officer, employee and agent of the Corporation
shall, in the performance of his duties with respect to the Corporation, be
fully justified and protected with regard to any act or failure to act in
reliance in good faith upon the books of account or other records of the
Corporation, upon an opinion of counsel or upon reports made to the Corporation
by any of its officers or employees or by the advisers, accountants, appraisers
or other experts or consultants selected by the Board of Directors or officers
of the Corporation, regardless of whether such counsel or expert may also be a
director.
Section 15. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS.
The directors shall have no responsibility to devote
their full time to the affairs of the Corporation. Any director,
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officer, employee or agent of the Corporation, in his personal capacity or in a
capacity as an affiliate, employee, or agent of any other person, or otherwise,
may have business interests and engage in business activities similar to or in
addition to those of or relating to the Corporation.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS.
The Board of Directors may appoint from among its members an
Executive Committee, an Audit Committee, a Compensation Committee and other
committees, composed of two or more directors,
to serve at the pleasure of the Board of Directors.
Section 2. POWERS.
Subject to the provisions of Section 3 below and provided that
any grant of authority beyond the customary powers for such a committee (such as
a grant of power to approve matters described in Sections 6(2), 6(3) and 7 of
Article III of these Bylaws) will require the approval of 75% of the entire
Board of such grant, the Board of Directors may delegate to committees appointed
under Section 1 of this Article any of the powers of the Board of Directors,
except as prohibited by law. Among the powers delegated thereto by the Board of
Directors, the Compensation Committee shall have the power to determine the
compensation for the officers of the Corporation.
Section 3. EXECUTIVE COMMITTEE.
The Board of Directors shall establish an Executive Committee
to oversee the day-to-day operations of the Corporation's properties. The
initial Executive Committee shall be comprised of two directors elected by
holders of Class B Common Stock and one director with substantial experience in
the real estate industry elected by holders of Class A Common Stock other than
Whitehall or Oaktree Capital Management, LLC. Thereafter, until the occurrence
of a Simplification Event, directors elected by holders of Class B Common Stock
shall elect two members of the Executive Committee and directors elected by
holders of Class A Common Stock shall elect one member thereof. The duties and
powers of the Executive Committee shall be established by the vote of 75% of the
entire Board, at its first meeting. The members of the Executive Committee shall
serve one-year terms.
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Section 4. MEETINGS.
Notice of committee meetings shall be given in the same manner
as notice for special meetings of the Board of Directors. A majority of the
members of the committee shall constitute a quorum for the transaction of
business at any meeting of the committee. The act of a majority of the committee
members present at a meeting shall be the act of such committee. The Board of
Directors may designate a chairman of any Committee, and such chairman or any
two members of any committee may fix the time and place of its meeting unless
the Board shall otherwise provide. In the absence of any member of such
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint another director to act in the place of such
absent member.
Section 5. TELEPHONE MEETINGS.
Members of a committee of the Board of Directors may
participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.
Section 6. INFORMAL ACTION BY COMMITTEES.
Any action required or permitted to be taken at any meeting of
a committee of the Board of Directors may be taken without a meeting if a
consent in writing to such action is signed by each member of the committee and
such written consent is filed with the minutes of proceedings of such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS.
The officers of the Corporation shall include a president, a
secretary and a treasurer and may include a chairman of the board (or one or
more co-chairmen of the board), a vice chairman of the board, one or more vice
presidents, a chief operating officer, a chief financial officer, one or more
assistant secretaries and one or more assistant treasurers. In addition, the
Board of Directors may from time to time appoint such other officers with such
powers and duties as they shall deem necessary or desirable. The officers of the
Corporation shall be elected annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of
stockholders,
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except that the president may appoint one or more vice presidents, assistant
secretaries and assistant treasurers. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as may be
convenient. Each officer shall hold office until his successor is elected and
qualifies or until his death, resignation or removal in the manner hereinafter
provided. Any two or more offices except president and vice president may be
held by the same person. In its discretion, the Board of Directors may leave
unfilled any office except that of president, treasurer and secretary. Election
of an officer or agent shall not of itself create contract rights between the
Corporation and such officer or agent.
Section 2. REMOVAL AND RESIGNATION.
Any officer or agent of the Corporation may be removed by the
Board of Directors if in its judgment the best interests of the Corporation
would be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Any officer of the
Corporation may resign at any time by giving written notice of his resignation
to the Board of Directors, the chairman of the board (or any co-chairman of the
board if more than one), the president or the secretary. Any resignation shall
take effect at any time subsequent to the time specified therein or, if the time
when it shall become effective is not specified therein, immediately upon its
receipt. The acceptance of a resignation shall not be necessary to make it
effective unless otherwise stated in the resignation. Such resignation shall be
without prejudice to the contract rights, if any, of the Corporation.
Section 3. VACANCIES.
A vacancy in any office may be filled by the Board of
Directors or the president for the balance of the term.
Section 4. PRESIDENT.
The president shall in general supervise and control all of
the business and affairs of the Corporation and shall be the chief operating
officer. He may execute any deed, mortgage, bond, contract or other instrument,
except in cases where the execution thereof shall be expressly delegated by the
Board of Directors or by these Bylaws to some other officer or agent of the
Corporation or shall be required by law to be otherwise executed; and in general
shall perform all duties incident to the office of president and such other
duties as may be prescribed by the Board of Directors from time to time. In
addition, the president shall have the power to determine the cash compensation
of employees of the Corporation other than its senior executive officers.
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Section 5. CHIEF OPERATING OFFICER.
The Board of Directors may designate a chief operating
officer. The chief operating officer shall have the responsibilities and duties
as set forth by the Board of Directors or the president.
Section 6. CHIEF FINANCIAL OFFICER.
The Board of Directors may designate a chief financial
officer. The chief financial officer shall have the responsibilities and duties
as set forth by the Board of Directors or the president.
Section 7. CHAIRMAN OF THE BOARD.
The Board of Directors shall designate a chairman of the board
(or one or more co-chairmen of the board). The chairman of the board shall
preside over the meetings of the Board of Directors and of the stockholders at
which he shall be present. If there be more than one, the co-chairman designated
by the Board of Directors will perform such duties. The chairman of the board
shall perform such other duties as may be assigned to him or them by the Board
of Directors.
Section 8. VICE PRESIDENT.
In the absence of the president or in the event of a vacancy
in such office, the vice president (or in the event there be more than one vice
president, the vice presidents in the order designated at the time of their
election or, in the absence of any designation, then in the order of their
election) shall perform the duties of the president and when so acting shall
have all the powers of and be subject to all the restrictions upon the
president, and shall perform such other duties as from time to time may be
assigned to him or them by the president or by the Board of Directors. The Board
of Directors may designate one or more vice presidents as executive vice
president or as vice president for particular areas of responsibility.
Section 9. SECRETARY.
The secretary shall (a) keep the minutes of the proceedings of
the stockholders, the Board of Directors and committees of the Board of
Directors in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these Bylaws or as
required by law; (c) be custodian of the trust records and of the seal of the
Corporation; (d) keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder; (e) have general
charge of the share transfer books of
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the Corporation; and (f) in general perform such other duties as from time to
time may be assigned to him by the president or by the Board of Directors.
Section 10. TREASURER.
The treasurer shall have the custody of the funds and
securities of the Corporation and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. In the absence of a designation of chief financial officer by the
Board of Directors, the treasurer shall be the chief financial officer of the
Corporation.
The treasurer shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and Board of Directors, at the
regular meetings of the Board of Directors or whenever it may so require, an
account of all his transactions as treasurer and of the financial condition of
the Corporation.
If required by the Board of Directors, he shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, all books, papers,
vouchers, moneys and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 11. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.
The assistant secretaries and assistant treasurers, in
general, shall perform such duties as shall be assigned to them by the secretary
or treasurer, respectively, or by the president or the Board of Directors. The
assistant treasurers shall, if required by the Board of Directors, give bonds
for the faithful performance of their duties in such sums and with such surety
or sureties as shall be satisfactory to the Board of Directors.
Section 12. SALARIES.
The salaries of the officers shall be fixed from time to time
by the Board of Directors and no officer shall be prevented from receiving such
salary by reason of the fact that he is also a director.
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ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS.
Subject to Article III, Section 6(2) of these Bylaws, the
Board of Directors may authorize any officer or agent to enter into any contract
or to execute and deliver any instruments in the name of and on behalf of the
Corporation and such authority may be general or confined to specific instances.
Any agreement, deed, mortgage, lease or other document executed by one or more
of the directors or by an authorized person shall be valid and binding upon the
Board of Directors and upon the Corporation when authorized or ratified by
action of the Board of Directors.
Section 2. CHECKS AND DRAFTS.
All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness issued in the name of the Corporation
shall be signed by such officer or officers, agent or agents of the Corporation
and in such manner as shall from time to time be determined by the Board of
Directors.
Section 3. DEPOSITS.
All funds of the Corporation not otherwise employed shall be
deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Board of Directors may designate.
ARTICLE VII
STOCK
Section 1. CERTIFICATES.
Each stockholder shall be entitled to a certificate or
certificates which shall represent and certify the number of shares of each
class of stock held by him in the Corporation. Each certificate shall be signed
by the president or a vice president and countersigned by the secretary or an
assistant secretary or the treasurer or an assistant treasurer and may be sealed
with the seal, if any, of the Corporation. The signatures may be either manual
or facsimile. Certificates shall be consecutively numbered; and if the
Corporation shall, from time to time, issue several classes of stock, each class
may have its own number series. A certificate is valid and may be issued whether
or not an officer who signed it is still an officer when it is issued.
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Section 2. TRANSFERS.
Upon surrender to the Corporation or the transfer agent of the
Corporation of a stock certificate duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, the Corporation
shall issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
The Corporation shall be entitled to treat the holder of
record of any share of stock as the holder in fact thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share 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 the State
of Maryland.
Section 3. REPLACEMENT CERTIFICATE.
The Board of Directors or any officer designated by it may
direct a new certificate to be issued in place of any certificate previously
issued by the Corporation alleged to have been lost, stolen or destroyed upon
the making of an affidavit of that fact by the person claiming the certificate
to be lost, stolen or destroyed. When authorizing the issuance of a new
certificate, the Board of Directors or any officer designated by it may, in its
or his discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate or his legal
representative to advertise the same in such manner as they shall require and/or
to give bond, with sufficient surety, to the Corporation to indemnify it against
any loss or claim which may arise as a result of the issuance of a new
certificate.
Section 4. CLOSE OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
The Board of Directors may set, in advance, a record date for
the purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders, or stockholders entitled to receive payment of any
dividend or the allotment of any other rights, or in order to make a
determination of stockholders for any other proper purpose. Such date, in any
case, shall not be prior to the close of business on the day the record date is
fixed and shall be not more than 90 days and, in the case of a meeting of
stockholders, not less than ten days, before the date on which the meeting or
particular action requiring such determination of stockholders is to be held or
taken.
In lieu of fixing a record date, the Board of Directors may
provide that the stock transfer books shall be closed for a stated period but
not longer than 20 days. If the stock transfer books are closed for the purpose
of determining stockholders
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entitled to notice of or to vote at a meeting of stockholders, such books shall
be closed at least ten days before the date of such meeting.
If no record date is fixed and the stock transfer books are
not closed for the determination of stockholders, (a) the record date for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day on which the notice of
meeting is mailed or the 30th day before the meeting, whichever is the closer
date to the meeting; and (b) the record date for the determination of
stockholders entitled to receive payment of a dividend or an allotment of any
other rights shall be the close of business on the day on which the resolution
of the directors, declaring the dividend or allotment of rights, is adopted.
When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, except where the
determination has been made throughout the closing of the transfer books and the
stated period of closing has expired.
Section 5. STOCK LEDGER.
The Corporation shall maintain at its principal office or at
the office of its counsel, accountants or transfer agent, an original or
duplicate share ledger containing the name and address of each stockholder and
the number of shares of each class held by such stockholder.
Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS.
The Board of Directors may issue fractional stock or provide
for the issuance of scrip, all on such terms and under such conditions as they
may determine. Notwithstanding any provision of the Charter or these Bylaws, the
Board of Directors may issue units consisting of different securities of the
Corporation. Any security issued in a unit shall have the same characteristics
as any identical securities issued by the Corporation, except that the Board of
Directors may provide that for a specified period securities of the Corporation
issued in such unit may be transferred on the books of the Corporation only in
such unit.
ARTICLE VIII
ACCOUNTING YEAR; FINANCIAL STATEMENTS
Section 1. ACCOUNTING YEAR
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The Board of Directors shall have the power, from time to
time, to fix the fiscal year of the Corporation by a duly adopted resolution.
Section 2. FINANCIAL STATEMENTS
If the Corporation is subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Act"), then the
Corporation shall deliver to the stockholders all materials required to be
delivered to stockholders under the Act, including any quarterly letter to
stockholders in the form agreed to by the Board of Directors. The Corporation
shall use its best efforts to become and remain subject to such reporting
requirements. If the Corporation is not subject to the reporting requirements of
the Act, the Corporation shall deliver to the stockholders and make available to
any prospective purchaser of shares of Common Stock, together with such
quarterly letter:
(a) As soon as available and in any event within 45 days after
the end of each of the first three quarterly fiscal periods of each fiscal year
of the Corporation, statements of income, retained earnings and changes in
financial position (or of cash flow, as the case may be) of the Corporation for
such period and for the period from the beginning of the respective fiscal year
to the end of such period, and the related balance sheets as at the end of such
period, setting forth in each case in comparative form the corresponding figures
for the corresponding period in the preceding fiscal year, accompanied by a
management's discussion and analysis meeting the requirements of Item 303 of
Regulation S-K promulgated by the SEC and a certificate of a senior financial
officer of the Corporation, which certificate shall state that said financial
statements fairly present the financial condition and results of operations, as
the case may be, of the Corporation in accordance with generally accepted
accounting principles and federal income tax reporting standards, consistently
applied, as at the end of, and for, such period (subject to normal year-end
audit adjustments);
(b) As soon as available and in any event within 90 days after
the end of each fiscal year of the Corporation, statements of income, retained
earnings and changes in financial position (or of cash flow, as the case may be)
of the Corporation for the last quarterly period of such year and for such year
and the related balance sheets as at the end of such year, setting forth in each
case in comparative form the corresponding figures for the preceding fiscal
year, and accompanied (i) a management's discussion and analysis meeting the
requirements of Item 303 of Regulation S-K promulgated by the SEC and in the
case of said statements and balance sheet, by an opinion thereon of independent
certified public accountants of recognized national standing, which opinion
shall state that said financial statements fairly present
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the financial condition and results of operations of the Corporation as at the
end of, and for, such fiscal year, and (ii) a certificate of a senior financial
officer of the Corporation, which certificate shall state that said financial
statements fairly present the financial condition and results of operations of
the Corporation in accordance with federal income tax reporting standards,
consistently applied, as at the end of, and for, such fiscal year; and
(c) Information required to be reported on Form 8-K
under the Act.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION.
Payment of distributions upon the stock of the Corporation may
be authorized by the Board of Directors, subject to the provisions of law, the
Charter and these Bylaws. Subject to Article III, Section 6(2)(d) of these
Bylaws, distributions may be made in cash, property or stock of the Corporation,
subject to the provisions of law, the Charter and these Bylaws.
Section 2. CONTINGENCIES.
Before making any distribution, there may be set aside out of
any assets of the Corporation available for distributions such sum or sums as
the Board of Directors may from time to time, in its absolute discretion, think
proper as a reserve fund for contingencies, for equalizing dividends, for
repairing or maintaining any property of the Corporation or for such other
purpose as the Board of Directors shall determine to be in the best interest of
the Corporation, and the Board of Directors may modify or abolish any such
reserve in the manner in which it was created.
ARTICLE X
INVESTMENT POLICY
Subject to the provision of the Charter, the Board of
Directors may from time to time adopt, amend, revise or terminate any policy or
policies with respect to investments by the corporation as it shall deem
appropriate in its sole discretion.
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<PAGE>
ARTICLE XI
SEAL
Section 1. SEAL.
The Board of Directors may authorize the adoption of a seal by
the Corporation. The seal shall have inscribed thereon the name of the
Corporation and the year of its organization. The Board of Directors may
authorize one or more duplicate seals and provide for the custody thereof.
Section 2. AFFIXING SEAL.
Whenever the Corporation is required to place its seal to a
document, it shall be sufficient to meet the requirements of any law, rule or
regulation relating to a seal to place the word "(SEAL)" adjacent to the
signature of the person authorized to execute the document on behalf of the
Corporation.
ARTICLE XII
INDEMNIFICATION
(a) General. The Corporation (which for the purpose of this
Article XII shall include predecessor entities of the Corporation as set forth
in Section 2-418 of the Maryland General Corporation Law) shall have the power
(to the fullest extent permitted by Maryland statutory or decisional law, as
amended or interpreted (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment)) to obligate itself by express provision in its Charter, by
agreement, or by majority vote of either its stockholders or disinterested
Directors, to indemnify, and to pay or reimburse reasonable expenses in advance
of final disposition of a proceeding to, any one or more of the following
classes of individuals from and against any claim or liability to which such
person may become subject or which such person may incur by reason of his or her
position with the Corporation: (1) present or former Directors of the
Corporation, (2) present or former officers of the Corporation, (3) present or
former agents and/or employees of the Corporation, (4) present or former
administrators, trustees or other fiduciaries under any pension, profit sharing,
deferred compensation, or other employee benefit plan maintained by the
Corporation, and (5) persons serving or who have served at the request of the
Corporation in any of these capacities for any other corporation, partnership,
joint
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<PAGE>
venture, trust or other enterprise who is made a party to any proceeding by
reason of service in that capacity.
(b) Repeal or Modification. Any repeal or modification of this
Article XII by the shareholders or directors of the Corporation shall be
prospective only, and shall not adversely affect any right to indemnification or
advancement of expenses hereunder existing at the time of such repeal or
modification.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given, pursuant to the
Charter or these Bylaws or pursuant to applicable law, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated herein, shall be deemed equivalent to the giving of
such notice. Neither the business to be transacted at nor the purpose of any
meeting need be set forth in the waiver of notice, unless specifically required
by statute. The attendance of any person at any meeting shall constitute a
waiver of notice of such meeting, except where such person attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
Subject to applicable law and the Charter, by affirmative vote
of the holders of not less than two-thirds of the shares of stock entitled to
vote, the stockholders shall have the right to adopt, alter and repeal Bylaws.
Subject to the right of the stockholders provided in the preceding sentence, the
Board of Directors shall have the exclusive power to adopt, alter or repeal
Bylaws; provided, that, Section 6(2) and 7 of Article III may only be amended
with the approval of not less than 66-2/3% of the entire Board of Directors, and
Article III, Section 6(3) and Sections 2 and 3 of Article IV may only be amended
with the approval of 75% of the entire Board of Directors.
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This Agreement and Plan of Merger (the "Agreement") is made and
entered into as of October 10, 1996 by and among 1290 Associates, L.L.C., a New
York limited liability company ("1290 LLC"), 237 Park Avenue Associates, L.L.C.,
a New York limited liability company ("237 LLC") and 237/1290 Upper Tier
Associates, L.P., a Delaware limited partnership ("Surviving Entity").
WHEREAS, on April 23, 1996, 1290 LLC and 237 LLC commenced cases
under chapter 11 of title 11 of the United States Code in the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court");
WHEREAS, pursuant to the Second Amended Joint Plan of Reorganization
of 1290 LLC and 237 LLC filed with the Bankruptcy Court (the "Plan"), 1290 LLC
and 237 LLC will merge with and into Surviving Entity; and
WHEREAS, by order dated September 20, 1996, the Bankruptcy Court
confirmed the Plan and authorized the transactions contemplated hereby (the
"Confirmation Order").
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, LLC and Surviving Entity hereby
agree as follows:
ARTICLE 1
DEFINITIONS
"237 LLC" has the meaning set forth in the Preamble
hereto.
"1290 LLC" has the meaning set forth in the Preamble
hereto.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person.
"Bankruptcy Court" has the meaning set forth in
recitals hereto.
"Building Corp" has the meaning set forth in Section
2.3 hereof.
"Confirmation Order" has the meaning set forth in the
Recitals hereto.
"DRULPA" has the meaning set forth in Section 2.1
hereof.
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<PAGE>
"Effective Time" has the meaning set forth in
Section 2.1 hereof.
"Encumbrance" means any lien, option, pledge, security interest,
right of first refusal, or restriction on transfer.
"Equityco" has the meaning set forth in Section 2.3
hereof.
"ERISA" means the Employees Retirement Income Security
Act of 1974, as amended.
"JMB" has the meaning set forth in Section 2.3 hereof.
"Merger" has the meaning set forth in Section 2.1
hereof.
"NYLLCL" has the meaning set forth in Section 2.1
hereof.
"O&Y Entities" has the meaning set forth in Section 2.3
hereof.
"Person" means an individual, a corporation, a partnership, a joint
venture, an association, a joint-stock company, a trust, a business trust, a
government or any agency or any political subdivision, any unincorporated
organization or any other entity.
"Plan" has the meaning set forth in the Recitals
hereto.
"Surviving Entity" has the meaning set forth in the
Preamble to this Agreement.
ARTICLE 2
THE MERGER
2.1 Merger of 1290 LLC and 237 LLC into Surviving Entity. 1290 LLC
and 237 LLC shall be merged (the "Merger") with and into Surviving Entity, upon
(i) the filing of a certificate of merger with the Secretary of State of the
State of New York pursuant to Article X, Section 1002 of the New York Limited
Liability Company Law (the "NYLLCL") and (ii) the filing of a certificate of
merger with the Secretary of State of the State of Delaware pursuant to Section
211 of the Delaware Revised Uniform Limited Partnership Act (the "DRULPA") (the
time of the later of such filings is referred to herein as the "Effective
Time"). At the Effective Time, the separate limited liability company
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<PAGE>
existence of 1290 LLC and 237 LLC shall cease and Surviving Entity shall be the
surviving entity and the separate limited partnership existence of Surviving
Entity, with all of its purposes, objects, rights privileges and powers, shall
continue unaffected and unimpaired by the Merger. The Merger shall be pursuant
to the provisions of and with the effect provided in the NYLLCL and the DRULPA.
2.2 Certificate of Limited Partnership. From the Effective Time and
until further amended in accordance with the DRULPA, the Certificate of Limited
Partnership of Surviving Entity shall be the Certificate of Limited Partnership
of the surviving entity.
2.3 Exchange of Member Interests in 1290 LLC and 237 LLC for Limited
Partner Interests in Surviving Entity. At the Effective Time, (a) the member
interests of O&Y NY Building Corp. ("Building Corp"), O&Y Equity Company, L.P.,
as debtor and debtor-in-possession ("Equityco"), and JMB/NYC Office Building
Associates, L.P. ("JMB") in 1290 LLC and 237 LLC will be converted into an
aggregate 2.6%, 49.9% and 46.5% partnership interest, respectively, as limited
partners, in Surviving Entity; (b) Building Corp, Equityco and JMB will be
admitted as limited partners of Surviving Entity; and (c) the current limited
partner of Surviving Entity shall withdraw as a limited partner of Surviving
Entity.
2.4 Waiver of Rights to Use Names. Surviving Entity hereby waives
any rights it may have or acquire to use the names "Olympia & York" or "O&Y" or
to use computer software licensed to Olympia & York.
2.5 Tax Intent. It is the intent of the parties to this Agreement
that 1290 LLC shall be considered the continuing entity for tax purposes. In
addition, the parties intend that the partnership liabilities of the Surviving
Entity as of the Effective Time first be allocated to the historic 237 LLC
Members (Building Corp., Equityco and JMB) in an amount equal to their negative
capital accounts in 237 LLC immediately prior to the merger hereunder.
ARTICLE 3
CONDITIONS
3.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the issuance by the Bankruptcy Court of its order confirming the Plan and there
not being in effect any preliminary or permanent injunction, decree or other
order restraining or prohibiting the consummation of the transactions
contemplated by this Agreement.
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<PAGE>
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF LLC
Each of 1290 LLC and 237 LLC represents and warrants, as to itself,
as follows:
4.1 Existence and Authority. Each of 1290 LLC and 237 LLC is a
limited liability company duly organized, validly existing and in good standing
under the law of the State of New York and has the power and authority to enter
into and to perform this Agreement. The execution, delivery and performance of
this Agreement by each of 1290 LLC and 237 LLC has been duly authorized by all
requisite actions and proceedings of such entity, subject to issuance by the
Bankruptcy Court of the Confirmation Order, and this Agreement constitutes the
valid and legally binding obligation of each such entity, enforceable against
each such entity in accordance with its terms.
4.2 Non-contravention. The execution, delivery and performance by
each of 1290 LLC and 237 LLC of this Agreement and any related instruments and
documents do not and will not (i) contravene the respective articles of
organization or the operating agreements of such entities, (ii) violate or
conflict with resolutions of the boards of managers or members of such entities,
or (iii) result in any violation by either of such entities of any law, rule or
regulation applicable to it or its assets or result in the creation of any
Encumbrance with respect thereto.
4.3 Capitalization; Title to Member Interests. Equityco and Building
Corp own, beneficially and of record, 49.9% and 3.6%, respectively, of the
member interests in each of 1290 LLC and 237 LLC, free and clear of all
Encumbrances, other than ________. JMB owns, beneficially and of record, 46.5%
of the member interests in each of 1290 LLC and 237 LLC, free and clear of all
Encumbrances, other than Encumbrances created by the JMB Notes (as such term is
defined in the Plan) and the related security agreements.
4.4 Investments. None of 1290 LLC and 237 LLC has any investment
(debt or equity), or any binding commitment to make any investment, in any
corporation, joint venture, general or limited partnership, other business
enterprise or other Person.
4.5 Taxes. All tax returns required to be filed as of the Effective
Time by, or with respect to, 1290 LLC and 237 LLC have been filed on a timely
basis in accordance with the laws, regulations and administrative requirements
of each taxing authority having jurisdiction over such entities. Each of 1290
LLC and 237 LLC has delivered to Surviving Entity copies of all
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<PAGE>
such tax returns. All such tax returns that have been filed on or before the
Effective Time were, when filed, and continue to be, true, correct and complete.
4.6 ERISA. The transactions contemplated by this Agreement will not
give rise to any liability under Section 4069 of ERISA.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SURVIVING ENTITY
Surviving Entity represents and warrants as follows:
5.1 Existence and Authority of Surviving Entity. Surviving Entity is
a limited partnership duly organized, validly existing and in good standing
under the law of the State of Delaware and has the power and authority to enter
into and to perform this Agreement. The execution, delivery and performance of
this Agreement by Surviving Entity has been duly authorized by all requisite
actions and proceedings of Surviving Entity this Agreement constitutes the valid
and legally binding obligation of Surviving Entity, enforceable against
Surviving Entity in accordance with its terms.
5.2 Non-contravention. The execution, delivery and performance by
Surviving Entity of this Agreement and any related instruments and documents do
not and will not (i) contravene the certificate of limited partnership or
limited partnership agreement of Surviving Entity, (ii) violate or conflict with
resolutions of the board of directors of the partners of Surviving Entity, or
(iii) result in any violation by Surviving Entity of any law, rule or regulation
applicable to it or its assets or result in the creation of any Encumbrance with
respect thereto. Surviving Entity is not in violation of, or default under, any
terms or provisions of its certificate of limited partnership or limited
partnership agreement.
5.3 Capitalization; Title to Partnership Interests. Building Corp.
is the sole general partner of Surviving Entity and owns, beneficially and of
record, a 1% partnership interest, as general partner, in Surviving Entity, free
and clear of all Encumbrances. 237/1290 Upper Tier GP Corp. is the sole limited
partner of Surviving Entity and owns, beneficially and of record, a 99%
interest, as limited partner, in Surviving Entity, free and clear of all
Encumbrances.
5.4 Business. Surviving Entity has engaged in no business prior to
the Effective Time, except in connection with its organization and this
Agreement.
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344127.7
<PAGE>
ARTICLE 6
MISCELLANEOUS
6.1 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of 1290 LLC, 237 LLC and Surviving
Entity.
6.2 Survivability. The representations and warranties of the parties
set forth in Articles IV and V shall not survive the consummation of the
transactions contemplated hereby.
6.3 Captions; Counterparts. The captions in this Agreement are for
convenience of reference only, do not form a part hereof and do not in any way
modify, interpret or construe the intentions of the parties. This Agreement may
be executed in two or more counterparts, all of which shall constitute one and
the same instrument.
6.4 Enforceability; Severability. If any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remaining
provisions of this Agreement shall not be affected thereby. To the extent
permitted by applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or unen- forceable in
any respect.
6.5 Entire Agreement. This Agreement and the Plan set
forth the entire understanding of the parties with respect to the
subject matter hereof.
6.6 Waiver. No breach of any agreement, warranty or representation
shall be deemed waived unless expressly waived in writing by the party who might
assert such breach.
6.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without giving effect to
the conflict of law provisions thereof.
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first written above.
1290 ASSOCIATES, L.L.C.
By: O&Y NY Building Corp., as
managing member
By: _______________________
Name:
Title:
237 PARK AVENUE ASSOCIATES, L.L.C.
By: O&Y NY Building Corp., as
managing member
By: _________________,
Name:
Title:
237/1290 UPPER TIER ASSOCIATES, L.P.
By: O&Y NY Building Corp., as
general partner
By: _______________________
Name:
Title:
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AMONG
1290 ASSOCIATES, L.L.C.
237 PARK AVENUE ASSOCIATES, L.L.C.
AND
237/1290 UPPER TIER ASSOCIATES, L.P.
DATED AS OF OCTOBER 10, 1996
344127.7
LIMITED PARTNERSHIP AGREEMENT OF
237 PARK PARTNERS, L.P.
(A Delaware Limited Partnership)
THIS AGREEMENT OF LIMITED PARTNERSHIP OF 237 PARK PARTNERS,
L.P. (the "Partnership"), dated as of October 10, 1996 (this "Agreement") is
entered into by and between 237 GP Corp., a Delaware corporation (the "General
Partner"), and 237/1290 Lower Tier Associates, L.P., a Delaware limited
partnership (the "Limited Partner").
WHEREAS, the parties hereto desire to form a Delaware limited
partnership under the Revised Uniform Limited Partnership Act of the State of
Delaware and in accordance with the terms and conditions of the Joint Plan of
Reorganization of 237 Park Avenue Associates, L.L.C. and 1290 Associates, L.L.C.
(the "Debtors"), filed under title 11 of the United States Code, 11 U.S.C.
Sections 101 et seq. (the "Plan"); and
WHEREAS, the Limited Partner, the Partnership and Metropolis
Realty Trust, Inc., a Maryland corporation (the "REIT") are parties to the Debt
Contribution Agreement, dated as of October 7, 1996, ("the Debt Contribution
Agreement") pursuant to which, among other things, the Limited Partner will
contribute to the Partnership the Contributed Debt (as hereinafter defined); and
WHEREAS, the Limited Partner, the Partnership and 237/1290
Upper Tier Associates, L.P., a Delaware limited partnership (the "Upper Tier
Partnership"), are parties to the Property Contribution Agreement, dated as of
October 10, 1996 (the "Property Contribution Agreement") pursuant to which,
among other things, the Limited Partner will contribute to the Partnership the
Property (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual covenants and
on the terms and conditions contained herein, and for other good, valid and
binding consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
Certain terms used in this Agreement shall have the meanings
designated below.
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<PAGE>
(a) "Act" means the Delaware Revised Uniform Limited
Partnership Act, as in effect on the date hereof as it may be amended from time
to time hereafter, or any successor law.
(b) "Adverse Transaction" means (i) any sale, disposition,
transfer or exchange of the Property, (ii) any release, discharge or reduction
of non-recourse indebtedness of the Partnership (other than through payment of
scheduled amortization, actions taken by a secured lender such as application of
insurance proceeds or condemnation awards or the exercise of remedies, or in the
case where the released indebtedness is concurrently being replaced with other
non-recourse indebtedness complying with clause (B) below), (iii) any
distribution of Partnership assets (other than distributions of cash and other
distributions by the Partnership in the ordinary course of business), or (iv)
any other transaction or agreement to which the Partnership is a party, if as a
result of any such transaction or agreement described in (i), (ii), (iii), or
(iv) above, JMB LP as a partner in the Upper Tier Partnership would be required
to recognize a material amount of taxable income or gain prior to the Approval
Right Termination Date. Adverse Transactions shall specifically exclude (A)
Partnership income derived in the ordinary course of the Partnership's business,
(B) non-recourse refinancing of the Property on commercially reasonable terms in
an aggregate amount together with any non-recourse financing encumbering 1290
Avenue of the Americas, New York, NY equal to not less than the lesser of
$325,000,000 or the amortized balance of the then existing non-recourse
financing encumbering the Properties (utilizing an amortization schedule no
shorter than twenty (20) years), (C) payment of amortization on non-recourse
financing encumbering the Property, provided that the outstanding balance of
non-recourse financing encumbering the Properties is not reduced below
$325,000,000, in the aggregate, as such amount would be reduced between the date
hereof and the Approval Right Termination Date assuming such amount is amortized
based on a twenty (20) year amortization schedule and except as otherwise
provided in the parenthetical of clause (ii) above (i.e., actions taken by a
secured lender such as applications of insurance proceeds or condemnation awards
or the exercise of remedies, or in the case where the released indebtedness is
concurrently being replaced with other non-recourse indebtedness complying with
clause (B) above), (D) the consummation of the transactions described in the
Plan (i.e., the property transfers and the issuance of the securities provided
therein), (E) a transfer of the Property pursuant to an involuntary foreclosure
or similar action arising from a default by the Partnership with respect to its
obligations under its indebtedness, and (F) a transfer of the Property pursuant
to a consensual foreclosure or similar action (including, without limitation, a
deed in lieu of foreclosure) arising from a default by the Partnership with
respect to its obligations under its indebtedness provided that, in the case of
a consensual foreclosure or deed in lieu of foreclosure by reason of a default
under the New Notes (as defined in the Plan), the default is a bona fide default
and the foreclosure or deed in lieu of foreclosure is not a collusive
transaction between the holders of the New Notes and the General Partner
attributable to any commonality of ownership between the beneficial ownership of
the New Notes and the General Partner. As used in clause (F) above, the term New
Notes shall include refinancings in which there is a commonality of ownership
between the holder of such financing and the General Partner similar to that
anticipated with respect to the New Notes.
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<PAGE>
(c) "Approval Right Termination Date" means the earliest of
(i) January 2, 2001, (ii) the date on which the Upper Tier Partnership no longer
holds any partnership interest in the Limited Partner as a result of the
authorized exercise of the Purchase Right or the Put Right (as defined in the
Agreement of Limited Partnership of the Limited Partner) or pursuant to such
other transaction which does not constitute an "Adverse Transaction" under the
Agreement of Limited Partnership of the Limited Partner, (iii) the date on which
the Limited Partner no longer holds a Partnership Interest in the Partnership
pursuant to a transaction which does not constitute an "Adverse Transaction"
under the Agreement of Limited Partnership of the Limited Partner, (iv) the date
on which JMB LP no longer holds any partnership interest in the Upper Tier
Partnership, and (v) the Default Date.
(d) "Capital Contribution" means, with respect to any Partner,
any cash, cash equivalents or the gross asset value of the Property, as
determined by the General Partner in its sole and absolute discretion (except as
otherwise provided in this Agreement), which such Partner contributes or is
deemed to contribute to the Partnership pursuant to Article III hereof.
(e) "Certificate" means the Certificate of Limited Partnership
of the Partnership filed in the Office of the Secretary of State of Delaware, as
such certificate may be amended and/or restated from time to time.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time (or any corresponding provisions of succeeding law).
(g) "Contributed Debt" means $119,940,916 of the undivided
$280,000,000 portion of the principal amount of the Existing Notes (as such term
is defined in the Plan) contributed by the REIT to the Limited Partner pursuant
to the Debt Contribution Agreement.
(h) "Debt Contribution Agreement" shall have the meaning set
forth in the Recitals to this Agreement.
(i) "Debtors" shall have the meaning set forth in the Recitals
to this Agreement.
(j) "Default Date" shall have the meaning set forth in the
Agreement of Limited Partnership of the Limited Partner dated as of the date
hereof.
(k) "Distribution" means any distribution pursuant to Articles
IV or XI hereof.
(l) "Entity" means any general partnership, limited
partnership, corporation, joint venture, trust, business trust, real estate
investment trust, limited liability company, cooperative or association.
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<PAGE>
(m) "Fiscal Year" means (i) the period commencing on the
Effective Date or any subsequent January 1 and ending on the earlier to occur of
(A) the next December 31 or (B) the date on which all assets of the Partnership
are distributed pursuant to Article IX hereof and the Certificate has been
cancelled pursuant to the Act.
(n) "General Partner" means 237 GP Corp., a Delaware
corporation, in its capacity as General Partner hereunder and all other Persons
hereafter being or acting as a general partner of the Partnership, individually
and collectively.
(o) "Indemnitee" means (i) any Person made a party to a
proceeding by reason of (A) such Person's status as (1) the General Partner, (2)
a stockholder, director, trustee or officer of the Partnership or the General
Partner, or (3) a director, trustee or officer of any other Entity, each Person
serving in such capacity at the request of the Partnership or the General
Partner, or (B) his or its liabilities, pursuant to a loan guarantee or
otherwise, for any indebtedness of the Partnership (including, without
limitation, any indebtedness which the Partnership has assumed or taken assets
subject to); and (ii) such other Persons (including affiliates of the General
Partner to the Partnership) as the General Partner may designate from time to
time (whether before or after the event giving rise to potential liability), in
its sole and absolute discretion.
(p) "JMB LP" means JMB/NYC Office Building Associates, L.P.,
an Illinois limited partnership.
(q) "Limited Partner" shall have the meaning set forth in the
Preamble to this Agreement.
(r) "Net Cash Flow" means the excess of all cash receipts of
any kind received by the Partnership over the sum of the amounts of (i)
Operating Expenses, and (ii) any reserves established by the General Partner.
(s) "Operating Expenses" means all cash expenses, costs, debts
and disbursements of every kind and nature which the Partnership shall pay or
become obligated to pay in connection with the business of the Partnership or
the performance of the General Partner's duties and obligations under this
Agreement, including, without limitation, debt service, audit and legal expenses
and management fees.
(t) "Partners" means the General Partner and the Limited
Partner, where no distinction is required by the context in which the terms is
used herein. "Partner" means any one of the Partners.
(u) "Partnership" means 237 Park Partners, L.P., a Delaware
limited partnership.
(v) "Partnership Interest(s)" means that ownership interest of
a Partner, expressed as a percentage, in the Partnership's profits and losses,
other items of income, gain, losses, deductions, expenses and credits, and
distributions of net cash receipts at any
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<PAGE>
particular time, including the right of such Partner to any and all benefits to
which a Partner may be entitled as provided in this Agreement and under the Act,
together with the obligation of such Partner to comply with all the terms and
provisions of this Agreement and the Act. The Partnership Interest of each
Partner is set forth on Exhibit A.
(w) "Person" means any individual, corporation, company,
partnership, joint venture, trust, association, unincorporated organization,
other entity or group, or any domestic or foreign national, state or municipal
or other local government or multi-national body any subdivision, agency,
commission or authority thereof.
(x) "Plan" shall have the meaning set forth in the Recitals to
this Agreement.
(y) "Property" means 237 Park Avenue, New York, New York.
(z) "Properties" means the Property and 1290 Avenue of the
Americas, New York, New York.
(aa) "Property Contribution Agreement" shall have the meaning
set forth in the Recitals to this Agreement.
(ab) "REIT" shall have the meaning set forth in the Recitals
to this Agreement.
(aa) "Upper Tier Partnership" means 237/1290 Upper Tier
Associates, L.P., a Delaware limited partnership.
ARTICLE II
ORGANIZATIONAL MATTERS
2.1 Formation. The General Partner and the Limited Partner
hereby agree to form the Partnership under and pursuant to the Act. Except as
expressly provided in this Agreement, the rights and obligations of the Partners
and the administration and termination of the Partnership shall be governed by
the Act.
2.2 Certificates The General Partner shall file, record and
publish such certificates and other documents as may be necessary and
appropriate to comply with the requirements for the organization and operation
of a limited partnership under the Act.
2.3 Foreign Qualifications. In the event that the business of
the Partnership is carried on or conducted in any state other than the State of
Delaware, then the parties agree that the Partnership shall be qualified to
conduct business in accordance with the laws of each such other state in which
business is conducted by the Partnership. The parties agree to execute such
other and further documents as may be necessary or appropriate to permit the
General Partner to qualify the Partnership, or otherwise to comply with
requirements for a
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limited partnership to conduct business, in each such state. The General Partner
shall execute and file in the proper offices such certificates as may be
required by the Assumed Name Act or similar law in effect in the counties and
other governmental jurisdictions in which the Partnership may elect to conduct
business.
2.4 Name. The name of the Partnership is "237 Park Partners,
L.P." The business of the Partnership shall be conducted under the name listed
above or under such other names as the General Partner deems appropriate. The
General Partner, in its sole discretion may, upon five days' prior written
notice to the Limited Partner, change the name of the Partnership.
2.5 Registered Office and Agent; Principal Office. The address
of the registered office of the Partnership in the State of Delaware and the
name and address at the registered agent for service of process on the
Partnership in the State of Delaware is The Corporation Trust Company, 1029
Orange Street, Wilmington (New Castle County), Delaware 19801. The principal
office of the Partnership shall be c/o Victor Capital Group, L.P., 885 Third
Avenue -- 12th Floor, New York, NY 10022, Attn: John Klopp or such other place
as the General Partner may from time to time designate by notice to the Limited
Partner. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems advisable.
2.6 Purpose and Business. The purpose and nature of the
business to be conducted by the Partnership is to engage in the following
activities: to acquire, hold, own, develop, construct, improve, maintain,
operate, sell, lease, transfer, encumber, convey, exchange, and otherwise
dispose of or deal with the Property; to acquire, hold, own, develop, construct,
improve, maintain, operate, sell, lease, transfer, encumber, convey, exchange,
and otherwise dispose of or deal with real and personal property of all kinds;
to undertake such other activities as may be necessary, advisable, desirable or
convenient to the business of the Partnership; to engage in such other ancillary
activities as shall be necessary or desirable to effectuate the foregoing
purposes; and to engage in such activities as are consistent with the powers
described in the proviso in Section 2.7 hereof. The Partnership shall have all
powers necessary or desirable to accomplish the purposes enumerated. In
connection with the foregoing, but subject to all of the terms, covenants,
conditions and limitations contained in this Agreement and any other agreement
entered into by the Partnership, the Partnership shall have full power and
authority to enter into, perform, and carry out contracts of any kind, to borrow
money and to issue evidences of indebtedness, whether or not secured by
mortgage, trust deed, pledge or other lien, and, directly or indirectly, to
acquire and construct additional properties necessary or useful in connection
with its business.
2.7 Powers. The Partnership is empowered to do any and all
acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described herein and for the protection and benefit of the Partnership.
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2.8 Term. The term of the Partnership shall commence on the
date hereof and shall continue until December 31, 2099, unless the Partnership
is dissolved sooner pursuant to any provision of this Agreement.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Capital Contributions of the General Partner. The General
Partner has made a Capital Contribution of One Dollar ($1) in cash to the
Partnership.
3.2 Capital Contributions. Pursuant to the Plan, the Debt
Contribution Agreement and the Property Contribution Agreement, on the Effective
Date (as such term is defined in the Plan), the Limited Partner shall make a
Capital Contribution of the Contributed Debt and the Property (subject to the
liabilities described in the Property Contribution Agreement) to the
Partnership. The Partnership and the Limited Partner hereby agree that the value
of the Contributed Debt is $119,940,916 and of the Property is $42,836.
3.3 Other Matters Relating to Capital Contributions.
A. Except as otherwise provided by the terms of this
Agreement, no Partner shall be entitled to withdraw, or to a return of,
any part of its Capital Contribution, or to receive property or assets
other than cash in return thereof, and the General Partner shall not be
liable to the Limited Partner for a return of its Capital
Contributions.
B. No Partner shall be entitled to priority over any other
Partner, either with respect to a return of his Capital Contribution,
or to allocations of taxable income, gains, losses or credits, or to
distributions, except as provided in this Agreement.
C. No interest shall be paid on Capital Contributions.
D. No Partner shall be obligated to make any further Capital
Contribution to the Partnership.
3.4 Capital Accounts. A separate capital account shall be
established for each Partner on the books of the Partnership on the dates on
which such Partner makes its Capital Contributions, as provided herein. Each
such capital account will thereafter be maintained on the books of the
Partnership. Each Partner's capital account will be increased by that Partner's
Capital Contributions, advances and allocation of income and gain and decreased
by that Partner's distributions and allocation of losses.
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ARTICLE IV
DISTRIBUTIONS OF NET CASH FLOW
4.1 Regular Distributions. Subject to Article XI, the General
Partner shall cause the Partnership to distribute from time to time as
determined by the General Partner, but in any event not less frequently than
quarterly, Net Cash Flow. Distributions of Net Cash Flow shall be made to the
Partners in accordance with their respective Partnership Interests.
4.2 Qualifications of the REIT as a Real Estate Investment
Trust. The General Partner shall use its best efforts to cause the Partnership
to distribute sufficient amounts under this Article IV to enable the Limited
Partner to make sufficient distributions to its general partner, the REIT, to
pay stockholder dividends that will (i) satisfy the requirements for qualifying
as a real estate investment trust under the Code and Regulations ("REIT
Requirements"), and (ii) avoid any federal income or excise tax liability of the
General Partner or the REIT, provided, however, the General Partner shall not be
bound to comply with this covenant to the extent such distributions would (i)
violate applicable Delaware law or (ii) contravene the terms of any notes,
mortgages or other types of debt obligations which the Partnership may be
subject to in conjunction with borrowed funds.
ARTICLE V
ALLOCATIONS OF PROFITS AND LOSSES
All items of income, gain, loss or deduction for any Fiscal
Year shall be allocated to the Partners in accordance with their respective
Partnership Interests.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER
6.1 Management.
A. Except as otherwise expressly provided in this Agreement,
all management powers over the business and affairs of the Partnership are and
shall be exclusively vested in the General Partner, and, except as provided in
Sections 6.1E and 10.3 and 10.4 hereof, the Limited Partner shall not have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partner with or without cause. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner shall have, subject to Section 6.1E hereof,
full power and authority to do all things deemed necessary or desirable by it to
conduct the business of the
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Partnership, to exercise all powers and to effectuate the purposes set forth in
Section 2.6 hereof, including, without limitation:
(1) (a) the making of any expenditures, the
lending or borrowing of money, including,
without limitation, making prepayments on
loans and borrowing money to permit the
Partnership to make distributions to its
Partners in such amounts as will permit the
Limited Partner's general partner, the REIT
(so long as the REIT qualifies as a real
estate investment trust) to avoid the
payment of any federal income tax
(including, for this purpose, any excise tax
pursuant to Section 4981 of the Code) and to
make distributions to its stockholders in
amounts sufficient to permit the REIT to
maintain real estate investment trust
status, (b) the assumption or guarantee of,
or other contracting for, indebtedness and
other liabilities, (c) the issuance of
evidence of indebtedness (including the
securing of the same by deed, mortgage, deed
of trust or other lien or encumbrance on the
Partnership's assets) and (d) the incurring
of any obligations it deems necessary for
the conduct of the activities of the
Partnership;
(2) subject to the provisions of Article X
hereof, the making of tax, regulatory and
other filings, or rendering of periodic or
other reports to governmental or other
agencies having jurisdiction over the
business or assets of the Partnership;
(3) the acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or
exchange of any assets of the Partnership
(including the exercise or grant of any
conversion, option, privilege, or
subscription right or other right available
in connection with any assets at any time
held by the Partnership) or the merger or
other combination of the Partnership with or
into another entity;
(4) the use of the assets of the Partnership
(including, without limitation, cash on
hand) for any purpose consistent with the
terms of this Agreement and on any terms it
sees fit, including, without limitation, the
financing of the conduct of the operations
of the General Partner, the Partnership or
any of the Partnership's subsidiaries, the
lending of funds to other Persons
(including, without limitation, the
subsidiaries of the Partnership and/or the
General Partner) and the repayment of
obligations of the Partnership and its
subsidiaries and any other Person in which
it has an equity investment, and the making
of capital contributions to the
Partnership's subsidiaries;
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(5) the management, operation, expansion,
development, construction, leasing,
landscaping, repair, alteration, demolition
or improvement of any real property or
improvements owned by the Partnership or any
subsidiary of the Partnership;
(6) the negotiation, execution, and performance
of any contracts, conveyances or other
instruments that the General Partner
considers useful or necessary to the conduct
of the Partnership's operations or the
implementation of the General Partner's
powers under this Agreement, including (i)
contracting with property managers, leasing
agents, contractors, developers,
consultants, accountants, legal counsel,
other professional advisors and other
agents, and (ii) the payment of such related
expenses and compensation out of the
Partnership's assets;
(7) the distribution of Partnership cash or
other Partnership assets in accordance with
this Agreement;
(8) holding, managing, investing and reinvesting
cash and other assets of the Partnership;
(9) the collection and receipt of revenues and
income of the Partnership;
(10) the establishment of one or more divisions
of the Partnership, the selection and
dismissal of employees of the Partnership
(including, without limitation, employees
having titles such as "president," "vice
president," "secretary" and "treasurer" of
the Partnership), and agents, outside
attorneys, accountants, consultants and
contractors of the Partnership, and the
determination of their compensation and
other terms of employment or engagement;
(11) the maintenance of such insurance for the
benefit of the Partnership and the Partners
as it deems necessary or appropriate;
(12) the formation of, or acquisition of an
interest in, and the contribution of
property to, any further limited or general
partnerships, joint ventures or other
relationships that it deems desirable
(including, without limitation, the
acquisition of interests in, and the
contributions of property to, its
subsidiaries and any other Person in which
it has an equity investment from time to
time);
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(13) the control of any matters affecting the
rights and obligations of the Partnership,
including the settlement, compromise,
submission to arbitration or any other form
of dispute resolution, or abandonment of,
any claim, cause of action, liability, debt
or damages, due or owing to or from the
Partnership, the commencement or defense of
suits, legal proceedings, administrative
proceedings, arbitration or other forms of
dispute resolution, and the representation
of the Partnership in all suits or legal
proceedings, administrative proceedings,
arbitrations or other forms of dispute
resolution, the incurring of legal expenses,
and the indemnification of any Person
against liabilities and contingencies to the
extent permitted by law;
(14) the undertaking of any action in connection
with the Partnership's direct or indirect
investment in its subsidiaries or any other
Person (including, without limitation, the
contribution or loan of funds by the
Partnership to such Persons);
(15) the determination of the fair market value
of any Partnership property distributed in
kind using such reasonable method of
valuation as the General Partner may adopt;
(16) the exercise, directly or indirectly,
through any attorney-in-fact acting under a
general or limited power of attorney, of any
right, including the right to vote,
appurtenant to any asset or investment held
by the Partnership;
(17) the exercise of any of the powers of the
General Partner enumerated in this Agreement
on behalf of or in connection with any
subsidiary of the Partnership or any other
Person in which the Partnership has a direct
or indirect interest, or jointly with any
such subsidiary or other Person;
(18) the exercise of any of the powers of the
General Partner enumerated in this Agreement
on behalf of any Person in which the
Partnership does not have an interest
pursuant to contractual or other
arrangements with such Person;
(19) the making, execution and delivery of any
and all deeds, leases, notes, mortgages,
deeds of trust, security agreements,
conveyances, contracts, guarantees,
warranties, indemnities, waivers, releases
or legal instruments or agreements in
writing necessary or appropriate, in the
judgment of the General Partner, for the
accomplishment of any of the foregoing;
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(20) the issuance of additional Partnership
Interests, as appropriate, in connection
with Capital Contributions by Partners or
additional limited partners; and
(21) The opening of bank accounts on behalf of,
and in the name of, the Partnership and its
subsidiaries.
B. In connection with such management and subject to any
limitations set forth elsewhere in this Agreement, the General Partner:
1. Shall maintain or cause to be maintained, at the expense of
the Partnership, complete and accurate records of all correspondence,
documents or instruments of any nature relating to the Partnership
business. Such records, together with such supporting evidence thereof
as is in the control and possession of the Partnership or of the
General Partner, shall be kept in the principal office of the General
Partner or of the Partnership for such periods as the General Partner
deems appropriate. The Partners and/or their authorized
representatives, shall have the right to inspect and/or copy any or all
of the above-described records during normal business hours.
2. Shall execute any and all documents or instruments of any
kind which the General Partner may reasonably deem appropriate in
carrying out the purposes of the Partnership.
3. Shall maintain, or cause to have maintained, at the expense
of the Partnership, adequate records and accounts of all transactions,
operations and expenditures and shall furnish or cause to be furnished
the Partners with annual statements of account as of the end of each
calendar year.
C. The Limited Partner agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Limited Partner (except as provided in Section 6.1E hereof).
Notwithstanding any other provision of this Agreement, to the fullest extent
permitted under the Act or other applicable law, rule or regulation, the
execution, delivery or performance by the General Partner or the Partnership of
any agreements authorized or permitted under this Agreement shall not constitute
a breach by the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partner or any other Persons under this Agreement or
of any duty stated or implied by law or equity.
D. Except as provided in Section 6.1E, in exercising its
authority under this Agreement, the General Partner may, but shall be under no
obligation to, take into account the tax consequences to any Partner of any
action taken by it; provided, that if the General Partner decides to refinance
(directly or indirectly) any outstanding indebtedness of the Partnership, the
General Partner shall, until the Approval Right Termination Date, use
commercially reasonable efforts to structure such refinancing in a manner that
allows all of the Partnership's non-recourse indebtedness to continue to be
included in the tax basis of the
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Limited Partners' Partnership Interests. The General Partner and the Partnership
shall not have liability to the Limited Partner or any partner of the Limited
Partner under any circumstances as a result of an income tax liability incurred
by the Limited Partner or its partners as a result of an action (or inaction) by
the General Partner taken pursuant to its authority under and in accordance with
this Agreement.
E. Notwithstanding anything to the contrary set forth in this
Agreement, until the Approval Right Termination Date, the General Partner shall
not, without the prior written consent of the Limited Partner (which may be
given or withheld in its sole and absolute discretion), cause or permit (to the
extent within the General Partner's reasonable control) any Adverse Transaction
to occur, provided however that the General Partner shall be under no obligation
to commence litigation or to incur any expense (unless JMB LP shall fund such
expense) in order to avoid or prevent an Adverse Transaction from occurring.
6.2 Outside Activities of the General Partner. The General
Partner shall devote such time and effort to the business of the Partnership as
the General Partner shall reasonably deem necessary to promote adequately the
interests of the Partnership and the interests of the Partners; however, it is
specifically understood and agreed that the General Partner shall not be
required to devote full time to the business of the Partnership and that the
Partners and their respective stockholders, partners, directors, officers and
affiliates may at any time and from time to time engage in and possess interests
in other business ventures of any and every type and description including
business interests and activities that are in direct competition with the
Partnership or that are enhanced by the activities of the Partnership, and
neither the Partnership nor any Partner shall by virtue of this Agreement or
otherwise have any right, title or interest in or to such independent ventures.
6.3 Employment of Experts or Advisors. The General Partner may
employ or retain such counsel, accountants, appraisers or other experts or
advisors as the General Partner may reasonably deem appropriate for the purpose
of discharging its duties hereunder, and shall be entitled to pay the fees of
any such persons from the funds of the Partnership. The General Partner may act,
and shall be protected in acting in good faith, on the opinion or advice of, or
information obtained from, any such counsel, accountant, appraiser or other
expert or advisor, whether retained or employed by the Partnership, the General
Partner, or otherwise, in relation to any matter connected with the
administration or operation of the business and affairs of the Partnership.
6.4 Contracts with Affiliates.
A. The Partnership may lend or contribute funds or other
assets to its subsidiaries or other entities in which it has an equity
investment and such entities may borrow funds from the Partnership, on terms and
conditions established in the sole and absolute discretion of the General
Partner. The foregoing authority shall not create any right or benefit in favor
of any subsidiary or any other entity.
B. Except as provided in Section 6.1E, the Partnership may
transfer assets to joint ventures, other partnerships, corporations or other
business entities in which it is or
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<PAGE>
thereby becomes a participant upon such terms and subject to such conditions
consistent with this Agreement and applicable law as the General Partner, in its
sole and absolute discretion, believes are advisable.
C. The General Partner, in its sole and absolute discretion
and without the approval of the Limited Partners, may propose and adopt, on
behalf of the Partnership, employee benefit plans, stock option plans, and
similar plans funded by the Partnership for the benefit of employees of the
General Partner, the Partnership, subsidiaries of the Partnership or any
affiliate of any of them in respect of services performed, directly or
indirectly, for the benefit of the Partnership, the General Partner, or any
subsidiaries of the Partnership.
D. The General Partner is expressly authorized to enter into,
in the name and on behalf of the Partnership, a "right of first opportunity" or
"right of first offer" arrangement, non-competition agreements and other
conflict avoidance agreements with various affiliates of the Partnership and the
General Partner, on such terms as the General Partner, in its sole and absolute
discretion, believes are advisable.
6.5 Other Matters Concerning the General Partner.
Notwithstanding any other provisions of this Agreement (other than Section 6.1E)
or the Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the REIT to
continue to qualify as a REIT; or (ii) to avoid the General Partner or the REIT
incurring any taxes under Section 857 or Section 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.
6.6 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any party dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority,
without consent or approval of any other Partner or party, to encumber, sell or
otherwise use in any manner any and all assets of the Partnership and to enter
into any contracts on behalf of the Partnership, and take any and all actions on
behalf of the Partnership, and such party shall be entitled to deal with the
General Partner as if the General Partner were the Partnership's sole party in
interest, both legally and beneficially. Each Limited Partner hereby waives any
and all defenses or other remedies which may be available against such party to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any party dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every party relying thereon or claiming thereunder
that (i) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect; (ii) the party
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership; and
(iii) such certificate, document or
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<PAGE>
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
7.1 Limitation of Liability. The Limited Partner shall have no
liability under this Agreement except as expressly provided in this Agreement,
or under the Act.
7.2 Management of Business. The Limited Partner shall not take
part in the operation, management or control (within the meaning of the Act) of
the Partnership's business, transact any business in the Partnership's name or
have the power to sign documents for or otherwise bind the Partnership. The
transaction of any such business by the General Partner, any of its affiliates
or any officer, director, employee, partner, agent or trustee of the General
Partner, the Partnership or any of their affiliates, in their capacity as such,
shall not affect, impair or eliminate the limitations on the liability of the
Limited Partner under this Agreement.
7.3 Outside Activities of Limited Partner. The Limited Partner
and any officer, director, partner, employee, agent, trustee, affiliate or
shareholder of the Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities that are in direct
competition with the Partnership or that are enhanced by the activities of the
Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of the Limited Partner. No
Limited Partner nor any other Person shall have any rights by virtue of this
Agreement or the Partnership relationship established hereby in any business
ventures of any other Person and such Person shall have no obligation pursuant
to this Agreement to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
7.4 Rights of Limited Partners Relating to the Partnership
A. In addition to the other rights provided by this Agreement
or by the Act, and except as limited by Section 7.4B hereof, each Limited
Partner shall receive from the Partnership the following:
(1) copies of all annual and quarterly reports
of the Partnership;
(2) a copy of the Partnership's federal, state
and local income tax returns for each
Partnership Year; and
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<PAGE>
(3) a copy of this Agreement and the Certificate
and all amendments and/or restatements
thereto, together with executed copies of
all powers of attorney pursuant to which
this Agreement, the Certificate and all
amendments and/or restatements thereto have
been executed.
B. In addition, each Limited Partner shall have the right, for
a purpose reasonably related to such Limited Partner's interest as a limited
partner in the Partnership, upon written demand with a statement of the purpose
of such demand:
(1) to obtain a current list of the name and
last known business, residence or mailing
address of each Partner; and
(2) to obtain true and full information
regarding the amount of cash and a
description and statement of any other
property or services contributed by each
Partner and which each Partner has agreed to
contribute in the future, and the date on
which each became a Partner.
C. Notwithstanding any other provision of this Section 7.4,
the General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information (other than information partners of
the Limited Partner require in order to comply with law, including making proper
tax filings) that (i) the General Partner reasonably believes to be in the
nature of trade secrets or other information, the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or its business; or (ii) the
Partnership is required by law or by agreements with an unaffiliated third party
to keep confidential.
ARTICLE VIII
AMENDMENTS OF LIMITED PARTNERSHIP AGREEMENT
This Agreement may be amended only by instrument in writing
signed by the General Partner and the Limited Partner.
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ARTICLE IX
LIMITATION ON SUBSTITUTION AND
ASSIGNMENT OF A PARTNERS INTEREST
9.1 Transfer.
A. The term "Transfer," when used in this Article IX with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which the General Partner purports to assign all or any part of its Partnership
Interest to another Person or by which a Limited Partner purports to assign all
or any part of its Partnership Interest to another Person.
B. No Partnership Interest shall be Transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article IX. Any Transfer or purported Transfer of a Partnership Interest not
made in accordance with this Article IX shall be null and void.
9.2 Limited Partner Right to Transfer. No Limited Partner
shall sell, assign, transfer or convey all or any portion of its Partnership
Interest to any person or entity without the prior written consent of the
General Partner. No Limited Partner shall pledge, encumber or place a lien on
its Partnership Interest without the prior written consent of the General
Partner. No successor to any of the Limited Partner's Partnership Interests
shall become a substituted limited partner, as that term is used in the Act,
without the prior written consent of the General Partner. Any consent from the
General Partner required under this Section 9.2 may be granted or withheld by
the General Partner in its sole discretion.
9.3 Transferred Partnership Interests Subject to This
Agreement. Sales, assignments, transfers, conveyances and pledges of Partnership
Interests pursuant to this Article IX shall be subject to, and the transferee or
pledgee shall acquire the transferred Partnership Interests subject to, all of
the terms and provisions of this Agreement.
9.4 Insolvency, Dissolution or Bankruptcy of a Limited
Partner. The insolvency, dissolution or bankruptcy of a Limited Partner shall
not terminate the Partnership. In such event, the trustee, representative, or
other successor in interest of such Limited Partner shall have only the rights
of an assignee of a Limited Partner which does not become a substituted limited
partner under the Act.
9.5 Transfers by the General Partner.
A. The General Partner may Transfer all or any part of its
Partnership Interest or withdraw as General Partner, in its sole discretion and
without the consent of any Limited Partners; provided that the General Partner
may withdraw as general partner only in connection with a Transfer of its
Partnership Interest and immediately following the
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admission of a successor General Partner, as general partner, in accordance with
this Article IX.
B. In the event the General Partner withdraws as general
partner in accordance with clause A. above, its general partner interest shall
immediately be converted into a limited partner interest and the General Partner
shall be entitled to receive distributions from the Partnership and the share of
net income, net losses, any other items, gain, loss, deduction and credit that
were otherwise attributable to its general partner interest.
9.6 Admission of Successor General Partner. A successor to all
of the General Partner Interest pursuant to this Section IX who is proposed to
be admitted as a successor General Partner shall be admitted to the Partnership
as the General Partner, effective immediately prior to such Transfer. Any such
transferee shall carry on the business of the Partnership without dissolution.
In each case, the admission shall be subject to the successor General Partner
executing and delivering to the Partnership an acceptance of all of the terms
and conditions of this Agreement and such other documents or instruments as may
be required to effect the admission.
ARTICLE X
BOOKS, RECORDS, ACCOUNTING, REPORTS AND TAX MATTERS
10.1 Records and Accounting. The General Partner shall keep or
cause to be kept at the principal office of the Partnership those records and
documents required to be maintained by the Act and other books and records
deemed by the General Partner to be appropriate with respect to the
Partnership's business, including, without limitation, all books and records
necessary to comply with applicable REIT Requirements and to provide to the
Limited Partners any information, lists and copies of documents required to be
provided pursuant to Sections 7.4 and 10.3 hereof. Any records maintained by or
on behalf of the Partnership in the regular course of its business may be kept
on, or be in the form of, punch cards, magnetic tape, photographs, micrographics
or any other information storage device, provided that the records so maintained
are convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial and tax
reporting purposes, on an accrual basis in accordance with generally accepted
accounting principles, or such other basis as the General Partner determines to
be necessary or appropriate.
10.2 Fiscal Year. The fiscal year of the Partnership shall be
the calendar ----------- year.
10.3 Reports.
A. As soon as practicable, but in no event later than ninety
(90) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner as of the close of the Partnership
Year, an annual report containing financial
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statements of the Partnership, or of the General Partner or the REIT if such
statements are prepared solely on a consolidated basis with the General Partner
or the REIT, for such Partnership Year, presented in accordance with GAAP, such
statements to be audited by Deloitte & Touche LLP or another nationally
recognized firm of independent public accountants selected by the General
Partner and, until the Approval Right Termination Date, reasonably acceptable to
JMB LP, provided that the failure of JMB LP to approve an independent public
accountant shall not be deemed to be unreasonable if such accountant fails to
confirm in writing to the Partnership and JMB LP that it will follow the
allocations of Partnership non-recourse liabilities as provided herein.
B. As soon as practicable, but in no event later than
forty-five (45) days after the close of each calendar quarter (except the last
calendar quarter of each calendar year), the General Partner shall cause to be
mailed to each Limited Partner a report containing unaudited financial
statements as of the last day of the calendar quarter of the Partnership, or of
the General Partner or the REIT, if such statements are prepared solely on a
consolidated basis with the General Partner or the REIT, and such other
information as may be required by applicable law or regulation, or as the
General Partner determines to be appropriate.
10.4 Preparation of Tax Returns. The General Partner shall
arrange for the preparation and timely filing by the Partnership's accountants
of all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within sixty (60) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes. The Limited Partners, the
Upper Tier Limited Partnership (as a partner in the Limited Partners) and JMB LP
(as a partner in the Upper Tier Limited Partnership) shall be entitled to confer
with such accountants concerning all tax matters.
10.5 Tax Matters Partner.
A. The General Partner shall be the "tax matters partner" of
the Partnership (within the meaning of Section 6231(a)(7) of the Code) and shall
exercise such position on a reasonable basis and in accordance with Sections
6.1D and 6.1E. Pursuant to Section 6230(e) of the Code, upon receipt of notice
from the Internal Revenue Service of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the Internal Revenue Service with the name, address, taxpayer
identification number, and profit interest of each of the Limited Partners;
provided, that such information is provided to the Partnership by the Limited
Partners.
B. The taking of any action and the incurring of any expense
by the tax matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of the
tax matters partner and the provisions relating to indemnification of the
General Partner set forth in Section 12.1 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
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C. The tax matters partner shall receive no compensation for
its services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm to assist
the tax matters partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is reasonable.
10.6 Organizational Expenses. The Partnership shall elect to
deduct expenses, if any, incurred by it in organizing the Partnership ratably
over a sixty (60) month period as provided in Section 709 of the Code.
10.7 Withholding. Each Limited Partner hereby authorizes the
Partnership to withhold from such Limited Partner any amount of federal, state,
local, or foreign taxes that the General Partner determines that the Partnership
is required to withhold or pay with respect to any amount distributable or
allocable to such Limited Partner pursuant to this Agreement, including, without
limitation, any taxes required to be withheld or paid by the Partnership
pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any amounts withheld
shall be treated as having been distributed to such Limited Partner.
10.8 Tax Elections. Except as otherwise provided herein, the
General Partner shall, in its sole and absolute discretion, determine whether to
make any available election pursuant to the Code. The General Partner shall
elect the "remedial method" of making Section 704(c) allocations pursuant to
Regulations Section 1.704-3 with respect to property contributed pursuant to the
Property Contribution Agreement and shall not make the election under Section
754 of the Code prior to January 1, 1997, unless otherwise requested by the
Limited Partner and in the event of any such request, the General Partner shall
comply with the request of the Limited Partner as to the making of Section
704(c) allocations and the making (or revocation) of a Section 754 election. The
General Partner shall have the right to seek to revoke any tax election it makes
(other than (i) the election to use the remedial method of making the Section
704(c) allocations described in this Section 10.8 or another method of making
Section 704(c) allocations requested by the Limited Partner and (ii) the
election under Section 754 of the Code), upon the General Partner's
determination, in its sole and absolute discretion, that such revocation is in
the best interests of the Partners.
ARTICLE XI
DISSOLUTION
11.1 Dissolution. The Partnership shall not be dissolved by
the admission of substituted Limited Partners or additional Limited Partners or
by the admission of a successor General Partner in accordance with the terms of
this Agreement. In the event of the withdrawal of the General Partner, any
successor General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs shall be wound up, only upon the
first to occur of any of the following:
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A. the expiration of its term as provided in Section 2.8
hereof;
B. an event of withdrawal of the General Partner, as defined
in the Act, unless, within ninety (90) days after such event of withdrawal all
of the remaining Partners agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
successor General Partner, provided that a withdrawal of the General Partner in
connection with a Transfer of its Partnership Interest shall be governed by the
provisions of Section 9.5A hereof;
C. (i) prior to the Approval Right Termination Date, an
election to dissolve the Partnership made by the General Partner, with the
consent of the Limited Partner (which may be given or withheld in its sole and
absolute discretion), (ii) after the Approval Right Termination Date, an
election to dissolve the Partnership made by the General Partner, without the
consent of the Limited Partner;
D. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
E. the sale of all or substantially all of the assets and
properties of the Partnership.
11.2 Liquidation. In the event of dissolution of the
Partnership pursuant to Section 11.1 where the business of the Partnership is
not reconstituted, liquidation shall occur. The General Partner shall supervise
the liquidation of the Partnership unless a wrongful act of the General Partner
dissolved the Partnership or the Limited Partner elects another Partner to do
so. In the event of any liquidation of the Partnership under this Agreement or
the Act, except as otherwise provided herein, the proceeds of liquidating the
Partnership shall be applied and distributed in the following order of priority
(each item to be satisfied in full in the order listed below before any of such
proceeds are allocated to the subsequent item):
(a) First, to creditors, including Partners who are creditors
(to the extent not otherwise prohibited by law), in satisfaction of
liabilities of the Partnership (whether by payment or the making of
reasonable provision for payment therefor), other than liabilities for
which reasonable provision for payment has been made and liabilities
for interim distributions to Partners and distributions to Partners on
withdrawal; then
(b) Second, to the setting up of any reserves which the
supervising Partner (or, if applicable, the liquidating trustee)
determines to be reasonably necessary for any contingent liabilities of
the Partnership or of any Partner arising out of, or in connection
with, a Partnership liability; then
(c) Finally, the balance, if any, to the Partners in
accordance with Article IV hereof.
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The General Partner shall not receive any compensation for any
services performed pursuant to this Article XI.
11.3 Rights of the Limited Partner. Except as otherwise
provided in this Agreement, the Limited Partner shall look solely to the assets
of the Partnership for the return of its Capital Contributions and shall have no
right or power to demand or receive property other than cash from the
Partnership. No Partner shall have priority over any other Partner as to the
return of its Capital Contributions, distributions, or allocations.
11.4 No Obligation to Contribute Deficit. If any Partner has a
deficit balance in its capital account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered a debt owed to
the Partnership or to any other Person for any purpose whatsoever.
ARTICLE XII
INDEMNIFICATION
12.1 To the fullest extent permitted by Delaware law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, reasonable attorneys' fees and other legal fees and expenses),
judgments, fines, settlements, and other amounts arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, that relate to the operations of the Partnership or the
General Partner as set forth in this Agreement, in which such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, except to
the extent it is finally determined by a court of competent jurisdiction, from
which no further appeal may be taken, that such Indemnitee's action constituted
intentional acts or omissions constituting willful misconduct or fraud. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guaranty or otherwise for any indebtedness of the
Partnership (including, without limitation, any indebtedness which the
Partnership has assumed or taken subject to), and the General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or
more indemnity agreements consistent with the provisions of this Article XII in
favor of any Indemnitee having or potentially having liability for any such
indebtedness. Any indemnification pursuant to this Article XII shall be made
only out of the assets of the Partnership, and neither the General Partner nor
any Limited Partner shall have any obligation to contribute to the capital of
the Partnership, or otherwise provide funds, to enable the Partnership to fund
its obligations under this Article XII.
12.2 Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding shall be paid or reimbursed by the Partnership in advance
of the final disposition of the proceeding.
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12.3 The indemnification provided by this Article XII shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity unless otherwise provided in a written
agreement pursuant to which such Indemnities are indemnified.
12.4 The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of the Indemnitees and such other
Persons as the General Partner shall determine, against any liability that may
be asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
12.5 In no event may an Indemnitee subject any of the Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
12.6 An Indemnitee shall not be denied indemnification in
whole or in part under this Article XII because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
12.7 The provisions of this Article XII are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Article XII or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this Article XII, as in effect immediately
prior to such amendment, modification, or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Notices. Notices hereunder shall be in writing and shall
be deemed to be delivered upon actual receipt or 72 hours following deposit in a
regularly maintained receptacle for the United States mail, registered or
certified mail, return receipt requested, with postage prepaid, and addressed to
the address of the addressee shown below, or to such other address of which any
party shall notify the other parties hereto, in accordance with the terms
hereof.
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If to the General Partner:
237 GP Corp.
c/o Victor Capital Group, L.P.
885 Third Avenue -- 12th Floor
New York, NY 10022
Attn: John Klopp
If to the Limited Partner:
237/1290 Lower Tier Associates, L.P.
c/o Victor Capital Group, L.P.
885 Third Avenue -- 12th Floor
New York, NY 10022
Attn: John Klopp
with a copy to:
JMB/NYC Office Building Associates, L.P.
900 North Michigan Avenue
Suite 1900
Chicago, Ilinois 60611
Attn: Mr. Stuart C. Nathan
13.2 Counterparts. This Agreement may be executed in multiple
counterparts, each to constitute an original, but all in the aggregate to
constitute one agreement as executed. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their heirs, legal representatives,
successors and permitted assigns.
13.3 Nature of Partnership Interest. The interest of each
Partner in this Partnership is personal property.
13.4 Insolvency Proceedings. No bankruptcy or insolvency
filing or proceeding in respect of the Partnership shall be made or commenced
without the consent of the General Partner, and the Partnership shall not
acquiesce, petition or otherwise invoke or cause any other person and/or entity
to invoke the process of the United States of America, any state or other
political subdivision thereof or any other jurisdiction, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government for the purpose of commencing or sustaining a case
against the Partnership under a federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Partnership or all or any part of
its property or assets or ordering the winding-up or liquidation of the affairs
of the Partnership, if such action has not been consented to by the General
Partner.
13.5 Titles and Captions. All article or section titles or
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or describe the scope
or intent of any provisions hereof.
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<PAGE>
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
13.6 Pronouns and Plurals. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
13.7 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
13.8 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
13.9 Creditors. Other than as expressly set forth herein with
respect to the Indemnitees, none of the provisions of this Agreement shall be
for the benefit of, or shall be enforceable by, any creditor of the Partnership.
13.10 Waiver. No failure by any party to insist upon the
strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach or any other covenant, duty,
agreement or condition.
13.11 Applicable Law. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware,
without regard to the principles of conflicts of laws thereof.
13.12 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
13.13 Entire Agreement. This Agreement contains the entire
understanding and agreement among the Partners with respect to the subject
matter hereof and supersedes any other prior written or oral understandings or
agreements among them with respect thereto.
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<PAGE>
IN WITNESS WHEREOF, this Agreement is executed by the General
Partner and the Limited Partner as of the date first above written.
237 PARK PARTNERS, L.P., a Delaware
limited partnership
By: 237 GP CORP., its general partner
By: /s/ Lee S. Neibart
Name: Lee S. Neibart
Title: President
237/1290 LOWER TIER ASSOCIATES, L.P.
By: Metropolis Realty Trust, Inc.,
its General Partner
By: /s/ Lee S. Neibart
Name: Lee S. Neibart
Title: President
[The remaining portion of this page
is intentionally left blank]
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Exhibit A
Entity Partnership Interest
237 GP Corp 1%
237/1290 Lower Tier Associates, L.P. 99%
C/M: 11764.0004 364998.8
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS............................................................. 1
ARTICLE II
ORGANIZATIONAL MATTERS.................................................. 5
2.1 Formation .................................................... 5
2.2 Certificates................................................... 5
2.3 Foreign Qualifications......................................... 5
2.4 Name .................................................... 6
2.5 Registered Office and Agent; Principal Office.................. 6
2.6 Purpose and Business........................................... 6
2.7 Powers .................................................... 6
2.8 Term .................................................... 7
ARTICLE III
CAPITAL CONTRIBUTIONS................................................... 7
3.1 Capital Contributions of the General Partner................... 7
3.2 Capital Contributions.......................................... 7
3.3 Other Matters Relating to Capital Contributions................ 7
3.4 Capital Accounts............................................... 7
ARTICLE IV
DISTRIBUTIONS OF NET CASH FLOW.......................................... 8
4.1 Regular Distributions.......................................... 8
4.2 Qualifications of the REIT as a Real Estate Investment Trust... 8
ARTICLE V
ALLOCATIONS OF PROFITS AND LOSSES....................................... 8
6.1 Management .................................................... 8
6.2 Outside Activities of the General Partner......................13
6.3 Employment of Experts or Advisors..............................13
6.4 Contracts with Affiliates......................................13
6.5 Other Matters Concerning the General Partner...................14
6.6 Reliance by Third Parties......................................14
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Page
ARTICLE VII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER...........................15
7.1 Limitation of Liability.......................................15
7.2 Management of Business........................................15
7.3 Outside Activities of Limited Partner.........................15
7.4 Rights of Limited Partners Relating to the Partnership........15
ARTICLE VIII
AMENDMENTS OF LIMITED PARTNERSHIP AGREEMENT.............................16
ARTICLE IX
LIMITATION ON SUBSTITUTION AND
ASSIGNMENT OF A PARTNERS INTEREST.......................................17
9.1 Transfer ....................................................17
9.2 Limited Partner Right to Transfer..............................17
9.3 Transferred Partnership Interests Subject to This Agreement....17
9.4 Insolvency, Dissolution or Bankruptcy of a Limited Partner.....17
9.5 Transfers by the General Partner...............................17
9.6 Admission of Successor General Partner.........................18
ARTICLE X
BOOKS, RECORDS, ACCOUNTING, REPORTS AND TAX MATTERS.....................18
10.1 Records and Accounting........................................18
10.2 Fiscal Year...................................................18
10.3 Reports ....................................................18
10.4 Preparation of Tax Returns....................................19
10.5 Tax Matters Partner...........................................19
10.6 Organizational Expenses.......................................20
10.7 Withholding...................................................20
ARTICLE XI
DISSOLUTION.............................................................20
11.1 Dissolution...................................................20
11.2 Liquidation...................................................21
11.3 Rights of the Limited Partner.................................22
11.4 No Obligation to Contribute Deficit...........................22
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Page
ARTICLE XII
INDEMNIFICATION.........................................................22
ARTICLE XIII
MISCELLANEOUS PROVISIONS................................................23
13.1 Notices ....................................................23
13.2 Counterparts..................................................24
13.3 Nature of Partnership Interest................................24
13.4 Insolvency Proceedings........................................24
13.5 Titles and Captions...........................................24
13.6 Pronouns and Plurals..........................................24
13.7 Further Action................................................25
13.8 Binding Effect................................................25
13.9 Creditors ....................................................25
13.10 Waiver ....................................................25
13.11 Applicable Law...............................................25
13.12 Invalidity of Provisions.....................................25
13.13 Entire Agreement.............................................25
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LIMITED PARTNERSHIP AGREEMENT
OF
237 PARK PARTNERS, L.P.
by and between
237 GP CORP.,
as General Partner
AND
237/1290 LOWER TIER ASSOCIATES, L.P.,
as Limited Partner
Dated: October 10, 1996
C/M: 11764.0004 364998.8
LIMITED PARTNERSHIP AGREEMENT OF
1290 PARTNERS, L.P.
(A Delaware Limited Partnership)
THIS AGREEMENT OF LIMITED PARTNERSHIP OF 1290 PARTNERS, L.P.
(the "Partnership"), dated as of October 10, 1996 (this "Agreement") is entered
into by and between 1290 GP Corp., a Delaware corporation (the "General
Partner"), and 237/1290 Lower Tier Associates, L.P., a Delaware limited
partnership (the "Limited Partner").
WHEREAS, the parties hereto desire to form a Delaware limited
partnership under the Revised Uniform Limited Partnership Act of the State of
Delaware and in accordance with the terms and conditions of the Joint Plan of
Reorganization of 237 Park Avenue Associates, L.L.C. and 1290 Associates, L.L.C.
(the "Debtors"), filed under title 11 of the United States Code, 11 U.S.C.
Sections 101 et seq. (the "Plan"); and
WHEREAS, the Limited Partner, the Partnership and Metropolis
Realty Trust, Inc., a Maryland corporation (the "REIT") are parties to the Debt
Contribution Agreement, dated as of October 10, 1996 ("the Debt Contribution
Agreement"), pursuant to which, among other things, the Limited Partner will
contribute to the Partnership the Contributed Debt (as hereinafter defined); and
WHEREAS, the Limited Partner, the Partnership and 237/1290
Upper Tier Associates, L.P., a Delaware limited partnership (the "Upper Tier
Partnership"), are parties to the Property Contribution Agreement, dated as of
October 10, 1996 (the "Property Contribution Agreement") pursuant to which,
among other things, the Limited Partner will contribute to the Partnership the
Property (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual covenants and
on the terms and conditions contained herein, and for other good, valid and
binding consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
Certain terms used in this Agreement shall have the meanings
designated below.
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<PAGE>
(a) "Act" means the Delaware Revised Uniform Limited
Partnership Act, as in effect on the date hereof as it may be amended from time
to time hereafter, or any successor law.
(b) "Adverse Transaction" means (i) any sale, disposition,
transfer or exchange of the Property, (ii) any release, discharge or reduction
of non-recourse indebtedness of the Partnership (other than through payment of
scheduled amortization, actions taken by a secured lender such as application of
insurance proceeds or condemnation awards or the exercise of remedies, or in the
case where the released indebtedness is concurrently being replaced with other
non-recourse indebtedness complying with clause (B) below), (iii) any
distribution of Partnership assets (other than distributions of cash and other
distributions by the Partnership in the ordinary course of business), or (iv)
any other transaction or agreement to which the Partnership is a party, if as a
result of any such transaction or agreement described in (i), (ii), (iii), or
(iv) above, JMB LP as a partner in the Upper Tier Partnership would be required
to recognize a material amount of taxable income or gain prior to the Approval
Right Termination Date. Adverse Transactions shall specifically exclude (A)
Partnership income derived in the ordinary course of the Partnership's business,
(B) non-recourse refinancing of the Property on commercially reasonable terms in
an aggregate amount together with any non-recourse financing encumbering 1290
Avenue of the Americas, New York, NY equal to not less than the lesser of
$325,000,000 or the amortized balance of the then existing non-recourse
financing encumbering the Properties (utilizing an amortization schedule no
shorter than twenty (20) years), (C) payment of amortization on non-recourse
financing encumbering the Property, provided that the outstanding balance of
non-recourse financing encumbering the Properties is not reduced below
$325,000,000, in the aggregate, as such amount would be reduced between the date
hereof and the Approval Right Termination Date assuming such amount is amortized
based on a twenty (20) year amortization schedule and except as otherwise
provided in the parenthetical of clause (ii) above (i.e., actions taken by a
secured lender such as applications of insurance proceeds or condemnation awards
or the exercise of remedies, or in the case where the released indebtedness is
concurrently being replaced with other non-recourse indebtedness complying with
clause (B) above), (D) the consummation of the transactions described in the
Plan (i.e., the property transfers and the issuance of the securities provided
therein), (E) a transfer of the Property pursuant to an involuntary foreclosure
or similar action arising from a default by the Partnership with respect to its
obligations under its indebtedness, and (F) a transfer of the Property pursuant
to a consensual foreclosure or similar action (including, without limitation, a
deed in lieu of foreclosure) arising from a default by the Partnership with
respect to its obligations under its indebtedness provided that, in the case of
a consensual foreclosure or deed in lieu of foreclosure by reason of a default
under the New Notes (as defined in the Plan), the default is a bona fide default
and the foreclosure or deed in lieu of foreclosure is not a collusive
transaction between the holders of the New Notes and the General Partner
attributable to any commonality of ownership between the beneficial ownership of
the New Notes and the General Partner. As used in clause (F) above, the term New
Notes shall include refinancings in which there is a commonality of ownership
between the holder of such financing and the General Partner similar to that
anticipated with respect to the New Notes.
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(c) "Approval Right Termination Date" means the earliest of
(i) January 2, 2001, (ii) the date on which the Upper Tier Partnership no longer
holds any partnership interest in the Limited Partner as a result of the
authorized exercise of the Purchase Right or the Put Right (as defined in the
Agreement of Limited Partnership of the Limited Partner) or pursuant to such
other transaction which does not constitute an "Adverse Transaction" under the
Agreement of Limited Partnership of the Limited Partner, (iii) the date on which
the Limited Partner no longer holds a Partnership Interest in the Partnership
pursuant to a transaction which does not constitute an "Adverse Transaction"
under the Agreement of Limited Partnership of the Limited Partner, (iv) the date
on which JMB LP no longer holds any partnership interest in the Upper Tier
Partnership, and (v) the Default Date.
(d) "Capital Contribution" means, with respect to any Partner,
any cash, cash equivalents or the gross asset value of the Property, as
determined by the General Partner in its sole and absolute discretion (except as
otherwise provided in this Agreement), which such Partner contributes or is
deemed to contribute to the Partnership pursuant to Article III hereof.
(e) "Certificate" means the Certificate of Limited Partnership
of the Partnership filed in the Office of the Secretary of State of Delaware, as
such certificate may be amended and/or restated from time to time.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time (or any corresponding provisions of succeeding law).
(g) "Contributed Debt" means $160,059,084 of the undivided
$280,000,000 portion of the principal amount of the Existing Notes (as such term
is defined in the Plan) contributed by the REIT to the Limited Partner pursuant
to the Debt Contribution Agreement.
(h) "Debt Contribution Agreement" shall have the meaning set
forth in the Recitals to this Agreement.
(i) "Debtors" shall have the meaning set forth in the
Recitals to this Agreement.
(j) "Default Date" shall have the meaning set forth in the
Agreement of Limited Partnership of the Limited Partner dated as of the date
hereof.
(k) "Distribution" means any distribution pursuant to
Articles IV or XI hereof.
(l) "Entity" means any general partnership, limited
partnership, corporation, joint venture, trust, business trust, real estate
investment trust, limited liability company, cooperative or association.
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(m) "Fiscal Year" means (i) the period commencing on the
Effective Date or any subsequent January 1 and ending on the earlier to occur of
(A) the next December 31 or (B) the date on which all assets of the Partnership
are distributed pursuant to Article IX hereof and the Certificate has been
cancelled pursuant to the Act.
(n) "General Partner" means 1290 GP Corp., a Delaware
corporation, in its capacity as General Partner hereunder and all other Persons
hereafter being or acting as a general partner of the Partnership, individually
and collectively.
(o) "Indemnitee" means (i) any Person made a party to a
proceeding by reason of (A) such Person's status as (1) the General Partner, (2)
a stockholder, director, trustee or officer of the Partnership or the General
Partner, or (3) a director, trustee or officer of any other Entity, each Person
serving in such capacity at the request of the Partnership or the General
Partner, or (B) his or its liabilities, pursuant to a loan guarantee or
otherwise, for any indebtedness of the Partnership (including, without
limitation, any indebtedness which the Partnership has assumed or taken assets
subject to); and (ii) such other Persons (including affiliates of the General
Partner to the Partnership) as the General Partner may designate from time to
time (whether before or after the event giving rise to potential liability), in
its sole and absolute discretion.
(p) "JMB LP" means JMB/NYC Office Building Associates, L.P.,
an Illinois limited partnership.
(q) "Limited Partner" shall have the meaning set forth in the
Preamble to this Agreement.
(r) "Net Cash Flow" means the excess of all cash receipts of
any kind received by the Partnership over the sum of the amounts of (i)
Operating Expenses, and (ii) any reserves established by the General Partner.
(s) "Operating Expenses" means all cash expenses, costs, debts
and disbursements of every kind and nature which the Partnership shall pay or
become obligated to pay in connection with the business of the Partnership or
the performance of the General Partner's duties and obligations under this
Agreement, including, without limitation, debt service, audit and legal expenses
and management fees.
(t) "Partners" means the General Partner and the Limited
Partner, where no distinction is required by the context in which the terms is
used herein. "Partner" means any one of the Partners.
(u) "Partnership" means 1290 Partners, L.P., a Delaware
limited partnership.
(v) "Partnership Interest(s)" means that ownership interest of
a Partner, expressed as a percentage, in the Partnership's profits and losses,
other items of income, gain, losses, deductions, expenses and credits, and
distributions of net cash receipts at any particular time, including the right
of such Partner to any and all benefits to which a Partner
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may be entitled as provided in this Agreement and under the Act, together with
the obligation of such Partner to comply with all the terms and provisions of
this Agreement and the Act. The Partnership Interest of each Partner is set
forth on Exhibit A.
(w) "Person" means any individual, corporation, company,
partnership, joint venture, trust, association, unincorporated organization,
other entity or group, or any domestic or foreign national, state or municipal
or other local government or multi-national body any subdivision, agency,
commission or authority thereof.
(x) "Plan" shall have the meaning set forth in the Recitals to
this Agreement.
(y) "Property" means 1290 Avenue of the Americas, New York,
New York.
(z) "Properties" means the Property and 237 Park Avenue, New
York, New York.
(aa) "Property Contribution Agreement" shall have the meaning
set forth in the Recitals to this Agreement.
(ab) "REIT" shall have the meaning set forth in the Recitals
to this Agreement.
(aa) "Upper Tier Partnership" means 237/1290 Upper Tier
Associates, L.P., a Delaware limited partnership.
ARTICLE II
ORGANIZATIONAL MATTERS
2.1 Formation. The General Partner and the Limited Partner
hereby agree to form the Partnership under and pursuant to the Act. Except as
expressly provided in this Agreement, the rights and obligations of the Partners
and the administration and termination of the Partnership shall be governed by
the Act.
2.2 Certificates The General Partner shall file, record and
publish such certificates and other documents as may be necessary and
appropriate to comply with the requirements for the organization and operation
of a limited partnership under the Act.
2.3 Foreign Qualifications. In the event that the business of
the Partnership is carried on or conducted in any state other than the State of
Delaware, then the parties agree that the Partnership shall be qualified to
conduct business in accordance with the laws of each such other state in which
business is conducted by the Partnership. The parties agree to execute such
other and further documents as may be necessary or appropriate to permit the
General Partner to qualify the Partnership, or otherwise to comply with
requirements for a limited partnership to conduct business, in each such state.
The General Partner shall
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execute and file in the proper offices such certificates as may be required by
the Assumed Name Act or similar law in effect in the counties and other
governmental jurisdictions in which the Partnership may elect to conduct
business.
2.4 Name. The name of the Partnership is "1290 Partners, L.P."
The business of the Partnership shall be conducted under the name listed above
or under such other names as the General Partner deems appropriate. The General
Partner, in its sole discretion may, upon five days' prior written notice to the
Limited Partner, change the name of the Partnership.
2.5 Registered Office and Agent; Principal Office. The address
of the registered office of the Partnership in the State of Delaware and the
name and address at the registered agent for service of process on the
Partnership in the State of Delaware is The Corporation Trust Company, 1029
Orange Street, Wilmington (New Castle County), Delaware 19801. The principal
office of the Partnership shall be c/o Victor Capital Group, L.P., 885 Third
Avenue -- 12th Floor, New York, New York 10022, Attn: John Klopp, or such other
place as the General Partner may from time to time designate by notice to the
Limited Partner. The Partnership may maintain offices at such other place or
places within or outside the State of Delaware as the General Partner deems
advisable.
2.6 Purpose and Business. The purpose and nature of the
business to be conducted by the Partnership is to engage in the following
activities: to acquire, hold, own, develop, construct, improve, maintain,
operate, sell, lease, transfer, encumber, convey, exchange, and otherwise
dispose of or deal with the Property; to acquire, hold, own, develop, construct,
improve, maintain, operate, sell, lease, transfer, encumber, convey, exchange,
and otherwise dispose of or deal with real and personal property of all kinds;
to undertake such other activities as may be necessary, advisable, desirable or
convenient to the business of the Partnership; to engage in such other ancillary
activities as shall be necessary or desirable to effectuate the foregoing
purposes; and to engage in such activities as are consistent with the powers
described in the proviso in Section 2.7 hereof. The Partnership shall have all
powers necessary or desirable to accomplish the purposes enumerated. In
connection with the foregoing, but subject to all of the terms, covenants,
conditions and limitations contained in this Agreement and any other agreement
entered into by the Partnership, the Partnership shall have full power and
authority to enter into, perform, and carry out contracts of any kind, to borrow
money and to issue evidences of indebtedness, whether or not secured by
mortgage, trust deed, pledge or other lien, and, directly or indirectly, to
acquire and construct additional properties necessary or useful in connection
with its business.
2.7 Powers. The Partnership is empowered to do any and all
acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described herein and for the protection and benefit of the Partnership.
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2.8 Term. The term of the Partnership shall commence on the
date hereof and shall continue until December 31, 2099, unless the Partnership
is dissolved sooner pursuant to any provision of this Agreement.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Capital Contributions of the General Partner. The
General Partner has made a Capital Contribution of One Dollar ($1) in cash to
the Partnership.
3.2 Capital Contributions. Pursuant to the Plan, the Debt
Contribution Agreement and the Property Contribution Agreement, on the Effective
Date (as such term is defined in the Plan), the Limited Partner shall make a
Capital Contribution of the Contributed Debt and the Property (subject to the
liabilities described in the Property Contribution Agreement) to the
Partnership. The Partnership and the Limited Partner hereby agree that the value
of the Contributed Debt is $160,059,084 and of the Property is $57,164.
3.3 Other Matters Relating to Capital Contributions.
A. Except as otherwise provided by the terms of this
Agreement, no Partner shall be entitled to withdraw, or to a return of,
any part of its Capital Contribution, or to receive property or assets
other than cash in return thereof, and the General Partner shall not be
liable to the Limited Partner for a return of its Capital
Contributions.
B. No Partner shall be entitled to priority over any other
Partner, either with respect to a return of his Capital Contribution,
or to allocations of taxable income, gains, losses or credits, or to
distributions, except as provided in this Agreement.
C. No interest shall be paid on Capital Contributions.
D. No Partner shall be obligated to make any further Capital
Contribution to the Partnership.
3.4 Capital Accounts. A separate capital account shall be
established for each Partner on the books of the Partnership on the dates on
which such Partner makes its Capital Contributions, as provided herein. Each
such capital account will thereafter be maintained on the books of the
Partnership. Each Partner's capital account will be increased by that Partner's
Capital Contributions, advances and allocation of income and gain and decreased
by that Partner's distributions and allocation of losses.
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ARTICLE IV
DISTRIBUTIONS OF NET CASH FLOW
4.1 Regular Distributions. Subject to Article XI, the General
Partner shall cause the Partnership to distribute from time to time as
determined by the General Partner, but in any event not less frequently than
quarterly, Net Cash Flow. Distributions of Net Cash Flow shall be made to the
Partners in accordance with their respective Partnership Interests.
4.2 Qualifications of the REIT as a Real Estate Investment
Trust. The General Partner shall use its best efforts to cause the Partnership
to distribute sufficient amounts under this Article IV to enable the Limited
Partner to make sufficient distributions to its general partner, the REIT, to
pay stockholder dividends that will (i) satisfy the requirements for qualifying
as a real estate investment trust under the Code and Regulations ("REIT
Requirements"), and (ii) avoid any federal income or excise tax liability of the
General Partner or the REIT, provided, however, the General Partner shall not be
bound to comply with this covenant to the extent such distributions would (i)
violate applicable Delaware law or (ii) contravene the terms of any notes,
mortgages or other types of debt obligations which the Partnership may be
subject to in conjunction with borrowed funds.
ARTICLE V
ALLOCATIONS OF PROFITS AND LOSSES
All items of income, gain, loss or deduction for any Fiscal
Year shall be allocated to the Partners in accordance with their respective
Partnership Interests.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER
6.1 Management.
A. Except as otherwise expressly provided in this Agreement,
all management powers over the business and affairs of the Partnership are and
shall be exclusively vested in the General Partner, and, except as provided in
Sections 6.1E and 10.3 and 10.4 hereof, the Limited Partner shall not have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partner with or without cause. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner shall have, subject to Section 6.1E hereof,
full power and authority to do all things deemed necessary or desirable by it to
conduct the business of the
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Partnership, to exercise all powers and to effectuate the purposes set forth in
Section 2.6 hereof, including, without limitation:
(1) (a) the making of any expenditures, the
lending or borrowing of money, including,
without limitation, making prepayments on
loans and borrowing money to permit the
Partnership to make distributions to its
Partners in such amounts as will permit the
Limited Partner's general partner, the REIT
(so long as the REIT qualifies as a real
estate investment trust) to avoid the
payment of any federal income tax
(including, for this purpose, any excise tax
pursuant to Section 4981 of the Code) and to
make distributions to its stockholders in
amounts sufficient to permit the REIT to
maintain real estate investment trust
status, (b) the assumption or guarantee of,
or other contracting for, indebtedness and
other liabilities, (c) the issuance of
evidence of indebtedness (including the
securing of the same by deed, mortgage, deed
of trust or other lien or encumbrance on the
Partnership's assets) and (d) the incurring
of any obligations it deems necessary for
the conduct of the activities of the
Partnership;
(2) subject to the provisions of Article X
hereof, the making of tax, regulatory and
other filings, or rendering of periodic or
other reports to governmental or other
agencies having jurisdiction over the
business or assets of the Partnership;
(3) the acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or
exchange of any assets of the Partnership
(including the exercise or grant of any
conversion, option, privilege, or
subscription right or other right available
in connection with any assets at any time
held by the Partnership) or the merger or
other combination of the Partnership with or
into another entity;
(4) the use of the assets of the Partnership
(including, without limitation, cash on
hand) for any purpose consistent with the
terms of this Agreement and on any terms it
sees fit, including, without limitation, the
financing of the conduct of the operations
of the General Partner, the Partnership or
any of the Partnership's subsidiaries, the
lending of funds to other Persons
(including, without limitation, the
subsidiaries of the Partnership and/or the
General Partner) and the repayment of
obligations of the Partnership and its
subsidiaries and any other Person in which
it has an equity investment, and the making
of capital contributions to the
Partnership's subsidiaries;
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(5) the management, operation, expansion,
development, construction, leasing,
landscaping, repair, alteration, demolition
or improvement of any real property or
improvements owned by the Partnership or any
subsidiary of the Partnership;
(6) the negotiation, execution, and performance
of any contracts, conveyances or other
instruments that the General Partner
considers useful or necessary to the conduct
of the Partnership's operations or the
implementation of the General Partner's
powers under this Agreement, including (i)
contracting with property managers, leasing
agents, contractors, developers,
consultants, accountants, legal counsel,
other professional advisors and other
agents, and (ii) the payment of such related
expenses and compensation out of the
Partnership's assets;
(7) the distribution of Partnership cash or
other Partnership assets in accordance with
this Agreement;
(8) holding, managing, investing and reinvesting
cash and other assets of the Partnership;
(9) the collection and receipt of revenues and
income of the Partnership;
(10) the establishment of one or more divisions
of the Partnership, the selection and
dismissal of employees of the Partnership
(including, without limitation, employees
having titles such as "president," "vice
president," "secretary" and "treasurer" of
the Partnership), and agents, outside
attorneys, accountants, consultants and
contractors of the Partnership, and the
determination of their compensation and
other terms of employment or engagement;
(11) the maintenance of such insurance for the
benefit of the Partnership and the Partners
as it deems necessary or appropriate;
(12) the formation of, or acquisition of an
interest in, and the contribution of
property to, any further limited or general
partnerships, joint ventures or other
relationships that it deems desirable
(including, without limitation, the
acquisition of interests in, and the
contributions of property to, its
subsidiaries and any other Person in which
it has an equity investment from time to
time);
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(13) the control of any matters affecting the
rights and obligations of the Partnership,
including the settlement, compromise,
submission to arbitration or any other form
of dispute resolution, or abandonment of,
any claim, cause of action, liability, debt
or damages, due or owing to or from the
Partnership, the commencement or defense of
suits, legal proceedings, administrative
proceedings, arbitration or other forms of
dispute resolution, and the representation
of the Partnership in all suits or legal
proceedings, administrative proceedings,
arbitrations or other forms of dispute
resolution, the incurring of legal expenses,
and the indemnification of any Person
against liabilities and contingencies to the
extent permitted by law;
(14) the undertaking of any action in connection
with the Partnership's direct or indirect
investment in its subsidiaries or any other
Person (including, without limitation, the
contribution or loan of funds by the
Partnership to such Persons);
(15) the determination of the fair market value
of any Partnership property distributed in
kind using such reasonable method of
valuation as the General Partner may adopt;
(16) the exercise, directly or indirectly,
through any attorney-in-fact acting under a
general or limited power of attorney, of any
right, including the right to vote,
appurtenant to any asset or investment held
by the Partnership;
(17) the exercise of any of the powers of the
General Partner enumerated in this Agreement
on behalf of or in connection with any
subsidiary of the Partnership or any other
Person in which the Partnership has a direct
or indirect interest, or jointly with any
such subsidiary or other Person;
(18) the exercise of any of the powers of the
General Partner enumerated in this Agreement
on behalf of any Person in which the
Partnership does not have an interest
pursuant to contractual or other
arrangements with such Person;
(19) the making, execution and delivery of any
and all deeds, leases, notes, mortgages,
deeds of trust, security agreements,
conveyances, contracts, guarantees,
warranties, indemnities, waivers, releases
or legal instruments or agreements in
writing necessary or appropriate, in the
judgment of the General Partner, for the
accomplishment of any of the foregoing;
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(20) the issuance of additional Partnership
Interests, as appropriate, in connection
with Capital Contributions by Partners or
additional limited partners; and
(21) The opening of bank accounts on behalf of,
and in the name of, the Partnership and its
subsidiaries.
B. In connection with such management and subject to any
limitations set forth elsewhere in this Agreement, the General Partner:
1. Shall maintain or cause to be maintained, at the expense of
the Partnership, complete and accurate records of all correspondence,
documents or instruments of any nature relating to the Partnership
business. Such records, together with such supporting evidence thereof
as is in the control and possession of the Partnership or of the
General Partner, shall be kept in the principal office of the General
Partner or of the Partnership for such periods as the General Partner
deems appropriate. The Partners and/or their authorized
representatives, shall have the right to inspect and/or copy any or all
of the above-described records during normal business hours.
2. Shall execute any and all documents or instruments of any
kind which the General Partner may reasonably deem appropriate in
carrying out the purposes of the Partnership.
3. Shall maintain, or cause to have maintained, at the expense
of the Partnership, adequate records and accounts of all transactions,
operations and expenditures and shall furnish or cause to be furnished
the Partners with annual statements of account as of the end of each
calendar year.
C. The Limited Partner agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Limited Partner (except as provided in Section 6.1E hereof).
Notwithstanding any other provision of this Agreement, to the fullest extent
permitted under the Act or other applicable law, rule or regulation, the
execution, delivery or performance by the General Partner or the Partnership of
any agreements authorized or permitted under this Agreement shall not constitute
a breach by the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partner or any other Persons under this Agreement or
of any duty stated or implied by law or equity.
D. Except as provided in Section 6.1E, in exercising its
authority under this Agreement, the General Partner may, but shall be under no
obligation to, take into account the tax consequences to any Partner of any
action taken by it; provided, that if the General Partner decides to refinance
(directly or indirectly) any outstanding indebtedness of the Partnership, the
General Partner shall, until the Approval Right Termination Date, use
commercially reasonable efforts to structure such refinancing in a manner that
allows all of the Partnership's non-recourse indebtedness to continue to be
included in the tax basis of the
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Limited Partners' Partnership Interests. The General Partner and the Partnership
shall not have liability to the Limited Partner or any partner of the Limited
Partner under any circumstances as a result of an income tax liability incurred
by the Limited Partner or its partners as a result of an action (or inaction) by
the General Partner taken pursuant to its authority under and in accordance with
this Agreement.
E. Notwithstanding anything to the contrary set forth in this
Agreement, until the Approval Right Termination Date, the General Partner shall
not, without the prior written consent of the Limited Partner (which may be
given or withheld in its sole and absolute discretion), cause or permit (to the
extent within the General Partner's reasonable control) any Adverse Transaction
to occur, provided however that the General Partner shall be under no obligation
to commence litigation or to incur any expense (unless JMB LP shall fund such
expense) in order to avoid or prevent an Adverse Transaction from occurring.
6.2 Outside Activities of the General Partner. The General
Partner shall devote such time and effort to the business of the Partnership as
the General Partner shall reasonably deem necessary to promote adequately the
interests of the Partnership and the interests of the Partners; however, it is
specifically understood and agreed that the General Partner shall not be
required to devote full time to the business of the Partnership and that the
Partners and their respective stockholders, partners, directors, officers and
affiliates may at any time and from time to time engage in and possess interests
in other business ventures of any and every type and description including
business interests and activities that are in direct competition with the
Partnership or that are enhanced by the activities of the Partnership, and
neither the Partnership nor any Partner shall by virtue of this Agreement or
otherwise have any right, title or interest in or to such independent ventures.
6.3 Employment of Experts or Advisors. The General Partner may
employ or retain such counsel, accountants, appraisers or other experts or
advisors as the General Partner may reasonably deem appropriate for the purpose
of discharging its duties hereunder, and shall be entitled to pay the fees of
any such persons from the funds of the Partnership. The General Partner may act,
and shall be protected in acting in good faith, on the opinion or advice of, or
information obtained from, any such counsel, accountant, appraiser or other
expert or advisor, whether retained or employed by the Partnership, the General
Partner, or otherwise, in relation to any matter connected with the
administration or operation of the business and affairs of the Partnership.
6.4 Contracts with Affiliates.
A. The Partnership may lend or contribute funds or other
assets to its subsidiaries or other entities in which it has an equity
investment and such entities may borrow funds from the Partnership, on terms and
conditions established in the sole and absolute discretion of the General
Partner. The foregoing authority shall not create any right or benefit in favor
of any subsidiary or any other entity.
B. Except as provided in Section 6.1E, the Partnership may
transfer assets to joint ventures, other partnerships, corporations or other
business entities in which it is or
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thereby becomes a participant upon such terms and subject to such conditions
consistent with this Agreement and applicable law as the General Partner, in its
sole and absolute discretion, believes are advisable.
C. The General Partner, in its sole and absolute discretion
and without the approval of the Limited Partners, may propose and adopt, on
behalf of the Partnership, employee benefit plans, stock option plans, and
similar plans funded by the Partnership for the benefit of employees of the
General Partner, the Partnership, subsidiaries of the Partnership or any
affiliate of any of them in respect of services performed, directly or
indirectly, for the benefit of the Partnership, the General Partner, or any
subsidiaries of the Partnership.
D. The General Partner is expressly authorized to enter into,
in the name and on behalf of the Partnership, a "right of first opportunity" or
"right of first offer" arrangement, non-competition agreements and other
conflict avoidance agreements with various affiliates of the Partnership and the
General Partner, on such terms as the General Partner, in its sole and absolute
discretion, believes are advisable.
6.5 Other Matters Concerning the General Partner.
Notwithstanding any other provisions of this Agreement (other than Section 6.1E)
or the Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the REIT to
continue to qualify as a REIT; or (ii) to avoid the General Partner or the REIT
incurring any taxes under Section 857 or Section 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.
6.6 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any party dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority,
without consent or approval of any other Partner or party, to encumber, sell or
otherwise use in any manner any and all assets of the Partnership and to enter
into any contracts on behalf of the Partnership, and take any and all actions on
behalf of the Partnership, and such party shall be entitled to deal with the
General Partner as if the General Partner were the Partnership's sole party in
interest, both legally and beneficially. Each Limited Partner hereby waives any
and all defenses or other remedies which may be available against such party to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any party dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every party relying thereon or claiming thereunder
that (i) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect; (ii) the party
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership; and
(iii) such certificate, document or
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<PAGE>
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
7.1 Limitation of Liability. The Limited Partner shall have no
liability under this Agreement except as expressly provided in this Agreement,
or under the Act.
7.2 Management of Business. The Limited Partner shall not take
part in the operation, management or control (within the meaning of the Act) of
the Partnership's business, transact any business in the Partnership's name or
have the power to sign documents for or otherwise bind the Partnership. The
transaction of any such business by the General Partner, any of its affiliates
or any officer, director, employee, partner, agent or trustee of the General
Partner, the Partnership or any of their affiliates, in their capacity as such,
shall not affect, impair or eliminate the limitations on the liability of the
Limited Partner under this Agreement.
7.3 Outside Activities of Limited Partner. The Limited Partner
and any officer, director, partner, employee, agent, trustee, affiliate or
shareholder of the Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities that are in direct
competition with the Partnership or that are enhanced by the activities of the
Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of the Limited Partner. No
Limited Partner nor any other Person shall have any rights by virtue of this
Agreement or the Partnership relationship established hereby in any business
ventures of any other Person and such Person shall have no obligation pursuant
to this Agreement to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
7.4 Rights of Limited Partners Relating to the Partnership
A. In addition to the other rights provided by this Agreement
or by the Act, and except as limited by Section 7.4B hereof, each Limited
Partner shall receive from the Partnership the following:
(1) copies of all annual and quarterly reports
of the Partnership;
(2) a copy of the Partnership's federal, state
and local income tax returns for each
Partnership Year; and
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(3) a copy of this Agreement and the Certificate
and all amendments and/or restatements
thereto, together with executed copies of
all powers of attorney pursuant to which
this Agreement, the Certificate and all
amendments and/or restatements thereto have
been executed.
B. In addition, each Limited Partner shall have the right, for
a purpose reasonably related to such Limited Partner's interest as a limited
partner in the Partnership, upon written demand with a statement of the purpose
of such demand:
(1) to obtain a current list of the name and
last known business, residence or mailing
address of each Partner; and
(2) to obtain true and full information
regarding the amount of cash and a
description and statement of any other
property or services contributed by each
Partner and which each Partner has agreed to
contribute in the future, and the date on
which each became a Partner.
C. Notwithstanding any other provision of this Section 7.4,
the General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information (other than information partners of
the Limited Partner require in order to comply with law, including making proper
tax filings) that (i) the General Partner reasonably believes to be in the
nature of trade secrets or other information, the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or its business; or (ii) the
Partnership is required by law or by agreements with an unaffiliated third party
to keep confidential.
ARTICLE VIII
AMENDMENTS OF LIMITED PARTNERSHIP AGREEMENT
This Agreement may be amended only by instrument in writing
signed by the General Partner and the Limited Partner.
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ARTICLE IX
LIMITATION ON SUBSTITUTION AND
ASSIGNMENT OF A PARTNERS INTEREST
9.1 Transfer.
A. The term "Transfer," when used in this Article IX with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which the General Partner purports to assign all or any part of its Partnership
Interest to another Person or by which a Limited Partner purports to assign all
or any part of its Partnership Interest to another Person.
B. No Partnership Interest shall be Transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article IX. Any Transfer or purported Transfer of a Partnership Interest not
made in accordance with this Article IX shall be null and void.
9.2 Limited Partner Right to Transfer. No Limited Partner
shall sell, assign, transfer or convey all or any portion of its Partnership
Interest to any person or entity without the prior written consent of the
General Partner. No Limited Partner shall pledge, encumber or place a lien on
its Partnership Interest without the prior written consent of the General
Partner. No successor to any of the Limited Partner's Partnership Interests
shall become a substituted limited partner, as that term is used in the Act,
without the prior written consent of the General Partner. Any consent from the
General Partner required under this Section 9.2 may be granted or withheld by
the General Partner in its sole discretion.
9.3 Transferred Partnership Interests Subject to This
Agreement. Sales, assignments, transfers, conveyances and pledges of Partnership
Interests pursuant to this Article IX shall be subject to, and the transferee or
pledgee shall acquire the transferred Partnership Interests subject to, all of
the terms and provisions of this Agreement.
9.4 Insolvency, Dissolution or Bankruptcy of a Limited
Partner. The insolvency, dissolution or bankruptcy of a Limited Partner shall
not terminate the Partnership. In such event, the trustee, representative, or
other successor in interest of such Limited Partner shall have only the rights
of an assignee of a Limited Partner which does not become a substituted limited
partner under the Act.
9.5 Transfers by the General Partner.
A. The General Partner may Transfer all or any part of its
Partnership Interest or withdraw as General Partner, in its sole discretion and
without the consent of any Limited Partners; provided that the General Partner
may withdraw as general partner only in connection with a Transfer of its
Partnership Interest and immediately following the
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<PAGE>
admission of a successor General Partner, as general partner, in accordance with
this Article IX.
B. In the event the General Partner withdraws as general
partner in accordance with clause A. above, its general partner interest shall
immediately be converted into a limited partner interest and the General Partner
shall be entitled to receive distributions from the Partnership and the share of
net income, net losses, any other items, gain, loss, deduction and credit that
were otherwise attributable to its general partner interest.
9.6 Admission of Successor General Partner. A successor to all
of the General Partner Interest pursuant to this Section IX who is proposed to
be admitted as a successor General Partner shall be admitted to the Partnership
as the General Partner, effective immediately prior to such Transfer. Any such
transferee shall carry on the business of the Partnership without dissolution.
In each case, the admission shall be subject to the successor General Partner
executing and delivering to the Partnership an acceptance of all of the terms
and conditions of this Agreement and such other documents or instruments as may
be required to effect the admission.
ARTICLE X
BOOKS, RECORDS, ACCOUNTING, REPORTS AND TAX MATTERS
10.1 Records and Accounting. The General Partner shall keep or
cause to be kept at the principal office of the Partnership those records and
documents required to be maintained by the Act and other books and records
deemed by the General Partner to be appropriate with respect to the
Partnership's business, including, without limitation, all books and records
necessary to comply with applicable REIT Requirements and to provide to the
Limited Partners any information, lists and copies of documents required to be
provided pursuant to Sections 7.4 and 10.3 hereof. Any records maintained by or
on behalf of the Partnership in the regular course of its business may be kept
on, or be in the form of, punch cards, magnetic tape, photographs, micrographics
or any other information storage device, provided that the records so maintained
are convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial and tax
reporting purposes, on an accrual basis in accordance with generally accepted
accounting principles, or such other basis as the General Partner determines to
be necessary or appropriate.
10.2 Fiscal Year. The fiscal year of the Partnership shall
be the calendar year.
10.3 Reports.
A. As soon as practicable, but in no event later than ninety
(90) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner as of the close of the Partnership
Year, an annual report containing financial
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statements of the Partnership, or of the General Partner or the REIT if such
statements are prepared solely on a consolidated basis with the General Partner
or the REIT, for such Partnership Year, presented in accordance with GAAP, such
statements to be audited by Deloitte & Touche LLP or another nationally
recognized firm of independent public accountants selected by the General
Partner and, until the Approval Right Termination Date, reasonably acceptable to
JMB LP, provided that the failure of JMB LP to approve an independent public
accountant shall not be deemed to be unreasonable if such accountant fails to
confirm in writing to the Partnership and JMB LP that it will follow the
allocations of Partnership non-recourse liabilities as provided herein.
B. As soon as practicable, but in no event later than
forty-five (45) days after the close of each calendar quarter (except the last
calendar quarter of each calendar year), the General Partner shall cause to be
mailed to each Limited Partner a report containing unaudited financial
statements as of the last day of the calendar quarter of the Partnership, or of
the General Partner or the REIT, if such statements are prepared solely on a
consolidated basis with the General Partner or the REIT, and such other
information as may be required by applicable law or regulation, or as the
General Partner determines to be appropriate.
10.4 Preparation of Tax Returns. The General Partner shall
arrange for the preparation and timely filing by the Partnership's accountants
of all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within sixty (60) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes. The Limited Partners, the
Upper Tier Limited Partnership (as a partner in the Limited Partners) and JMB LP
(as a partner in the Upper Tier Limited Partnership) shall be entitled to confer
with such accountants concerning all tax matters.
10.5 Tax Matters Partner.
A. The General Partner shall be the "tax matters partner" of
the Partnership (within the meaning of Section 6231(a)(7) of the Code) and shall
exercise such position on a reasonable basis and in accordance with Sections
6.1D and 6.1E. Pursuant to Section 6230(e) of the Code, upon receipt of notice
from the Internal Revenue Service of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the Internal Revenue Service with the name, address, taxpayer
identification number, and profit interest of each of the Limited Partners;
provided, that such information is provided to the Partnership by the Limited
Partners.
B. The taking of any action and the incurring of any expense
by the tax matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of the
tax matters partner and the provisions relating to indemnification of the
General Partner set forth in Section 12.1 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
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C. The tax matters partner shall receive no compensation for
its services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm to assist
the tax matters partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is reasonable.
10.6 Organizational Expenses. The Partnership shall elect to
deduct expenses, if any, incurred by it in organizing the Partnership ratably
over a sixty (60) month period as provided in Section 709 of the Code.
10.7 Withholding. Each Limited Partner hereby authorizes the
Partnership to withhold from such Limited Partner any amount of federal, state,
local, or foreign taxes that the General Partner determines that the Partnership
is required to withhold or pay with respect to any amount distributable or
allocable to such Limited Partner pursuant to this Agreement, including, without
limitation, any taxes required to be withheld or paid by the Partnership
pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any amounts withheld
shall be treated as having been distributed to such Limited Partner.
10.8 Tax Elections. Except as otherwise provided herein, the
General Partner shall, in its sole and absolute discretion, determine whether to
make any available election pursuant to the Code. The General Partner shall
elect the "remedial method" of making Section 704(c) allocations pursuant to
Regulations Section 1.704-3 with respect to property contributed pursuant to the
Property Contribution Agreement and shall not make the election under Section
754 of the Code prior to January 1, 1997, unless otherwise requested by the
Limited Partner and in the event of any such request, the General Partner shall
comply with the request of the Limited Partner as to the making of Section
704(c) allocations and the making (or revocation) of a Section 754 election. The
General Partner shall have the right to seek to revoke any tax election it makes
(other than (i) the election to use the remedial method of making the Section
704(c) allocations described in this Section 10.8 or another method of making
Section 704(c) allocations requested by the Limited Partner and (ii) the
election under Section 754 of the Code), upon the General Partner's
determination, in its sole and absolute discretion, that such revocation is in
the best interests of the Partners.
ARTICLE XI
DISSOLUTION
11.1 Dissolution. The Partnership shall not be dissolved by
the admission of substituted Limited Partners or additional Limited Partners or
by the admission of a successor General Partner in accordance with the terms of
this Agreement. In the event of the withdrawal of the General Partner, any
successor General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs shall be wound up, only upon the
first to occur of any of the following:
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A. the expiration of its term as provided in Section 2.8
hereof;
B. an event of withdrawal of the General Partner, as defined
in the Act, unless, within ninety (90) days after such event of withdrawal all
of the remaining Partners agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
successor General Partner, provided that a withdrawal of the General Partner in
connection with a Transfer of its Partnership Interest shall be governed by the
provisions of Section 9.5A hereof;
C. (i) prior to the Approval Right Termination Date, an
election to dissolve the Partnership made by the General Partner, with the
consent of the Limited Partner (which may be given or withheld in its sole and
absolute discretion), (ii) after the Approval Right Termination Date, an
election to dissolve the Partnership made by the General Partner, without the
consent of the Limited Partner;
D. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
E. the sale of all or substantially all of the assets and
properties of the Partnership.
11.2 Liquidation. In the event of dissolution of the
Partnership pursuant to Section 11.1 where the business of the Partnership is
not reconstituted, liquidation shall occur. The General Partner shall supervise
the liquidation of the Partnership unless a wrongful act of the General Partner
dissolved the Partnership or the Limited Partner elects another Partner to do
so. In the event of any liquidation of the Partnership under this Agreement or
the Act, except as otherwise provided herein, the proceeds of liquidating the
Partnership shall be applied and distributed in the following order of priority
(each item to be satisfied in full in the order listed below before any of such
proceeds are allocated to the subsequent item):
(a) First, to creditors, including Partners who are creditors
(to the extent not otherwise prohibited by law), in satisfaction of
liabilities of the Partnership (whether by payment or the making of
reasonable provision for payment therefor), other than liabilities for
which reasonable provision for payment has been made and liabilities
for interim distributions to Partners and distributions to Partners on
withdrawal; then
(b) Second, to the setting up of any reserves which the
supervising Partner (or, if applicable, the liquidating trustee)
determines to be reasonably necessary for any contingent liabilities of
the Partnership or of any Partner arising out of, or in connection
with, a Partnership liability; then
(c) Finally, the balance, if any, to the Partners in
accordance with Article IV hereof.
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The General Partner shall not receive any compensation for any
services performed pursuant to this Article XI.
11.3 Rights of the Limited Partner. Except as otherwise
provided in this Agreement, the Limited Partner shall look solely to the assets
of the Partnership for the return of its Capital Contributions and shall have no
right or power to demand or receive property other than cash from the
Partnership. No Partner shall have priority over any other Partner as to the
return of its Capital Contributions, distributions, or allocations.
11.4 No Obligation to Contribute Deficit. If any Partner has a
deficit balance in its capital account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered a debt owed to
the Partnership or to any other Person for any purpose whatsoever.
ARTICLE XII
INDEMNIFICATION
12.1 To the fullest extent permitted by Delaware law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, reasonable attorneys' fees and other legal fees and expenses),
judgments, fines, settlements, and other amounts arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, that relate to the operations of the Partnership or the
General Partner as set forth in this Agreement, in which such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, except to
the extent it is finally determined by a court of competent jurisdiction, from
which no further appeal may be taken, that such Indemnitee's action constituted
intentional acts or omissions constituting willful misconduct or fraud. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guaranty or otherwise for any indebtedness of the
Partnership (including, without limitation, any indebtedness which the
Partnership has assumed or taken subject to), and the General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or
more indemnity agreements consistent with the provisions of this Article XII in
favor of any Indemnitee having or potentially having liability for any such
indebtedness. Any indemnification pursuant to this Article XII shall be made
only out of the assets of the Partnership, and neither the General Partner nor
any Limited Partner shall have any obligation to contribute to the capital of
the Partnership, or otherwise provide funds, to enable the Partnership to fund
its obligations under this Article XII.
12.2 Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding shall be paid or reimbursed by the Partnership in advance
of the final disposition of the proceeding.
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<PAGE>
12.3 The indemnification provided by this Article XII shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity unless otherwise provided in a written
agreement pursuant to which such Indemnities are indemnified.
12.4 The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of the Indemnitees and such other
Persons as the General Partner shall determine, against any liability that may
be asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
12.5 In no event may an Indemnitee subject any of the Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
12.6 An Indemnitee shall not be denied indemnification in
whole or in part under this Article XII because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
12.7 The provisions of this Article XII are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Article XII or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this Article XII, as in effect immediately
prior to such amendment, modification, or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Notices. Notices hereunder shall be in writing and shall
be deemed to be delivered upon actual receipt or 72 hours following deposit in a
regularly maintained receptacle for the United States mail, registered or
certified mail, return receipt requested, with postage prepaid, and addressed to
the address of the addressee shown below, or to such other address of which any
party shall notify the other parties hereto, in accordance with the terms
hereof.
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<PAGE>
If to the General Partner:
1290 GP Corp.
c/o Victor Capital Group, L.P.
885 Third Avenue -- 12th Floor
New York, New York 10022
Attn: John Klopp
If to the Limited Partner:
237/1290 Lower Tier Associates, L.P.
c/o Victor Capital Group, L.P.
885 Third Avenue -- 12th Floor
New York, New York 10022
Attn: John Klopp
with a copy to:
JMB/NYC Office Building Associates, L.P.
900 North Michigan Avenue
Suite 1900
Chicago, Illinois 60611
Attn: Mr. Stuart C. Nathan
13.2 Counterparts. This Agreement may be executed in multiple
counterparts, each to constitute an original, but all in the aggregate to
constitute one agreement as executed. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their heirs, legal representatives,
successors and permitted assigns.
13.3 Nature of Partnership Interest. The interest of each
Partner in this Partnership is personal property.
13.4 Insolvency Proceedings. No bankruptcy or insolvency
filing or proceeding in respect of the Partnership shall be made or commenced
without the consent of the General Partner, and the Partnership shall not
acquiesce, petition or otherwise invoke or cause any other person and/or entity
to invoke the process of the United States of America, any state or other
political subdivision thereof or any other jurisdiction, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government for the purpose of commencing or sustaining a case
against the Partnership under a federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Partnership or all or any part of
its property or assets or ordering the winding-up or liquidation of the affairs
of the Partnership, if such action has not been consented to by the General
Partner.
13.5 Titles and Captions. All article or section titles or
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and
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<PAGE>
in no way define, limit, extend or describe the scope or intent of any
provisions hereof. Except as specifically provided otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.
13.6 Pronouns and Plurals. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
13.7 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
13.8 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
13.9 Creditors. Other than as expressly set forth herein with
respect to the Indemnitees, none of the provisions of this Agreement shall be
for the benefit of, or shall be enforceable by, any creditor of the Partnership.
13.10 Waiver. No failure by any party to insist upon the
strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach or any other covenant, duty,
agreement or condition.
13.11 Applicable Law. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware,
without regard to the principles of conflicts of laws thereof.
13.12 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
13.13 Entire Agreement. This Agreement contains the entire
understanding and agreement among the Partners with respect to the subject
matter hereof and supersedes any other prior written or oral understandings or
agreements among them with respect thereto.
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IN WITNESS WHEREOF, this Agreement is executed by the General
Partner and the Limited Partner as of the date first above written.
1290 PARTNERS, L.P., a Delaware
limited partnership
By: 1290 GP CORP., its general partner
By: /s/ Lee S. Neibart
Name: Lee S. Neibart
Title: President
237/1290 LOWER TIER ASSOCIATES, L.P.
By: Metropolis Realty Trust, Inc.,
its General Partner
By: /s/ Lee S. Neibart
Name: Lee S. Neibart
Title: President
[The remaining portion of this page
is intentionally left blank]
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Exhibit A
Entity Partnership Interest
1290 GP Corp. 1%
237/1290 Lower Tier Associates, L.P. 99%
C/M: 11764.0004 397409.3
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS........................................................... 1
ARTICLE II
ORGANIZATIONAL MATTERS................................................ 5
2.1 Formation .................................................. 5
2.2 Certificates................................................. 5
2.3 Foreign Qualifications....................................... 5
2.4 Name .................................................. 6
2.5 Registered Office and Agent; Principal Office................ 6
2.6 Purpose and Business......................................... 6
2.7 Powers .................................................. 6
2.8 Term .................................................. 7
ARTICLE III
CAPITAL CONTRIBUTIONS................................................. 7
3.1 Capital Contributions of the General Partner................. 7
3.2 Capital Contributions........................................ 7
3.3 Other Matters Relating to Capital Contributions.............. 7
3.4 Capital Accounts............................................. 7
ARTICLE IV
DISTRIBUTIONS OF NET CASH FLOW........................................ 8
4.1 Regular Distributions........................................ 8
4.2 Qualifications of the REIT as a Real Estate Investment Trust. 8
ARTICLE V
ALLOCATIONS OF PROFITS AND LOSSES..................................... 8
6.1 Management .................................................. 8
6.2 Outside Activities of the General Partner.................... 13
6.3 Employment of Experts or Advisors............................ 13
6.4 Contracts with Affiliates.................................... 13
6.5 Other Matters Concerning the General Partner................. 14
6.6 Reliance by Third Parties.................................... 14
ARTICLE VII
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Page
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER......................... 15
7.1 Limitation of Liability...................................... 15
7.2 Management of Business....................................... 15
7.3 Outside Activities of Limited Partner........................ 15
7.4 Rights of Limited Partners Relating to the Partnership....... 15
ARTICLE VIII
AMENDMENTS OF LIMITED PARTNERSHIP AGREEMENT........................... 16
ARTICLE IX
LIMITATION ON SUBSTITUTION AND
ASSIGNMENT OF A PARTNERS INTEREST..................................... 17
9.1 Transfer .................................................. 17
9.2 Limited Partner Right to Transfer............................ 17
9.3 Transferred Partnership Interests Subject to This Agreement.. 17
9.4 Insolvency, Dissolution or Bankruptcy of a Limited Partner... 17
9.5 Transfers by the General Partner............................. 17
9.6 Admission of Successor General Partner....................... 18
ARTICLE X
BOOKS, RECORDS, ACCOUNTING, REPORTS AND TAX MATTERS................... 18
10.1 Records and Accounting...................................... 18
10.2 Fiscal Year................................................. 18
10.3 Reports .................................................. 18
10.4 Preparation of Tax Returns.................................. 19
10.5 Tax Matters Partner......................................... 19
10.6 Organizational Expenses..................................... 20
10.7 Withholding................................................. 20
ARTICLE XI
DISSOLUTION........................................................... 20
11.1 Dissolution................................................. 20
11.2 Liquidation................................................. 21
11.3 Rights of the Limited Partner............................... 22
11.4 No Obligation to Contribute Deficit......................... 22
ARTICLE XII
INDEMNIFICATION....................................................... 22
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Page
ARTICLE XIII
MISCELLANEOUS PROVISIONS.............................................. 23
13.1 Notices .................................................. 23
13.2 Counterparts................................................ 24
13.3 Nature of Partnership Interest.............................. 24
13.4 Insolvency Proceedings...................................... 24
13.5 Titles and Captions......................................... 24
13.6 Pronouns and Plurals........................................ 25
13.7 Further Action.............................................. 25
13.8 Binding Effect.............................................. 25
13.9 Creditors .................................................. 25
13.10 Waiver .................................................. 25
13.11 Applicable Law............................................. 25
13.12 Invalidity of Provisions................................... 25
13.13 Entire Agreement........................................... 25
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LIMITED PARTNERSHIP AGREEMENT
OF
1290 PARTNERS, L.P.
by and between
1290 GP CORP.,
as General Partner
AND
237/1290 LOWER TIER ASSOCIATES, L.P.,
as Limited Partner
Dated: October 10, 1996
C/M: 11764.0004 397409.3
AGREEMENT OF LIMITED PARTNERSHIP
OF
237/1290 LOWER TIER ASSOCIATES, L.P.
Dated as of October 10, 1996
11764.0001 340937.14
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 EFFECTIVENESS OF AGREEMENT................................ 1
ARTICLE 2 DEFINED TERMS............................................. 1
ARTICLE 3 ORGANIZATIONAL MATTERS.................................... 16
Section 3.1 Formation................................................. 16
Section 3.2 Name...................................................... 17
Section 3.3 Registered Office and Agent; Principal Office............. 17
Section 3.4 Power of Attorney......................................... 17
Section 3.5 Term...................................................... 19
ARTICLE 4 PURPOSE................................................... 19
Section 4.1 Purpose and Business...................................... 19
Section 4.2 Powers.................................................... 19
ARTICLE 5 CAPITAL CONTRIBUTIONS..................................... 20
Section 5.1 Capital Contributions of the Partners..................... 20
Section 5.2 Additional Funds; Restrictions on General Partner......... 20
Section 5.3 Issuance of Additional Partnership Interests;
Admission of Additional Limited Partners................ 21
Section 5.4 No Third Party Beneficiary................................ 21
Section 5.5 No Interest; No Return.................................... 21
Section 5.6 No Preemptive Rights...................................... 21
ARTICLE 6 DISTRIBUTIONS............................................. 22
ARTICLE 7 ALLOCATIONS............................................... 23
ARTICLE 8 MANAGEMENT AND OPERATIONS OF BUSINESS..................... 23
Section 8.1 Management................................................ 23
Section 8.2 Certificate of Limited Partnership........................ 28
Section 8.3 Reimbursement of the General Partner...................... 28
Section 8.4 Outside Activities of the General Partner................. 28
Section 8.5 Contracts with Affiliates................................. 29
Section 8.6 Indemnification........................................... 29
Section 8.7 Liability of the General Partner.......................... 31
Section 8.8 Other Matters Concerning the General Partner.............. 32
Section 8.9 Title to Partnership Assets............................... 32
Section 8.10 Reliance by Third Parties................................. 33
11764.0001 340937.14
i
<PAGE>
Page
ARTICLE 9 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS................33
Section 9.1 Limitation of Liability...................................33
Section 9.2 Management of Business....................................34
Section 9.3 Outside Activities of Limited Partners....................34
Section 9.4 Return of Capital.........................................34
Section 9.5 Rights of Limited Partners Relating to the
Partnership..............................................35
ARTICLE 10 BOOKS, RECORDS, ACCOUNTING AND REPORTS....................36
Section 10.1 Records and Accounting....................................36
Section 10.2 Fiscal Year...............................................36
Section 10.3 Reports...................................................36
ARTICLE 11 TAX MATTERS...............................................37
Section 11.1 Preparation of Tax Returns................................37
Section 11.2 Tax Elections.............................................37
Section 11.3 Tax Matters Partner.......................................37
Section 11.4 Organizational Expenses...................................38
Section 11.5 Withholding...............................................38
ARTICLE 12 TRANSFERS AND WITHDRAWALS.................................38
Section 12.1 Transfer..................................................38
Section 12.2 General Partner's Purchase Right; Limited Partner's
Put Rights...............................................39
Section 12.3 Transfer of the General Partner Interest..................41
Section 12.4 Limited Partners' Rights to Transfer......................41
Section 12.5 Substituted Limited Partners..............................41
Section 12.6 Intentionally Omitted.....................................42
Section 12.7 General Provisions........................................42
ARTICLE 13 ADMISSION OF PARTNERS.....................................43
Section 13.1 Admission of Successor General Partner....................43
Section 13.2 Admission of Additional Limited Partners..................43
Section 13.3 Amendment of Agreement and Certificate of Limited
Partnership..............................................44
ARTICLE 14 DISSOLUTION, LIQUIDATION AND TERMINATION..................44
Section 14.1 Dissolution...............................................44
Section 14.2 Winding Up................................................45
Section 14.3 No Obligation to Contribute Deficit.......................47
Section 14.4 Rights of Limited Partners................................47
Section 14.5 Notice of Dissolution.....................................47
Section 14.6 Termination of Partnership and Cancellation of
Certificate of Limited Partnership.......................47
Section 14.7 Reasonable Time for Winding-Up............................47
11764.0001 340937.14
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Section 14.8 Waiver of Partition.......................................48
ARTICLE 15 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS..............48
Section 15.1 Amendments................................................48
Section 15.2 Meetings of the Partners..................................49
ARTICLE 16 GENERAL PROVISIONS........................................50
Section 16.1 Addresses and Notice......................................50
Section 16.2 Titles and Captions.......................................50
Section 16.3 Pronouns and Plurals......................................50
Section 16.4 Further Action............................................50
Section 16.5 Binding Effect............................................51
Section 16.6 Creditors.................................................51
Section 16.7 Waiver....................................................51
Section 16.8 Counterparts..............................................51
Section 16.9 Applicable Law............................................51
Section 16.10 Invalidity of Provisions..................................51
Section 16.11 Entire Agreement..........................................52
EXHIBITS
Exhibit A -Allocations
Exhibit B -Partners' Contributions and Partnership Interests
Exhibit C -Indemnity Agreement
11764.0001 340937.14
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<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
237/1290 LOWER TIER ASSOCIATES
THIS AGREEMENT OF LIMITED PARTNERSHIP OF 237/1290 LOWER TIER
ASSOCIATES, L.P. (the "Partnership"), dated as of October 10, 1996 (this
"Agreement"), is entered into by and between Metropolis Realty Trust, Inc., a
Maryland corporation, as general partner (the "General Partner") and 237/1290
Upper Tier Associates, L.P., a Delaware limited partnership, as limited partner
(the "Limited Partner").
WHEREAS, the parties hereto desire to form a Delaware limited
partnership under the Revised Uniform Limited Partnership Act of the State of
Delaware and in accordance with the terms and conditions of the Joint Plan of
Reorganization of 237 Park Avenue Associates, L.L.C. and 1290 Associates, L.L.C.
(collectively, the "Debtors"), filed under title 11 of the United States Code,
11 U.S.C. Sections 101 et seq. (the "Plan"); and
WHEREAS, the General Partner and the Partnership are parties
to the GP Contribution Agreement (as hereinafter defined) pursuant to which,
among other things, the General Partner will contribute to the Partnership the
Contributed Debt (as hereinafter defined); and
WHEREAS, the Limited Partner and the Partnership are parties
to the LP Contribution Agreements (as hereinafter defined) pursuant to which,
among other things, the Limited Partner will contribute to the Partnership the
Initial LP Contributed Property (as hereinafter defined).
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties do hereby agree as follows:
ARTICLE 1
EFFECTIVENESS OF AGREEMENT
This Agreement shall become effective on the Effective Date
(as hereinafter defined).
ARTICLE 2
DEFINED TERMS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
11764.0001 340937.14
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"Act" means the Delaware Revised Uniform Limited Partnership
Act, as it may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 5.3 hereof and who is shown
as such on the books and records of the Partnership.
"Adjusted Capital Account Deficit" means with respect to any
Partner, the negative balance, if any, in such Partner's Capital Account as of
the end of any relevant fiscal year, determined after giving effect to the
following adjustments:
(a) credit to such Capital Account any portion of such
negative balance which such Partner (i) is treated as obligated to
restore to the Partnership pursuant to the provisions of Section
1.704-1(b)(2)(ii)(c) of the Regulations, or (ii) is deemed to be
obligated to restore to the Partnership pursuant to the penultimate
sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations; and
(b) debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
"Adjusted GP Contribution" means as of any time such amount is
being determined, the aggregate Capital Contributions made by the General
Partner to the Partnership plus the Preference Amount reduced by the total
distributions previously made to such Partner pursuant to paragraphs 4(a)(ii),
4(b)(ii) and 4(b)(v) of Exhibit A.
"Adverse Transaction" means (i) any sale, disposition,
transfer or exchange of the Properties or the Property Owning Partnership
Interests, (ii) any release, discharge or reduction of non-recourse indebtedness
of the Property Owning Partnerships (other than through payment of scheduled
amortization, actions taken by a secured lender such as application of insurance
proceeds or condemnation awards or the exercise of remedies, or in the case
where the released indebtedness is concurrently being replaced with other
non-recourse indebtedness complying with clause (B) below), (iii) any
distribution of Partnership assets (other than distributions of cash and other
distributions by the Partnership and the Property Owning Partnerships, in each
case, in the ordinary course of business), or (iv) any other transaction or
agreement to which any of the Partnership and the Property Owning Partnerships
is a party, if as a result of any such transaction or agreement described in
(i), (ii), (iii), or (iv) above, JMB LP as a partner in the Upper Tier Limited
Partnership would be required to recognize a material amount of taxable income
or gain prior to the Approval Right Termination Date. Adverse Transactions shall
specifically exclude (A) Partnership income derived in the ordinary course of
the Partnership's and the Property Owning Partnerships' business, (B)
non-recourse refinancing of the Properties on commercially reasonable terms in
an aggregate amount equal to not less than the lesser of $325,000,000 or the
amortized balance of the then existing non-recourse financing encumbering the
Properties (utilizing an amortization schedule no shorter than twenty (20)
years), (C) payment of amortization on
11764.0001 340937.14
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<PAGE>
non-recourse financing encumbering the Properties, provided that the outstanding
balance of such financing is not reduced below $325,000,000, in the aggregate,
as such amount would be reduced between the date hereof and the Approval Right
Termination Date assuming such amount is amortized based on a twenty (20) year
amortization schedule and except as otherwise provided in the parenthetical of
clause (ii) above (i.e. actions taken by a secured lender such as application of
insurance proceeds or condemnation awards or the exercise of remedies, or in the
case where released indebtedness is concurrently being replaced with other
non-recourse indebtedness complying with clause (B) above), (D) the consummation
of the transactions described in the Plan (i.e., the property transfers and the
issuance of the securities provided therein), (E) a transfer of the Properties
pursuant to an involuntary foreclosure or similar action arising from a default
by the Property Owning Partnerships with respect to their obligations under
their indebtedness, and (F) a transfer of the Properties pursuant to a
consensual foreclosure or similar action (including, without limitation, a deed
in lieu of foreclosure) arising from a default by the Property Owning
Partnerships with respect to their obligations under their indebtedness provided
that in the case of a consensual foreclosure or deed in lieu of foreclosure by
reason of a default under the New Notes (as defined in the Plan) the default is
a bona fide default and the foreclosure or deed in lieu of foreclosure is not a
collusive transaction between the holders of the New Notes and the General
Partner attributable to any commonality of ownership between the beneficial
ownership of the New Notes and the General Partner. As used in clause (F) above,
the term New Notes shall include refinancings in which there is a commonality of
ownership between the holder of such financing and the General Partner similar
to that anticipated with respect to the New Notes.
"Affiliate" means, (a) with respect to any individual Person,
any member of the Immediate Family of such Person or a trust established for the
benefit of such member, or (b) with respect to any Entity, any Person which,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, any such Entity.
"Agreement" means this Agreement of Limited Partnership, as
originally executed and as amended, modified, supplemented or restated from time
to time, as the context requires.
"Approval Right Termination Date" shall mean the earliest of
(i) January 2, 2001, (ii) the date on which the Upper Tier Limited Partnership
no longer holds any Partnership Interest as a result of the authorized exercise
of the Purchase Right or the Put Right pursuant to Sections 12.2A or 12.2C of
this Agreement or pursuant to such other transaction which does not constitute
an Adverse Transaction, (iii) the date on which the Partnership no longer holds
the Property Owning Partnership Interests pursuant to a transaction which does
not constitute an Adverse Transaction, (iv) the date on which JMB LP no longer
holds any partnership interest in the Upper Tier Limited Partnership, and (v)
the Default Date.
11764.0001 340937.14
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<PAGE>
"Assignee" means a Person to whom Limited Partner Interests
have been transferred in a manner permitted under this Agreement, but who has
not become a Substituted Limited Partner, and who has the rights set forth in
Section 12.6.
"Asset Management Agreement" means the Asset Management
Agreement, date the date hereof, between the REIT and Victor Capital Group,
L.P., providing for the overall oversight of the property of the REIT, as same
may be amended, and any substitutions or replacements therefor.
"Available Cash" means, with respect to the applicable period
of measurement (i.e., any period beginning on the first day of the fiscal year,
quarter or other period commencing immediately after the last day of the fiscal
year, quarter or other applicable period for purposes of the prior calculation
of Available Cash for or with respect to which a distribution has been made, and
ending on the last day of the fiscal year, quarter or other applicable period
immediately preceding the date of the calculation) the excess, if any, as of
such date, of (a) the gross cash receipts of the Partnership for such period
from all sources whatsoever, including, without limitation, the following:
(i) all rents, revenues, income and proceeds derived by the
Partnership from its operations, including, without limitation,
distributions received by the Partnership from any Entity in which the
Partnership has an interest; (ii) all proceeds and revenues received by
the Partnership on account of any sales of property of the Partnership
or any Entity in which the Partnership has an interest or as a
refinancing of or payments of principal, interest, costs, fees,
penalties or otherwise on account of any borrowings or loans made by
the Partnership or any Entity in which the Partnership has an interest
or financings or refinancings of any property of the Partnership or any
Entity in which the Partnership has an interest; (iii) the amount of
any insurance proceeds and condemnation awards received by the
Partnership; (iv) all cash capital contributions or loans received by
the Partnership from its Partners; (v) all cash amounts previously
reserved by the Partnership, to the extent such amounts are no longer
needed for the specific purposes for which such amounts were reserved;
and (vi) the proceeds of liquidation of the Partnership's property in
accordance with this Agreement,
over (b) the sum of:
(i) all operating costs and expenses, including costs relating
to tenant improvements, brokerage expenses, taxes and other expenses of
the Properties, of the Partnership and capital expenditures made during
such period (without deduction, however, for any capital expenditures,
charges for Depreciation or other expenses not paid in cash or
expenditures from reserves described in (viii) below) by the
Partnership or any Entity in which the Partnership has an interest;
(ii) all costs and expenses expended or paid during such period in
connection with the sale or other disposition, or financing or
refinancing, of property of the Partnership or any Entity in which the
11764.0001 340937.14
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<PAGE>
Partnership has an interest or the recovery of insurance or
condemnation proceeds; (iii) all fees provided for under this
Agreement, the Property Owning Partnership Agreements, and the Property
Management and Leasing Agreements; (iv) all debt service, including
principal and interest, paid during such period on all indebtedness
(including under any line of credit) of the Partnership or any Entity
in which the Partnership has an interest; (v) all capital
contributions, advances, reimbursements or similar payments made to any
Entity in which the Partnership has an interest; (vi) all loans made by
the Partnership in accordance with the terms of this Agreement; (vii)
all reimbursements to the General Partner or its Affiliates during such
period; and (viii) any new reserves or increases in reserves reasonably
determined by the General Partner to be necessary for working capital,
capital improvements, payments of periodic expenditures, debt service
or other purposes for the Partnership or any Person in which the
Partnership has an interest.
Notwithstanding the foregoing, Available Cash shall not
include any cash received or reductions in reserves, or take into account any
disbursements made or reserves established, after commencement of the
dissolution and liquidation of the Partnership.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
codified under title 11 of the United States Code and in effect on the
Confirmation Date.
"Bankruptcy Court" means the District Court of the United
States District Court for the Southern District of New York having jurisdiction
over the Reorganization Cases and, to the extent of having 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 Rules" means the Federal Rules of Bankruptcy
Procedure as in effect on the Petition Date.
"Capital Account" means with respect to any Partner, the
Capital Account maintained for such Partner in accordance with the following
provisions:
a. to each Partner's Capital Account there shall be credited
(i) such Partner's Capital Contributions, (ii) such Partner's
distributive share of Net Income and any items in the nature of income
or gain which are specially allocated to such Partner pursuant to
Paragraphs 1 and 2 of Exhibit A and (iii) the amount of any Partnership
liabilities assumed by such Partner or which are secured by any asset
distributed to such Partner;
b. to each Partner's Capital Account there shall be debited
(i) the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this
Agreement, (ii) such Partner's distributive share of Net Losses and any
items in the nature of expenses or losses which are specially allocated
to such Partner pursuant to Paragraphs 1 and 2 of Exhibit A and (iii)
the amount of any
11764.0001 340937.14
5
<PAGE>
liabilities of such Partner assumed by the Partnership or which are
secured by any asset contributed by such Partner to the Partnership;
and
c. in the event all or a portion of a Partnership Interest is
transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to
the extent it relates to the transferred Partnership Interest.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Sections 1.704-1(b) and 1.704-2 of the Regulations, and shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall reasonably determine that it is prudent to
modify the manner in which the Capital Accounts, or any debits or credits
thereto (including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed assets or which are
assumed by the Partnership, the General Partner or any Limited Partner) are
computed in order to comply with such Regulations, the General Partner may make
such modification; provided that it does not have an adverse effect on the
amounts distributable to any Partner at any time.
"Capital Contribution" means, with respect to any Partner, any
cash, cash equivalents or the Gross Asset Value of property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Article 5
hereof.
"Capital Transaction" shall mean any one of the following
events: (i) any sale, transfer or other disposition of a Property or a Property
Owning Partnership Interest, (ii) any loan made to the Partnership or a Property
Owning Partnership, (iii) the refinancing of indebtedness of the Property Owning
Partnerships, (iv) the condemnation of all or any part of a Property or (v) any
insurance recovery relating to the Property Owning Partnerships (other than
rental interruption insurance).
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed on September 30, 1996 in the office of the
Delaware Secretary of State, as amended from time to time in accordance with the
terms hereof and the Act.
"Charter" means the Articles of Incorporation of Metropolis
Realty Trust, Inc., as amended and restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Confirmation Date" means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order.
11764.0001 340937.14
6
<PAGE>
"Confirmation Order" means the order of the Bankruptcy Court
confirming the Plan.
"Consent" means the consent or approval of a proposed action
by a Partner given in accordance with Section 15.2 hereof.
"Contributed Debt" means the undivided $300,000,000 portion of
the principal amount of the Existing Notes contributed by the General Partner to
the Partnership pursuant to the GP Contribution Agreement.
"Contributed Property" means each property or other asset,
other than the Initial LP Contributed Property and the Contributed Debt, in such
form as may be permitted by the Act, contributed or deemed contributed to the
Partnership by any Partner (including deemed contributions to the Partnership on
termination and reconstitution thereof pursuant to Section 708 of the Code).
"Default Date" has the meaning set forth in Section 12.2.
"Depreciation" means, with respect to any asset of the
Partnership (or, with respect to assets of the Property Owning Partnerships, the
Partnership's share) for any fiscal year or other period, the depreciation,
depletion, amortization or other cost recovery deduction, as the case may be,
allowed or allowable for federal income tax purposes in respect of such asset
for such fiscal year or other period; provided, however, that except as
otherwise provided in Section 1.704-2 of the Regulations, if there is a
difference between the Gross Asset Value (including the Gross Asset Value, as
increased pursuant to paragraph 1 of the definition of Gross Asset Value) and
the adjusted tax basis of such asset at the beginning of such fiscal year or
other period, Depreciation for such asset shall be an amount that bears the same
ratio to the beginning Gross Asset Value of such asset as the federal income tax
depreciation, depletion, amortization or other cost recovery deduction for such
fiscal year or other period bears to the beginning adjusted tax basis of such
asset; provided, further, that if the federal income tax depreciation,
depletion, amortization or other cost recovery deduction for such asset for such
fiscal year or other period is zero, Depreciation of such asset shall be
determined with reference to the beginning Gross Asset Value of such asset using
any reasonable method selected by the General Partner.
"Effective Date" means the eleventh day (calculated under Rule
9006 of the Bankruptcy Rules) after the Confirmation Date if (x) no stay is then
in effect and (y) each of the conditions precedent to the occurrence of the
Effective Date contained in the Plan have been satisfied or waived.
"Entity" means any general partnership, limited partnership,
corporation, joint venture, trust, business trust, real estate investment trust,
limited liability company, cooperative or association.
11764.0001 340937.14
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<PAGE>
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"Existing Notes" means those certain notes issued and
outstanding under the Indenture.
"GAAP" means United States generally accepted accounting
principles, as in effect from time to time.
"GAAP Net Income" for any period means the net income (or
loss) of the Property Owning Partnerships for such period, determined in
accordance with GAAP, consistently applied, excluding (without duplication) to
the extent included therein (a) all extraordinary gains, including, without
limitation, any extraordinary gains arising from, or in connection with a
Capital Transaction, and (b) non-recurring gains. GAAP Net Income with respect
to the Properties shall be determined in good faith by the General Partner and
such determination shall be final and binding on all parties hereto.
"General Partner" means Metropolis Realty Trust, Inc., a
Maryland corporation, in its capacity as the general partner of the Partnership,
or its successors as general partner of the Partnership and, without limitation,
all other Persons being or acting as a general partner of the Partnership,
individually and collectively.
"General Partner Interest" means a Partnership Interest held
by the General Partner, in its capacity as general partner.
"GP Contribution Agreement" means the Debt Contribution
Agreement, dated as of the Effective Date, between the General Partner, the
Partnership and the Property Owning Partnerships relating to the Contributed
Debt.
"Gross Asset Value" means, with respect to any asset of the
Partnership, such asset's adjusted basis for federal income tax purposes, except
as follows:
1. the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, without reduction for liabilities, as determined by the
contributing Partner and the Partnership on the date of contribution
thereof;
2. if the General Partner reasonably determines that an
adjustment is necessary or appropriate to reflect the relative economic
interests of the Partners, the Gross Asset Values of all Partnership
assets shall be adjusted in accordance with Sections
1.704-1(b)(2)(iv)(f) and (g) of the Regulations to equal their
respective gross fair market values, without reduction for liabilities,
as reasonably determined by the General Partner, as of the following
times:
11764.0001 340937.14
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<PAGE>
a. a Capital Contribution (other than a de minimis
Capital Contribution) to the Partnership by a new or existing
Partner as consideration for a Partnership Interest; or
b. the distribution by the Partnership to a Partner
of more than a de minimis amount of Partnership assets as
consideration for the repurchase of a Partnership Interest; or
c. the liquidation of the Partnership within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations;
3. the Gross Asset Values of Partnership assets distributed to
any Partner shall be the gross fair market values of such assets
without reduction for liabilities, as reasonably determined by the
General Partner as of the date of distribution; and
4. the Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Sections 734(b) or 743(b) of the Code,
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Section 1.704- 1(b)(2)(iv)(m)
of the Regulations (as set forth in Exhibit A); provided, however, that
Gross Asset Values shall not be adjusted pursuant to this paragraph (4)
to the extent that the General Partner reasonably determines that an
adjustment pursuant to this paragraph (4) would duplicate an adjustment
pursuant to this paragraph (2).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of computing
Net Income and Net Loss.
"Immediate Family" means, with respect to any natural Person,
such Person's spouse, parents, parents-in-law, descendants, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law, stepchildren, sons-in-law
and daughters-in-law or any trust solely for the benefit of any of the foregoing
family members whose sole beneficiaries include the foregoing family members.
"Incapacity" or "Incapacitated" means, (i) as to any
individual Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating him incompetent to manage his person or his
estate; (ii) as to any corporation which is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership; (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner commences a
11764.0001 340937.14
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<PAGE>
voluntary proceeding seeking liquidation, reorganization or other relief under
any bankruptcy, insolvency or other similar law now or hereafter in effect; (b)
the Partner is adjudged as bankrupt or insolvent, or a final and nonappealable
order for relief under any bankruptcy, insolvency or similar law now or
hereafter in effect has been entered against the Partner; (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors; (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above; (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties; (f) any proceeding seeking liquidation, reorganization or
other relief of or against such Partner under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof; (g) the appointment
without the Partner's consent or acquiescence of a trustee, receiver or
liquidator has not been vacated or stayed within ninety (90) days of such
appointment; or (h) an appointment referred to in clause (g) which has been
stayed is not vacated within ninety (90) days after the expiration of any such
stay.
"Indemnitee" means (i) any Person made a party to a proceeding
by reason of (A) such Person's status as (1) the General Partner, (2) a
stockholder, director, trustee or officer of the Partnership or the General
Partner, or (3) a director, trustee or officer of any other Entity, each Person
serving in such capacity at the request of the Partnership or the General
Partner, or (B) his or its liabilities, pursuant to a loan guarantee or
otherwise, for any indebtedness of the Partnership or any Subsidiary of the
Partnership (including, without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken assets
subject to); and (ii) such other Persons (including Affiliates of the General
Partner or the Partnership) as the General Partner may designate from time to
time (whether before or after the event giving rise to potential liability), in
its sole and absolute discretion.
"Indenture" means that certain Mortgage Spreader and
Consolidation Agreement and Trust Indenture dated as of March 20, 1984 among O&Y
Equity Corp., Olympia & York Holdings Corporation, FAME Associates, Olympia &
York 2 Broadway Land Company, Olympia & York 2 Broadway Company and
Manufacturers Hanover Trust Company as Trustee, as supplemented by that certain
Supplemental Indenture No. 1 dated as of March 20, 1984, that certain
Supplemental Indenture No. 2 dated as of December 30, 1986, that certain
Supplemental Indenture No. 3 dated as of March 30, 1988, that certain Instrument
of Resignation, Appointment and Acceptance dated as of October 28, 1992 among 2
Broadway Associates, 2 Broadway Land Company, 237 Park Avenue Associates, 1290
Associates, NationsBank of Tennessee, N.A., and Manufacturers Hanover Trust
Company, that certain Supplemental Indenture No. 4 dated August 17, 1995 and
that certain Supplemental Indenture No. 5 dated as of September 18, 1995 and as
the same may be further supplemented from time to time in accordance with the
terms thereof prior to the date of the Supplemental Indenture.
11764.0001 340937.14
10
<PAGE>
"Initial LP Contributed Property" means (i) 237 Park Avenue,
New York, NY and the related assets that will be contributed to the Partnership
by the Upper Tier Limited Partnership, and (ii) 1290 Avenue of the Americas, New
York, New York and the related assets that will be contributed to the
Partnership by the Upper Tier Limited Partnership, in each case pursuant to the
terms of the LP Contribution Agreements. The Partnership's books and records
shall reflect that (i) the initial gross fair market value of 237 Park Avenue,
New York, NY and the related assets shall be $290,000,000, the Initial Gross
Fair Market Value of 1290 Avenue of the Americas New York, NY and the related
amounts shall be $387,000,000 and that such properties are encumbered by
$700,000,000 of Partnership Non-recourse Liabilities and (ii) after giving
effect to the reductions in debt secured by the Initial LP Contributed Property
taking place concurrently herewith, 237 Park Avenue will be encumbered by
$171,344,165* of Partnership Non-recourse Liabilities and 1290 Avenue of the
Americas such property shall be encumbered by $228,655,835* of Partnership
Nonrecourse Liabilities.
"IRS" shall mean the Internal Revenue Service of the United
States.
"JMB" means JMB/NYC Office Building Associates, an Illinois
general partnership.
"JMB Collateral" shall have the meaning provided in Section
12.2B hereof.
"JMB Indemnitors" means JMB/Manhattan Associates, Ltd.,
Carlyle Real Estate Limited Partnership - XIII and Carlyle Real Estate Limited
Partnership XIV.
"JMB Indemnity" means the Indemnity Agreement to be executed
and delivered by the JMB Indemnitors to the General Partner as of the Effective
Date in the form of Exhibit C hereto.
"JMB LP" means JMB/NYC Office Building Associates, L.P., an
Illinois limited partnership.
"JMB Notes" means that certain (i) Promissory Note dated July
27, 1984, reissued July 25, 1985, made by JMB to O&Y DFC in the principal amount
of $9,758,363 secured by certain liens and security interests granted under the
Security Agreement dated July 27, 1984 between JMB and OYHC and assigned by O&Y
DFC to O&Y MFC pursuant to the Assignment and Assumption Agreement dated
September 28, 1987; (ii) Promissory Note dated August 14, 1984, reissued July
25, 1985, made by JMB to O&Y DFC in the principal amount of $4,514,229 secured
by certain liens and security interests granted under the Security Agreement
dated August 14, 1984 between JMB and OYHC and assigned by O&Y DFC to O&Y MFC
pursuant to the Assignment and Assumption Agreement dated September 28, 1987;
and (iii) Amended, Restated and Consolidated Promissory Note dated May 31, 1995
between JMB LP and O&Y MFC in the principal amount of $78,605,779 secured by
certain liens and security interests granted under the Amended, Restated and
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Consolidated Security Agreement dated May 31, 1995 between JMB LP and O&Y MFC,
which Notes and Security Agreements have been assigned as of the date hereof to
the General Partner (subject to the interest of the participant under a
Participation Agreement of even date herewith) and are being amended and
restated as of the date hereof pursuant to the Second Amended, Restated and
Consolidated Promissory Note in the principal amount of $88,572,780 and the
Second Amended, Restated and Consolidated Security Agreement.
"Lien" means any lien, security interest, mortgage, deed of
trust, charge, claim, encumbrance, pledge, option, right of first offer or first
refusal and any other right or interest of others of any kind or nature, actual
or contingent, or other similar encumbrance of any nature whatsoever.
"Limited Partner" means the Upper Tier Limited Partnership or
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a limited partner of the Partnership.
"Limited Partner Interest" means a Partnership Interest of a
Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Partners and includes any and all benefits to which
the holder of such a Partnership Interest may be entitled, as provided in this
Agreement, together with all obligations of such Person to comply with the terms
and provisions of this Agreement.
"Liquidating Event" has the meaning set forth in Section 14.1
hereof.
"Liquidator" has the meaning set forth in Section 14.2 hereof.
"LP Contribution Agreements" means, collectively, (i) the 237
Property Contribution Agreement, dated as of the Effective Date, between The
Upper Tier Limited Partnership, the Partnership and 237 Park Partners, L.P with
respect to the portion of the Initial LP Contributed Property constituting 237
Park Avenue, New York, New York and related assets, and (ii) the 1290 Property
Contribution Agreement, dated as of the Effective Date, between the Upper Tier
Limited Partnership, the Partnership and 1290 Partners, L.P, with respect to the
portion of the Initial LP Contributed Property constituting 1290 Avenue of the
Americas, New York, New York and related assets.
"Net Income" or "Net Loss" means, for each fiscal year or
other applicable period, an amount equal to the Partnership's taxable income or
loss for such year or period as determined for federal income tax purposes by
the General Partner, determined in accordance with Section 703(a) of the Code
(for this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Section 703(a) of the Code shall be included in
taxable income or loss), adjusted as follows: (a) by including as an item of
gross income any tax-exempt income received by the Partnership and not otherwise
taken into account in computing Net Income or Net Loss; (b) by treating as a
deductible expense any expenditure of the Partnership described in Section
705(a)(2)(B) of the Code (or which is treated as a
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Section 705(a)(2)(B) expenditure pursuant to Section 1.704-1(b)(2)(iv)(i) of the
Regulations) and not otherwise taken into account in computing Net Income or Net
Loss, including amounts paid or incurred to organize the Partnership (unless an
election is made pursuant to Section 709(b) of the Code) or to promote the sale
of interests in the Partnership and by treating deductions for any losses
incurred in connection with the sale or exchange of Partnership property
disallowed pursuant to Section 267(a)(1) or 707(b) of the Code as expenditures
described in Section 705(a)(2)(B) of the Code; (c) by taking into account
Depreciation in lieu of depreciation, depletion, amortization and other cost
recovery deductions taken into account in computing taxable income or loss; (d)
by computing gain or loss resulting from any disposition of Partnership property
with respect to which gain or loss is recognized for federal income tax purposes
by reference to the Gross Asset Value of such property rather than its adjusted
tax basis; (e) in the event of an adjustment of the Gross Asset Value of any
Partnership asset which requires that the Capital Accounts of the Partnership be
adjusted pursuant to Sections 1.704-1(b)(2)(iv)(e), (f) and (g) of the
Regulations, by taking into account the amount of such adjustment as if such
adjustment represented additional Net Income or Net Loss pursuant to Exhibit A;
and (f) by not taking into account in computing Net Income or Net Loss items
separately allocated to the Partners pursuant to Paragraphs 1 and 2 of Exhibit
A.
"Net Operating Income" for any period means the amount equal
to (a) the Property Owning Partnerships' GAAP Net Income for such fiscal year,
plus (b) the sum, without duplication (and only to the extent such amounts are
deducted from revenues in determining such GAAP Net Income), of (i) the interest
expense for such period of the Property Owning Partnerships, and (ii) the real
estate related depreciation and amortization expenses for such period of the
Property Owning Partnerships in respect of the Properties. Net Operating Income
with respect to the Properties shall be determined in good faith by the General
Partner and such determination shall be final and binding on all parties hereto.
"Nonrecourse Deductions" has the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Regulations.
"Nonrecourse Liabilities" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners, collectively.
"Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
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"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership taxable
year shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the
Act and pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the
Partnership representing a Capital Contribution by either a Limited Partner or
the General Partner and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement.
"Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in a Partnership Minimum Gain, for a
Partnership taxable year shall be determined in accordance with the rules of
Regulations Section 1.704-2(d).
"Partnership Record Date" means the record date established by
the General Partner for the distribution of Available Cash pursuant to Section
6.1 hereof.
"Partnership Year" means the fiscal year of the Partnership,
as set forth in Section 10.2 hereof.
"Permitted Partners" has the meaning set forth in subparagraph
1(b) of Exhibit A.
"Permitted Transferee" means any person to whom Limited
Partner Interests are Transferred in accordance with Section 12.4 of this
Agreement.
"Person" means an individual or Entity.
"Petition Date" the date on which the Debtors filed their
voluntary petitions under chapter 11 of the Bankruptcy Code.
"Plan" means the Second Amended Joint Plan of Reorganization
of 237 Park Avenue Associates, LLC and 1290 Associates, LLC filed under title 11
of the United States Code, 11 U.S.C. Sections 101 et seq. with the United States
Bankruptcy Court, Southern District of New York on September 20, 1996.
"Precontribution Gain" has the meaning set forth in
subparagraph 3(c) of Exhibit A.
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"Preference Amount" shall mean $100,000,000.
"Prohibited Action" shall have the meaning provided in Section
12.2B hereof.
"Properties" means 237 Park Avenue, New York, New York and
1290 Avenue of the Americas, New York, New York.
"Property Management and Leasing Agreements" means the
Property Management and Leasing Agreements, dated the date hereof between the
Property Owning Partnerships and Tishman Speyer Properties, L.P., providing for
the day-to-day management of, and leasing services related to, the Properties,
as same may be amended, and any substitutions or replacements therefor.
"Property Owning Partnerships" means 237 Park Partners, L.P.
and 1290 Partners, L.P., each a Delaware limited partnership.
"Property Owning Partnership Interests" means the
Partnership's 99% interest as a limited partner in each of the Property Owning
Partnerships.
"Property Owning Partnership Agreements" means the (i)
Agreement of Limited Partnership of 237 Park Partners, L.P., dated as of the
date hereof, between 237 GP Corp. and the Partnership, and (ii) the Agreement of
Limited Partnership of 1290 Partners, L.P., dated as of the date hereof, between
1290 GP Corp. and the Partnership.
"Purchase Price Amount" has the meaning set forth in Section
12.2.
"Purchase Right Notice" has the meaning set forth in Section
12.2.
"Purchase Right" has the meaning set forth in Section 12.2.
"Put Price" has the meaning set forth in Section 12.2.
"Put Right" has the meaning set forth in Section 12.2.
"Put Right Notice" has the meaning set forth in Section 12.2.
"Quarter" means each of the three month periods ending on
March 31, June 30, September 30 and December 31.
"Regulations" means the final, temporary or proposed Income
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
11764.0001 340937.14
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"REIT" means a real estate investment trust as defined in
Section 856 of the ---- Code.
"REIT Requirements" has the meaning set forth in Section 6.2.
"Reorganization Cases" means the Debtors' cases under chapter
11 of the Bankruptcy Code, Case Nos. 96B42177(JLG) and 96B42178(JLG), which were
commenced by the Debtors by the filing of voluntary petitions with the
Bankruptcy Court on the Petition Date.
"Restricted Partner" has the meaning set forth in Section 1(b)
of Exhibit A.
"Subsidiary" means, with respect to any Person, any
corporation, partnership or other entity of which a majority of (i) the voting
power of the voting equity securities; or (ii) the outstanding equity interests,
is owned, directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 12.5 hereof.
"Tax Items" has the meaning set forth in Exhibit A.
"Transfer" as a noun, means any sale, assignment, conveyance,
pledge, hypothecation, gift, encumbrance or other transfer, and as a verb, means
to sell, assign, convey, pledge, hypothecate, give, encumber or otherwise
transfer.
"Upper Tier Limited Partnership" means 237/1290 Upper Tier
Associates, L.P., a Delaware limited partnership.
Certain additional terms and phrases have the meanings set
forth in Exhibit A.
ARTICLE 3
ORGANIZATIONAL MATTERS
Section 3.1 Formation
The Partners hereby agree to form the Partnership under and
pursuant to the Act. Except as expressly provided herein to the contrary, the
rights and obligations of the Partners and the administration and termination of
the Partnership shall be governed by the Act. The Partnership Interest of each
Partner shall be personal property for all purposes.
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Section 3.2 Name
The name of the Partnership shall be 237/1290 Lower Tier
Associates, L.P. The Partnership's business may be conducted under any other
name or names deemed advisable by the General Partner, including the name of the
General Partner or any Affiliate thereof. The words "Limited
Partnership,""L.P.,""Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purposes of complying with the laws
of any jurisdiction that so requires. The General Partner in its sole and
absolute discretion may, upon 5 days prior written notice to the Limited
Partner, change the name of the Partnership.
Section 3.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the
State of Delaware and the name and address of the registered agent for service
of process on the Partnership in the State of Delaware is The Corporation Trust
Company, 1029 Orange Street, Wilmington (New Castle County), Delaware 19801. The
principal office of the Partnership shall be c/o Victor Capital Group, 885 Third
Avenue -- 12th Floor, New York, New York 10022, Attn: John Klopp, or such other
place as the General Partner may from time to time designate by notice to the
Limited Partners. The Partnership may maintain offices at such other place or
places within or outside the State of Delaware as the General Partner deems
advisable.
Section 3.4 Power of Attorney
A. Each Limited Partner and each Assignee hereby constitutes
and appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver,
file and record in the appropriate public
offices (a) all certificates, documents and
other instruments (including, without
limitation, this Agreement and the
Certificate and all amendments or
restatements thereof) that the General
Partner or the Liquidator deems appropriate
or necessary to form, qualify or continue
the existence or qualification of the
Partnership as a limited partnership (or a
partnership in which the Limited Partners
have limited liability) in the State of
Delaware and in all other jurisdictions in
which the Partnership may or plans to
conduct business or own property, including,
without limitation, any documents necessary
or advisable to convey any Contributed
Property to the Partnership; (b) all
instruments that the General Partner deems
appropriate or necessary to reflect any
amendment, change, modification or
restatement of this Agreement in accordance
with
11764.0001 340937.14
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its terms; (c) all conveyances and other
instruments or documents that the General
Partner or the Liquidator deems appropriate
or necessary to reflect the dissolution and
liquidation of the Partnership pursuant to
the terms of this Agreement, including,
without limitation, a certificate of
cancellation; (d) all instruments relating
to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or
other events described in, Article 12, 13 or
14 hereof or the Capital Contribution of any
Partner; and (e) all certificates, documents
and other instruments relating to the
determination of the rights, preferences and
privileges of Partnership Interest; and
(2) execute, swear to, seal, acknowledge and
file all ballots, consents, approvals,
waivers, certificates and other instruments
appropriate or necessary, in the sole and
absolute discretion of the General Partner
or any Liquidator, to make, evidence, give,
confirm or ratify any vote, consent,
approval, agreement or other action which is
made or given by the Partners hereunder or
is consistent with the terms of this
agreement or appropriate or necessary, in
the sole discretion of the General Partner
or any Liquidator, to effectuate the terms
or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 15
hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
and any Liquidator to act as contemplated by this Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
Transfer of all or any portion of such Limited Partner's or Assignee's Limited
Partner Interests and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within fifteen (15) days after receipt of the
General Partner's or Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.
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<PAGE>
Section 3.5 Term
The term of the Partnership shall commence on the date hereof
and shall continue until December 31, 2099, unless the Partnership is dissolved
sooner pursuant to the provisions of Article 14 or as otherwise provided by law.
ARTICLE 4
PURPOSE
Section 4.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is to hold the property of the Partnership and serve as a limited
partner of the Property Owning Partnerships; to undertake such other activities
as may be necessary, advisable, desirable or convenient to the business of the
Partnership; to engage in such other ancillary activities as shall be necessary
or desirable to effectuate the foregoing purposes; and to engage in such
activities as are consistent with the powers described in the proviso in Section
4.2 hereof. The Partnership shall have all powers necessary or desirable to
accomplish the purposes enumerated. In connection with the foregoing, but
subject to all of the terms, covenants, conditions and limitations contained in
this Agreement and any other agreement entered into by the Partnership, the
Partnership shall have full power and authority to enter into, perform, and
carry out contracts of any kind, to borrow money and to issue evidences of
indebtedness, whether or not secured by mortgage, trust deed, pledge or other
Lien, and, directly or indirectly, to acquire and construct additional
properties necessary or useful in connection with its business.
Section 4.2 Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership; provided, that the
Partnership shall not take, or refrain from taking, any action which, in the
judgment of the General Partner, in its sole and absolute discretion, (i) could
adversely affect the ability of the General Partner to continue to qualify as a
REIT; (ii) could subject the General Partner to any additional taxes under
Section 857 or Section 4981 of the Code; or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over the
General Partner or its securities, unless such action (or inaction) shall have
been specifically consented to by the General Partner in writing.
11764.0001 340937.14
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<PAGE>
ARTICLE 5
CAPITAL CONTRIBUTIONS
Section 5.1 Capital Contributions of the Partners
(a) Pursuant to the Plan and the GP Contribution Agreement, on
the Effective Date, the General Partner shall make a Capital Contribution of the
Contributed Debt to the Partnership. The Partnership and the General Partner
hereby agree that the Contributed Debt shall have a Gross Asset Value of
$280,000,000.
(b) The General Partner may, in its sole discretion, make
additional Capital Contributions to the Partnership.
(c) Pursuant to the Plan and the LP Contribution Agreement, on
the Effective Date, the Limited Partners shall make a Capital Contribution of
the Properties, subject to the liabilities described in the LP Contribution
Agreements, to the Partnership. The Partnership and the Limited Partner hereby
agree that the 237 Park Avenue Property shall have a Gross Asset Value of
$299,894,836 and the 1290 Avenue of the Americas Property shall have a Gross
Asset Value of $400,205,164 and are subject to $700,000,000 of debt. The excess
of the Gross Asset Value over the adjusted tax basis of the Properties shall be
allocated entirely to real property.
(d) The Partners shall have an interest in Net Income, Net
Loss and distributions of the Partnership as set forth in Exhibit A, which
interests shall be adjusted in Exhibit A from time to time by the General
Partner to the extent necessary to reflect accurately exchanges, additional
Capital Contributions or similar events having an effect on any Partner's
Partnership Interest. Except as provided in this Section 5.1 and 11.5, the
Partners shall have no obligation to make any additional Capital Contributions
or loans to the Partnership.
Section 5.2 Additional Funds; Restrictions on General Partner
The sums of money required to finance the business and affairs
of the Partnership shall be derived from the initial Capital Contributions made
to the Partnership by the Partners as set forth in Section 5.1 and from funds
generated from the operation and business of the Partnership including, without
limitation, distributions directly or indirectly received by the Partnership
from any Property Owning Partnership. In the event additional financing is
needed from sources other than as set forth in the preceding sentence for any
reason, the General Partner may, in its sole and absolute discretion but subject
to Section 8.1E, in such amounts and at such times as it solely shall determine
to be necessary or appropriate, (i) cause the Partnership to issue additional
Partnership Interests and admit additional limited partners to the Partnership
in accordance with Section 5.3; (ii) make additional Capital Contributions to
the Partnership; (iii) cause the Partnership to borrow money, enter into loan
arrangements, issue debt securities, obtain letters of credit or otherwise
11764.0001 340937.14
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<PAGE>
borrow money on a secured or unsecured basis; (iv) make a loan or loans to the
Partnership; or (v) subject to Section 8.1E sell any assets or properties of the
Partnership.
Section 5.3 Issuance of Additional Partnership Interests;
Admission of Additional Limited Partners
In addition to any Partnership Interests issuable by the
Partnership pursuant to Section 5.2, the General Partner is authorized to cause
the Partnership to issue additional Partnership Interests (or options therefor)
senior or junior to the Partnership Interests issued in respect of the initial
Capital Contributions (as set forth in Section 5.1(a), (b) and (c)) to any
Persons at any time or from time to time, for consideration not less than the
fair market value thereof (or the fair market value as of the date an option is
granted) (as such fair market value is determined in the sole and absolute
discretion of the General Partner's Board of Directors), and on such terms and
conditions, as the General Partner shall establish in each case in its sole and
absolute discretion, without any approval being required from any Limited
Partner or any other Person; provided, however, that such issuance does not
cause any amounts of the Partnership's indebtedness to be excluded from the tax
basis of the Partnership Interests of the Limited Partners who are Partners of
the Partnership prior to such issuance. Subject to the limitations set forth in
the preceding sentence, the General Partner may take such steps as it, in its
reasonable discretion, deems necessary or appropriate to admit any Person as a
Limited Partner of the Partnership, including, without limitation, amending the
Certificate, Exhibit B or any other provision of this Agreement.
Section 5.4 No Third Party Beneficiary
No creditor or other third party having dealings with the
Partnership shall have the right to enforce the right or obligation of any
Partner to make Capital Contributions or loans or to pursue any other right or
remedy hereunder or at law or in equity, it being understood and agreed that the
provisions of this Agreement shall be solely for the benefit of, and may be
enforced solely by, the parties hereto and their respective successors and
assigns.
Section 5.5 No Interest; No Return
No Partner shall be entitled to interest on its Capital
Contribution or on such Partner's Capital Account. Except as provided herein or
by law, no Partner shall have any right to demand or receive the return of its
Capital Contribution from the Partnership.
Section 5.6 No Preemptive Rights
No Person shall have any preemptive or other similar right
with respect to (i) additional Capital Contributions or loans to the
Partnership; or (ii) issuance or sale of any Partnership Interests.
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<PAGE>
ARTICLE 6
DISTRIBUTIONS
6.1 Regular Distributions
Except for distributions pursuant to Section 14.2 in
connection with the dissolution and liquidation of the Partnership, and subject
to the provisions of Sections 6.3, 6.4 and 6.5, the General Partner shall cause
the Partnership to distribute, from time to time as determined by the General
Partner, but in any event not less frequently than quarterly, all Available
Cash, to the Partners, in accordance with the provisions of Exhibit A.
6.2 Qualification as a REIT
The General Partner shall use its best efforts to cause the
Partnership to distribute sufficient amounts under this Article 6 to enable the
General Partner to pay stockholder dividends that will (i) satisfy the
requirements for qualifying as a REIT under the Code and Regulations ("REIT
Requirements"), and (ii) avoid any federal income or excise tax liability of the
General Partner, provided, however, the General Partner shall not be bound to
comply with this covenant to the extent such distributions would (i) violate
applicable Delaware law or (ii) contravene the terms of any notes, mortgages or
other types of debt obligations which the Partnership may be subject to in
conjunction with borrowed funds.
6.3 Withholding
With respect to any withholding tax or other similar tax
liability or obligation to which the Partnership may be subject as a result of
any act or status of any Partner or to which the Partnership becomes subject
with respect to any Partnership Interest, the Partnership shall have the right
to withhold amounts of Available Cash distributable to such Partner or with
respect to such Partnership Interest, to the extent of the amount of such
withholding tax or other similar tax liability or obligation pursuant to the
provisions contained in Section 11.5.
6.4 Additional Partnership Interests
If the Partnership issues Partnership Interests in accordance
with Section 5.2 or 5.3, the distribution priorities set forth in Exhibit A
shall be amended, as necessary, to reflect the distribution priority of such
Partnership Interests.
6.5 Distributions Upon Liquidation
Proceeds from a Capital Transaction shall be distributed
pursuant to the provisions of Exhibit A and any other cash received or
reductions in reserves made after commencement of the liquidation of the
Partnership shall be distributed to the Partners in
11764.0001 340937.14
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<PAGE>
accordance with Section 14.2, after allocating Net Income, Net Loss or items
thereof in accordance with Section 1(c) of Exhibit A.
ARTICLE 7
ALLOCATIONS
The Net Income, Net Loss and other Partnership items shall be
allocated pursuant to the provisions of Exhibit A.
ARTICLE 8
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 8.1 Management
A. Except as otherwise expressly provided in this Agreement,
all management powers over the business and affairs the Partnership are and
shall be exclusively vested in the General Partner, and, except as provided in
Section 8.1E hereof, no Limited Partner shall have any right to participate in
or exercise control or management power over the business and affairs of the
Partnership. The General Partner may not be removed by the Limited Partners with
or without cause. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner shall have, subject to Section 8.1E hereof, full power and authority to
do all things deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers set forth in Section 4.2 hereof and to
effectuate the purposes set forth in Section 4.1 hereof, including, without
limitation:
(1) (a) the making of any expenditures, the
lending or borrowing of money, including,
without limitation, making prepayments on
loans and borrowing money to permit the
Partnership to make distributions to its
Partners in such amounts as will permit the
General Partner (so long as the General
Partner qualifies as a REIT) to avoid the
payment of any federal income tax
(including, for this purpose, any excise tax
pursuant to Section 4981 of the Code) and to
make distributions to its stockholders in
amounts sufficient to permit the General
Partner to maintain REIT status, (b) the
assumption or guarantee of, or other
contracting for, indebtedness and other
liabilities, (c) the issuance of evidence of
indebtedness (including the securing of the
same by deed, mortgage, deed of trust or
other lien or encumbrance on the
Partnership's assets) and (d) the incurring
of
11764.0001 340937.14
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<PAGE>
any obligations it deems necessary for the
conduct of the activities of the
Partnership;
(2) the making of tax, regulatory and other
filings, or rendering of periodic or other
reports to governmental or other agencies
having jurisdiction over the business or
assets of the Partnership;
(3) the acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or
exchange of any assets of the Partnership
(including the exercise or grant of any
conversion, option, privilege, or
subscription right or other right available
in connection with any assets at any time
held by the Partnership) or the merger or
other combination of the Partnership with or
into another entity;
(4) the use of the assets of the Partnership
(including, without limitation, cash on
hand) for any purpose consistent with the
terms of this Agreement and on any terms it
sees fit, including, without limitation, the
financing of the conduct of the operations
of the General Partner, the Partnership, the
Property Owning Partnerships or any of the
Partnership's Subsidiaries, the lending of
funds to other Persons (including, without
limitation, the Property Owning
Partnerships, the Subsidiaries of the
Partnership and/or the General Partner) and
the repayment of obligations of the
Partnership, the Property Owning
Partnerships and the Subsidiaries of the
Partnership and any other Person in which
the Partnership has an equity investment,
and the making of capital contributions to
the Property Owning Partnerships and the
Partnership's Subsidiaries;
(5) the management, operation, expansion,
development, construction, leasing,
landscaping, repair, alteration, demolition
or improvement of any real property or
improvements owned by the Partnership or any
Subsidiary of the Partnership;
(6) the negotiation, execution, and performance
of any contracts, conveyances or other
instruments that the General Partner
considers useful or necessary to the conduct
of the Partnership's operations or the
implementation of the General Partner's
powers under this Agreement, including (i)
contracting with property managers, leasing
agents, contractors, developers,
consultants, accountants, legal counsel,
other professional advisors and other
agents, and (ii) the payment of such related
expenses and compensation out of the
Partnership's assets;
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(7) the distribution of Partnership cash or
other Partnership assets in accordance with
this Agreement;
(8) holding, managing, investing and reinvesting
cash and other assets of the Partnership;
(9) the collection and receipt of revenues and
income of the Partnership;
(10) the establishment of one or more divisions
of the Partnership, the selection and
dismissal of employees of the Partnership
(including, without limitation, employees
having titles such as "president," "vice
president," "secretary" and "treasurer" of
the Partnership), and agents, outside
attorneys, accountants, consultants and
contractors of the Partnership, and the
determination of their compensation and
other terms of employment or engagement;
(11) the maintenance of such insurance for the
benefit of the Partnership and the Partners
as it deems necessary or appropriate;
(12) the formation of, or acquisition of an
interest in, and the contribution of
property to, any further limited or general
partnerships, joint ventures or other
relationships that it deems desirable
(including, without limitation, the
acquisition of interests in, and the
contributions of property to, its
Subsidiaries, the Property Owning
Partnerships and any other Person in which
it has an equity investment from time to
time);
(13) the control of any matters affecting the
rights and obligations of the Partnership,
including the settlement, compromise,
submission to arbitration or any other form
of dispute resolution, or abandonment of,
any claim, cause of action, liability, debt
or damages, due or owing to or from the
Partnership, the commencement or defense of
suits, legal proceedings, administrative
proceedings, arbitration or other forms of
dispute resolution, and the representation
of the Partnership in all suits or legal
proceedings, administrative proceedings,
arbitrations or other forms of dispute
resolution, the incurring of legal expenses,
and the indemnification of any Person
against liabilities and contingencies to the
extent permitted by law;
(14) the undertaking of any action in connection
with the Partnership's direct or indirect
investment in its Subsidiaries, the
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<PAGE>
Property Owning Partnerships or any other
Person (including, without limitation, the
contribution or loan of funds by the
Partnership to such Persons);
(15) the determination of the fair market value
of any Partnership property distributed in
kind using such reasonable method of
valuation as the General Partner may adopt;
(16) the exercise, directly or indirectly,
through any attorney-in-fact acting under a
general or limited power of attorney, of any
right, including the right to vote,
appurtenant to any asset or investment held
by the Partnership;
(17) the exercise of any of the powers of the
General Partner enumerated in this Agreement
on behalf of or in connection with any
Subsidiary of the Partnership, the Property
Owning Partnerships or any other Person in
which the Partnership has a direct or
indirect interest, or jointly with any such
Subsidiary or other Person;
(18) the exercise of any of the powers of the
General Partner enumerated in this Agreement
on behalf of any Person in which the
Partnership does not have an interest
pursuant to contractual or other
arrangements with such Person;
(19) the making, execution and delivery of any
and all deeds, leases, notes, mortgages,
deeds of trust, security agreements,
conveyances, contracts, guarantees,
warranties, indemnities, waivers, releases
or legal instruments or agreements in
writing necessary or appropriate, in the
judgment of the General Partner, for the
accomplishment of any of the foregoing;
(20) the issuance of additional Partnership
Interests, as appropriate, in connection
with Capital Contributions by Additional
Limited Partners and additional Capital
Contributions by Partners pursuant to
Article 5 hereof; and
(21) The opening of bank accounts on behalf of,
and in the name of, the Partnership and its
Subsidiaries.
B. Each of the Limited Partners agrees that the General
Partner is authorized to execute, deliver and perform the above-mentioned
agreements and transactions on behalf of the Partnership without any further
act, approval or vote of the Partners (except as provided in Section 8.1E),
notwithstanding any other provision of this Agreement, to the
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<PAGE>
fullest extent permitted under the Act or other applicable law, rule or
regulation. The execution, delivery or performance by the General Partner or the
Partnership of any agreement authorized or permitted under this Agreement shall
not constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners or any other Persons
under this Agreement or of any duty stated or implied by law or equity.
C. At all times from and after the date hereof, the General
Partner may cause the Partnership to establish and maintain at any and all times
working capital accounts and other cash or similar balances in such amount as
the General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
D. Except as provided in Section 8.1E, in exercising its
authority under this Agreement, the General Partner may, but shall be under no
obligation to, take into account the tax consequences to any Partner of any
action taken by it. The General Partner and the Partnership shall not have
liability to a Limited Partner under any circumstances as a result of an income
tax liability incurred by such Limited Partner as a result of an action (or
inaction) by the General Partner taken pursuant to its authority under and in
accordance with this Agreement.
E. Notwithstanding anything to the contrary set forth in this
Agreement, until the Approval Right Termination Date, the General Partner shall
not, without the prior written consent of the Upper Tier Limited Partnership
(which may be given or withheld in its sole and absolute discretion) cause or
permit (to the extent within the General Partner's reasonable control) any
Adverse Transaction to occur, provided however that the General Partner shall be
under no obligation to commence litigation or to incur any expense (unless JMB
LP shall fund such expense) in order to avoid or prevent an Adverse Transaction
from occurring. In addition, until the Approval Right Termination Date, the
General Partner shall not, without the prior written consent of the Upper Tier
Limited Partnership (which may be given or withheld in its sole and absolute
discretion), have the power to take, on behalf of the Partnership as a limited
partner of the Property Owning Partnerships, the following actions:
1. Consent to any Adverse Transaction (as such term
is defined in the Property Owning Partnership Agreements)
pursuant to Section 6.1E of the Property Owning Partnership
Agreements;
2. Consent to the amendment of the Property Owning
Partnership Agreements in a manner that would be prohibited
under Sections 15.1B and 15.1C hereof with respect to this
Agreement; and
3. Consent to the dissolution of the Property Owning
Partnerships pursuant to Section 11.1C of the Property Owning
Partnership Agreements.
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Section 8.2 Certificate of Limited Partnership
The General Partner has filed the Certificate with the
Secretary of State of Delaware as required by the Act. The General Partner shall
use all reasonable efforts to cause to be filed such other certificates or
documents as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware and any other state, or the District of Columbia, in which the
Partnership may elect to do business or own property. To the extent that such
action is determined by the General Partner to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate and do all of the things to maintain the Partnership as a
limited partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other state, or the
District of Columbia, in which the Partnership may elect to do business or own
property. Subject to the terms of Section 9.5A(4) hereof, the General Partner
shall not be required, before or after filing, to deliver or mail a copy of the
Certificate or any amendment thereto to any Limited Partner.
Section 8.3 Reimbursement of the General Partner
A. Except as provided in this Section 8.3 and elsewhere in
this Agreement (including the provisions of Articles 6 and 7 regarding
distributions, payments, and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.
B. The General Partner, shall be reimbursed on a monthly
basis, or such other basis as it may determine in its sole and absolute
discretion, for all expenses that it incurs relating to the ownership and
operation of, or for the benefit of, the Partnership; provided, that the amount
of any such reimbursement shall be reduced by any interest earned by the General
Partner with respect to bank accounts or other instruments or accounts of the
Partnership held by it in its name. Such reimbursement shall be in addition to
any reimbursement made as a result of indemnification pursuant to Section 8.6
hereof.
Section 8.4 Outside Activities of the General Partner
A. The General Partner shall devote such time and effort to
the business of the Partnership as the General Partner shall reasonably deem
necessary to promote adequately the interests of the Partnership and the
interests of the Partners; however, it is specifically understood and agreed
that the General Partner shall not be required to devote full time to the
business of the Partnership and that the Partners and their respective
stockholders, partners, directors, officers and affiliates may at any time and
from time to time engage in and possess interests in other business ventures of
any and every type and description, including, without limitation, the
ownership, operation, financing and management of real estate, interests in real
estate or real estate-related securities, independently or with others which may
be competitive
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<PAGE>
with the Partnership's business, and neither the Partnership nor any Partner
shall by virtue of this Agreement or otherwise have any right, title or interest
in or to such independent ventures.
B. The General Partner and any Affiliates of the General
Partner may acquire Limited Partner Interests and shall be entitled to exercise
all rights of a Limited Partner relating to such Limited Partner Interests.
C. The Partners shall be under no obligation to contribute
additional capital to the Partnership and the General Partner may raise
additional capital without any obligation to contribute it to the Partnership.
Section 8.5 Contracts with Affiliates
A. The Partnership may lend or contribute funds or other
assets to its Subsidiaries or other Persons in which it has an equity investment
and such Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
B. Except as provided in Section 8.1E, the Partnership may
Transfer assets to joint ventures, other partnerships, corporations or other
business entities in which it is or thereby becomes a participant upon such
terms and subject to such conditions consistent with this Agreement and
applicable law as the General Partner, in its sole and absolute discretion,
believes are advisable.
C. The General Partner, in its sole and absolute discretion
and without the approval of the Limited Partners, may propose and adopt, on
behalf of the Partnership, employee benefit plans, stock option plans, and
similar plans funded by the Partnership for the benefit of employees of the
General Partner, the Partnership, Subsidiaries of the Partnership or any
Affiliate of any of them in respect of services performed, directly or
indirectly, for the benefit of the Partnership, the General Partner, or any
Subsidiaries of the Partnership.
D. The General Partner is expressly authorized to enter into,
in the name and on behalf of the Partnership, a "right of first opportunity" or
"right of first offer" arrangement, non-competition agreements and other
conflict avoidance agreements with various Affiliates of the Partnership and the
General Partner, on such terms as the General Partner, in its sole and absolute
discretion, believes are advisable.
Section 8.6 Indemnification
A. To the fullest extent permitted by Delaware law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities,
11764.0001 340937.14
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<PAGE>
joint or several, expenses (including, without limitation, reasonable attorneys'
fees and other legal fees and expenses), judgments, fines, settlements, and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate to
the operations of the Partnership or the General Partner as set forth in this
Agreement, in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, except to the extent it is finally determined
by a court of competent jurisdiction, from which no further appeal may be taken,
that such Indemnitee's action constituted intentional acts or omissions
constituting willful misconduct or fraud. Without limitation, the foregoing
indemnity shall extend to any liability of any Indemnitee, pursuant to a loan
guaranty or otherwise for any indebtedness of the Partnership, the Property
Owning Partnerships or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership, the Property Owning
Partnerships or any Subsidiary of the Partnership has assumed or taken subject
to), and the General Partner is hereby authorized and empowered, on behalf of
the Partnership, to enter into one or more indemnity agreements consistent with
the provisions of this Section 8.6 in favor of any Indemnitee having or
potentially having liability for any such indebtedness. Any indemnification
pursuant to this Section 8.6 shall be made only out of the assets of the
Partnership, and neither the General Partner nor any Limited Partner shall have
any obligation to contribute to the capital of the Partnership, or otherwise
provide funds, to enable the Partnership to fund its obligations under this
Section 8.6.
B. Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding shall be paid or reimbursed by the Partnership in advance
of the final disposition of the proceeding.
C. The indemnification provided by this Section 8.6 shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity unless otherwise provided in a written
agreement pursuant to which such Indemnities are indemnified.
D. The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of the Indemnitees and such other
Persons as the General Partner shall determine, against any liability that may
be asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
E. For purposes of this Section 8.6, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by such Indemnitee of its duties to the
Partnership also imposes duties on, or otherwise involves services by, such
Indemnitee to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
Section 8.6; and
11764.0001 340937.14
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<PAGE>
actions taken or omitted by the Indemnitee with respect to an employee benefit
plan in the performance of its duties for a purpose reasonably believed by it to
be in the interest of the participant and beneficiaries of the plan shall be
deemed to be for a purpose which is not opposed to the best interests of the
Partnership.
F. In no event may an Indemnitee subject any of the Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
G. An Indemnitee shall not be denied indemnification in whole
or in part under this Section 8.6 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 8.6 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 8.6 or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this Section 8.6, as in effect immediately
prior to such amendment, modification, or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
Section 8.7 Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner and its officers and directors shall not be
liable for monetary damages to the Partnership, any Partners or any Assignees
for losses sustained or liabilities incurred as a result of errors in judgment
or of any act or omission if the General Partner acted in good faith; provided,
however, the foregoing shall not be deemed to exculpate the General Partner from
any liability the General Partner may have under the GP Contribution Agreement.
B. The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership and the stockholders of the
General Partner collectively, that the General Partner, subject to the
provisions of Section 8.1E hereof, is under no obligation to consider the
separate interest of the Limited Partners in deciding whether to cause the
Partnership to take (or decline to take) any actions, and that the General
Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners in connection
with such decisions, provided that the General Partner has acted in good faith.
With respect to any indebtedness of the Partnership which any Limited Partner
may have guaranteed, the General Partner shall have no duty to keep such
indebtedness outstanding.
C. Subject to its obligations and duties as General Partner
set forth in Section 8.1A hereof, the General Partner may exercise any of the
powers granted to it by this
11764.0001 340937.14
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<PAGE>
Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agent. The General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
Section 8.8 Other Matters Concerning the General Partner
A. The General Partner may rely and shall be protected in
acting, or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture,
or other paper or document believed by it in good faith to be genuine and to
have been signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers, architects,
engineers, environmental consultants and other consultants and advisers selected
by it, and any act taken or omitted to be taken in reliance upon the advice or
opinion of such Persons as to matters which such General Partner reasonably
believes to be within such Person's professional or expert competence shall be
conclusively presumed to have been done or omitted in good faith and in
accordance with such advice or opinion.
C. The General Partner shall have the right, in respect of any
of its powers or obligations hereunder, to act through any of its duly
authorized officers and duly appointed attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement
(other than Section 8.1E) or the Act, any action of the General Partner on
behalf of the Partnership or any decision of the General Partner to refrain from
acting on behalf of the Partnership, undertaken in the good faith belief that
such action or omission is necessary or advisable in order (i) to protect the
ability of the General Partner to continue to qualify as a REIT; or (ii) to
avoid the General Partner incurring any taxes under Section 857 or Section 4981
of the Code, is expressly authorized under this Agreement and is deemed approved
by all of the Limited Partners.
Section 8.9 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed
and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General Partner
may determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership asset for which legal title is
held in the name of the
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General Partner or any nominee or Affiliate of the General Partner shall be held
by the General Partner for the use and benefit of the Partnership in accordance
with the provisions of this Agreement; provided, that the General Partner shall
use its best efforts to cause beneficial and record title to such assets to be
vested in the Partnership as soon as reasonably practicable. All Partnership
assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which legal title to such Partnership
assets is held.
Section 8.10 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement,
any Person dealing with the Partnership shall be entitled to assume that the
General Partner has full power and authority, without consent or approval of any
other Partner or Person, to encumber, sell or otherwise use in any manner any
and all assets of the Partnership and to enter into any contracts on behalf of
the Partnership, and take any and all actions on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect; (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership; and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
ARTICLE 9
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 9.1 Limitation of Liability
The Limited Partners shall have no liability under this
Agreement except as expressly provided in this Agreement, including Section 11.5
hereof, or under the Act.
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Section 9.2 Management of Business
No Limited Partner or Assignee (other than the General
Partner, any of its Affiliates or any officer, director, employee, agent or
trustee of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
Section 9.3 Outside Activities of Limited Partners
Subject to any agreements entered into pursuant to Section 8.5
hereof and any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or any of its Subsidiaries, any Limited Partner
and any officer, director, partner, employee, agent, trustee, Affiliate or
shareholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities that are in direct
competition with the Partnership or that are enhanced by the activities of the
Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee. None of the Limited Partners nor any other Person shall have any
rights by virtue of this Agreement or the Partnership relationship established
hereby in any business ventures of any other Person and such Person shall have
no obligation pursuant to this Agreement to offer any interest in any such
business ventures to the Partnership, any Limited Partner or any such other
Person, even if such opportunity is of a character which, if presented to the
Partnership, any Limited Partner or such other Person, could be taken by such
Person.
Section 9.4 Return of Capital
No Limited Partner shall be entitled to the withdrawal or
return of its Capital Contribution, except to the extent of distributions made
pursuant to this Agreement or upon termination of the Partnership as provided
herein. Except to the extent provided by Exhibit A, or as otherwise expressly
provided in this Agreement, no Limited Partner or Assignee shall have priority
over any other Limited Partner or Assignee, either as to the return of Capital
Contributions or as to profits, losses or distributions.
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<PAGE>
Section 9.5 Rights of Limited Partners Relating to the
Partnership
A. In addition to the other rights provided by this Agreement
or by the Act, and except as limited by Section 9.5B hereof, each Limited
Partner shall receive from the Partnership the following:
(1) copies of all annual and quarterly reports
of the Partnership;
(2) a copy of the Partnership's federal, state
and local income tax returns for each
Partnership Year; and
(3) a copy of this Agreement and the Certificate
and all amendments and/or restatements
thereto, together with executed copies of
all powers of attorney pursuant to which
this Agreement, the Certificate and all
amendments and/or restatements thereto have
been executed.
B. In addition, each Limited Partner shall have the right, for
a purpose reasonably related to such Limited Partner's interest as a limited
partner in the Partnership, upon written demand with a statement of the purpose
of such demand:
(1) to obtain a current list of the name and
last known business, residence or mailing
address of each Partner; and
(2) to obtain true and full information
regarding the amount of cash and a
description and statement of any other
property or services contributed by each
Partner and which each Partner has agreed to
contribute in the future, and the date on
which each became a Partner.
C. Notwithstanding any other provision of this Section 9.5,
the General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information (other than information partners of
the Limited Partners require in order to comply with law, including making
proper tax filings) that (i) the General Partner reasonably believes to be in
the nature of trade secrets or other information, the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or its business; or (ii) the
Partnership is required by law or by agreements with an unaffiliated third party
to keep confidential.
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<PAGE>
ARTICLE 10
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 10.1 Records and Accounting
The General Partner shall keep or cause to be kept at the
principal office of the Partnership those records and documents required to be
maintained by the Act and other books and records deemed by the General Partner
to be appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to comply with applicable REIT
Requirements and to provide to the Limited Partners any information, lists and
copies of documents required to be provided pursuant to Sections 9.5A and 10.3
hereof. Any records maintained by or on behalf of the Partnership in the regular
course of its business may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, micrographics or any other information storage
device, provided that the records so maintained are convertible into clearly
legible written form within a reasonable period of time. The books of the
Partnership shall be maintained, for financial and tax reporting purposes, on an
accrual basis in accordance with generally accepted accounting principles, or
such other basis as the General Partner determines to be necessary or
appropriate.
Section 10.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 10.3 Reports
A. As soon as practicable, but in no event later than ninety
(90) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner as of the close of the Partnership
Year, an annual report containing financial statements of the Partnership, or of
the General Partner if such statements are prepared solely on a consolidated
basis with the General Partner, for such Partnership Year, presented in
accordance with GAAP, such statements to be audited by Deloitte & Touche LLP or
another nationally recognized firm of independent public accountants selected by
the General Partner and, until the Approval Right Termination Date, reasonably
acceptable to JMB LP, provided that the failure of JMB LP to approve a public
accountant shall not be deemed to be unreasonable if such accountant fails to
confirm in writing to the Partnership and JMB LP that it will follow the
allocations of Partnership non-recourse liabilities as provided herein.
B. As soon as practicable, but in no event later than
forty-five (45) days after the close of each calendar quarter (except the last
calendar quarter of each calendar year), the General Partner shall cause to be
mailed to each Limited Partner a report containing unaudited financial
statements as of the last day of the calendar quarter of the Partnership, or of
the General Partner, if such statements are prepared solely on a consolidated
basis with the General Partner, and such other information as may be required by
applicable law or regulation, or as the General Partner determines to be
appropriate.
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ARTICLE 11
TAX MATTERS
Section 11.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and
timely filing by the Partnership's accountants of all returns of Partnership
income, gains, deductions, losses and other items required of the Partnership
for federal and state income tax purposes and shall use all reasonable efforts
to furnish, within sixty (60) days of the close of each taxable year, the tax
information reasonably required by Limited Partners for federal and state income
tax reporting purposes. The Upper Tier Limited Partnership and JMB LP, as a
partner therein, shall be entitled to confer with such accountants concerning
all tax matters.
Section 11.2 Tax Elections
Except as otherwise provided herein, the General Partner
shall, in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code. In addition, the Upper Tier Limited
Partnership will have full and exclusive authority with respect to those matters
reserved to the Limited Partner (as such term is defined in the Property Owning
Partnership Agreements) under Section 10.8 of each of the Property Owning
Partnership Agreements. The General Partner shall elect the "remedial method" of
making Section 704(c) allocations pursuant to Regulations Section 1.704-3 with
respect to property contributed pursuant to the LP Contribution Agreement and
shall not make the election under Section 754 of the Code prior to January 1,
1997, unless otherwise requested by the Limited Partner and in the event of any
such request, the General Partner shall comply with the request of the Limited
Partner as to the making of Section 704(c) allocations and the making (or
revocation) of a Section 754 election. The General Partner shall have the right
to seek to revoke any tax election it makes (other than (i) the election to use
the remedial method of making the Section 704(c) allocations described in this
Section 11.2 or another method of making Section 704(c) allocations requested by
the Limited Partner and (ii) the election under Section 754 of the Code), upon
the General Partner's determination, in its sole and absolute discretion, that
such revocation is in the best interests of the Partners.
Section 11.3 Tax Matters Partner
A. The General Partner shall be the "tax matters partner" of
the Partnership (within the meaning of Section 6231(a)(7) of the Code) and shall
exercise such position on a reasonable basis and in accordance with Sections
8.1D and 8.1E. Pursuant to Section 6230(e) of the Code, upon receipt of notice
from the Internal Revenue Service of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the Internal Revenue Service with the name, address, taxpayer
identification number, and profit interest of each of the Limited Partners and
the Assignees; provided, that such information is provided to the Partnership by
the Limited Partners and the Assignees.
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B. The taking of any action and the incurring of any expense
by the tax matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of the
tax matters partner and the provisions relating to indemnification of the
General Partner set forth in Section 8.6 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
C. The tax matters partner shall receive no compensation for
its services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm to assist
the tax matters partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is reasonable.
Section 11.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any,
incurred by it in organizing the Partnership ratably over a sixty (60) month
period as provided in Section 709 of the Code.
Section 11.5 Withholding
Each Limited Partner hereby authorizes the Partnership to
withhold from such Limited Partner any amount of federal, state, local, or
foreign taxes that the General Partner determines that the Partnership is
required to withhold or pay with respect to any amount distributable or
allocable to such Limited Partner pursuant to this Agreement, including, without
limitation, any taxes required to be withheld or paid by the Partnership
pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any amounts withheld
shall be treated as having been distributed to such Limited Partner.
ARTICLE 12
TRANSFERS AND WITHDRAWALS
Section 12.1 Transfer
A. The term "Transfer," when used in this Article 12 with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which the General Partner purports to assign all or any part of its General
Partner Interest to another Person or by which a Limited Partner purports to
assign all or any part of its Limited Partner Interest to another Person.
B. No Partnership Interest shall be Transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article 12. Any Transfer or
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purported Transfer of a Partnership Interest not made in accordance with this
Article 12 shall be null and void.
C. Subject to any provisions of this Agreement relating to
Adverse Transactions, the General Partner shall have the right to Transfer its
Partnership Interest in its sole discretion.
Section 12.2 General Partner's Purchase Right; Limited
Partner's Put Rights.
A. The General Partner shall have the continuing right the
("Purchase Right"), exercisable at any time on or after the earliest of (i) the
Default Date (as hereinafter defined), (ii) January 2, 2001 and (iii) the date
on which JMB LP no longer holds any partnership interest in the Upper Tier
Limited Partnership, to acquire or cause its designee to acquire the Partnership
Interest of the Limited Partner, free and clear of any liens, restrictions and
encumbrances (other than those set forth in this Agreement), for an amount (the
"Purchase Price Amount") equal to the greater of (x) the amount that would be
distributed to the Limited Partner pursuant to Section 14.2 of this Agreement
(after repaying all debt encumbering the Properties) if the Properties were sold
(and all proceeds therefrom were distributed to the Property Owning
Partnerships' partners in accordance with the Property Owning Partnership
Agreements) for a cash amount equal to the quotient of (A) the product of two
times the Properties' Net Operating Income for the period of January 1, 2000
through June 30, 2000 and (B) 0.12, and (y) $100. If the exercise of the
Purchase Right is prior to January 2, 2001 pursuant to clause (i) or (iii)
above, then the amount to be calculated under clause (A) above shall be
calculated in the manner provided in clause (A) of paragraph C below. The
Purchase Right shall be exercised upon fifteen (15) business days' prior written
notice (the "Purchase Right Notice") from the General Partner to the Limited
Partner (which shall not be delivered before fifteen (15) business days prior to
January 2, 2001 or an earlier Default Date) and shall be consummated, without
any action on the part of the Limited Partner, on the fifteenth business day
following delivery of the Purchase Right Notice. The Limited Partner hereby
constitutes and appoints the General Partner and its authorized officers and
attorneys-in-fact, in each case with full power of substitution, as its true and
lawful agent and attorney-in-fact, with full power and authority in its name,
place and stead to execute, swear to, acknowledge, deliver, file and record all
certificates, documents, and other instruments in order to effectuate the
transfer pursuant to the Purchase Right and the Put Right (as hereinafter
defined).
B. JMB LP shall concurrently herewith (i) cause the JMB
Indemnitors to execute and deliver to the General Partner the JMB Indemnity, and
(ii) deliver to the General Partner a marketable security in form and substance
acceptable to the General Partner which will be guaranteed by the full faith and
credit of the United States of America and which will have a market value as of
January 2, 2001 of $10,000,000 (the "JMB Collateral"). The General Partner shall
hold the JMB Collateral in accordance with the terms hereof and JMB LP hereby
grants to the General Partner a first priority perfected security interest
therein and agrees to take such actions as the General Partner may reasonably
request to ratify, confirm
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and continue such security interest. JMB LP shall be charged with all income
accrued under the JMB Collateral prior to its liquidation and application by the
General Partner in accordance herewith. The General Partner may, at its
election, liquidate the JMB Collateral and hold or distribute the proceeds
thereof free and clear of any interest of JMB LP and demand payment under the
JMB Indemnity if (1) JMB LP or any of its officers, directors, partners,
stockholders, agents or affiliates (collectively, the "Controlled Entities")
intentionally interferes with, impedes or prevents (including, without
limitation, the filing by JMB LP of a voluntary petition under the Bankruptcy
Code or any other federal or state bankruptcy or insolvency statute or any
Controlled Entity joining an involuntary petition against JMB LP under the
Bankruptcy Code or such other statute) (x) the exercise by the General Partner
of the Purchase Right or (y) any disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of the Properties by the Property Owning Partnerships
or the Property Owning Partnership Interests by the Partnership or the merger or
other combination of the Property Owning Partnerships or the Partnership with or
into another entity, in accordance with the terms of this Agreement, provided
that such disposition, mortgage, pledge, encumbrance, hypothecation, exchange,
merger or other combination does not constitute an Adverse Transaction a
("Prohibited Action") and (2) the Prohibited Action is not revoked or rescinded
within sixty (60) days after notice by the indemnitee thereunder to the JMB
Indemnitors so as to permit the consummation of the transaction described in
clause (x) or (y) above unimpeded by any action by JMB LP or any of the
Controlled Entities. If JMB LP shall take a Prohibited Action (the date of such
Prohibited Action being the "Default Date" ), the General Partner shall have the
continuing right at any time after the Default Date to exercise the Purchase
Right pursuant to Section 12.2A. The General Partner shall deliver the JMB
Collateral to JMB LP upon the expiration of the preference period under Section
547 of the Bankruptcy Code following (A) the transfer of the interest of JMB LP
to or at the direction of the general partner of the Limited Partner pursuant to
JMB's put right contained in the Agreement of Limited Partnership of the Limited
Partner, (B) the transfer of the interest of the Limited Partner pursuant to the
Purchase Right or the Put Right, (C) a sale of the Properties by the Property
Owning Partnerships or a transfer of the Property Owning Partnership Interests
by the Partnership to the extent permitted under the terms of this Agreement, in
each case without JMB LP or any other Controlled Entity having taken any
Prohibited Action, or (D) receipt by the General Partner of all amounts payable
under the JMB Indemnity following the occurrence of a Prohibited Action. The
General Partner's right to apply the proceeds of the JMB Collateral as provided
herein shall be reduced on a dollar for dollar basis to the extent the General
Partner receives payments from the JMB Indemnitors under the JMB Indemnity in
excess of $15,000,000.
C. The Limited Partner shall have the continuing right (the
"Put Right") exercisable at any time to require the General Partner to purchase
the Partnership Interest of the Limited Partner, free and clear of all liens,
restrictions, and encumbrances (other than those set forth in the Agreement) for
a cash amount (the "Put Price") equal to the greater of (x) the amount that
would be distributed to the Limited Partner pursuant to Section 14.2 of this
Agreement (after repaying all debt encumbering the Property) if the Property
were sold for a cash amount equal to the quotient of (A) the Property's Net
Operating Income for the
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period provided in the last sentence of this paragraph C and (B) 0.12, and (y)
$100. The Put Right shall be exercised by the Limited Partner upon fifteen (15)
days prior written notice (the "Put Right Notice") to the General Partner and
shall be consummated, without any action on the part of the Limited Partner,
within fifteen (15) days following the delivery of the Put Right Notice. If the
Limited Partner exercises the Put Right, the Put Price shall be calculated based
on the Property's Net Operating Income for the immediately preceding calendar
year.
D. In connection with the exercise of either the Purchase
Right or the Put Right, the Limited Partner shall pay all transfer taxes, gain
taxes and other similar costs related to the exercise of such rights, including,
in the case of the Put Right, any additional transfer taxes and transfer gains
taxes which would be retroactively assessed with respect to the transfer of the
Properties to the Property Owning Partnerships pursuant to the Plan by reason of
the exercise of the Put Right.
Section 12.3 Transfer of the General Partner Interest
A. The General Partner may Transfer all or any part of its
General Partner Interest or withdraw as General Partner, in its sole discretion
and without the consent of any Limited Partners; provided that the General
Partner may withdraw as general partner only in connection with a Transfer of
its General Partner Interest and immediately following the admission of a
successor General Partner, as general partner, in accordance with Article 13
hereof.
B. In the event the General Partner withdraws as general
partner in accordance with clause A. above, its Partnership Interest shall
immediately be converted into a Limited Partner Interest and the General Partner
shall be entitled to receive distributions from the Partnership and the share of
Net Income, Net Losses, any other items, gain, loss, deduction and credit that
were otherwise attributable to its General Partner Interest.
Section 12.4 Limited Partners' Rights to Transfer
A Limited Partner may Transfer such Limited Partner's Limited
Partner Interests only with the prior written consent of the General Partner,
which may be withheld in the sole and absolute discretion of the General
Partner. Any such attempted or actual Transfer by a Limited Partner to any
Person without the approval of the General Partner shall be null and void ab
initio and of no force and effect.
Section 12.5 Substituted Limited Partners
A. The General Partner shall have the right to consent to the
admission of a transferee who receives Limited Partner Interests pursuant to
Section 12.4, which consent may be given or withheld by the General Partner in
its sole and absolute discretion. The General
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Partner's failure or refusal to permit such transferee to become a Substituted
Limited Partner shall not give rise to any cause of action against the
Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 12 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement.
C. No Permitted Transferee will be admitted as a Substituted
Limited Partner unless (i) such transferee has furnished to the General Partner
(a) evidence of acceptance in form satisfactory to the General Partner of all of
the terms and conditions of this Agreement, including, without limitation, the
power of attorney granted in Section 3.4 and 12.2(A) hereof and (b) such other
documents or instruments as may be required in the reasonable discretion of the
General Partner in order to effect such Person's admission as a Substituted
Limited Partner and (ii) the General Partner has consented to such admission in
accordance with Section 12.5A. Upon the admission of a Substituted Limited
Partner, the General Partner shall amend Exhibit B to reflect the name, address
and Limited Partner Interests of such Substituted Limited Partner and to
eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 12.6 Intentionally Omitted
Section 12.7 General Provisions
A. No Limited Partner may withdraw from the Partnership other
than as a result of a permitted Transfer of all of such Limited Partner's
Limited Partner Interests in accordance with this Article 12.
B. Any Limited Partner who shall Transfer all of its Limited
Partner Interests in a Transfer permitted pursuant to this Article 12 shall
cease to be a Limited Partner upon the admission of all Assignees of such
Limited Partner Interests as Substituted Limited Partners.
C. Without the consent of the General Partner, transfers
pursuant to this Article 12 may only be made as of the first day of a fiscal
quarter of the Partnership.
D. If any Partnership Interest is transferred or assigned
during the Partnership's fiscal year in compliance with the provisions of this
Article 12 on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items attributable to such
interest for such Partnership Year shall be divided and allocated between the
transferor Partner and the transferee Partner by taking into account their
varying interests during the Partnership Year in accordance with Section 706(d)
of the Code, using the interim closing of the books method. Solely for purposes
of making such allocations, each of such items for the calendar month in which
the Transfer or assignment occurs shall be allocated to the transferee Partner,
and none of such items for the calendar
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month in which an exchange occurs shall be allocated to the exchanging Partner,
provided, however, that the General Partner may adopt such other conventions
relating to allocations in connection with transfers, assignments, or exchanges
as it determines are necessary or appropriate. All distributions of Available
Cash attributable to such Limited Partner Interests with respect to which the
Partnership Record Date is before the date of such transfer, assignment, or
exchange shall be made to the transferor Partner or the exchanging Partner, as
the case may be, and in the case of a Transfer or assignment other than an
exchange, all distributions of Available Cash thereafter attributable to such
Limited Partner Interests shall be made to the transferee Partner.
ARTICLE 13
ADMISSION OF PARTNERS
Section 13.1 Admission of Successor General Partner
A successor to all of the General Partner Interest pursuant to
Section 12 hereof who is proposed to be admitted as a successor General Partner
shall be admitted to the Partnership as the General Partner, effective
immediately prior to such transfer. Any such transferee shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
the admission. In the case of such admission on any day other than the first day
of a Partnership Year, all items attributable to the General Partner Interest
for such Partnership Year shall be allocated between the transferring General
Partner and such successor as provided in Section 12.7D hereof.
Section 13.2 Admission of Additional Limited Partners
A. After the admission to the Partnership of the initial
Limited Partner on the Effective Date, a Person who makes a Capital Contribution
to the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 3.4 and, if applicable,
12.2(A) hereof and (ii) such other documents or instruments as may be required
in the discretion of the General Partner in order to effect such Person's
admission as an Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section
13.2, no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole and absolute discretion. The admission of any Person as
an Additional Limited Partner shall become effective on the
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date upon which the name of such Person is recorded on the books and records of
the Partnership, following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items allocable among
Partners and Assignees for such Partnership Year shall be allocated among such
Additional Limited Partner and all other Partners and Assignees by taking into
account their varying interests during the Partnership Year in accordance with
Section 706(d) of the Code, using the interim closing of the books method.
Solely for purposes of making such allocations, each of such items for the
calendar month in which an admission of any Additional Limited Partner occurs
shall be allocated among all of the Partners and Assignees, including such
Additional Limited Partner. All distributions of Available Cash with respect to
which the Partnership Record Date is before the date of such admission shall be
made solely to Partners and Assignees, other than the Additional Limited
Partner, and all distributions of Available Cash thereafter shall be made to all
of the Partners and Assignees, including such Additional Limited Partner.
Section 13.3 Amendment of Agreement and Certificate of
Limited Partnership
For the admission to the Partnership of any Partner, the
General Partner shall take all steps necessary and appropriate under the Act to
amend the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including, if applicable, amendments
of Exhibits A and B) and, if required by law, shall prepare and file an
amendment to the Certificate and may for this purpose exercise the power of
attorney granted pursuant to Section 3.4 hereof.
ARTICLE 14
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 14.1 Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
In the event of the withdrawal of the General Partner, any successor General
Partner shall continue the business of the Partnership. Subject to Section 8.1E
hereof, the Partnership shall dissolve, and its affairs shall be wound up, only
upon the first to occur of any of the following ("Liquidating Events"):
A. the expiration of its term as provided in Section 3.5
hereof;
B. an event of withdrawal of the General Partner, as defined
in the Act unless, within ninety (90) days after such event of withdrawal all of
the remaining Partners agree in writing to continue the business of the
Partnership and to the appointment, effective
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as of the date of withdrawal, of a successor General Partner, provided that a
withdrawal of the General Partner in connection with a Transfer of its General
Partner Interest shall be governed by the provisions of Section 12.3A hereof;
C. until the Approval Right Termination Date, an election to
dissolve the Partnership made by the General Partner, with the consent of the
Limited Partner (which may be given or withheld in its sole and absolute
discretion);
D. from and the after Approval Right Termination Date, an
election to dissolve the Partnership made by the General Partner, in its sole
and absolute discretion;
E. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
F. the sale of all or substantially all of the assets and
properties of the Partnership.
Section 14.2 Winding Up
A. Upon the occurrence of a Liquidating Event, the Partnership
shall continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its creditors and
Partners. No Partner shall take any action that is inconsistent with, or not
necessary to or appropriate for, the winding up of the Partnership's business
and affairs. The General Partner, or, in the event there is no remaining General
Partner, any Person elected by Limited Partners holding at least a majority of
the Limited Partnership Interests (the General Partner or such other Person
being referred to herein as the "Liquidator"), shall be responsible for
overseeing the winding up and dissolution of the Partnership and shall take full
account of the Partnership's liabilities and property and the Partnership
property shall be liquidated as promptly as is consistent with obtaining the
fair value thereof, and the proceeds therefrom (which may, to the extent
determined by the General Partner, include shares of beneficial interest or
other securities of the General Partner) shall be applied and distributed in the
following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors
other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General
Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other
Partners; and
(4) The balance, if any, to the General Partner and
Limited Partners to the extent of and in accordance
with the positive balances in their Capital
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Accounts after giving effect to all contributions,
distributions, and allocations for all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 14.
B. Notwithstanding the provisions of Section 14.2A hereof
which require liquidation of the assets of the Partnership, but subject to the
order of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any asset except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 14.2A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interests of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
C. In the discretion of the Liquidator, a pro rata portion of
the distributions that would otherwise be made to the General Partner and
Limited Partners pursuant to this Article 14 may be:
(1) distributed to a trust established for the
benefit of the General Partner and Limited
Partners for the purposes of liquidating
Partnership assets, collecting amounts owed
to the Partnership, and paying any
contingent or unforeseen liabilities or
obligations of the Partnership or the
General Partner arising out of or in
connection with the Partnership. The assets
of any such trust shall be distributed to
the General Partner and Limited Partners
from time to time, in the reasonable
discretion of the Liquidator, in the same
proportions as the amount distributed to
such trust by the Partnership would
otherwise have been distributed to the
General Partner and Limited Partners
pursuant to this Agreement; or
(2) withheld or escrowed to provide a reasonable
reserve for Partnership liabilities
(contingent or otherwise) and to reflect the
unrealized portion of any installment
obligations owed to the Partnership,
provided that such withheld or escrowed
amounts shall be distributed to the General
Partner and Limited Partners
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in the manner and order of priority set forth
in Section 14.2A as soon as practicable.
Section 14.3 No Obligation to Contribute Deficit
If any Partner has a deficit balance in his Capital Account
(after giving effect to all contributions, distributions and allocations for all
taxable years, including the year during which such liquidation occurs), such
Partner shall have no obligation to make any contribution to the capital of the
Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever.
Section 14.4 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited
Partner shall look solely to the assets of the Partnership for the return of its
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership. Except as otherwise provided in
this Agreement, no Limited Partner shall have priority over any other Partner as
to the return of its Capital Contributions, distributions, or allocations.
Section 14.5 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs
that would, but for the provisions of an election or objection by one or more
Partners pursuant to Section 14.1, result in a dissolution of the Partnership,
the General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners.
Section 14.6 Termination of Partnership and Cancellation
of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership's
assets, as provided in Section 14.2 hereof, the Partnership shall be terminated,
a certificate of cancellation shall be filed, and all qualifications of the
Partnership as a foreign limited partnership in jurisdictions other than the
state of Delaware shall be canceled and such other actions as may be necessary
to terminate the Partnership shall be taken.
Section 14.7 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up
of the business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 14.2 hereof in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
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Section 14.8 Waiver of Partition
Each Partner hereby waives any right to partition of the
Partnership property.
ARTICLE 15
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 15.1 Amendments
A. The General Partner shall have the power, without the
consent of the Limited Partners, to amend this Agreement as may be required to
facilitate or implement any of the following purposes:
(1) to add to the obligations of the General
Partner or surrender any right or power
granted to the General Partner or any
Affiliate of the General Partner for the
benefit of the Limited Partners;
(2) to reflect the admission, substitution,
termination, or withdrawal of Partners in
accordance with this Agreement;
(3) to set forth the designations, rights,
powers, duties, and preferences of the
holders of any additional Partnership
Interests issued pursuant to Section 5.3
hereof;
(4) to reflect a change that (i) is of an
inconsequential nature or to cure any
ambiguity, correct or supplement any
provision in this Agreement not inconsistent
with law or with other provisions, or make
other changes with respect to matters
arising under this Agreement that will not
be inconsistent with law or with the
provisions of this Agreement, and (ii) does
not adversely affect any Limited Partner in
any material respect; and
(5) to satisfy any requirements, conditions, or
guidelines contained in any order,
directive, opinion, ruling or regulation of
a federal or state agency or contained in
federal or state law.
The General Partner shall provide notice to the Limited Partners when any action
under this Section 15.1A is taken.
B. Notwithstanding Section 15.1A hereof, this Agreement shall
not be amended without the Consent of each Partner adversely affected (which
consent may be given or withheld in its sole and absolute discretion) if such
amendment would (i) convert a Limited Partner's Partnership Interest into a
General Partner Interest; (ii) modify the limited liability
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of a Limited Partner in a manner adverse to such Limited Partner; (iii) alter
rights of the Partner to receive distributions pursuant to Article 6 or Article
14, or the allocations specified in Article 7 (except as permitted pursuant to
Article 4 and Section 15.1A(3) hereof); (iv) cause the termination of the
Partnership prior to the time set forth in Section 3.5 or 14.1; or (v) amend
this Section 15.1B. Further, no amendment may alter the restrictions on the
General Partner's authority set forth in Section 14.1C without the Consent
specified in that section.
C. Notwithstanding Section 15.1A or Section 15.1B hereof, the
General Partner shall not amend at any time prior to the Approval Right
Termination Date, Article XI, or Sections 4.1, 8.1D, 8.1E, 10.3, 12.2, 14.3, or
15.1C, without the consent of the Upper Tier Limited Partnership which consent
may be given or withheld in its sole and absolute discretion.
Section 15.2 Meetings of the Partners
A. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by Limited Partners (other than the General Partner) holding 25 percent
or more of the Partnership Interests. The request shall state the nature of the
business to be transacted. Notice of any such meeting shall be given to all
Partners not less than seven (7) days nor more than thirty (30) days prior to
the date of such meeting. Partners may vote in person or by proxy at such
meeting. Whenever the vote or Consent of the Limited Partners is permitted or
required under this Agreement, such vote or Consent may be given at a meeting of
the Partners. Except as otherwise expressly provided in this Agreement, the
Consent of holders of a majority of the Partnership Interests held by Partners
(including Limited Partnership Interests held by the Company) shall control.
B. Any action required or permitted to be taken at a meeting
of the Partners may be taken without a meeting if a written consent setting
forth the action so taken is signed by a majority of the Partnership Interests
of the Partners (or such other percentage as is expressly required by this
Agreement). Such consent may be in one instrument or in several instruments, and
shall have the same force and effect as a vote of a majority of the Partnership
Interests of the Partners (or such other percentage as is expressly required by
this Agreement). Such consent shall be filed with the General Partner. An action
so taken shall be deemed to have been taken at a meeting held on the effective
date so certified.
C. Each Limited Partner may authorize any Person or Persons to
act for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Limited Partner executing it,
11764.0001 340937.14
49
<PAGE>
such revocation to be effective upon the Partnership's receipt of written notice
of such revocation from the Limited Partner executing such proxy.
D. Each meeting of the Partners shall be conducted by the
General Partner or such other Person as the General Partner may appoint pursuant
to such rules for the conduct of the meeting as the General Partner or such
other Person deems appropriate. Meetings of Partners may be conducted in the
same manner as meetings of the stockholders of the General Partner and may be
held at the same time, and as part of, meetings of the stockholders of the
General Partner.
ARTICLE 16
GENERAL PROVISIONS
Section 16.1 Addresses and Notice
Any notice, demand, request or report required or permitted to
be given or made to a Partner or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by first class United States mail or by other means of written communication to
the Partner or Assignee at the address set forth in Exhibit B or such other
address of which the Partner shall notify the General Partner in writing.
Section 16.2 Titles and Captions
All article or section titles or captions in this Agreement
are for convenience only. They shall not be deemed part of this Agreement and in
no way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 16.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.
Section 16.4 Further Action
The parties shall execute and deliver all documents, provide
all information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
11764.0001 340937.14
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<PAGE>
Section 16.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their heirs, executors, administrators, successors,
legal representatives and permitted assigns.
Section 16.6 Creditors
Other than as expressly set forth herein with respect to the
Indemnitees, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
Section 16.7 Waiver
No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
Section 16.8 Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all of the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 16.9 Applicable Law
This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of laws thereof.
Section 16.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.
11764.0001 340937.14
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<PAGE>
Section 16.11 Entire Agreement
This Agreement contains the entire understanding and agreement
among the Partners with respect to the subject matter hereof and supersedes any
other prior written or oral understandings or agreements among them with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of October 10, 1996.
GENERAL PARTNER:
METROPOLIS REALTY TRUST, INC.
By:
Name:
Title:
LIMITED PARTNER:
237/1290 UPPER TIER ASSOCIATES, L.P.
By: O&Y NY Building Corp.,
general partner
By:
Name:
Title:
Solely with respect to
Section 12.2B hereof:
JMB/NYC OFFICE BUILDING ASSOCIATES,
L.P., an Illinois limited partnership
By: Carlyle Managers, Inc.,
its General Partner
By:
Name:
Title:
11764.0001 340937.14
52
<PAGE>
Exhibit A
Allocations
1. Allocation of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided in this Exhibit A, Net
Income (or items thereof) (other than Net Income, or items thereof, arising in
connection with a Capital Transaction) of the Partnership for any fiscal year or
other applicable period shall be allocated to the Partners first in accordance
with any prior allocation of Net Losses, other than Nonrecourse Deductions and
Partner Nonrecourse Deductions, pro rata, until each Partner has been allocated
an amount of Net Income pursuant to this clause equal to the cumulative amount
of Net Losses, other than Nonrecourse Deductions and Partner Nonrecourse
Deductions, that have been allocated to such Partner, and thereafter to the
Partners in accordance with the manner in which Available Cash has been (or
would be, if the Partnership had an amount of Available Cash equal to such Net
Income) distributed to the Partners, other than distributions representing a
return of Capital Contributions.
(b) Net Loss. Except as otherwise provided in this Exhibit A, Net Loss
(or items thereof) (other than Net Loss, or items thereof, arising in connection
with a Capital Transaction) of the Partnership for each fiscal year or other
applicable period shall be allocated to the Partners first in accordance with
the positive Capital Account balances of the Partners, pro rata, until such
Capital Accounts have been reduced to zero, and thereafter 95% to the General
Partner and 5% to the Limited Partner. Notwithstanding the preceding sentence,
to the extent any Net Loss (or items thereof) allocated to a Partner under this
subparagraph (b) would cause such Partner (hereinafter, a "Restricted Partner")
to have an Adjusted Capital Account Deficit, or increase the amount of an
existing Adjusted Capital Account Deficit, as of the end of the fiscal year or
other applicable period to which such Net Loss relates, such Net Loss shall not
be allocated to such Restricted Partner and instead shall be allocated to the
other Partner(s) (hereinafter, the "Permitted Partner").
(c) Capital Transaction; Liquidation. Allocations of Net Income or Net
Loss (or items thereof) in connection with a Capital Transaction or Liquidation
of the Partnership shall first be made so that, to the extent possible, the
General Partner's Capital Account balance is the Adjusted GP Contribution and
the Limited Partner's Capital Account is equal to $100,000, and the remainder of
such Net Income or Net Loss (or items thereof) shall be allocated to the
Partners in a manner that results in the Capital Account of each Partner being
equal to the distribution to which each such Partner is entitled pursuant to
paragraph 4 of this Exhibit A. Notwithstanding the preceding sentence, to the
extent any Net Loss (or items thereof) would be allocated to a Restricted
Partner under this subparagraph (c), such Net Loss shall not be allocated to
such Restricted Partner and instead shall be allocated to the Permitted Partner.
11764.0001 340937.14
A-1
<PAGE>
(d) Rules of Construction.
(1) Capital Account Increases. For purposes of making
allocations pursuant to subparagraph 1(c) of this Exhibit A, a Partner's Capital
Account balance shall be deemed to be increased by such Partner's share of any
Partnership Minimum Gain and Partner Minimum Gain remaining at the close of the
fiscal period in respect of which such allocations are being made.
(2) Change in Partnership Interests. In the event any
Partner's Partnership Interest changes during a fiscal year for any reason,
including without limitation, the Transfer of any interest in the Partnership,
the tax allocations contained in this Exhibit A shall be applied as necessary to
reflect the varying interests of the Partners during such year.
2. Special Allocations. Notwithstanding any provisions of paragraph 1 of
this Exhibit A, the following special allocations shall be made.
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). Except as
otherwise provided in Section 1.704-2(f) of the Regulations, if there is a net
decrease in Partnership Minimum Gain for any Partnership fiscal year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain to the extent
required by Regulations Section 1.704-2(f). The items to be so allocated shall
be determined in accordance with Sections 1.704-2(f) and (i) of the Regulations.
This subparagraph 2(a) is intended to comply with the minimum gain chargeback
requirement in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this subparagraph 2(a) shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant hereto.
(b) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any fiscal year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of
the Regulations, shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
that Partner's share of the net decrease in the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt to the extent and in the manner
required by Section 1.704-2(i) of the Regulations. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i)(4) and (j)(2)(ii) of
the Regulations. This subparagraph 2(b) is intended to comply with the minimum
gain chargeback requirement with respect to Partner Nonrecourse Debt contained
in Section 1.704-2 of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this subparagraph 2(b) shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.
11764.0001 340937.14
A-2
<PAGE>
(c) Qualified Income Offset. In the event a Partner unexpectedly
receives any adjustments, allocations or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, and such Partner has an
Adjusted Capital Account Deficit, items of Partnership income (including gross
income) and gain shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate the Adjusted Capital Account Deficit as quickly
as possible as required by the Regulations. This subparagraph 2(c) is intended
to constitute a "qualified income offset" under Section 1.704-1(b)(2)(ii)(d) of
the Regulations and shall be interpreted consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year
or other applicable period shall be allocated to the Partners in accordance with
their respective Partnership Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for
any fiscal year or other applicable period with respect to a Partner Nonrecourse
Debt shall be specially allocated to the Partner that bears the economic risk of
loss for such Partner Nonrecourse Debt (as determined under Sections
1.704-2(b)(4) and 1.704-2(i)(1) of the Regulations).
(f) Intent of Allocations. The parties intend that the allocation
provisions of this Exhibit A shall result in final Capital Account balances of
the Partners that equal to the amounts distributable to the Partners in
accordance with paragraph 4(b) of this Exhibit A, so that when liquidating
distributions are made in accordance with such final Capital Account balances
under Section 14.2A(4) hereof, such distributions will be able to return to each
Partner the amounts distributable to the Partner in accordance with paragraph
4(b) of this Exhibit A. To the extent that such final Capital Account balances
do not so reflect the intent of this Exhibit A, income and loss of the
Partnership for the current year and future years, as computed for book
purposes, shall be allocated among the Partners so as to result in final Capital
Account balances reflecting the intent of this Exhibit A. This subparagraph
shall control notwithstanding any reallocation of income, loss, or items
thereof, as computed for book purposes, by the Internal Revenue Service or any
other taxing authority.
(g) Section 754 Adjustment. To the extent an adjustment to the adjusted
tax basis of any asset of the Partnership pursuant to Section 734(b) of the Code
or Section 743(b) of the Code is required, pursuant to Section
1.704-1(b)(2)(iv)(m) of the Regulations, to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis) and such gain or loss shall be
specially allocated among the Partners in a manner consistent with the manner in
which each of their respective Capital Accounts are required to be adjusted
pursuant to such section of the Regulations.
11764.0001 340937.14
A-3
<PAGE>
3. Tax Allocations.
(a) Items of Income or Loss. Except as is otherwise provided in this
Exhibit A, an allocation of Partnership Net Income or Net Loss to a Partner
shall be treated as an allocation to such Partner of the same share of each item
of income, gain, loss, deduction and item of tax-exempt income or Section
705(a)(2)(B) expenditure (or item treated as such expenditure pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i)) ("Tax Items") that is taken into
account in computing Net Income or Net Loss.
(b) Section 1245/1250 Recapture. If any portion of gain from the sale
of Partnership assets is treated as gain which is ordinary income by virtue of
the application of Code Sections 1245 or 1250 ("Affected Gain"), then such
Affected Gain shall be allocated among the Partners in the same proportion that
the depreciation and amortization deductions giving rise to the Affected Gain
were allocated. This subparagraph 3(b) shall not alter the amount of Net Income
(or items thereof) allocated among the Partners, but merely the character of
such Net Income (or items thereof). For purposes hereof, in order to determine
the proportionate allocations of depreciation and amortization deductions for
each fiscal year or other applicable period, such deductions shall be deemed
allocated on the same basis as Net Income and Net Loss for such respective
period.
(c) Precontribution Gain. The Partnership shall use the remedial method
of allocation contained in Section 1.704-3(d) of the Regulations to take into
account any variation between the adjusted basis and the fair market value of
the Initial LP Contributed Property and the Contributed Debt at the time of the
contribution ("Precontribution Gain"). By executing this Agreement, each Partner
hereby agrees to report income, gain, loss and deduction on such Partner's
federal income tax return in a manner that is consistent with the use of the
remedial method of allocation with respect to the Initial LP Contributed
Property and the Contributed Debt. With respect to any Contributed Property
other than the Initial LP Contributed Property and the Contributed Debt, the
Partnership shall use any permissible method contained in the Regulations
promulgated under Section 704(c) of the Code selected by the General Partner, in
its sole discretion, to take into account any variation between the adjusted
basis of such asset and the fair market value of such asset as of the time of
the contribution, provided that such method does not cause 237 Park Avenue
Associates (or its successor by merger) or its members any material adverse
income tax consequences. Each Partner hereby agrees to report income, gain, loss
and deduction on such Partner's federal income tax return in a manner consistent
with the method used by the Partnership.
(d) Allocations Respecting Section 704(c) and Revaluations. If any
asset has a Gross Asset Value which is different from the Partnership's adjusted
basis for such asset for federal income tax purposes because the Partnership has
revalued such asset pursuant to Regulations Section 1.704-1(b)(2)(iv)(f), the
allocations of Tax Items shall be made in accordance with the principles of
Section 704(c) of the Code and the Regulations and the methods of allocation
promulgated thereunder, provided, however, that with respect to the Initial LP
Contributed Property and the Contributed Debt, income, gain, loss and deduction
11764.0001 340937.14
A-4
<PAGE>
with respect to such property shall be allocated using the "remedial method"
described in Regulations Section 1.704-3(b). The intent of this subparagraph
3(d) and subparagraph 3(c) above is that each Partner who contributed to the
capital of the Partnership a Contributed Property will bear, through reduced
allocations of depreciation, increased allocations of gain or other items, the
tax detriments associated with any Precontribution Gain. This subparagraph 3(d)
and subparagraph 3(c) are to be interpreted consistently with such intent.
(e) Excess Nonrecourse Liability Safe Harbor. Pursuant to Regulations
Section 1.752-3(a)(3), for purposes of determining each Partner's proportionate
share of the "excess nonrecourse liabilities" of the Partnership (as defined in
Regulations Section 1.752- 3(a)(3)), the Partners' respective interests in
Partnership profits shall be determined in accordance with each Partner's
Partnership Interest; provided, however, that each Partner who has contributed
an asset to the Partnership shall be allocated, to the extent possible, a share
of "excess nonrecourse liabilities" of the Partnership which results in such
Partner being allocated nonrecourse liabilities in an amount which is at least
equal to the amount of income pursuant to Section 704(c) of the Code and the
Regulations promulgated thereunder (the "Liability Shortfall"). In the event
there is an insufficient amount of nonrecourse liabilities to allocate to each
Partner an amount of nonrecourse liabilities equal to the Liability Shortfall,
then an amount of nonrecourse liabilities to the extent of, the Liability
Shortfall shall be allocated to the Upper Tier Limited Partnership. The intended
effect of using the "remedial method" described in Regulation Section 1.704-3(d)
shall be that the Upper Tier Limited Partnership shall receive an allocation of
Partnership Nonrecourse Liabilities that on the date hereof is not less than
$380,000,000.
(f) References to Regulations. Any reference in this Exhibit A or the
Agreement to a provision of proposed and/or temporary Regulations shall, in the
event such provision is modified or renumbered, be deemed to refer to the
successor provision as so modified or renumbered, but only to the extent such
successor provision applies to the Partnership under the effective date rules
applicable to such successor provision.
(g) Successor Partners. For purposes of this Exhibit A, a transferee of
a Partnership Interest shall be deemed to have been allocated the Net Income,
Net Loss and other items of Partnership income, gain, loss, deduction and credit
allocable to the transferred Partnership Interest that previously have been
allocated to the transferor Partner pursuant to this Agreement.
4. Distributions.
(a) Available Cash. Except as set forth in subparagraph (b), Available
Cash shall be distributed in the following order of priority:
(i) 100% to the General Partner until it has received
aggregate distributions pursuant to this clause (a)(i) equal to an amount which,
when added to all prior distributions to the General Partner made pursuant to
clause (b)(i) below, equals 12% per annum
11764.0001 340937.14
A-5
<PAGE>
cumulative compounded on its Adjusted GP Contribution, commencing with respect
to each Capital Contribution, on the date such Capital Contribution was made;
(ii) 100% to the General Partner until it has received
aggregate distributions pursuant to this clause (a)(ii) equal to an amount
which, when added to all prior distributions to the General Partner made
pursuant to clauses (b)(ii) and b(v) below, equals the Adjusted GP Contribution;
and
(iii) 95% to the General Partner and 5% to the Limited
Partner.
(b) Capital Transactions. The net proceeds of Capital Transactions
shall be distributed in the following order of priority:
(i) 100% to the General Partner until it has received
aggregate distributions pursuant to this clause (b)(i), which, when added to all
prior distributions to the General Partner made pursuant to clause (a)(i) above,
equals the product of (x) .5 and (y) 12% per annum cumulative compounded on its
Adjusted GP Contribution, commencing with respect to each Capital Contribution,
on the date such Capital Contribution was made;
(ii) 100% to the General Partner until it has received
aggregate distributions pursuant to this clause (b)(ii) equal to an amount which
when added to all prior distributions to the General Partner made pursuant to
clause (a)(ii), equals the product of (x) .75 and (y) the Adjusted GP
Contribution;
(iii) of the next $500,000, 90% to the Limited Partner and 10%
to the General Partner;
(iv) 100% to the General Partner until it has received
aggregate distributions pursuant to this clause (b)(iv) which, when added to all
prior distributions to the General Partner made pursuant to clauses (a)(i) and
(b)(i), equals 12% per annum cumulative compounded on its Adjusted GP
Contribution, commencing with respect to each Capital Contribution, on the date
such Capital Contribution was made;
(v) 100% to the General Partner until it has received
aggregate distributions pursuant to this clause (b)(v) which, when added to all
prior distributions to the General Partner made pursuant to clauses (a)(ii) and
(b)(ii), equals the Adjusted GP Contribution; and
(vi) 95% to the General Partner and 5% to the Limited Partner.
11764.0001 340937.14
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<PAGE>
Exhibit B
Partners' Contributions and Partnership Interests
Cash Agreed
Value of
Name and Address of Partner Contributions % Interest
General Partner
Metropolis Realty Trust, Inc. $280,000,000 95%
c/o Victor Capital Group, L.P.
885 Third Avenue - 12th Floor
New York, NY 10022
Attn: John Klopp
Limited Partner
237/1290 Upper Tier Associates, L.P. $100,000 5%
c/o Victor Capital Group, L.P.
885 Third Avenue - 12th Floor
New York, NY 10022
Attn: John Klopp
11764.0001 340937.14
<PAGE>
Exhibit C
Indemnity Agreement
[To be annexed/form contained in Plan Supplements]
11764.0001 340937.14
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
237/1290 UPPER TIER ASSOCIATES, L.P.
(A Delaware Limited Partnership)
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
237/1290 UPPER TIER ASSOCIATES, L.P. (the "Partnership"), dated as of October
10, 1996 (this "Agreement") is entered into by and between 237/1290 Upper Tier
GP Corp., a Delaware corporation (the "General Partner"), and JMB/NYC Office
Building Associates, L.P., an Illinois limited partnership (the "JMB Limited
Partner" and/or the "Limited Partner").
WHEREAS, in accordance with the terms and conditions of the
Joint Plan of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290
Associates L.L.C. (respectively the "237 LLC" and the "1290 LLC" and
collectively the "LLCs"), each a Delaware limited liability company, filed under
title 11 of the United States Code, 11 U.S.C. Sections 101 et seq. (the "Plan"),
(i) O&Y NY Building Corp. (the "Prior General Partner"), the JMB Limited Partner
and the O&Y Equity Company, L.P. ("Equityco") entered into a Limited Partnership
Agreement dated October 10, 1996 ( the "Original LP Agreement") pursuant to
which they formed the Partnership in accordance with the Revised Uniform Limited
Partnership Act of the State of Delaware, (ii) the LLCs merged into the
Partnership pursuant to an Agreement and Plan of Merger dated the date hereof
(the "Merger Agreement"), with the Partnership as the surviving entity (the
"Merger"), and (iii) pursuant to a Redemption and Substitution Agreement dated
the date hereof, the Prior General Partner and Equityco withdrew from the
Partnership and the General Partner was admitted in its place;
WHEREAS, the parties hereto desire to amend and restate the
Original LP Agreement in its entirety as of the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
on the terms and conditions contained herein, and for other good, valid and
binding consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
Certain terms used in this Agreement shall have the meanings
designated below.
11764.0001 345760.13
<PAGE>
(a) "Act" means the Delaware Revised Uniform Limited
Partnership Act, as in effect on the date hereof as it may be amended from time
to time hereafter, or any successor law.
(b) "Capital Contribution" means, with respect to any Partner,
any cash, cash equivalents or the gross asset value of the Property, as
determined by the General Partner in its sole and absolute discretion (except as
otherwise provided in this Agreement), which such Partner contributes or is
deemed to contribute to the Partnership pursuant to Article III hereof.
(c) "Adverse Transaction" means (i) any sale, disposition,
transfer or exchange of any Partnership Property, the interests of the Lower
Tier Partnership in the Property Owning Partnership or the properties owned by
the Property Owning Partnerships (ii) any release, discharge or reduction of
non-recourse indebtedness of the Property Owning Partnerships (other than
through payment of scheduled amortization, actions taken by a secured lender
such as application of insurance proceeds or condemnation awards or the exercise
of remedies, or in the case where the released indebtedness is concurrently
being replaced with other non-recourse indebtedness complying with clause (B)
below), (iii) any distribution of Partnership assets (other than distributions
of cash and other distributions by the Partnership, the Lower Tier Partnership
and the Property Owning Partnerships, in each case, in the ordinary course of
business), or (iv) any other transaction or agreement to which any of the
Partnership, the Lower Tier Partnership or the Property Owning Partnerships is a
party, if as a result of any such transaction or agreement described in (i),
(ii), (iii), or (iv) above, the JMB Limited Partner would be required to
recognize a material amount of taxable income or gain prior to the Approval
Right Termination Date. Adverse Transactions shall specifically exclude (A)
Partnership income derived in the ordinary course of the Partnership's, the
Lower Tier Partnership's and the Property Owning Partnerships' business, (B)
non-recourse refinancing of the properties owned by the Property Owning
Partnerships on commercially reasonable terms in an aggregate amount equal to
not less than the lesser of $325,000,000 or the amortized balance of the then
existing non-recourse financing encumbering the properties owned by the Property
Owning Partnerships (utilizing an amortization schedule no shorter than twenty
(20) years), (C) payment of amortization on non-recourse financing encumbering
the properties owned by the Property Owning Partnerships, provided that the
outstanding balance of such financing is not reduced below $325,000,000, in the
aggregate, as such amount would be reduced between the date hereof and the
Approval Right Termination Date assuming such amount is amortized based on a
twenty (20) year amortization schedule and except as otherwise provided in the
parenthetical of clause (ii) above (i.e., actions taken by a secured lender such
as application of insurance proceeds or condemnation awards or the exercise of
remedies, or in the case where the released indebtedness is concurrently being
replaced with other non-recourse indebtedness complying with clause (B) above),
and (D) the consummation of the transactions described in the Plan (i.e., the
property transfers and the issuance of the securities provided therein), (E) a
transfer of the properties owned by the Property Owning Partnerships pursuant to
an involuntary foreclosure or similar action arising from a default by the
Property Owning Partnerships with respect to their obligations under their
indebtedness, and (F) a transfer of the properties owned by the Property Owning
Partnerships with respect to their obligations
-2-
11764.0001 345760.13
<PAGE>
under their indebtedness provided that, in the case of a consensual foreclosure
or deed in lieu of foreclosure by reason of a default under the New Notes (as
defined in the Plan), the default is a bona fide default and the foreclosure or
deed in lieu of foreclosure is not a collusive transaction between the holders
of the New Notes and the general partner of the Property Owning Partnerships
attributable to any commonality of ownership between the beneficial ownership of
the New Notes and the general partner of the Property Owning Partnerships. As
used in clause (F) above, the term New Notes shall include refinancings in which
there is a commonality of ownership between the holder of such financing and the
general partner of the Property Owning Partnerships similar to that anticipated
with respect to the New Notes.
(d) "Approval Right Termination Date" means the earliest of
(i) January 2, 2001, and (ii) the date on which the Partnership no longer holds
the Lower Tier Partnership Interest as a result of the authorized exercise of
the Purchase Right or the Put Right (as such terms are defined in the Lower Tier
Partnership Agreement) pursuant to Sections 12.2A or 12.2C of the Lower Tier
Partnership Agreement or pursuant to such other transaction which does not
constitute an Adverse Transaction (iii) the date on which the Lower Tier
Partnership no longer holds the Property Owning Partnership Interests pursuant
to a transaction which does not constitute an Adverse Transaction, (iv) the date
on which the JMB Limited Partner no longer holds a Partnership Interest in the
Partnership, and (v) the Default Date.
(e) "Certificate" means the Certificate of Limited Partnership
of the Partnership filed in the Office of the Secretary of State of Delaware, as
such certificate may be amended and/or restated from time to time.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time (or any corresponding provisions of succeeding law).
(g) "Default Date" shall have the meaning set forth in the
Lower Tier Partnership Agreement.
(h) "Distribution" means any distribution pursuant to
Articles IV or XI hereof.
(i) "Entity" means any general partnership, limited
partnership, corporation, joint venture, trust, business trust, real estate
investment trust, limited liability company, cooperative or association.
(j) "Fiscal Year" means (i) the period commencing on the
Effective Date or any subsequent January 1 and ending on the earlier to occur of
(A) the next December 31 or (B) the date on which all assets of the Partnership
are distributed pursuant to Article IX hereof and the Certificate has been
cancelled pursuant to the Act.
(k) "General Partner" means 237/1290 Upper Tier GP Corp., a
Delaware corporation, in its capacity as General Partner hereunder and all other
Persons hereafter being or acting as a general partner of the Partnership,
individually and collectively.
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(l) "Indemnitee" means (i) any Person made a party to a
proceeding by reason of (A) such Person's status as (1) the General Partner, (2)
a stockholder, director, trustee or officer of the Partnership or the General
Partner, or (3) a director, trustee or officer of any other Entity, each Person
(including a Limited Partner) serving in such capacity at the request of the
Partnership or the General Partner, or (B) his or its liabilities, pursuant to a
loan guarantee or otherwise, for any indebtedness of the Partnership (including,
without limitation, any indebtedness which the Partnership has assumed or taken
assets subject to); and (ii) such other Persons (including affiliates of the
General Partner to the Partnership) as the General Partner may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.
(m) "JMB Indemnitors" shall mean JMB/Manhattan Associates,
Ltd., Carlyle Real Estate Limited Partnership - XIII, and Carlyle Real Estate
Limited Partnership - XIV.
(n) "JMB Limited Partner" shall have the meaning set forth in
the Preamble to this Agreement.
(o) "JMB Purchase Right" shall have the meaning set forth in
Section 9.7 of this Agreement.
(p) "JMB Put Right" shall have the meaning set forth in
Section 7.7 of this Agreement.
(q) "Limited Partners" shall have the meaning set forth in the
Preamble to this Agreement and any additional Limited Partners admitted to the
Partnership in accordance with the terms hereof.
(r) "LLC(s)" shall have the meanings set forth in the Recitals
to this Agreement.
(s) "Lower Tier General Partner" means Metropolis Realty
Trust, Inc., a Maryland corporation.
(t) "Lower Tier Partnership" means 237/1290 Lower Tier
Associates, L.P.
(u) "Lower Tier Partnership Agreement" means the Agreement of
Limited Partnership of the Lower Tier Partnership, dated as of October 10,
1996.
(v) "Lower Tier Partnership Interest" means the Partnership's
ownership interest, as a limited partner, in the Lower Tier Partnership pursuant
to the Lower Tier Partnership Agreement.
(w) "Merger" means the merger of the LLCs with and into the
Partnership pursuant to the Merger Agreement.
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(x) "Merger Agreement" means the Agreement and Plan of Merger,
dated as of October 10, 1996 between the Partnership and the LLCs.
(y) "Net Cash Flow" means the excess of all cash receipts of
any kind received by the Partnership over the sum of the amounts of (i)
Operating Expenses, and (ii) any reserves established by the General Partner.
(z) "Operating Expenses" means all cash expenses, costs, debts
and disbursements of every kind and nature which the Partnership shall pay or
become obligated to pay in connection with the business of the Partnership or
the performance of the General Partner's duties and obligations under this
Agreement, including, without limitation, debt service, audit and legal expenses
and management fees.
(aa) "Partners" means the General Partner and the Limited
Partners, where no distinction is required by the context in which the terms is
used herein. "Partner" means any one of the Partners.
(ab) "Partnership" means 237/1290 Upper Tier Associates, L.P.
(ac) "Partnership Interest(s)" means that ownership interest
of a Partner, expressed as a percentage, in the Partnership's profits and
losses, other items of income, gain, losses, deductions, expenses and credits,
and distributions of net cash receipts at any particular time, including the
right of such Partner to any and all benefits to which a Partner may be entitled
as provided in this Agreement and under the Act, together with the obligation of
such Partner to comply with all the terms and provisions of this Agreement and
the Act. The Partnership Interest of each Partner is set forth on Exhibit A.
(ad) "Partnership Property" means the Lower Tier Partnership
Interest and any other property the Partnership may acquire after the date
hereof.
(ae) "Person" means any individual, corporation, company,
partnership, joint venture, trust, association, unincorporated organization,
other entity or group, or any domestic or foreign national, state or municipal
or other local government or multi-national body any subdivision, agency,
commission or authority thereof.
(af) "Plan" shall have the meaning set forth in the Recitals
to this Agreement.
(ag) "Property Owning Partnership Interests" shall mean the
Lower Tier Partnership's ownership interests, as a limited partner, in the
Property Owning Partnerships pursuant to the Property Owning Partnership
Agreements.
(ah) "Property Owning Partnership Agreements" means the
Agreements of Limited Partnership of the Property Owning Partnerships, each
dated as of October 10, 1996.
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(ai) "Property Owning Partnerships" means 237 Park Partners,
L.P. and 1290 Partners, L.P., each, a Delaware limited partnership.
(aj) "Purchase Right Notice" shall have the meaning set forth
in Section 9.7 of this Agreement.
(ak) "Put Price" shall have the meaning set forth in Section
7.7 of this Agreement.
(al) "Put Right Notice" shall have the meaning set forth in
Section 7 of this Agreement.
ARTICLE II
ORGANIZATIONAL MATTERS
2.1 Formation. The General Partner and the Limited Partners
hereby agree to continue the Partnership as a limited partnership pursuant and
subject to the Act. Except as expressly provided in this Agreement, the rights
and obligations of the Partners and the administration and termination of the
Partnership shall be governed by the Act.
2.2 Certificates The General Partner shall file, record and
publish such certificates and other documents as may be necessary and
appropriate to comply with the requirements for the organization and operation
of a limited partnership under the Act.
2.3 Foreign Qualifications. In the event that the business of
the Partnership is carried on or conducted in any state other than the State of
Delaware, then the parties agree that this Partnership shall be qualified to
conduct business in accordance with the laws of each such other state in which
business is conducted by the Partnership. The parties agree to execute such
other and further documents as may be necessary or appropriate to permit the
General Partner to qualify this Partnership, or otherwise to comply with
requirements for a limited partnership to conduct business, in each such state.
The General Partner shall execute and file in the proper offices such
certificates as may be required by the Assumed Name Act or similar law in effect
in the counties and other governmental jurisdictions in which the Partnership
may elect to conduct business.
2.4 Name. The name of the Partnership is "237/1290 Upper Tier
Associates, L.P." The business of the Partnership shall be conducted under the
name listed above or under such other names as the General Partner deems
appropriate. The General Partner, in its sole discretion may, upon five days'
prior written notice to the Limited Partners, change the name of the
Partnership.
2.5 Registered Office and Agent; Principal Office. The address
of the registered office of the Partnership in the State of Delaware and the
name and address at the registered agent for service of process on the
Partnership in the State of Delaware is The Corporation Trust Company, 1029
Orange Street, Wilmington (New Castle County),
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Delaware 19801. The principal office of the Partnership shall be c/o Victor
Capital Group, L.P., 885 Third Avenue - 12th Floor, New York, New York 10022,
Attn: John Klopp or such other place as the General Partner may from time to
time designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems advisable.
2.6 Purpose; Powers. The purpose and nature of the business to
be conducted by the Partnership is to hold the Partnership Property and serve as
a limited partner of the Lower Tier Partnership. The Partnership is empowered to
do any and all acts and things necessary, appropriate, proper, advisable,
incidental to or convenient for the furtherance and accomplishment of the
purposes and business described herein.
2.7 Term. The term of the Partnership shall commence on the
date hereof and shall continue until December 31, 2099, unless the Partnership
is dissolved sooner pursuant to any provision of this Agreement.
2.8 Initial Limited Partner. Immediately following the
execution of this Agreement, 237/1290 Upper Tier GP Corp., the initial limited
partner, shall withdraw as a limited partner and its Capital Contribution of
$100.00 shall be returned by the Partnership.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Capital Contributions of the General Partner. The General
Partner has made a Capital Contribution of $1 in cash to the Partnership.
3.2 Capital Contributions. As provided in the Merger
Agreement, upon the consummation of the Merger, the Partnership succeeded to all
of the LLCs' assets and liabilities (the "LLC Net Assets"). The Partnership
hereby agrees that (i) the LLC Net Assets shall be deemed to be the Capital
Contributions of the JMB Limited Partner, and (ii) the LLC Net Assets shall have
a gross fair market value of $100,000.
3.3 Other Matters Relating to Capital Contributions.
A. Except as otherwise provided by the terms of this
Agreement, no Partner shall be entitled to withdraw, or to a return of,
any part of its Capital Contribution, or to receive property or assets
other than cash in return thereof, and the General Partner shall not be
liable to the Limited Partners for a return of their Capital
Contributions.
B. No Partner shall be entitled to priority over any other
Partner, either with respect to a return of his Capital Contribution,
or to allocations of taxable income, gains, losses or credits, or to
distributions, except as provided in this Agreement.
C. No interest shall be paid on Capital Contributions.
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D. No Partner shall be obligated to make any further Capital
Contribution to the Partnership.
3.4 Capital Accounts. A separate capital account shall be
established for each Partner on the books of the Partnership on the dates on
which such Partner makes its Capital Contributions, as provided herein. Each
such capital account will thereafter be maintained on the books of the
Partnership. Each Partner's capital account will be increased by that Partner's
Capital Contributions, advances and allocation of income and gain and decreased
by that Partner's distributions and allocation of losses.
ARTICLE IV
DISTRIBUTIONS OF NET CASH FLOW
Subject to Article XI, the Partnership shall distribute to the
Partners any Net Cash Flow at such times as the General Partner shall reasonably
determine to be appropriate. Distributions of Net Cash Flow shall be made to the
Partners in accordance with their respective Partnership Interests.
Notwithstanding the foregoing, the Partners acknowledge that the interest of the
JMB Limited Partner is subject to a Second Amended, Restated and Consolidated
Security Agreement dated as of the date hereof being executed and delivered
pursuant to the Plan and the JMB Limited Partner agrees that the General Partner
shall be authorized to pay any distributions otherwise payable to the JMB
Limited Partner hereunder to or at the direction of the holder of the Second
Amended, Restated and Consolidated Promissory Note secured thereby.
ARTICLE V
ALLOCATIONS OF PROFITS AND LOSSES
5.1 Except as provided in Section 5.2, all items of income,
gain, loss or deduction for any Fiscal Year shall be allocated to the Partners
in accordance with their respective Partnership Interests.
5.2 All items of income, gain, loss or deduction attributable
to the assumption or reduction of debt occurring on or about the date hereof and
provided for in the Plan shall be allocated to the Prior General Partner and
Equityco. At the election of the JMB Limited Partner, the Partnership shall use
the "remedial method" described in Treasury Regulation Section 1.704-3(b) and
allocations of nonrecourse debt shall be made in accordance therewith. The
intended effect of this Agreement shall be that the JMB Limited Partner shall
receive an allocation of Partnership nonrecourse debt that on the date hereof is
not less than $380,000,000.
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ARTICLE VI
RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER
6.1 Management.
A. Except as otherwise expressly provided in this Agreement,
all management powers over the business and affairs of the Partnership are and
shall be exclusively vested in the General Partner, and, except as provided in
Section 6.1D hereof, no Limited Partner shall have any right to participate in
or exercise control or management power over the business and affairs of the
Partnership. The General Partner may not be removed by the Limited Partners with
or without cause. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner shall have, subject to Section 6.1D hereof, full power and authority to
do all things deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers and to effectuate the purposes set forth in
Section 2.6 hereof, including, without limitation, the power and authority to:
1. to acquire, sell, transfer, exchange, manage or otherwise
dispose of all or a portion of the Partnership Property upon such terms
and for such consideration as the General Partner may, in its sole and
absolute discretion determine;
2. to take or enter into, perform and carry out contracts and
agreements of every kind necessary or incidental to the purposes of the
Partnership;
3. to take or omit such other or further action in connection
with the Partnership's business as may, in the opinion of the General
Partner, be necessary or desirable to further the purposes of the
Partnership, including, without limitation, actions pursuant to the
Lower Tier Partnership Agreement;
4. to invest such funds as are temporarily not required for
Partnership purposes; and
5. to carry on any other activities the General Partner may
reasonably deem necessary, in connection with or incident to any of the
foregoing.
B. In connection with such management and subject to any
limitations set forth elsewhere in this Agreement, the General Partner:
1. Shall maintain or cause to be maintained, at the expense of
the Partnership, complete and accurate records of all correspondence,
documents or instruments of any nature relating to the Partnership
business. Such records, together with such supporting evidence thereof
as is in the control and possession of the Partnership or of the
General Partner, shall be kept in the principal office of the General
Partner or of the Partnership for such periods as the General Partner
deems appropriate. The
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Partners and/or their authorized representatives, shall have the right
to inspect and/or copy any or all of the above-described records during
normal business hours.
2. Shall execute any and all documents or instruments of any
kind which the General Partner may reasonably deem appropriate in
carrying out the purposes of the Partnership.
3. Shall maintain, or cause to have maintained, at the expense
of the Partnership, adequate records and accounts of all transactions,
operations and expenditures and shall furnish or cause to be furnished
the Partners with annual statements of account as of the end of each
calendar year.
C. The Limited Partner agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Limited Partner (except as provided in Section 6.1D hereof).
Notwithstanding any other provision of this Agreement, to the fullest extent
permitted under the Act or other applicable law, rule or regulation, the
execution, delivery or performance by the General Partner or the Partnership of
any agreements authorized or permitted under this Agreement shall not constitute
a breach by the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partner or any other Persons under this Agreement or
of any duty stated or implied by law or equity.
D. Notwithstanding anything to the contrary set forth in this
Agreement, until the Approval Right Termination Date, the General Partner shall
not, without the prior written consent of the JMB Limited Partner (which may be
given or withheld in its sole and absolute discretion), have the power to take,
on behalf of the Partnership as a limited partner of the Lower Tier Partnership,
the following actions:
1. Consent to any Adverse Transaction (as such term is defined
in the Lower Tier Partnership Agreement) pursuant to Section 8.1E of
the Lower Tier Partnership Agreement;
2. Exercise the Partnership's Put Right (as such term is
defined in the Lower Tier Partnership Agreement) to require the Lower
Tier General Partner to purchase the Lower Tier Partnership Interest
pursuant to Section 12.2C of the Lower Tier Partnership Agreement;
3. Effect the sale, disposition, exchange or transfer of the
Lower Tier Partnership Interest if such transaction would constitute an
Adverse Transaction;
4. Consent to the amendment of the Lower Tier Partnership
Agreement pursuant to Sections 15.1B and 15.1C of such Partnership
Agreement or to the amendment of the Property Owning Partnership
Agreements in a manner which would be prohibited under Sections 15.1B
and 15.1C of the Lower Tier Partnership Agreement were it an amendment
to such Partnership Agreement;
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5. Consent to the dissolution of the Lower Tier Partnership
pursuant to Section 14.1C of the Lower Tier Partnership Agreement or to
the dissolution of the Property Owning Partnerships pursuant to Section
8.1.E.3 of the Lower Tier Partnership Agreement; and
6. Cause or permit (to the extent within the General Partner's
reasonable control) any Adverse Transaction, provided however that the
General Partner shall be under no obligation to commence litigation or
to incur any expense (unless the JMB Limited Partner shall fund such
expense) in order to avoid or prevent an Adverse Transaction from
occurring.
6.2 Outside Activities of the General Partner. The General
Partner shall devote such time and effort to the business of the Partnership as
the General Partner shall reasonably deem necessary to promote adequately the
interests of the Partnership and the interests of the Partners; however, it is
specifically understood and agreed that the General Partner shall not be
required to devote full time to the business of the Partnership and that the
Partners and their respective stockholders, partners, directors, officers and
affiliates may at any time and from time to time engage in and possess interests
in other business ventures of any and every type and description including
business interests and activities that are in direct competition with the
Partnership or that are enhanced by the activities of the Partnership, and
neither the Partnership nor any Partner shall by virtue of this Agreement or
otherwise have any right, title or interest in or to such independent ventures.
6.3 Employment of Experts or Advisors. The General Partner may
employ or retain such counsel, accountants, appraisers or other experts or
advisors as the General Partner may reasonably deem appropriate for the purpose
of discharging its duties hereunder, and shall be entitled to pay the fees of
any such persons from the funds of the Partnership. The General Partner may act,
and shall be protected in acting in good faith, on the opinion or advice of, or
information obtained from, any such counsel, accountant, appraiser or other
expert or advisor, whether retained or employed by the Partnership, the General
Partner, or otherwise, in relation to any matter connected with the
administration or operation of the business and affairs of the Partnership.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
7.1 Limitation of Liability. The Limited Partners shall have
no liability under this Agreement except as expressly provided in this
Agreement, or under the Act.
7.2 Management of Business. No Limited Partner shall take part
in the operation, management or control (within the meaning of the Act) of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for or otherwise bind the Partnership. The
transaction of any such business by the General Partner, any of its affiliates
or any officer, director, employee, partner, agent or
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trustee of the General Partner, the Partnership or any of their affiliates, in
their capacity as such, shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners under this Agreement.
7.3 Outside Activities of Limited Partners. Any Limited
Partner and any officer, director, partner, employee, agent, trustee, affiliate
or shareholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities that are in direct
competition with the Partnership or that are enhanced by the activities of the
Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner. None
of the Limited Partners nor any other Person shall have any rights by virtue of
this Agreement or the Partnership relationship established hereby in any
business ventures of any other Person and such Person shall have no obligation
pursuant to this Agreement to offer any interest in any such business ventures
to the Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
7.4 Covenant of Limited Partners. Each Limited Partner hereby
warrants and covenants to the Partnership that neither it nor any of its
partners or their respective officers, directors, partners, stockholders, agents
and affiliates shall intentionally interfere with (x) the exercise by the Lower
Tier General Partner of the Purchase Right (as such term is defined in the Lower
Tier Partnership Agreement) pursuant to Section 12.2A of the Lower Tier
Partnership Agreement, or (y) any disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of the Lower Tier Partnership Interest by the
Partnership, the Property Owning Partnership Interests by the Lower Tier
partnership or the Property (as defined in the Property Owning Partnership
Agreements) by either Property Owning Partnership or the merger or other
combination of the Lower Tier Partnership or the Property Owning Partnership
with or into another entity in accordance with the terms of this Agreement, the
Lower Tier Partnership Agreement or the Property Owning Partnership Agreement
provided same is not an Adverse Transaction.
7.5 Covenant of the JMB Limited Partner. The JMB Limited
Partner hereby warrants and covenants to the Partnership that it shall arrange
for the delivery to the Lower Tier General Partner in accordance with the
requirements of Section 12.2 of the Lower Tier Partnership Agreement of the
security having a value of $10,000,000 as of January 2, 2001 and the Indemnity
Agreement from the JMB Indemnitors, each as more particularly described in
Section 12.2 of the Lower Tier Partnership Agreement and relating to the
covenants of the JMB Limited Partner set forth in Section 7.4 above.
7.6 Exercise of Lower Tier Partnership Put Right. The General
Partner shall, upon the written request of the JMB Limited Partner, cause the
Partnership to exercise its Put Right (as such term is defined in the Lower Tier
Partnership Agreement) to require the Lower Tier General Partner to purchase the
Lower Tier Partnership Interest pursuant to Section 12.2C of the Lower Tier
Partnership Agreement.
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7.7 Put Right.
A. The JMB Limited Partner shall have the continuing
right ("JMB Put Right") exercisable at any time from the date hereof to require
the General Partner or its designee to purchase the JMB Limited Partner's
Partnership Interest, free and clear of all liens, restrictions, and
encumbrances, for a cash amount (the "Put Price") calculated in the same manner
as the price of the Put Right. The Put Right shall be exercised by the Limited
Partner upon 15 days' prior written notice (the "Put Right Notice") to the
General Partner and shall be consummated, without any further action on the part
of the JMB Limited Partner, within 15 days following the delivery of the Put
Right Notice. Notwithstanding the foregoing, the JMB Limited Partner shall
execute such documents as the General Partner shall reasonably request in
connection with such transaction.
B. The General Partner shall, in its sole discretion,
designate the Person(s) who shall receive the Partnership Interests to be
purchased by the General Partner pursuant to this Section.
C. In connection with the exercise of the JMB Put
Right, the JMB Limited Partner shall pay all transfer taxes, gains taxes and
other similar costs related to the exercise of such rights, including any
additional transfer taxes and transfer gains taxes which would be retroactively
assessed with respect to the transfer of the Properties to the Property Owning
Partnerships pursuant to the Plan by reason of the exercise of the JMB Put
Right.
ARTICLE VIII
AMENDMENTS OF LIMITED PARTNERSHIP AGREEMENT
This Agreement may be amended only by instrument in writing
signed by the General Partner and the Limited Partners.
ARTICLE IX
LIMITATION ON SUBSTITUTION AND
ASSIGNMENT OF A PARTNERS INTEREST
9.1 Transfer.
A. The term "Transfer," when used in this Article IX with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which the General Partner purports to assign all or any part of its Partnership
Interest to another Person or by which a Limited Partner purports to assign all
or any part of its Partnership Interest to another Person.
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B. No Partnership Interest shall be Transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article IX. Any Transfer or purported Transfer of a Partnership Interest not
made in accordance with this Article IX shall be null and void.
9.2 Limited Partners Right to Transfer. Subject to the
provisions of Sections 7.6, 7.7 and 9.7 hereof and this Section 9.2, no Limited
Partner shall sell, assign, transfer or convey all or any portion of its
Partnership Interest to any person or entity without the prior written consent
of the General Partner. No Limited Partner shall pledge, encumber or place a
lien on its Partnership Interest without the prior written consent of the
General Partner. No successor to any of the Limited Partners' Partnership
Interests shall become a substituted limited partner, as that term is used in
the Act, without the prior written consent of the General Partner. Any consent
from the General Partner required under this Section 9.2 may be granted or
withheld by the General Partner in its sole discretion.
9.3 Transferred Partnership Interests Subject to This
Agreement. Sales, assignments, transfers, conveyances and pledges of Partnership
Interests pursuant to this Article IX shall be subject to, and the transferee or
pledgee shall acquire the transferred Partnership Interests subject to, all of
the terms and provisions of this Agreement.
9.4 Insolvency, Dissolution or Bankruptcy of a Limited
Partner. The insolvency, dissolution or bankruptcy of a Limited Partner shall
not terminate the Partnership. In such event, the trustee, representative, or
other successor in interest of such Limited Partner shall have only the rights
of an assignee of a Limited Partner which does not become a substituted limited
partner under the Act.
9.5 Transfers by the General Partner.
A. The General Partner may Transfer all or any part of its
Partnership Interest or withdraw as General Partner, in its sole discretion and
without the consent of any Limited Partners; provided that the General Partner
may withdraw as general partner only in connection with a Transfer of its
Partnership Interest and immediately following the admission of a successor
General Partner, as general partner, in accordance with this Article IX.
B. In the event the General Partner withdraws as general
partner in accordance with clause A. above, its general partner interest shall
immediately be converted into a limited partner interest and the General Partner
shall be entitled to receive distributions from the Partnership and the share of
Net Income, Net Losses, any other items, gain, loss, deduction and credit that
were otherwise attributable to its general partner interest.
9.6 Admission of Successor General Partner. A successor to all
of the General Partner Interest pursuant to this Section IX who is proposed to
be admitted as a successor General Partner shall be admitted to the Partnership
as the General Partner, effective immediately prior to such Transfer. Any such
transferee shall carry on the business
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of the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required to effect the
admission.
9.7 Intentionally Omitted.
ARTICLE X
ACCOUNTING PROCEDURE
10.1 Books and Accounts. The General Partner shall keep or
cause to be kept full, accurate, complete and proper books and accounts of all
operations of the Partnership. Such books shall be kept in accordance with sound
accounting practices consistently applied.
10.2 Choice of Accountants; Tax Information. Notwithstanding
anything to the contrary in this Agreement or any status of the General Partner
as general partner or tax matters partner under Section 6231(a)(7) of the Code,
the JMB Limited Partner shall have full and exclusive authority over all
Partnership tax matters, including, without limitation, with respect to those
matters under Section 11.2 of the Lower Tier Partnership Agreement and Section
10.8 of the Property Owning Partnership Agreement, in each case, reserved to the
respective Limited Partner of such partnerships (as such term is respectively
defined) under such Section 11.2 of the Lower Tier Partnership Agreement or
Section 10.8 of the Property Owning Partnership Agreement, as appropriate. The
Partnership's tax returns shall be prepared by a big six accounting firm
selected by the JMB Limited Partner. The General Partner shall sign and file tax
returns prepared by the Partnership's accountant in consultation with the JMB
Limited Partner. The General Partner shall annually deliver or cause to be
delivered to the Limited Partners all information forms reasonably necessary for
federal tax purposes.
10.3 Delivery of Information. The General Partner shall
promptly deliver to the JMB Limited Partner copies of all reports and
information received from the Lower Tier Partnership.
ARTICLE XI
DISSOLUTION
11.1 Dissolution. The Partnership shall not be dissolved by
the admission of substituted Limited Partners or additional Limited Partners or
by the admission of a successor General Partner in accordance with the terms of
this Agreement. In the event of the withdrawal of the General Partner, any
successor General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs shall be wound up, only upon the
first to occur of any of the following:
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11764.0001 345760.13
<PAGE>
A. the expiration of its term as provided in Section 2.7
hereof;
B. an event of withdrawal of the General Partner, as defined
in the Act, unless, within ninety (90) days after such event of withdrawal all
of the remaining Partners agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
successor General Partner;
C. (i) prior to the Approval Right Termination Date, an
election to dissolve the Partnership made by the General Partner, with the
consent of the JMB Limited Partner (which may be given or withheld in its sole
and absolute discretion), and (ii) after the Approval Right Termination Date, an
election to dissolve the Partnership made by the General Partner, without the
consent of the Limited Partners;
D. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
E. the sale of all or substantially all of the assets and
properties of the Partnership.
11.2 Liquidation. In the event of dissolution of the
Partnership pursuant to Section 11.1 where the business of the Partnership is
not reconstituted, liquidation shall occur. The General Partner shall supervise
the liquidation of the Partnership unless a wrongful act of the General Partner
dissolved the Partnership or the Limited Partners elect another Partner to do
so. In the event of any liquidation of the Partnership under this Agreement or
the Act, except as otherwise provided herein, the proceeds of liquidating the
Partnership shall be applied and distributed in the following order of priority
(each item to be satisfied in full in the order listed below before any of such
proceeds are allocated to the subsequent item):
(a) First, to creditors, including Partners who are creditors
(to the extent not otherwise prohibited by law), in satisfaction of
liabilities of the Partnership (whether by payment or the making of
reasonable provision for payment therefor), other than liabilities for
which reasonable provision for payment has been made and liabilities
for interim distributions to Partners and distributions to Partners on
withdrawal; then
(b) Second, to the setting up of any reserves which the
supervising Partner (or, if applicable, the liquidating trustee)
determines to be reasonably necessary for any contingent liabilities of
the Partnership or of any Partner arising out of, or in connection
with, a Partnership liability; then
(c) Finally, the balance, if any, to the Partners in
accordance with Article IV hereof.
The General Partner shall not receive any compensation for any
services performed pursuant to this Article XI.
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11764.0001 345760.13
<PAGE>
11.3 Rights of Limited Partners. Except as otherwise provided
in this Agreement, each Limited Partner shall look solely to the assets of the
Partnership for the return of its Capital Contributions and shall have no right
or power to demand or receive property other than cash from the Partnership. No
Limited Partner shall have priority over any other Limited Partner as to the
return of its Capital Contributions, distributions, or allocations.
11.4 No Obligation to Contribute Deficit. If any Partner has a
deficit balance in its capital account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered a debt owed to
the Partnership or to any other Person for any purpose whatsoever.
ARTICLE XII
INDEMNIFICATION
12.1 To the fullest extent permitted by Delaware law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, reasonable attorneys' fees and other legal fees and expenses),
judgments, fines, settlements, and other amounts arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, that relate to the operations of the Partnership or the
General Partner as set forth in this Agreement, in which such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, except to
the extent it is finally determined by a court of competent jurisdiction, from
which no further appeal may be taken, that such Indemnitee's action constituted
intentional acts or omissions constituting willful misconduct or fraud. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guaranty or otherwise for any indebtedness of the
Partnership (including, without limitation, any indebtedness which the
Partnership has assumed or taken subject to), and the General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or
more indemnity agreements consistent with the provisions of this Article XII in
favor of any Indemnitee having or potentially having liability for any such
indebtedness. Any indemnification pursuant to this Article XII shall be made
only out of the assets of the Partnership, and neither the General Partner nor
any Limited Partner shall have any obligation to contribute to the capital of
the Partnership, or otherwise provide funds, to enable the Partnership to fund
its obligations under this Article XII.
12.2 Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding shall be paid or reimbursed by the Partnership in advance
of the final disposition of the proceeding.
12.3 The indemnification provided by this Article XII shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any
-17-
11764.0001 345760.13
<PAGE>
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity unless otherwise provided in a written agreement pursuant to which
such Indemnities are indemnified.
12.4 The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of the Indemnitees and such other
Persons as the General Partner shall determine, against any liability that may
be asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
12.5 In no event may an Indemnitee subject any of the Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
12.6 An Indemnitee shall not be denied indemnification in
whole or in part under this Article XII because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
12.7 The provisions of this Article XII are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Article XII or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this Article XII, as in effect immediately
prior to such amendment, modification, or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Notices. Notices hereunder shall be in writing and shall
be deemed to be delivered upon actual receipt or 72 hours following deposit in a
regularly maintained receptacle for the United States mail, registered or
certified mail, return receipt requested, with postage prepaid, and addressed to
the address of the addressee shown below, or to such other address of which any
party shall notify the other parties hereto, in accordance with the terms
hereof.
If to the General Partner:
237/1290 Upper Tier GP Corp.
c/o Victor Capital Group, L.P.
885 Third Avenue - 12th Floor
New York, New York 10022
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11764.0001 345760.13
<PAGE>
Attn: John Klopp
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Kenneth Friedman
If to the JMB Limited Partner:
900 North Michigan Avenue
19th Floor
Chicago, Illinois 60611
Attention: Stuart C. Nathan
Gary Nickele
13.2 Counterparts. This Agreement may be executed in multiple
counterparts, each to constitute an original, but all in the aggregate to
constitute one agreement as executed. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their heirs, legal representatives,
successors and permitted assigns.
13.3 Nature of Partnership Interest. The interest of each
Partner in this Partnership is personal property.
13.4 Insolvency Proceedings. No bankruptcy or insolvency
filing or proceeding in respect of the Partnership shall be made or commenced
without the consent of the General Partner, and the Partnership shall not
acquiesce, petition or otherwise invoke or cause any other person and/or entity
to invoke the process of the United States of America, any state or other
political subdivision thereof or any other jurisdiction, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government for the purpose of commencing or sustaining a case
against the Partnership under a federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Partnership or all or any part of
its property or assets or ordering the winding-up or liquidation of the affairs
of the Partnership, if such action has not been consented to by the General
Partner.
13.5 Titles and Captions. All article or section titles or
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or describe the scope
or intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
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11764.0001 345760.13
<PAGE>
13.6 Pronouns and Plurals. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
13.7 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
13.8 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
13.9 Creditors. Other than as expressly set forth herein with
respect to the Indemnitees, none of the provisions of this Agreement shall be
for the benefit of, or shall be enforceable by, any creditor of the Partnership.
13.10 Waiver. No failure by any party to insist upon the
strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach or any other covenant, duty,
agreement or condition.
13.11 Applicable Law. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware,
without regard to the principles of conflicts of laws thereof.
13.12 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
13.13 Entire Agreement. This Agreement contains the entire
understanding and agreement among the Partners with respect to the subject
matter hereof and supersedes any other prior written or oral understandings or
agreements among them with respect thereto.
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11764.0001 345760.13
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed by the General
Partner and the Initial Limited Partner as of the date first above written.
237/1290 UPPER TIER GP CORP.
By:
Name:
Title:
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.,
an Illinois limited partnership
By: Carlyle Managers, Inc., its General Partner
By:
Name:
Title:
[The remaining portion of this page
is intentionally left blank]
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11764.0001 345760.13
<PAGE>
Exhibit A
Entity Partnership Interest
237/1290 UPPER TIER GP CORP. 1%
JMB/NYC OFFICE BUILDING
ASSOCIATES, L.P. 99%
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11764.0001 345760.13
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS................................................................ 1
ARTICLE II
ORGANIZATIONAL MATTERS..................................................... 6
2.1 Formation .................................................. 6
2.2 Certificates................................................. 6
2.3 Foreign Qualifications....................................... 6
2.4 Name .................................................. 6
2.5 Registered Office and Agent; Principal Office................ 6
2.6 Purpose; Powers.............................................. 7
2.7 Term .................................................. 7
2.8 Initial Limited Partner...................................... 7
ARTICLE III
CAPITAL CONTRIBUTIONS...................................................... 7
3.1 Capital Contributions of the General Partner................. 7
3.2 Capital Contributions........................................ 7
3.3 Other Matters Relating to Capital Contributions.............. 7
3.4 Capital Accounts............................................. 8
ARTICLE IV
DISTRIBUTIONS OF NET CASH FLOW............................................. 8
ARTICLE V
ALLOCATIONS OF PROFITS AND LOSSES.......................................... 8
ARTICLE VI
RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER.............................. 9
6.1 Management .................................................. 9
6.2 Outside Activities of the General Partner.................... 11
6.3 Employment of Experts or Advisors............................ 11
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS................................. 11
11764.0001 345760.13
<PAGE>
Page
7.1 Limitation of Liability...................................... 11
7.2 Management of Business....................................... 11
7.3 Outside Activities of Limited Partners....................... 12
7.4 Covenant of Limited Partners................................. 12
7.5 Covenant of the JMB Limited Partner.......................... 12
7.6 Exercise of Lower Tier Partnership Put Right................. 12
7.7 Put Right .................................................. 13
ARTICLE VIII
AMENDMENTS OF LIMITED PARTNERSHIP AGREEMENT................................ 13
ARTICLE IX
LIMITATION ON SUBSTITUTION AND
ASSIGNMENT OF A PARTNERS INTEREST.......................................... 13
9.1 Transfer .................................................. 13
9.2 Limited Partners Right to Transfer........................... 14
9.3 Transferred Partnership Interests Subject to This Agreement.. 14
9.4 Insolvency, Dissolution or Bankruptcy of a Limited Partner... 14
9.5 Transfers by the General Partner............................. 14
9.6 Admission of Successor General Partner....................... 14
9.7 Intentionally Omitted........................................ 15
ARTICLE X
ACCOUNTING PROCEDURE....................................................... 15
10.1 Books and Accounts.......................................... 15
10.2 Choice of Accountants; Tax Information...................... 15
10.3 Delivery of Information..................................... 15
ARTICLE XI
DISSOLUTION................................................................ 15
11.1 Dissolution................................................. 15
11.2 Liquidation................................................. 16
11.3 Rights of Limited Partners.................................. 17
11.4 No Obligation to Contribute Deficit......................... 17
ARTICLE XII
INDEMNIFICATION............................................................ 17
11764.0001 345760.13
-ii-
<PAGE>
Page
ARTICLE XIII
MISCELLANEOUS PROVISIONS................................................... 18
13.1 Notices .................................................. 18
13.2 Counterparts................................................ 19
13.3 Nature of Partnership Interest.............................. 19
13.4 Insolvency Proceedings...................................... 19
13.5 Titles and Captions......................................... 19
13.6 Pronouns and Plurals........................................ 20
13.7 Further Action.............................................. 20
13.8 Binding Effect.............................................. 20
13.9 Creditors .................................................. 20
13.10 Waiver .................................................. 20
13.11 Applicable Law............................................. 20
13.12 Invalidity of Provisions................................... 20
13.13 Entire Agreement........................................... 20
11764.0001 345760.13
-iii-
<PAGE>
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
237/1290 UPPER TIER ASSOCIATES, L.P.
by and between
237/1290 UPPER TIER GP CORP.,
as General Partner
AND
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.,
as Limited Partner
Dated: October 10, 1996
11764.0001 345760.13
REDEMPTION AND SUBSTITUTION AGREEMENT
REDEMPTION AND SUBSTITUTION AGREEMENT, dated October 10,
1996, by and among JMB/NYC Office Building Associates, L.P., an Illinois limited
partnership ("JMB LP"), O&Y Equity Company, L.P., a Delaware limited partnership
("Equityco"), O&Y NY Building Corp., a New York corporation ("Building Corp"),
and 237/1290 Upper Tier GP Corp., a Delaware corporation ("Upper Tier GP Corp")
and 237/1290 Upper Tier Associates, L.P., a Delaware limited partnership (the
"Partnership").
WHEREAS, the parties hereto desire to enter into this
Redemption and Substitution Agreement pursuant to the Second Amended Joint Plan
of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290 Associates,
L.L.C., confirmed by order of the United States Bankruptcy Court for the
Southern District of New York dated September 20, 1996 (the "Plan");
WHEREAS, JMB LP and Equityco are limited partners of the
Partnership, holding partnership interests of 46.5% and 49.9%, respectively, as
limited partners therein, and Building Corp is general partner and a limited
partner of the Partnership, holding partnership interests of 1%, as general
partner, and 2.6% as a limited partner, therein;
WHEREAS, pursuant to the Plan, the parties hereto desire that
(i) Upper Tier GP Corp be admitted to the Partnership, as a general partner,
(ii) Building Corp withdraw from the Partnership as a general partner, (iii)
Upper Tier GP Corp receive a 1% partnership interest, as general partner, in the
Partnership, (iv) the remaining partners reconstitute and continue the
Partnership as a successor limited partnership, (v) Equityco and Building Corp
withdraw from the Partnership, as limited partners, and (vi) JMB LP's 46.5%
partnership interest, as a limited partner, in the Partnership be increased to a
99% partnership interest, as a limited partner, in the Partnership;
NOW THEREFORE, in consideration of the premises and other good
and valuable consideration, the parties hereto agree as follows:
1. Admission of Upper Tier GP Corp as an Additional General
Partner. Pursuant to Section 17-401 of the Delaware Revised Uniform Limited
Partnership Act ("DRULPA"), each of JMB LP, Equityco and Building Corp,
constituting all of the partners of the Partnership, hereby consent to the
admission of Upper Tier GP Corp to the Partnership as an additional general
partner, such admission to be effective on the date hereof.
2. Withdrawal of Building Corp as General Partner. Building
Corp hereby withdraws from the Partnership and, each of JMB LP, Equityco and
Upper Tier GP Corp hereby agrees that this Agreement shall constitute the
required notice of such withdrawal under Section 17-602 of the DRULPA.
C/M: 11764.0004 372045.4
<PAGE>
3. Upper Tier GP Corp's Partnership Interest. In consideration
for agreeing to serve as the general partner of the Partnership and exposing its
assets and liabilities to the Partnership, the parties hereto agree that Upper
Tier GP Corp shall receive a 1% partnership interest, as general partner, in the
Partnership.
4. Reconstitution and Continuation of the Partnership.
Pursuant to Section 17-801 of the DRULPA, JMB LP, and Upper Tier GP Corp hereby
elect to reconstitute and continue the Partnership as a successor partnership
upon the terms and conditions set forth in the Agreement of Limited Partnership
of the Partnership, annexed hereto as Exhibit A.
5. Withdrawal of Building Corp and Equityco as Limited
Partners. Building Corp and Equityco hereby withdraw from the Partnership as
limited partners. Upper Tier GP Corp, as general partner of the Partnership,
hereby waives the six month notice requirement required under Section 17-603 of
the DRULPA and hereby consents to the withdrawal of Building Corp from the
Partnership as limited partner.
6. Reallocation Limited Partner Interests. The parties hereto
agree that JMB LP's 46.5% limited partnership interest is hereby increased to a
99% partnership interest, as a limited partner, in the Partnership.
7. Governing Law. This Agreement shall be governed by the laws
of Delaware, without regard to the conflict of law principles thereof.
8. Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
9. Captions; Counterparts. The captions in this Agreement are
for convenience of reference only, do not form a part hereof and do not in any
way modify, interpret or construe the intentions of the parties. This Agreement
may be executed in two or more counterparts, all of which shall constitute one
and the same instrument.
10. Enforceability; Severability. If any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remaining
provisions of this Agreement shall not be affected thereby. To the extent
permitted by applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
11. Entire Agreement. This Agreement and the Plan set forth
the entire understanding of the parties with respect to the subject matter
hereof.
-2-
C/M: 11764.0004 372045.4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the date first written above.
JMB/NYC OFFICE BUILDING
ASSOCIATES, L.P.
By: , as
general partner
By:
Name:
Title:
O&Y EQUITY COMPANY, L.P.
By: O&Y Equity General Partner Corp.,
as general partner
By:
Name:
Title:
O&Y NY BUILDING CORP.
By:
Name:
Title:
237/1290 UPPER TIER GP CORP.
By:
Name:
Title:
237/1290 UPPER TIER ASSOCIATES, L.P.
By: 237/1290 Upper Tier GP Corp., as
general partner
By:
Name:
Title:
-3-
C/M: 11764.0004 372045.4
METROPOLIS REALTY TRUST, INC.
1996 Directors' Stock Plan
<PAGE>
METROPOLIS REALTY TRUST, INC.
1996 Directors' Stock Plan
1. Purposes. The purposes of the Metropolis Realty Trust, Inc. Directors' Stock
Plan (the "Plan") are (i) to provide incentives to Directors of Metropolis
Realty Trust, Inc. (the "Company") whose substantial contributions are essential
to the growth and success of the Company's business, (ii) to strengthen the
ability of the Company to attract and retain competent and dedicated individuals
to serve as Directors of the Company, and (iii) to align the interests of the
Directors with the interests of the stockholders of the Company. To accomplish
such purposes, the Plan provides for annual stock awards and provides that the
Company may grant stock options to Directors. The stock options granted by the
Company pursuant to the terms and conditions of the Plan shall be referred to
herein as the "Stock Options."
2. Administration. Except as expressly set forth herein, the Plan shall be
administered by either the Compensation Committee (the "Committee") of the Board
of Directors (the "Board") of the Company or the Board itself. The Board or the
Committee, as applicable, depending on which entity is then administering the
Plan, shall hereinafter be referred to as the "Administrator." Subject to the
provisions hereof, the Administrator shall have the full power and authority to
administer and interpret the Plan and adopt or amend such rules, regulations,
agreements and instruments for implementing the Plan as it may deem appropriate
for the proper administration of the Plan. Any such interpretation,
determination or other action of the Administrator shall be conclusive and
binding on participants, beneficiaries and any other interested parties.
3. Stock Subject to the Plan. The total number of shares of the common stock of
the Company, par value $10 per share (the "Shares"), for which Stock Options may
be granted under the Plan shall not exceed, in the aggregate, 100,000 Shares,
subject, however, to adjustment in accordance with the provisions of Section 13
hereof. Any Shares which were the subject of unexercised portions of any
terminated or expired Stock Options may again be subject to Stock Options under
the Plan.
4. Award of Shares. Beginning with the Annual Meeting of the Company's
shareholders in 1997 and on each Annual Meeting thereafter, so long as Shares
remain available for issuance under the Plan, each Director (a "Participant")
shall receive 400 shares, subject, however, to adjustment in accordance with the
provisions of Section 13 hereof. The Shares shall be fully vested and
non-forfeitable.
5. Award of Stock Options. The Administrator, in its sole discretion, may, at
any time prior to the Expiration Date authorize the granting of Stock Options to
Directors of the Company.
C/M: 11764.0001 345770.4
<PAGE>
6. Term. A Stock Option may be exercised by the holder at such times as may be
specified in such holder's Stock Option Agreement; provided that no Stock Option
shall be exercised later than ten years from the date such Stock Option was
granted (the "Expiration Date").
7. Initial Option Grants. Pursuant to the provisions of the Plan and the Joint
Plan of Reorganization of 237 Park Avenue Associates, LLC and 1290 Associates,
LLC, filed under title 11 of the United States Code, 11 U.S.C. Sections 101 et
seq. (the "Reorganization Plan"), and subject to the terms and conditions of the
Plan and the Reorganization Plan, effective on the Effective Date (as such term
is defined in the Reorganization Plan), the Company shall grant to each person
serving as a Director of the Company on the Effective Date, Stock Options to
purchase 3,000 Shares (the "Initial Grants") at an exercise price of $25 per
share.
Each Stock Option shall be evidenced by a written agreement
substantially in the form of Exhibit A hereof or in such form and containing
such provisions not inconsistent with the Plan as the Administrator shall from
time to time to approve (the "Stock Option Agreement").
8. Price. The exercise price of a Stock Option shall be (i) the fair market
value per share of the Shares covered by the Stock Option at the time that the
Stock Option is granted, as determined by the Administrator in its sole
discretion, and, in the case of the Initial Grants, $25 per share, in accordance
with the Plan, or (ii) such other price as the Administrator deems appropriate.
The exercise price of a Stock Option, as determined by the Administrator in
accordance with (i) or (ii) above and specified in the holder's Stock Option
Agreement shall hereinafter be referred to as the "Exercise Price."
9. Termination of Service. If a Participant ceases to be a member of the Board
for any reason, the Participant (or the Participant's legal representative or
the person or persons to whom the Stock Options shall have been transferred by
will or by the laws of descent and distribution, as the case may be), shall have
the right to exercise the option until the Expiration Date.
10. Nontransferability. No Stock Option shall be transferable by a holder other
than by will or the laws of descent and distribution. During the lifetime of a
holder the Stock Option shall be exercisable only by such holder or, in the case
of disability, by such holder's personal representative.
11. Exercise of Options. Unless otherwise provided in any Stock Option
Agreement, Stock Options distributed pursuant to the Plan shall become
exercisable as follows:
- 3 -
C/M: 11764.0001 345770.4
<PAGE>
(a) one-third of the Shares covered by the Stock
Options issued to a holder shall become purchasable on the date of the original
issuance of such Stock Options;
(b) an additional one-third of the Shares covered
by the Stock Options issued to any holder shall become purchasable on the first
anniversary date of the original issuance date of such Stock Options; and
(c) the remaining one-third of the Shares covered
by the Stock Options issued to a holder shall become purchasable on the second
anniversary date of the original issuance date of such Stock Options.
12. Payment for Stock.
(a) The aggregate purchase price of Shares issued
upon the exercise of any Stock Options granted hereunder shall be paid in full
on the date of exercise. Payment shall be made either in cash or in such other
consideration as the Administrator deems appropriate, including, but not limited
to, Shares already owned by the holder or Shares to be acquired by the holder
upon exercise of a Stock Option having a total fair market value, as determined
by the Administrator, equal to the aggregate purchase price, or a combination of
cash and Shares having a total fair market value, as so determined, equal to the
aggregate purchase price.
(b) Shares shall not be issued upon the exercise
of any Stock Option unless and until the aggregate amount of federal, state or
local taxes of any kind required by law to be withheld with respect to the
exercise of such Stock Options have been paid or satisfied or provision for
their payment and satisfaction has been made upon such terms as the
Administrator may prescribe.
(c) No fractional Shares, or cash in lieu thereof,
shall be issued under any Stock Option.
13. Stock Adjustments.
(a) The total number of Shares which may be issued
under the Plan, the number of Shares which may be purchased upon the exercise of
Stock Options granted hereunder and the exercise price of such Stock Options
shall be appropriately adjusted for any increase or decrease in the number of
outstanding Shares resulting from payment of a stock dividend on the Shares, a
subdivision or combination of Shares, or a reclassification of the Shares, and
(in accordance with the provisions contained in the next following paragraph) in
the event of a consolidation or a merger in which the Company shall be the
surviving corporation.
- 4 -
C/M: 11764.0001 345770.4
<PAGE>
(b) After any merger of one or more corporations
into the Company in which the Company shall be the surviving corporation, or
after any consolidation of the Company and one or more other corporations, each
holder shall, at no additional cost, be entitled, upon any exercise of his/her
Stock Options, to receive (subject to any required action by stockholders), in
lieu of the number of Shares as to which such Stock Options shall then be so
exercised, the number and class of Shares or other securities to which such
holder would have been entitled pursuant to the terms of the applicable
agreement of merger or consolidation if at the time of such merger or
consolidation such holder had been a holder of record of a number of Shares
equal to the number of Shares to which such holder's Stock Options may have then
be so exercised. Comparable rights shall accrue to each holder in the event of
successive mergers or consolidations of the character described above.
(c) In its absolute discretion, and on such terms
and conditions as it deems appropriate, the Board may provide by the terms of
any Stock Option that such Stock Option cannot be exercised after the merger or
consolidation of the Company into another entity, the exchange of all or
substantially all of the assets of the Company for the securities of another
entity, the acquisition by another entity of 80% or more of the Company's then
outstanding Shares or the liquidation or dissolution of the Company, and if the
Board so provides, it may, in its absolute discretion and on such terms and
conditions as it deems appropriate, also provide, either by the terms of such
option or by a resolution adopted prior to the occurrence of such merger,
consolidation, exchange, acquisition, liquidation or dissolution, that, for some
period of time prior to such event, such Stock Option shall be exercisable as to
all Shares subject thereto, notwithstanding anything to the contrary in Section
11.
14. No Rights as a Stockholder. A holder or a transferee of a Stock Option shall
have no rights as a stockholder with respect to any Shares covered by his Stock
Option until he shall have become the holder of record of such Shares, and,
except for stock dividends as provided in Section 13 above, no adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights in respect of such Shares for
which the record date is prior to the date on which he shall become the holder
of record thereof.
15. Amendment and Termination. The Administrator may at any time terminate,
amend or modify the Plan in any respect it deems suitable; provided, however,
that no such action of the Administrator, without the approval of the
stockholders of the Company, may increase the total number of Shares which may
be issued under the Plan; and provided, further, that no amendment, modification
or termination of the Plan may in any manner affect any Stock Option theretofore
granted under the Plan without the consent of the then holder of the Stock
Option.
16. Investment Purpose. No Shares shall be issued hereunder or transferred upon
the exercise of any Stock Option unless and until all legal requirements
applicable to
- 5 -
C/M: 11764.0001 345770.4
<PAGE>
the issuance or transfer of such Shares have been complied with to the
satisfaction of the Administrator. At the time of exercise of any Stock Option
or the issuance of any Shares, the Company may, if it shall deem it necessary or
desirable for any reason, require the Participant to represent in writing to the
Company that it is his/her then intention to acquire the Shares for investment
and not with a view to the distribution thereof.
17. Governing Law. The Plan shall be governed by the laws of the State of
Maryland.
18. Effective Date. The Plan shall be effective on the Effective Date of
Reorganization Plan.
- 6 -
C/M: 11764.0001 345770.4
METROPOLIS REALTY TRUST, INC.
FORM OF STOCK OPTION AGREEMENT FOR DIRECTORS
1. Grant of Options
METROPOLIS REALTY TRUST, INC., a Maryland corporation (the "Company"),
hereby grants to _______________ (the "Optionee"), pursuant to the Company's
1996 Directors' Stock Plan (the "Plan"), Stock Options (the "Stock Options"), to
purchase an aggregate of _____ shares of common stock, $10.00 par value per
share ("Common Stock" or "Shares"), of the Company at a price of $25.00 per
share (the "Exercise Price Per Share"), purchasable as set forth in and subject
to the terms and conditions of this Option Agreement and the Plan. All undefined
capitalized terms herein shall have the same meaning as set forth in the Plan.
2. Exercise of Stock Options and Effect of Termination of Services, Death or
Disability.
(a) Exercisability of Options. The Stock Options shall become
exercisable and option shares may be purchased as follows:
(i) one-third of the option shares covered by the Stock Options
shall become purchasable on the date of grant;
(ii) an additional one-third of the option shares covered by the
Stock Options shall become purchasable on the first
anniversary date of the date of grant; and
(iii) the remaining one-third of the option shares covered by the
Stock Options shall become purchasable on the second
anniversary of the date of grant.
(b) Expiration Date. Except as otherwise provided in this Option
Agreement or the Plan, the Stock Options may not be exercised after the date
(hereinafter the "Expiration Date") that is the tenth anniversary of the date of
grant.
(c) Effect of Termination of Services, Death or Disability. If the
Optionee ceases to serve as a director of the Company for any reason, the Stock
Options that have been previously granted to the Optionee and that are vested as
of the date of such cessation may be exercised by the Optionee not later than
the Expiration Date. If the Optionee dies prior to the Expiration Date, the
Stock Options that have been previously granted to the Optionee and that are
vested as of the date of such death may be exercised by the legal representative
of the Optionee, or by the person to whom such Stock Options are transferred by
will or the laws of descent and distribution not later than the Expiration Date.
If the Optionee becomes
404914.1
<PAGE>
totally disabled prior to the Expiration Date, the Stock Options that have been
previously granted to the Optionee and that are vested as of the date of such
disability may be exercised by the Optionee or his legal representative not
later than the Expiration Date.
(d) Exercise Procedure. Subject to the conditions set forth in this
Option Agreement and the Plan, the Stock Options shall be exercised by the
Optionee's delivery of written notice of exercise to the Secretary of the
Company, specifying the number of shares to be purchased and the Exercise Price
Per Share to be paid therefor and accompanied by payment in accordance with
Section 3 hereof. The Optionee may purchase less than the total number of shares
covered hereby, provided that no exercise of less than all the Stock Options may
be for less than 100 whole Shares.
3. Payment of Purchase Price
Payment of the Exercise Price Per Share for shares purchased upon exercise
of a Stock Option shall be made by delivery to the Company of the purchase
price, payable (i) in cash (by check), (ii) by transferring previously owned
Shares to the Company having a fair market value on the date preceding the date
of exercise equal to the cash amount for which such shares are substituted,
(iii) by directing the Company to withhold a number of Shares that would
otherwise be received upon exercise having a fair market value on the date
preceding the date of exercise equal to the cash amount for which such Shares
are substituted or (iv) any combination of the foregoing.
4. Delivery of Shares
The Company shall, upon payment of the Exercise Price Per Share for the
number of Shares purchased and paid for, make prompt delivery of such Shares to
the Optionee. No Shares shall be issued and delivered upon exercise of a Stock
Option unless and until the aggregate amount of federal, state or local taxes of
any kind required by law to be withheld with respect to the exercise of such
Stock Options have been paid or satisfied or provision for their payment and
satisfaction has been made in accordance with the Plan.
5. Non-transferability of Stock Options
Except as provided in the Plan, the Stock Options are personal and no
rights granted hereunder may be transferred in any way other than by will or the
laws of descent and distribution, nor shall any such rights be subject to
execution, attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of a Stock Option or of such rights
contrary to the provisions hereof, or upon the levy of any attachment or similar
process upon any Stock Option or such rights, this Option Agreement and such
rights shall, at the election of the Company, become null and void.
404914.1
2
<PAGE>
6. No Special Directorship Rights
Nothing contained in the Plan or in this Option Agreement shall constitute
evidence of any agreement or understanding, express or implied, that the
Optionee has a right to continue as a director for any period of time.
7. Rights as a Stockholder
The Optionee shall have no rights as a stockholder with respect to any
Shares which may be purchased by exercise of the Stock Options unless and until
a certificate representing such Shares is duly issued to the Optionee. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date on such
stock certificate.
8. Optionee Representations; Legend
(a) Representations. The Optionee represents, warrants and covenants
that he has had such opportunity as he has deemed adequate to obtain from
representatives of the Company such information as is necessary to permit the
Optionee to evaluate the merits and risks of his investment in the Company. The
Optionee understands that there may be restrictions on his ability to resell any
Shares acquired on exercise of a Stock Option. By making payment upon exercise
of a Stock Option, the Optionee shall be deemed to have reaffirmed, as of the
date of such payment, the representations made in this Section 8.
(b) Legend on Stock Certificate. The Optionee understands that, any
Shares of Common Stock acquired upon exercise of a Stock Option may not have
been registered under the Securities Act nor the securities laws of any state.
Accordingly, in the event such Shares have not been registered, all stock
certificates representing shares of Common Stock issued to the Optionee upon
exercise of a Stock Option shall have affixed thereto a legend substantially in
the following form, in addition to any other legends required by applicable
state law:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT
IN COMPLIANCE WITH SUCH ACT AND THE APPLICABLE RULES AND REGULATIONS
THEREUNDER."
9. Miscellaneous
In the event that the Plan terminates prior to the expiration date of the
Options granted hereunder, this Option Agreement shall incorporate by reference
all applicable provisions of the Plan until the earlier of (i) the close of
business on the day the Option(s)
404914.1
3
<PAGE>
granted hereunder expire, or (ii) the date on which all Shares available for
issuance hereunder shall have been issued pursuant to the exercise of Stock
Options granted hereunder.
Except as provided herein or in the Plan, this Option Agreement may not be
amended or otherwise modified unless evidenced in writing and signed by the
Company and the Optionee.
All notices under this Option Agreement shall, unless otherwise provided
herein, be mailed or delivered by hand to the parties at their respective
addresses set forth beneath their names below or at such other address as may be
designated in writing by either of the parties to the other.
This Option Agreement shall be governed by and construed in accordance
with the laws of the State of Maryland.
This Option Agreement shall be binding upon and inure to the heirs,
successors and assigns of the Optionee (subject, however, to the limitations set
forth herein with respect to assignment of the Stock Options or rights therein)
and the Company, and shall be construed in a manner that is consistent with the
provisions of the Plan.
Date of Grant: METROPOLIS REALTY TRUST, INC.
October 10, 1996 By:__________________________
Name:
Title:
Address:
c/o Victor Capital Group, L.P.
885 Third Avenue - 12th Floor
New York, New York 10022
Attn: John Klopp
404914.1
4
<PAGE>
OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing Option Agreement and agrees
to the terms and conditions thereof. The undersigned hereby acknowledges receipt
of a copy of the Company's 1996 Directors' Stock Plan. The undersigned
understands and agrees that the Option Agreement is not meant to interpret,
extend, or change the Plan in any way, nor to represent the full terms of the
Plan. If there is any discrepancy, conflict or omission between this Option
Agreement and the provisions of the Plan as interpreted by the Company, the
provisions of the Plan shall govern.
OPTIONEE:
By:________________________
Name:
Address:
404914.1
5
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT (the "Agreement") between Metropolis Realty
Trust, Inc., a Maryland corporation (the "Company"), and [___________________],
a director and/or an officer of the Company (the "Indemnitee"), dated as of
____________, 1996.
WHEREAS, it is essential that the Company retain as directors and
officers the most capable persons available.
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors/officers of
companies in today's environment.
WHEREAS, the Indemnitee has agreed to serve as a director and/or an
officer of the Company.
WHEREAS, the Articles of Incorporation (the "Articles of
Incorporation") and the By-Laws of the Company (the "By-Laws") provide for
certain indemnification of the officers and directors of the Company.
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability and to provide Indemnitee with specific
contractual assurance that the protection provided by the Articles of
Incorporation will be available to Indemnitee (regardless of, among other
things, any amendment to or revocation of the Articles of Incorporation or
By-Laws, or any Change in Control (as herein defined), the Company wishes to
provide in this Agreement for the indemnification of and the advancement of
expenses to Indemnitee to the fullest extent permitted by law and as set forth
in this Agreement, and, to the extent insurance is maintained, for the continued
coverage of Indemnitee under the Company's directors' and officers' liability
insurance policies.
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound hereby, the parties hereto agree as follows:
Section 1. Indemnification.
In the event that the Indemnitee was or is made a party to or
witness or other participant in, or is threatened to be made a party to or
witness or other participant in, or is or was otherwise involved, in any action,
suit, proceeding, arbitration, alternate dispute resolution mechanism, or any
inquiry or investigation, whether civil, criminal, administrative or
investigative (hereinafter a "Proceeding"), by reason of the fact that the
Indemnitee or a person of whom the Indemnitee is the legal representative is or
was a director, officer or
353942.2
<PAGE>
employee of the Company or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such actual or threatened
proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director, officer,
employee or agent, the Indemnitee shall be indemnified and held harmless by the
Company to the fullest extent authorized by the General Corporation Law of
Maryland (the "GCL"), the Articles of Incorporation and the By-Laws as the same
exist or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expense, liability and loss (including, without
limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
the Indemnitee in connection therewith, and such indemnification shall continue
as to the Indemnitee if the Indemnitee ceases to be a director, officer,
employee or agent and shall inure to the benefit of the Indemnitee's heirs,
executors and administrators; provided, however, that, except as provided in
Section 2 with respect to proceedings seeking to enforce rights to
indemnification, the Company shall indemnify the Indemnitee in connection with a
proceeding (or part thereof) initiated by the Indemnitee only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Company.
Section 2. Suit to Recover.
If a claim under Section 1 is not paid in full by the Company within
thirty days after a written claim has been received by the Company, the
Indemnitee may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
Indemnitee 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 expense incurred in defending any actual or threatened
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Company) that the Indemnitee has
not met the standards of conduct which make it permissible under the GCL for the
Company to indemnify the Indemnitee for the amount claimed, but the burden of
proving such defense shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel or stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the Indemnitee is proper in the circumstances because the
Indemnitee has met the applicable standard of conduct set forth in the GCL, nor
an actual determination by the Company (including its Board of Directors,
independent legal counsel or stockholders) that the Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the Indemnitee has not met the applicable standard of conduct.
-2-
353942.2
<PAGE>
Section 3. Change in Control.
Following any "change in control" of the Company of the type
required to be reported under Item 1 of Form 8-K promulgated under the
Securities Exchange Act of 1934, as amended, any determination as to entitlement
to indemnification shall be made by Independent Legal Counsel selected by the
Indemnitee, such Independent Legal Counsel to be retained by the Board of
Directors on behalf of the Company. "Independent Legal Counsel" shall mean an
attorney or firm of attorneys who shall not have otherwise performed services
for the Company or Indemnitee within the last five years (other than with
respect to matters concerning the rights of Indemnitee under this Agreement, or
of other indemnitees under similar indemnity agreements).
Section 4. Insurance.
In the event that the Company maintains insurance to protect itself
and any director or officer of the Company against any expense, liability or
loss, such insurance shall cover the Indemnitee to at least the same extent as
any other director or officer of the Company.
Section 5. Advance of Expenses.
The right to indemnification conferred by this Agreement shall
include the right to be paid by the Company the expenses incurred in defending
any actual or threatened proceeding in advance of its final disposition;
provided, however, that, if the GCL requires, the payment of such expenses
incurred by the Indemnitee in advance of the final disposition of any actual or
threatened proceeding shall be made only upon delivery to the Company of an
undertaking, by or on behalf of the Indemnitee, to repay all amounts so advanced
if it shall ultimately be determined that the Indemnitee is not entitled to be
indemnified under this Agreement or otherwise.
Section 6. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including reasonable attorneys' fees) and, if requested by Indemnitee, shall
(within ten business days of such request) advance such expenses to Indemnitee,
which are incurred by Indemnitee in connection with any action brought by
Indemnitee for (i) indemnification or advance payment of expenses by the Company
under this Agreement, the Charter or any other agreement, certificate of
incorporation or Company by-law now or hereafter in effect relating to claims
and/or (ii) recovery under any directors' and officers' liability insurance
policies maintained by the Company; provided, however, that the payment of
expenses incurred by Indemnitee in advance of the final disposition of such
action will be made only upon receipt by the Company of an undertaking by the
Indemnitee to repay all amounts advanced if it should be ultimately determined
that the Indemnitee is not entitled to be indemnified under this Agreement or
otherwise.
-3-
353942.2
<PAGE>
Section 7. Partial Indemnity.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for a portion of the expenses, judgments, fines,
penalties and amounts paid in settlement of a claim but not, however, for the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding
any other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all claims or in
defense of any issue or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against all expenses incurred in connection
therewith.
Section 8. Burden of Proof.
In connection with any determination by the Reviewing Party or
otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall be on the Company to establish that Indemnitee is not so
entitled. "Reviewing Party" shall mean any person or group of persons consisting
of a member or members of the Company's Board of Directors or any other person
or body appointed by the Board who is not a party to the particular Proceeding
for which Indemnitee is seeking indemnification, or Independent Legal Counsel,
who shall determine whether Indemnitee is entitled to be indemnified hereunder.
Section 9. No Presumptions.
For purposes of this Agreement, the termination of any claim,
action, suit or proceeding, by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law. In addition,
neither the failure of a Reviewing Party to have made a determination as to
whether Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by a Reviewing Party that
Indemnitee has not met such standard of conduct or did not have such belief,
prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under applicable
law shall be a defense to Indemnitee's claim or create a presumption that
Indemnitee has not met any particular standard of conduct or did not have any
particular belief.
Section 10. Non-Exclusivity.
The rights conferred in this Agreement shall not be exclusive of any
other right which the Indemnitee may have or hereafter acquire under any
statute, provision of the Articles of Incorporation, By-Laws, agreement, vote of
stockholders or of disinterested directors or otherwise.
-4-
353942.2
<PAGE>
Section 11. Subrogation.
In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.
Section 12. No Duplication of Payments.
The Company shall not be liable under this Agreement to make any
payment in connection with any claim made against Indemnitee to the extent
Indemnitee has otherwise actually received payment (under any insurance policy,
the Articles of Incorporation or otherwise) of the amounts otherwise
indemnifiable hereunder.
Section 13. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors, assigns,
including any direct or indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business and/or assets of the
Company, spouses, heirs, executors and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Indemnitee continues to
serve as an officer or director of the Company or of any other enterprise at the
Company's request.
Section 14. Severability.
The provisions of this Agreement shall be severable in the event
that any of the provisions hereof (including any provision within a single
section, paragraph or sentence) is held by a court of competent jurisdiction to
be invalid, void or otherwise unenforceable in any respect, and the validity and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired and shall remain enforceable
to the fullest extent permitted by law.
Section 15. Amendment.
This Agreement may not be changed, modified or amended except in
writing signed by the parties hereto.
Section 16. Governing Law.
This Agreement shall be governed and construed in accordance with
the law of the State of New York, without regard to its conflict of laws
doctrine.
-5-
353942.2
<PAGE>
IN WITNESS WHEREOF, the Company and the Indemnitee have executed
this Agreement as of the day and year first above written.
COMPANY:
METROPOLIS REALTY TRUST, INC.
By:
Name:
Title:
INDEMNITEE:
Name:
-6-
353942.2
REGISTRATION RIGHTS AGREEMENT
Dated as of October 10, 1996
By and Among
METROPOLIS REALTY TRUST, INC.
a Maryland corporation,
And
The Holders referred to herein
360341.1
<PAGE>
TABLE OF CONTENTS
Page
1.
ARTICLE I
DEFINITIONS 1
2.
ARTICLE II
REGISTRATION RIGHTS 4
Section 2.1. Demand Registration 4
-------------------
Section 2.2. Piggyback Registration 5
----------------------
Section 2.3. Expenses 7
--------
Section 2.4. Registration and Qualification 7
------------------------------
Section 2.5. Conversion of Other Securities, etc. 9
-----------------------------------
Section 2.6. Underwriting; Due Diligence 9
---------------------------
Section 2.7. Indemnification and Contribution 10
--------------------------------
Section 2.8. Transfer of Registration Rights 12
-------------------------------
3.
ARTICLE III
MISCELLANEOUS 12
Section 3.1. No Conflicting Agreements 12
-------------------------
Section 3.2. Remedies 13
--------
Section 3.3. Amendments 13
----------
Section 3.4. Term 13
----
Section 3.5. Successors and Assigns; Third Parties 13
-------------------------------------
Section 3.6. Severability 13
------------
Section 3.7. Notices 13
-------
Section 3.8. Governing Law 14
-------------
Section 3.9. Headings 14
--------
Section 3.10. Counterparts 14
------------
-i-
360341.1
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of October 10, 1996 (this
"Agreement") between METROPOLIS REALTY TRUST, INC., a Maryland corporation (the
"Company"), and the Holders referred to herein.
W I T N E S S E T H:
WHEREAS, pursuant to and upon the effectiveness of the Joint Plan of
Reorganization of 237 Park Avenue Associates, LLC and 1290 Associates, LLC,
filed under title 11 of the United States Code, 11 U.S.C. Section 101 et seq.
(the "Plan"), the Company is issuing shares of its Common Stock, par value $10
per share ("Common Stock"), to (i) holders of Existing Notes (as defined in the
Plan), and (ii) the Morgan Loan Lenders (as defined in the Plan), who elect to
receive shares of Common Stock under the Plan (such holders are herein referred
to as the "Initial Holders");
WHEREAS, pursuant to and upon the effectiveness of the Plan, this
Agreement shall become effective, and, upon the receipt by the Initial Holders
of the Common Stock issued to them pursuant to the Plan and without any further
action on the Initial Holders' part, the Initial Holders shall be deemed to be
parties hereto and shall be entitled to the benefits and bound by the provisions
of this Agreement, whether they shall have signed this Agreement or not;
WHEREAS, the Company desires to enter into this Agreement, which
sets forth certain registration rights applicable to the Registrable Securities
(as defined below) held from time to time by any Holder (as defined below);
NOW, THEREFORE, in consideration of the mutual promises herein set
forth and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and subject to the conditions and upon the
terms hereof, the parties hereto hereby agree as follows:
1.
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms will have the
following meanings, applicable both to the singular and the plural forms of the
terms described:
360341.1
<PAGE>
"Affiliate" means, with respect to a given Person, any Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the power to vote a
majority of the securities having voting power for the election of directors (or
other Persons acting in similar capacities) of such Person or otherwise to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract, or otherwise.
"After-Tax Basis" means, with respect to any payment to be received
or accrued by any Person, the amount of such payment supplemented by a further
payment or payments (which shall be payable either simultaneously with the
initial payment or, in the event that taxes resulting from the receipt or
accrual of such initial payment are not payable in the year of receipt or
accrual, at the time or times such taxes become payable) so that the sum of all
such initial and supplemental payments, after deduction of all taxes imposed by
any taxing authority (after taking into account any credits or deductions or
other tax benefits arising therefrom to the extent such are currently utilized)
resulting from the receipt or accrual of such payments (whether or not such
taxes are payable in the year of receipt or accrual) shall be equal to the
initial payment to be so received or accrued.
"Agreement" has the meaning ascribed thereto in the preamble hereto,
as such agreement may be amended and supplemented from time to time in
accordance with its terms.
"Company Securities" has the meaning ascribed
thereto in Section 2.2(b).
"Disadvantageous Condition" has the meaning ascribed
thereto in Section 2.1(a).
"Holder" means each Initial Holder and any Trans-
feree.
"Holder Securities" has the meaning ascribed thereto
in Section 2.2(b).
"Other Holders" has the meaning ascribed thereto in
Section 2.2(b).
-2-
360341.1
<PAGE>
"Other Securities" has the meaning ascribed thereto
in Section 2.2.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government (and any department
or agency thereof) or other entity.
"Registrable Securities" means Common Stock and any stock or other
securities into which or for which such Common Stock (or such shares or other
securities into which or for which such shares are so changed, converted or
exchanged) may hereafter be changed, converted or exchanged and any other shares
or securities issued to Holders of such Common Stock (or such shares or other
securities into which or for which such shares are so changed, converted
exchanged) upon any reclassification, share combination, share subdivision,
share dividend, merger, consolidation or similar transaction or event. Any
particular Registrable Securities will cease to be such when (y) a registration
statement hereunder covering such Registrable Securities been declared effective
and such Registrable Securities have been disposed of pursuant to such effective
registration statement, or (z) for purposes of Section 2.1 only, such
Registrable Shares may be distributed to the public pursuant to Rule 144 of the
Commission promulgated under the Securities Act.
"Registration Expenses" means all expenses in connection with any
registration of securities pursuant to Article II, including, without
limitation, the following: (i) the fees, disbursements and expanses of the
Company's counsel and accountants in connection with the registration of the
securities to be disposed of; (ii) all expenses in connection with the
preparation, printing and filing of the registration statement, any preliminary
prospectus or final prospectus, any other offering document and amendments and
supplements thereto and the mailing and delivering of copies thereof to any
underwriters and dealers; (iii) the cost of printing or producing any agreements
among underwriters, underwriting agreements, and blue sky or legal investment
memoranda, any selling agreements and any other documents in connection with the
offering, sale or delivery of the securities to be disposed of; (iv) all
expenses in connection with the qualification of the securities to be disposed
of for offering and sale under state securities laws, including the fees and
disbursements of counsel for the underwriters or the Holders of securities in
connection with such qualification
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and in connection with any blue sky and legal investments surveys; (v) the
filing fees incident to securing any required review by the National Association
of Securities Dealers, Inc. of the terms of the sale of the securities to be
disposed of; (vi) transfer agents', depositaries' and registrars' fees and the
fees of any other agent appointed in connection with such offering; (vii) all
security engraving and security printing expenses; and (viii) all fees and
expenses payable in connection with the listing of the securities on any
securities exchange or inter-dealer quotation system.
"Restricted Holder" means each of Apollo Real Estate Investment
Fund, L.P. ("Apollo"), WSA Realty LLC, Oaktree Capital Management, LLC and any
other Holder under the control of a person who is a director of the Company on
the date of effectiveness of the Plan, and any Transferee of any of the
foregoing entitled to demand registration under Section 2.1 pursuant to Section
2.8.
"Rule 415 Offering" means an offering on a delayed or continuous
basis pursuant to Rule 415 (or any successor rule to similar effect) promulgated
under the Securities Act, or any successor rule to similar effect.
"SEC" means the United States Securities and
Exchange Commission.
"Securities Act" means the Securities Act of 1933,
as amended, or any successor statute.
"Selling Holder" has the meaning ascribed thereto in
Section 2.4(e).
"Subsidiary" means with respect to any Person, any other Person
which is directly or indirectly controlled by such Person. For purposes of this
definition, "control", as applied to any Person, means the possession, directly
or indirectly, of the power to vote a majority of the securities having voting
power for the election of directors (or other Persons acting in similar
capacities) of such Person or otherwise to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"Transferee" has the meaning ascribed thereto in
Section 2.8.
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Unless the context indicates otherwise, references to sections and
paragraphs shall refer to the corresponding articles, sections and paragraphs in
this Agreement and references to the parties shall mean the parties to this
Agreement.
2.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1. Demand Registration. (a) Upon written notice provided
at any time after January 1, 1997 from any Restricted Holder of Registrable
Securities requesting that the Company effect the registration under the
Securities Act of any or all of the Registrable Securities held by such
Restricted Holder, which notice shall specify the intended method or methods of
disposition of such Registrable Securities, the Company shall use its best
efforts to effect the registration under the Securities Act of such Registrable
Securities for disposition in accordance with the intended method or methods of
disposition stated in such request (including in a Rule 415 Offering, if the
Company is then eligible to register such Registrable Securities on Form S-3 (or
a successor form) for such offering); provided that:
(i) with respect to any registration statement filed, or to be
filed, pursuant to this Section 2.1, if the Company shall furnish to the
Restricted Holders of Registrable Securities that have made such request a
certified resolution of the Board of Directors stating that in the Board
of Directors' judgment it would (because of the existence of, or in
anticipation of, any acquisition or financing activity, or the
unavailability for reasons beyond the Company's reasonable control of any
required financial statements, or any other event or condition be
significantly disadvantageous (a "Disadvantageous Condition") to the
Company or its stockholders for such a registration statement to be
maintained effective, or to be filed and become effective, and setting
forth the general reasons for such judgment (without the need to disclose
any confidential or sensitive information), the Company shall be entitled
to cause such registration statement to be withdrawn and the effectiveness
of such registration statement terminated, or, in the event no
registration statement has yet been filed, shall be entitled not to file
any such registration statement, until such Disadvantageous Condition no
longer exists (notice of
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which the Company shall promptly deliver to such Restricted Holders) and
upon receipt of any such notice of a Disadvantageous Condition, such
Restricted Holders shall forthwith discontinue use of the prospectus
contained in such registration statement and, if so directed by the
Company, each such Restricted Holder will deliver to the Company all
copies, other than permanent file copies then in such Restricted Holder's
possession, of the prospectus then covering such Registrable Securities
current at the time of receipt of such notice, and, in the event no
registration statement has yet been filed, all drafts of the prospectus
covering such Registrable Securities; provided, that the filing of any
such registration statement may not be delayed for a period in excess of
six months due to the occurrence of any particular Disadvantageous
Condition;
(ii) a Restricted Holder of Registrable Securities may exercise its
rights under this Section 2.1 on not more than one occasion, except that
(x) Apollo may exercise its rights under this Section 2.1 on not more than
three occasions and (y) if, in any registration pursuant to this Section
2.1, a Restricted Holder is not able, as a result of cutbacks implemented
pursuant to Section 2.1(d) or 2.2(c), to register for sale at least 75% of
the Registrable Securities it requested be registered (and such deficiency
shall not have been cured by concessions made by the Company or any other
Restricted Holder) then such registration shall not count against the
limits set forth in this Section 2.1(a)(ii); and
(iii) a Restricted Holder of Registrable Securities shall not have the
right to exercise registration rights pursuant to this Section 2.1 in any
twelve-month period following the registration and sale of Registrable
Securities effected pursuant to a prior exercise of the registration
rights provided in this Section 2.1, if such Restricted Holder did not
elect to exercise its rights under Section 2.2 for such prior registration
and sale with respect to the highest possible number of the Registrable
Securities it held at such time.
(b) Notwithstanding any other provision of this Agreement to the
contrary, a registration requested by a Restricted Holder of Registrable
Securities pursuant to this
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Section 2.1 shall not be deemed to have been effected (and, therefore, not
requested for purposes of paragraph (a) above, (i) unless it has become
effective, (ii) if after it has become effective such registration is interfered
with by any stop order, injunction or other order or requirement of the SEC or
other governmental agency or court for any reason other than a misrepresentation
or an omission by such Restricted Holder and, as a result thereof, the
Registrable Securities requested to be registered cannot be completely
distributed in accordance with the plan of distribution set forth in the related
registration statement or (iii) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in connection with
such registration are not satisfied or waived other than solely by reason of
some act or omission by such Restricted Holder of Registrable Securities.
(c) In the event that any registration pursuant to this Section 2.1
shall involve, in whole or in part, an underwritten offering, the Restricted
Holder with respect to the greatest number of Registrable Securities to be
registered shall have the right to designate an underwriter as the lead
underwriter of such underwritten offering.
(d) The Company shall have the right to cause the registration of
additional securities for sale for the account of any Person (including, without
limitation, the Company and any existing or former directors, officers or
employees) in any registration of Registrable Securities requested by the
Restricted Holders pursuant to paragraph (a) above; provided, that,
notwithstanding any other provision of this Agreement, the Company shall not
have the right to cause the registration of such additional securities if and to
the extent such Restricted Holders are advised in writing (with a copy to the
Company) by a nationally recognized investment banking firm selected by such
Restricted Holders (which shall be the lead underwriter in the case of an
underwritten offering) that, in such firm's view, registration of such
additional securities would materially and adversely affect the offering and
sale of the Registrable Securities then contemplated by any Restricted Holder.
The Restricted Holders with respect to the Regis- trable Securities to be
offered may require that any such additional securities be included in the
offering proposed by such Restricted Holders on the same terms and conditions as
the Registrable Securities that are included therein.
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Section 2.2. Piggyback Registration. In the event that the Company
at any time proposes to register any of its Common Stock or any other of its
common equity securities (collectively, "Other Securities") under the Securities
Act, whether or not for sale for its own account or for the account of any
shareholder (including any registration pursuant to Section 2.1), in a manner
which would permit registration of Registrable Securities for sale for cash to
the public under the Securities Act, it shall at each such time give prompt
written notice to each Holder of Registrable Securities (as of a record date to
be determined by the Board of Directors) of its intention to do so and of the
rights of such Holder under this Section 2.2, at least 30 days prior to the
anticipated filing date of the registration statement relating to such
registration. Subject to the terms and conditions hereof, such notice shall
offer each such Holder the opportunity to include in such registration statement
such number of Registrable Securities as such Holder may request. Upon the
written request of any such Holder made within 10 days after the receipt of the
Company's notice (which request shall specify the number of Registrable
Securities intended to be disposed of), the Company shall use its best efforts
to effect, in connection with the registration of the Other Securities, the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register, to the extent required to permit the
disposition of the Registrable Securities so requested to be registered;
provided that:
(a) if, at any time after giving such written notice of its
intention to register any Other Securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register the Other Securities, the
Company may, at its election, give written notice of such determination to such
Holders and thereupon the Company shall be relieved of its obligation to
register such Registrable Securities in connection with the registration of such
Other Securities, without prejudice, however, to the rights of the Restricted
Holders of Registrable Securities however, immediately to request that such
registration be effected as a registration under Section 2.1;
(b) if the registration referred to in the first sentence of this
Section 2.2 is to be an underwritten registration on behalf of the Company, and
a nationally recognized investment banking firm selected by the Company
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advises the Company in writing that, in such firm's view, such offering would be
materially and adversely affected by the inclusion therein of all the
Registrable Securities requested to be included therein, the Company shall
include in such registration: (1) first, all Other Securities the Company
proposes to sell for its own account ("Company Securities"), and (2) second, up
to the full number of Registrable Securities held by Holders of Registrable
Securities that are requested to be included in such registration (Registrable
Securities that are held by Holders being sometimes referred to herein as
"Holder Securities") in excess of the number of Company Securities to be sold in
such offering which, in the good faith view of such investment banking firm, can
be so sold without so materially and adversely affecting such offering (and if
such number is less than the full number of such Holder Securities that are so
requested to be included, such number shall be allocated pro rata among such
Holders on the basis of the number of Holder Securities requested to be included
therein by each such Holder).
(c) if the registration referred to in the first sentence of this
Section 2.2 is to be an underwritten registration on behalf of a Restricted
Holder pursuant to Section 2.1, and a nationally recognized investment banking
firm selected pursuant to Section 2.1(c) advises the Company in writing that, in
such firm's view, such offering would be materially and adversely affected by
the inclusion therein of all the Registrable Securities requested to be included
therein, the Company shall include in such registration up to the full number of
Registrable Securities which, in the good faith view of such investment banking
firm, can be so sold without so materially and adversely affecting such offering
(and if such number is less than the full number of Holder Securities requested
to be included by the Restricted Holder requesting registration pursuant to
Section 2.1 and by any other Holders pursuant to this Section 2.2, such number
shall be allocated pro rata among all such Holders on the basis of the number of
Holder Securities requested to be included therein by each such Holder;
(d) the Company shall not be required to effect any registration of
Registrable Securities under this Section 2.2 incidental to the registration of
any of its securities in connection with mergers, acquisitions, exchange offers,
subscription offers, dividend reinvestment plans or stock option or other
executive or employee benefit or compensation plans; and
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(e) no registration of Registrable Securities effected under this
Section 2.2 shall, subject to Section 2.1(a)(i), relieve the Company of its
obligation to effect a registration of Registrable Securities pursuant to
Section 2.1.
Section 2.3. Expenses. Except as provided herein, each of Holder and
the Company shall pay its pro rata portion of Registration Expenses with respect
to a particular offering (or proposed offering), such pro rata portion to be
equal to the total amount of such Registration Expenses multiplied by a
fraction, the numerator of which is the number of shares sold (or proposed to be
sold) in such offering by such Holder or by the Company, as the case may be, and
the denominator of which is the total number of shares sold (or proposed to be
sold) in such offering. For purposes of determining which Person is required to
pay Registration Expenses, shares sold (or proposed to be sold) by the Company
on behalf of any Person other than a Holder shall be deemed to have been sold
(or proposed to be sold) by the Company. Notwithstanding the foregoing, each of
Holder and the Company shall be responsible for its own internal administrative
and similar costs, which shall not constitute Registration Expenses.
Underwriting discounts with respect to any offering shall also be apportioned in
the manner set forth above.
Section 2.4. Registration and Qualification. If and whenever the
Company is required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Section 2.1 or
Section 2.2, the Company shall as promptly as practicable:
(a) prepare, file and use its best efforts to cause to become
effective a registration statement under the Securities Act relating to the
Registrable Securities to be offered;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities until the earlier of (A) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition set forth in such registration statement and (B) the
expiration of nine months after such registration statement becomes effective;
provided, that such nine month
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period shall be extended for such number of days that equals the number of days
elapsing from (x) the date the written notice contemplated by paragraph (f)
below is given by capital to (y) the date on which the Company delivers to the
Holders of Registrable Securities the supplement or amendment contemplated by
paragraph (f) below;
(c) furnish to the Holders of Registrable Securities and to any
underwriter of such Registrable Securities such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such registration
statement or prospectus, and such other documents, as the Holders of Reg-
istrable Securities or such underwriter may reasonably request; and the Company
shall furnish to the underwriters a copy of any and all transmittal letters or
other correspondence to, or received from, the SEC or any other governmental
agency or self-regulatory or other body having jurisdiction (including any
domestic or foreign securities exchange) relating to such offering;
(d) use its best efforts to register or qualify all Registrable
Securities covered by such registration statement under the securities or blue
sky laws of such jurisdictions or (domestic or foreign) as the Holders of such
Registrable Securities or any underwriter of such Registrable Securities shall
reasonably request, and use its best efforts to obtain all appropriate
registrations, permits and consents in connection therewith, and any and all
other acts and things which may be necessary or advisable to enable the Holders
of Registrable Securities or any such underwriter to consummate the disposition
in such jurisdictions of its Registrable Securities covered by such registration
statement;
(e) (i) furnish to each Holder of Registrable Securities included in
such registration (each, a "Selling Holder") and to any underwriter of such
Registrable Securities, upon written request, an opinion of counsel for the
Company addressed to the Company and dated the date of the closing under the
underwriting agreement (if any) (or if such offering is not underwritten, dated
the effective date of the registration statement), and (ii) use its best efforts
to
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furnish to each Selling Holder, upon written request, a "cold comfort" letter
addressed to the Company and signed by the independent public accountants who
have audited the Company's financial statements included in such registration
statement, in each such case covering substantially the same matters with
respect to such registration statement (and the prospectus included therein) as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of securities
and such other matters as the Selling Holders may reasonably request and, in the
case of such accountants' letter, with respect to events subsequent to the date
of such financial statements;
(f) as promptly as practicable, notify the Selling Holders in
writing (i) at any time when a prospectus relating to a registration pursuant to
Section 2.1 or Section 2.2 is required be delivered under the Securities Act of
the happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) of any request by the SEC or any
other regulatory body or other body having jurisdiction for any amendment of or
supplement to any registration statement or other amendment relating to such
offering, and in either such case, at the request of the Selling Holders prepare
and furnish to the Selling Holders a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
(g) use its best efforts, if requested by the Selling Holders, to
list all such Registrable Securities covered by such registration on each
securities exchange and inter-dealer quotation system on which a class of common
equity securities of the Company is then listed;
(h) to the extent reasonably requested by the managing underwriter,
send appropriate officers of the Company to attend any "road shows" scheduled in
connection with any
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such registration, with all out-of-pocket costs and expenses incurred by the
Company or such officers in connection with such attendance to be shared pro
rata on the basis set forth in Section 2.3; and
(i) furnish unlegended certificates representing ownership of the
Registrable Securities being sold in such denominations as shall be requested by
the Selling Holders or the underwriters.
Section 2.5. Conversion of Other Securities, etc. In the event that
any Holder offers any options, rights, warrants or other securities issued by it
or any other Person that are offered with, convertible into or exercisable or
exchangeable for any Registrable Securities, the Registrable Securities
underlying such options, rights, warrants or other securities shall continue to
be eligible for registration pursuant to Section 2.1 and Section 2.2.
Section 2.6. Underwriting; Due Diligence. (a) If requested by the
underwriters for any underwritten offering of Registrable Securities pursuant to
a registration requested under this Article II, the Company shall enter into an
underwriting agreement with such underwriters for such offering, such agreement
to contain such representations and warranties by the Company and such other
terms and provisions as are customarily contained in underwriting agreements
with respect to secondary distributions, including, without limitation,
indemnification and contribution provisions substantially to the effect and to
the extent provided in Section 2.7, and agreements as to the provision of
opinions of counsel and accoun- tants' letters to the effect and to the extent
provided in Section 2.4(e). The Selling Holders on whose behalf the Registrable
Securities are to be distributed by such underwriters shall be parties to any
such underwriting agreement and the representations and warranties by, and the
other agreements on the part of, the Company to and for the benefit of such
underwriters, shall also be made to and for the benefit of such underwriters,
shall also be made to and for the benefit of such Selling Holders.
(b) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act, the Company shall give the Holders of such Registrable Securities and the
underwriters, if any, and their respective counsel and accountants, such
reasonable and customary access to its books
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and records and such opportunities to discuss the business of the Company with
its officers and the independent public accountants who have certified the
Company's financial statement as shall be necessary, in the opinion of such
Holders and such underwriters or their respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
Section 2.7. Indemnification and Contribution. (a) In the case of
each offering of Registrable Securities made pursuant to this Article II, the
Company agrees to save, protect, indemnify and hold harmless, on an After-Tax
Basis, each Holder of Registrable Securities, each underwriter of Regis- trable
Securities so offered and each Person, if any, who controls any of the foregoing
persons within the meaning of the Securities Act and the officers and directors
of each of the foregoing, from and against any and all liabilities, costs
(including attorney's fees and disbursements), claims and damages to which they
or any of them may become subject, under the Securities Act or otherwise,
including any amount paid in settlement of any litigation commenced or
threatened, arising from or relating to any untrue statement by the Company or
alleged untrue statement by the Company of a material fact contained in the
registration statement (or in any preliminary or final prospectus included
therein) or in any offering memorandum or other offering document relating to
the offering and sale of such Registrable Securities, or any amendment thereof
or supplement thereto, or in any document incorporated by reference therein, or
any omission by the Company or alleged omission by the Company to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or arising from or relating to any violation
or alleged violation by the Company of the Securities Act, any blue sky laws,
securities laws or other applicable laws of any state or country it which the
Registrable Securities are offered and relating to action or inaction required
of the Company in connection with such offering; provided, however, that the
Company shall not be liable to a particular Holder or Registrable Securities in
any such case to the extent that any such liability, cost, claim or damage
arises out of or relates to any untrue statement or alleged untrue statement, or
any omission, if such statement or omission shall have been made in reliance
upon and in conformity with information relating to such Holder furnished in
writing to the Company by or on behalf of such Holder specifically for use in
the preparation of the registration statement (or in any preliminary or final
prospectus included
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therein), offering memorandum or other offering document, or any amendment
thereof or supplement thereto. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of a Holder of
Registrable Securities and shall survive the transfer of such securities. The
foregoing indemnity agreement is in addition to any liability which the Company
may otherwise have to each Holder of Registrable Securities, underwriters of the
Registrable Securities or any controlling person of the foregoing and the
officers and directors of each of the foregoing; provided, further, that, in the
case of an offering with respect to which a Selling Holder has designated the
lead underwriter (or a Selling Holder is offering Registrable Securities
directly, without an underwriter), this indemnity does not apply to any
liability, cost, claim or damage arising out of or relating to any untrue
statement or alleged untrue statement or omission or alleged omission in any
preliminary prospectus if a copy of a final prospectus was not sent or given by
or on behalf of an underwriter (or such Selling Holder, as the case may be) to
such Person asserting such liability cost, claim or damage at or prior to the
written confirmation of the sale of the Regis- trable Securities as required by
the Securities Act and such untrue statement or omission had been corrected in
such final prospectus.
(b) In the case of each offering made pursuant to this Agreement,
each Holder of Registrable Securities included in such offering, by exercising
its registration rights hereunder, agrees to save, protect, indemnify and hold
harmless, on an After-Tax Basis, the Company, each underwriter who participates
in such offering, and each Person, if any, who controls any of the foregoing
within the meaning of the Securities Act and the officers and directors of each
of the foregoing, from and against any and all liabilities, costs, claims and
damages to which they or any of them may become subject, under the Securities
Act or otherwise, including any amount paid in settlement of any litigation
commenced or threatened, arising from or relating to any untrue statement or
alleged untrue statement by such Holder of a material fact contained in the
registration statement (or in any preliminary or final prospectus included
therein) or in any offering memorandum or other offering document relating to
the offering and sale of such Registrable Securities, or any amendment thereof
or supplement thereto, or any omission by such Holder or alleged omission by
such Holder of a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the extent
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that such untrue statement of a material fact is contained in, or such material
fact is omitted from, information relating to such Holder furnished in writing
to the Company by or on behalf of such Holder specifically for use in such
registration statement (or in any preliminary or final prospectus included
therein), offering memorandum or other offering document. The foregoing
indemnity is in addition to any liability which such Holder may otherwise have
to the Company, or controlling persons and the officers and directors of each of
the foregoing; provided, however, that, in the case of an offering with respect
to which the Company has designated the lead underwriter (or the Company is
offering Registrable Securities directly, without an underwriter), this
indemnity does not apply to any liability, cost, claim, or damage arising out of
or based upon any untrue statement or alleged untrue statement or omission or
alleged omission in any preliminary prospectus if a copy of a final prospectus
was not sent or given by or on behalf of an underwriter (or the Company, as the
case may be) to such Person asserting such liability, cost, claim or damage at
or prior to the written confirmation of the sale of the Registrable Securities
as required by the Securities Act and such untrue statement or omission had been
corrected in such final prospectus.
(c) Each party indemnified under paragraph (a) or (b) above shall,
promptly after receipt of notice of a claim or action against such indemnified
party in respect of which indemnity may be sought hereunder, notify the
indemnifying party in writing of the claim or action; provided, that the failure
to notify the indemnifying party shall not relieve it from any liability which,
it may have to an indemnified party on account of the indemnity agreement
contained in paragraph (a) or (b) above except to the extent that the
indemnifying party was prejudiced by such failure, and in no event shall such
failure relieve the indemnifying party from any other liability which it may
have to such indemnified party. If any such claim or action shall be brought
against an indemnified party, and it shall have notified the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein, and,
to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel satisfactory to
the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or action,
the indemnifying party shall not be liable to the indemnified party under this
Section 2.7 for any legal or other expenses subsequently incurred by the
indemnified party
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in connection with the defense thereof other than reasonable costs of
investigation. Any indemnifying party against whom indemnity may be sought under
this Section 2.7 shall not be liable to indemnify an indemnified party if such
indemnified party settles such claim or action without the consent of the
indemnifying party. The indemnifying party may not agree to any settlement of
any such claim or action as the result of which any remedy or relief, other than
solely for monetary damages for which the indemnifying party shall be
responsible hereunder, shall be applied to or against the indemnified party,
without the prior written consent of the indemnified party, which consent shall
not be unreasonably withheld. In any action hereunder as to which the
indemnifying party has assumed the defense thereof with counsel satisfactory to
the indemnified party, the indemnified party shall continue to be entitled to
participate in the defense thereof, with counsel of its own choice, but the
indemnifying party shall not be obligated hereunder to reimburse the indemnified
party for the costs thereof.
(d) If the indemnification provided for in this Section 2.7 shall
for any reason be unavailable to an indemnified party in respect of any
liability, cost, claim or damage referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such liability,
cost, claim or damage in such proportion as shall be appropriate to reflect the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other with respect to the statements or omissions which resulted in
such liability, cost, claim or damage as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to whether
the untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party on the one hand or the indemnified party on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission, but not by
reference to any indemnified party's stock ownership in the Company. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this paragraph
(d) shall be deemed to include, for purposes of this paragraph (d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or
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defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
Section 2.8. Transfer of Registration Rights. Any Holder may
transfer all or any portion of its rights under Article II to any transferee of
Registrable Securities owned by such Holder (each transferee that receives such
Registrable Securities, a "Transferee"); provided that a Restricted Holder and
its Transferees shall not in the aggregate have greater rights than those
provided to such Restricted Holder pursuant to Section 2.1(a)(ii). Any transfer
of registration rights pursuant to this Section 2.8 shall be effective upon
receipt by the Company within 30 days after the effective date of such transfer
of (i) written notice from such Holder stating the name and address of any
Transferee and identifying the amount of Registrable Securities with respect to
which the rights under this Agreement are being transferred, the nature of the
rights so transferred and, in the case of a Restricted Holder, the allocation of
rights under Section 2.1 and (ii) a written agreement from such Transferee to be
bound by the terms of this Agreement. The Holders may exercise their rights
hereunder in such priority as they shall agree upon among themselves.
ARTICLE III
MISCELLANEOUS
3.
Section 3.1. No Conflicting Agreements. The Company will not
hereafter enter into any agreement with respect to its securities which is in
conflict with the rights granted to the holders of Registrable Securities under
this Agreement.
Section 3.2. Remedies. Any Person having rights under any provision
of this Agreement will be entitled to enforce such rights specifically, to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
Section 3.3. Amendments. This Agreement may not be
amended or terminated or any provision hereof waived orally,
but only by a writing duly executed by or on behalf of the
Company, and with the written consent of Holders representing
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<PAGE>
at least a majority of the Registrable Securities outstanding at the time. Any
such amendment shall be validly and sufficiently authorized for purposes of this
Agreement if it is signed on behalf of the Company by its president or any of
its vice presidents.
Section 3.4. Term. This Agreement shall remain in effect until all
Registrable Securities held by Holders have been transferred by them to Persons
other than Transferees; provided that the provisions of Section 2.7 shall
survive any such expiration.
Section 3.5. Successors and Assigns; Third Parties. (a) This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Except as provided herein, no
rights or obligations of either party hereto may be assigned or transferred
without the prior written consent of the other party.
(b) Nothing in this Agreement, expressed or implied, is intended or
shall be construed to confer upon any Person other than the parties and their
successors and assigns any right, remedy or claim under or by reason of this
Agreement.
Section 3.6. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction or duly authorized arbitration
tribunal to be invalid, illegal or unenforceable to any extent, the remainder of
the Agreement or such provision or the application of such provision to such
party or circumstances, other than those to which it is so determined to be
invalid, illegal or unenforceable, shall remain in full force and effect to the
fullest extent permitted by law and shall not be affected thereby, unless such a
construction would be unreasonable.
Section 3.7. Notices. All notices, consents, deliveries, demands,
requests, approvals and other communications which are required or may be given
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered (including courier service), telecopied or mailed certified
first class mail, postage prepaid, addressed as follows:
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(a) if to the Company, to:
Metropolis Realty Trust, Inc.
Telecopier Number:
Confirmation Number:
Attention:
With a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Douglas L. Furth, Esq.
Kenneth J. Friedman, Esq.
Telephone: (212) 856-7000
Telecopier: (212) 339-9150
(b) If to the Holders, to their addresses as set
forth on the record books of the Company.
Section 3.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the choice of law provisions of its conflicts of law rules.
Section 3.9. Headings. The article and section
headings contained in this Agreement are intended solely for
the convenience of reference and shall not affect in any
manner the meaning or interpretation of this Agreement.
Section 3.10. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original instrument, but all
of which together shall constitute one and the same agreement, and shall become
binding when one or more counterparts have been executed and delivered by each
of the parties hereto.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
METROPOLIS REALTY TRUST, INC.
By
Name:
Title:
RESTRICTED HOLDERS
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360341.1
PARTICIPATION AGREEMENT
(JMB Notes)
THIS AGREEMENT made as of the 10th day of
October, 1996, between METROPOLIS REALTY TRUST, INC.,
a Maryland corporation (hereinafter referred to as
"Lender"), having an office at c/o Victor Capital
Group, L.P., 885 Third Avenue - 12th Floor, New York,
New York 10022, Attention: John Klopp; and MICHIGAN
AVENUE, L.L.C., a Delaware limited liability company
(hereinafter referred to as "Participant"), having an
office at c/o JMB Property Management, Inc., 900
North Michigan Avenue, Suite 1900, Chicago, Illinois
60611.
W I T N E S S E T H:
WHEREAS, Olympia & York Massachusetts Financial Company
("OYMFC") is the holder of those certain promissory notes (the "Existing Notes")
and the security agreements securing such notes (the "Existing Security
Agreements") all as described on Exhibit A annexed hereto;
WHEREAS, pursuant to the terms of the Second Amended Joint
Plan of Reorganization for 237 Park Avenue Associates, L.L.C. and 1290
Associates, L.L.C. (the "Plan") as confirmed by the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court") by order
dated September 20, 1996 and authorized by the Bankruptcy Court in the case of
Olympia & York Realty Corp. et al. by order dated September 20, 1996, OYMFC
will, immediately following the execution and delivery of this Agreement, assign
all of its right, title and interest in the Existing Notes and the Existing
Security Agreements to Lender (subject to the rights of Participant under this
Agreement) (Participant acknowledging that the original "1290 Note"
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<PAGE>
defined on Exhibit A has been lost by OYMFC and consequently not delivered to
Lender);
WHEREAS, pursuant to the Plan, Lender and JMB/NYC Office
Building Associates, L.P., the obligor under the Existing Notes (the "Maker"),
will enter into an amended, restated and consolidated promissory note in the
form of Exhibit B annexed hereto (hereinafter referred to as the "Restated
Note") and an amended, restated and consolidated security agreement securing
such note in the form of Exhibit C annexed hereto (hereinafter referred to as
the "Restated Security Agreement");
WHEREAS, Lender desires to assign to the Participant, and the
Participant desires to assume from Lender, an undivided participation interest
in the outstanding principal balance of the Existing Notes and the Existing
Security Agreement and interest payable thereon on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Lender and the Participant
mutually agree as follows:
1. Assignment of Undivided Interest. In consideration for
$1,000.00 paid by the Participant. Lender hereby assigns to the Participant, and
the Participant hereby assumes from Lender, an undivided participation interest
in the Existing Notes and the Existing Security Agreement which shall be
effective immediately upon the assignment of the Existing Notes and the Existing
Security Agreements by OYMFC to Lender, and Lender shall, subject to the
provisions of paragraph 10 of this Agreement, retain an undivided interest in
the Existing Notes and the Existing Security Agreements, such that Participant
shall be the holder of 100% of the outstanding principal balance
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<PAGE>
and all interest accrued thereon except that Lender shall retain the right to
receive the first $750,000 paid under the Existing Notes (regardless of
characterization as interest or principal). The foregoing interests of the
Lender and Participant shall be unaffected by the amendment and restatement of
the Existing Notes and the Existing Security Agreements and shall continue in
effect with respect to the Restated Note and the Restated Security Agreement.
The respective undivided interests of the Lender and Participant in the Existing
Notes and the Restated Note shall be equal in lien and no party to this
Agreement shall have priority over the other party to this Agreement except as
otherwise provided herein. The Participant hereby consents to and authorizes the
execution and delivery by Lender of the Restated Note and the Restated Security
Agreement.
2. Interest on Undivided Interests. For purposes of allocating
interest accruals under the Existing Notes and the Restated Note between the
parties hereto, the interests of the parties therein shall be treated as
"stripped bonds" within the meaning of Section 1286 of the Internal Revenue Code
of 1986, as amended.
3. Obligations of Lender. Lender shall, in its capacity as
holder and until the Participant's undivided interest in the Restated Note has
been paid in full, (i) hold the Restated Security Agreement and the collateral
for the Restated Note for the benefit of itself and the Participant (each party
shall be deemed to have an interest therein in proportion to its undivided
interest in the Restated Note), (ii) receive all payments of interest, principal
and other sums on account of or with respect to the Restated Note, and (iii)
promptly remit to the Participant its share of interest, principal and other
sums received by Lender on account of or with respect to the Restated Note in
accordance with the provisions of this Agreement. Except as specifically
provided to the contrary in this paragraph 2 or in paragraph 5 of this
Agreement, Lender shall not without the prior
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<PAGE>
consent of the Participant (i) modify or amend in any material respect the
interest rate provisions set forth in the Restated Note and Restated Security
Agreement, (ii) extend the maturity date of the Restated Note, other than in
accordance with the express provisions of the Restated Note and the Restated
Security Agreement, (iii) make or consent to any materially adverse amendment,
modification or waiver of any of the terms, covenants, provisions or conditions
of the Restated Note and Restated Security Agreement, (iv) waive, compromise or
settle any material claim under the Restated Note or the Restated Security
Agreement against the Maker or any guarantor or other person or entity
(hereinafter referred to as a Guarantor) liable for payment of the Restated Note
in whole or in part or for the observance and performance by the Maker of any of
the terms, covenants, provisions and conditions of the Restated Note and the
Restated Security Agreement, or release the Maker or any Guarantor from any
material obligation or liability under the Restated Note and the Restated
Security Agreement, (v) waive any material default under the Restated Note or
the Restated Security Agreement, or (vi) release, reconvey or change in any
material respect, any collateral or security interest held under the Restated
Note and the Restated Security Agreement other than in accordance with the
express provisions of the Restated Note and the Restated Security Agreement.
Lender, in its capacity as holder of the Restated Note, may, without obtaining
the prior consent of the Participant, (i) extend for reasonable periods of time
the time for the observance or performance by the Maker or any Guarantor of the
terms and conditions of the Restated Note and the Restated Security Agreement,
(ii) agree or consent to any non-material amendment, modification or waiver of
the terms, covenants, provisions or conditions of the Restated Note and the
Restated Security Agreement, (iii) waive, compromise or settle any non-material
claim under the Restated Note or the Restated Security Agreement against the
Maker or any Guarantor under the Restated Note or the Restated Security
Agreement, or release the Maker or any Guarantor from any non-material
obligation or liability under the Restated Note and the Restated Security
Agreement, (iv) waive any non-material
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<PAGE>
default under the Restated Note and the Restated Security Agreement, (vi)
release, reconvey or change, in whole or in part, any collateral or security
interest held under the Restated Note and the Restated Security Agreement which
is required to be released or reconveyed in accordance with the express
provisions of the Restated Note and the Restated Security Agreement, and (vii)
do or perform any act or thing which in the reasonable judgment of Lender is
necessary to enable Lender to discharge and perform its duties under this
Agreement or which in the reasonable judgment of Lender is necessary or required
to preserve and protect the liens and security interests created by the Restated
Note and the Restated Security Agreement and the priority thereby and the
collateral for the Restated Note and the interest of Lender and the Participant
therein. The Participant shall from time to time, upon request of Lender,
execute and deliver such documents and instruments as may be reasonably
necessary to enable Lender to effectively administer and service the Restated
Note in its capacity as lead lender and servicer and in the manner contemplated
by the provisions of this Agreement. The Participant hereby acknowledges that
Lender has made no representations or warranties with respect to the Existing
Notes or the Restated Note and that Lender shall have no responsibility for (i)
the collectibility of the Restated Note, (ii) the validity, enforceability or
legal effect of the Restated Note or the Restated Security Agreement, (iii) the
validity, sufficiency or effectiveness of the lien created or to be created by
the Restated Note and the Restated Security Agreement, or (iv) the financial
condition of the Maker or any Guarantor or the accuracy of any information
supplied by or to be supplied in connection with the Maker, any Guarantor or
otherwise with respect to the Restated Note or the collateral for the Restated
Note. The Participant assumes all risk of loss in connection with its undivided
interest in the Existing Notes and the Restated Note to the full extent of its
undivided percentage interest therein. Lender assumes all risk of loss in
connection with its undivided interest in the Existing Notes and the Restated
Note to the full extent of its undivided percentage interest therein. Lender, in
its capacity as holder of the
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<PAGE>
Restated Note, shall retain all rights under the Restated Note and Restated
Security Agreement with respect to enforcement, collection and administration of
the Restated Note and the security for the Restated Note, which rights of Lender
shall be subject to the provisions of paragraph 5 of this Agreement. At all
times and until such time as the Restated Note has been paid in full Lender
shall act as the holder of the Restated Note on behalf of itself and the
Participant in accordance with the provisions of this Agreement. Lender shall
have no liability with respect to the Participant's undivided interest in the
Restated Note.
4. Expenses. Lender and the Participant shall be responsible
for expenses and costs sustained or incurred in connection with the Existing
Notes and the Restated Note in proportion to the relative amounts of payments
thereunder received by such parties in accordance with their interests under
this Agreement.
5. Default by Maker. If a default shall occur under the
Restated Note or the Security Agreement, the decision of Lender shall control,
which decision may include the taking of any action otherwise prohibited under
this Agreement. Lender shall, after Lender's having knowledge thereof, inform
the Participant of any material default under the Restated Note and/or the
Restated Security Agreement and of all material facts relating to such default
or relating to any other aspect which facts could or might have a materially
adverse effect on the value of the security for the Restated Note or on the
ability of the obligor under the Restated Note to perform its obligation under
the Restated Note and Restated Security Agreement.
6. Approval of Documents. The Participant has examined and
approved the Existing Notes, the Existing Security Agreements, the Restated Note
and the Restated Security Agreement and such other documents as the Participant
has deemed necessary or appropriate.
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<PAGE>
7. Files and Records. Lender shall keep and maintain at its
offices, complete and accurate files and records of all matters pertaining to
the Restated Note, which files and records shall be available for inspection and
copying by the Participant and its employees and agents during normal business
hours upon reasonable prior notice to Lender.
8. Other Security. So far as the Participant's undivided
interest in the Restated Note and Restated Security Agreement is concerned, the
security for the Restated Note shall include only that security specifically
listed or described in the Restated Security Agreement, together with any
permitted substitutions therefor, and any additional security specifically
pledged to secure the advances made pursuant to the Restated Security Agreement.
The Participant shall have no interest in any property or guaranty taken as
security for any other transaction made by Lender, in any other property or
guaranty now or hereafter in Lender's possession or control which may be or
become security for the undivided interest in the Restated Note held by Lender
by reason of the general description contained in such guaranty, in any general
loan and collateral agreement or collateral note held by Lender or by reason of
applicable law now or hereafter in effect or otherwise.
9. Amounts Received by the Participant. Lender agrees that if
at any time it shall receive from any sources whatsoever any payment on account
of the Restated Note in excess of its share thereof, it will promptly remit to
the Participant its share of such excess.
10. Assignments and Subparticipations. Lender shall, subject
to the terms of this paragraph herein set forth, have the right after the date
of this Agreement to sell one or more additional undivided participation
interests in Lender's retained undivided interest in the Restated Note to any
person, party or investor selected by Lender and on terms satisfactory to
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<PAGE>
Lender. Without implying the necessity therefor, the Participant shall, upon
request of Lender, enter into an amended and restated participation agreement to
reflect any such additional undivided participation interest in the Restated
Note so sold and assigned by Lender, which amended and restated participation
agreement shall be identical to this Agreement other than for (i) modifications
necessary to reflect any such additional undivided participation interest in the
Restated Note so sold and assigned by Lender, and (ii) modifications requested
by the purchaser of any such additional undivided participation interest in the
Restated Note and which are of a non-material nature or are generally more
favorable to the Participant. The Participant shall not have the right to assign
or subparticipate its undivided interest in the Restated Note, in whole or in
part, without the prior consent of Lender. If the Participant shall
subparticipate its undivided interest in the Restated Note in accordance with
the provisions of this paragraph, Lender shall not have any obligation to look
to any person, party or entity (including, without limitation, any such person,
party or entity to whom the Participant has subparticipated its undivided
interest in the Restated Note in accordance with the provisions of this
paragraph) other than the Participant for the observance and performance by the
Participant of its obligations under this Agreement.
11. Withholding Taxes. In the event Lender or Maker shall be
required by law to deduct and withhold Taxes (as hereinafter defined) from
interest, fees or other amounts payable to the Participant with respect to the
Restated Note as a result of the Participant constituting a Non-Exempt Person
(as hereinafter defined), Lender, in its capacity as lead lender and servicer,
shall be entitled to do so with respect to the Participant's interest in such
payment (all withheld amounts being deemed paid to the Participant), provided
Lender shall furnish the Participant a statement setting forth the amount of
Taxes withheld, the applicable rate and other information which may reasonably
be requested for the purposes of assisting the Participant to seek any
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<PAGE>
allowable credits or deductions for the Taxes so withheld in each jurisdiction
in which the Participant is subject to tax. A "Non-Exempt Person" is any
"Person" (i.e., an individual, corporation, partnership, business trust, trust,
unincorporated association or other entity, or a governmental entity of any
country) other than a Person who is either (i) a United States Person or (ii)
has on file with Lender for the year involved such duly executed form(s) or
statement(s) which may, from time to time, be prescribed by law and which,
pursuant to applicable provisions of (a) an income tax treaty between the United
States and the country of residence of such Person, (b) the United States
Internal Revenue Code of 1986, as amended and as such may hereafter be amended,
or (c) any applicable rules or regulations in effect under (a) or (b) above,
permit Lender to make such payments free of any obligation or liability for
withholding. For the purposes of this paragraph, "Taxes" shall mean any income
or other taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature, now or hereafter imposed by any jurisdiction or by any
department, agency, state or other political subdivision thereof or therein. The
Participant agrees to indemnify Lender against and to hold Lender harmless from
any Taxes, interests, penalties and reasonable counsel fees arising from any
failure of Lender or Maker to withhold Taxes from payments made to the
Participant in reliance upon any representation, certificate, statement,
document or instrument made or provided by the Participant to Lender or Maker in
connection with the obligation of Lender or Maker to withhold Taxes from
payments made to the Participant, it being expressly understood and agreed that
(i) Lender shall be absolutely and unconditionally entitled to accept any such
representation, certificate, statement, document or instrument as being true and
correct in all respects and to fully rely thereon without any obligation or
responsibility to investigate or to make any inquiries with respect to the
accuracy, veracity, conclusory correctness, or validity of the same, and (ii)
the Participant upon request of Lender shall, at its sole cost and expense,
defend any claim relating to the foregoing indemnification by counsel selected
by the
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Participant and reasonably satisfactory to Lender. The Participant represents to
Lender that it is not a Non-Exempt Person and that neither Lender or Maker is
obligated under applicable law to withhold Taxes on sums paid to it with respect
to the Restated Note or otherwise pursuant to this Agreement. Contemporaneously
with the execution of this Agreement, and from time to time as necessary during
the term of this Agreement, each Participant shall deliver to Lender evidence
reasonably satisfactory to Lender substantiating that it is not a Non-Exempt
Person and that Lender is not obligated under applicable law to withhold Taxes
on sums paid to it with respect to the Restated Note or otherwise.
12. Notices. Except as otherwise provided to the contrary
herein, any notice, request, demand, statement, authorization, direction,
approval or consent given or made hereunder shall be in writing and shall either
be hand delivered or sent by fax (with a duplicate copy being sent by another
form of delivery permitted hereunder), reputable courier service or registered
or certified mail, return receipt requested, and shall be deemed given in the
case of hand delivery, fax or reputable courier service when delivered to or
received at the following addresses, and in the case of registered or certified
mail three (3) business days after being postmarked and addressed as follows:
If to Lender:
Metropolis Realty Trust, Inc.
c/o Victor Capital Group, L.P.
885 Third Avenue - 12th Floor
New York, New York 10022
Attention: John Klopp
Telephone No.: (212) 593-5400
Fax No.: (212) 593-0316
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Kenneth J. Friedman
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If to the Participant:
Michigan Avenue, L.L.C.
c/o JMB Property Management, Inc.
900 North Michigan Avenue, Suite 900
Chicago, Illinois 60611
Attention: Gary Nickele
Telephone No.: (312) 915-1977
Fax No.: (312) 915-1023
Each party may designate a change of address, telephone number or fax number by
notice to the other parties given at least 15 days before such change of
address, telephone number or Fax number is to become effective. If the
Participant does not notify or inform Lender of whether or not it consents to,
or approves of or agrees to any matter of any nature whatsoever with respect to
which its consent, approval or agreement is required under the express
provisions of this Agreement (including, without limitation, the provisions of
paragraphs 3 and 5 of this Agreement) or with respect to which its consent,
approval or agreement is otherwise requested by Lender, in its capacity as
holder of the Restated Note in connection with the Restated Note or any matter
pertaining to the Note within fourteen (14) business days (or such longer period
as may be specified by Lender) after such consent, approval or agreement is
requested by Lender, the Participant shall be deemed to have given its consent,
approval or agreement, as the case may be, with respect to the matter in
question.
13. Undivided Interests Not Securities. The respective
undivided interests in the Existing Notes and the Restated Note sold by Lender
to the Participant shall not be deemed to be securities within the meaning of
the Securities Act of 1933 or the Securities Exchange Act of 1934. No
representations with respect to the Existing Notes and the Restated Note, Maker,
and any Guarantor have been made by Lender to the Participant except those, if
any, contained herein. The Participant acknowledges that the Note is a
non-recourse obligation of the Maker and is payable only to the extent of
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<PAGE>
distributions payable to Maker under the partnership agreement of 237/1290 Upper
Tier Associates, L.P..
14. Parties' Intent. It is the intent and purpose of the
parties hereto that this Agreement represent a sale by Lender to the Participant
of undivided interests in the Existing Notes and the Existing Security
Agreements and the rights, benefits and obligations arising therefrom.
15. Captions. The titles and headings of the paragraphs of
this Agreement have been inserted for convenience of reference only and are not
intended to summarize or otherwise describe the subject matter of such
paragraphs and shall not be given any consideration in the construction of this
Agreement.
16. Counterparts. This Agreement may be executed in one or
more counterparts by some or all of the parties hereto, each of which
counterparts shall be an original and all of which together shall constitute a
single agreement.
17. Severability. If any term, covenant or provision of this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be construed without such term, covenant or provision.
18. Modification. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter of this
Agreement. This Agreement shall not be modified, amended or terminated, except
by an agreement in writing signed by the parties hereto.
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19. Due Execution. Lender and the Participant respectively
represent for itself that this Agreement has been duly executed and delivered by
it and constitutes its binding and enforceable obligation in accordance with its
terms.
20. Liability of Lender. Neither Lender nor any of its
directors, officers, agents or employees shall be liable to the Participant for
any action taken or not taken by it in good faith or with the consent or at the
request of the Participant. Lender shall not have any fiduciary duty to the
Participant hereunder. Lender may rely upon any notice, consent, certificate,
statement or other writing believed by it in good faith to be genuine or to be
signed by the proper party or parties.
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IN WITNESS WHEREOF, Lender and the Participant have caused
this Agreement to be duly executed as of the day and year first above written.
METROPOLIS REALTY TRUST, INC.
By:___________________________
Name: _______________________
Title: ______________________
MICHIGAN AVENUE, L.L.C.
By: JMB Property Management, Inc.,
managing member
By:___________________________
Name: _______________________
Title: ______________________
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EXHIBIT A
Notes and Security Agreements
(a) JMB/NYC Office Building Associates ("JMB") made the
following promissory notes to the order of O&Y (Delaware) Finance Corp. ("O&Y
Delaware"): (1) Promissory Note, dated July 27, 1984, reissued July 25, 1985, in
the original principal amount of $9,758,363 (the "1290 Note"), relating to JMB's
acquisition of an interest in 1290 Associates ("1290 Assocs."), which was the
owner of the fee and leasehold estates of 1290 Avenue of the Americas, New York,
New York ("1290"), (2) Promissory Note, dated August 14, 1984, reissued July 25,
1985, in the original principal amount of $4,514,229 (the "1237 Note"; and,
together with the 1290 Note, collectively, the "Prior 1290/237 Notes"), relating
to JMB's acquisition of an interest in 237 Park Avenue Associates ("237
Assocs."), which was the owner of 237 Park Avenue, New York, New York ("237"),
(3) Promissory Note, dated August 14, 1984, reissued July 25, 1985, in the
original principal amount of $19,014,077 (the "Bdwy Leasehold Note"), relating
to JMB's acquisition of an interest in 2 Broadway Associates ("Bdwy Assocs."),
which had owned the leasehold estate of 2 Broadway, New York, New York ("2
Bdwy"), and (4) Promissory Note, dated August 14, 1984, reissued July 25, 1985,
in the original principal amount of $871,556 (the "Bdwy Fee Note"; and, together
with the Bdwy Leasehold Note, collectively, the "Prior Bdwy Notes"), relating to
JMB's acquisition of an interest in 2 Broadway Land Company ("Bdwy Land Co."),
which had owned the fee estate of 2 Bdwy (the Prior 1290/237 Notes and the Prior
Bdwy Notes, collectively, the "Prior JMB Notes").
(b) The Prior JMB Notes were assigned to Assignor by O&Y
Delaware by instrument dated September 28, 1987, and were assigned by Assignor
to Assignee by instrument dated as of the date hereof.
(c) The Prior 1290/237 Notes are secured, respectively, by the
following security agreements, which were entered into between JMB and Olympia &
York Holdings Corporation ("O&Y Holdings") and assigned to O&Y Delaware by O&Y
Holdings pursuant to the Assignment of Security Interests (the "Assignment"),
dated as of July 25, 1985 (collectively, the "Prior 1290/237 Security
Agreements"): (1) Security Agreement, dated July 27, 1984, which secures the
1290 Note and created a security interest in JMB's interest in 1290 Assocs. (the
"Prior 1290 Security Interest") and (2) Security Agreement, dated August 14,
1984, which secures the 237 Note and created a security interest in JMB's
interest in 237 Assocs. (together with the Prior 1290 Security Interest,
collectively, the "Prior 1290/237 Security Interests").
(d) The Bdwy Leasehold Note was secured by the Security
Agreement, dated August 14, 1984, which was assigned to O&Y Delaware by O&Y
Holdings pursuant to the Assignment (the "Prior Bdwy Leasehold Security
Agreement"), and which created a security interest in JMB's interest in Bdwy
Assocs. (the "Prior Bdwy Leasehold Security Interest").
(e) The Bdwy Fee Note was secured by the Security Agreement,
dated August 14, 1984, between JMB and Olympia & York Broadway Limited ("O&Y
Bdwy Ltd."), which was assigned to O&Y Delaware by O&Y Bdwy Ltd., pursuant to
the Assignment of Security Interest, dated as of July 25, 1985 (together with
the Prior Bdwy Leasehold Security Agreement, collectively, the "Prior Bdwy
Security Agreements"), and which created a security interest in JMB's interest
in Bdwy Land Co. (together with the Prior Bdwy Leasehold Security Interest,
collectively, the "Prior Bdwy Security Interests").
(f) The Prior 1290/237 Security Interests and the Prior Bdwy
Security Interests (collectively, the "Prior Security Interests"), and the Prior
1290/237 Security Agreements and the Prior Bdwy Security Agreements
-15-
C/M: 11764.0001 352606.6
<PAGE>
(collectively, the "Prior Security Agreements") were assigned to Assignor by O&Y
Delaware by instrument dated September 28, 1987, and were assigned by Assignor
to Assignee by instrument dated as of the date hereof.
(g) JMB transferred its interests in 1290 Assocs., 237
Assocs., Bdwy Assocs. and Bdwy Land Co. (collectively, the "Prior
Partnerships"), subject to the Prior Security Interests, to JMB/NYC Office
Building Associates, L.P. ("JMB LP") on March 31, 1993, and JMB LP was
substituted for JMB as a general partner in each Prior Partnership.
(h) O&Y Equity Company, L.P., O&Y NY Building Corp.
(collectively, the "O&Y Partners") and JMB LP were the partners in the Prior
Partnerships.
(i) On May 31, 1995, (1) the O&Y Partners and JMB LP entered
into the Agreement of Limited Partnership of 2 Broadway Associates, L.P. ("2
Bdwy LP"), dated as of May 30, 1995 (the "Bdwy Agreement"), (2) Bdwy Assocs. and
Bdwy Land Co. transferred all of their respective assets, including, without
limitation, their interests in 2 Bdwy, to 2 Bdwy LP, (3) JMB LP and Assignee
entered into the Amended, Restated and Consolidated Security Agreement, dated
May 31, 1995 (the "Bdwy Consolidated Security Agreement"), which (a) constituted
JMB LP's interest in 2 Bdwy LP for the collateral covered by the Prior Bdwy
Security Agreements and created a security interest (the "Bdwy Consolidated
Security Interest") therein and (b) amended and restated the terms of the Prior
Bdwy Security Agreements, and (4) JMB LP and Assignee entered into the Amended,
Restated and Consolidated Promissory Note, dated May 31, 1995, in the original
principal amount of $78,605,779 (the "Bdwy Consolidated Note"), which (a)
consolidated the indebtedness evidenced by the Prior Bdwy Notes into a single
debt and (b) amended and restated the terms of the Prior Bdwy Notes.
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C/M: 11764.0001 352606.6
<PAGE>
EXHIBIT B
FORM OF RESTATED NOTE
C/M: 11764.0001 352606.6
<PAGE>
EXHIBIT C
FORM OF RESTATED SECURITY AGREEMENT
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C/M: 11764.0001 352606.6
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT dated as of the 10th day of
October, 1996 given by PROPERTY PARTNERS, L.P., CARLYLE-XIII ASSOCIATES, L.P.,
and CARLYLE-XIV ASSOCIATES, L.P., each a Delaware limited partnership having an
office at 900 North Michigan Avenue-19th floor, Chicago, Illinois 60611
(hereinafter individually referred to as an "Indemnitor" and collectively as the
"Indemnitors") to METROPOLIS REALTY TRUST, INC., a Maryland corporation having
an office at c/o Victor Capital Group, L.P., 885 Third Avenue - 12th Floor, New
York, New York 10022, Attn: John Klopp (hereinafter referred to as
"Indemnitee").
W I T N E S S E T H:
WHEREAS, each Indemnitor is a partner in JMB/NYC Office
Building Associates, L.P. ("JMB LP"), an Illinois limited partnership and a
member of 237 Park Avenue Associates, LLC and 1290 Associates, LLC
(collectively, the "Debtors"), each a New York limited liability company and the
obligors under certain notes in the aggregate original principal amount of
$970,000,000 issued pursuant to that certain Mortgage Spreader and Consolidation
Agreement and Trust Indenture dated as of March 20, 1984 among O&Y Equity Corp.,
Olympia & York Holdings Corporation, FAME Associates, Olympia & York 2 Broadway
Land Company, Olympia & York 2 Broadway Company and Manufacturers Hanover Trust
Company as Trustee, as supplemented and amended (the "Indenture"), which
encumbers the fee estates of the Debtors in properties known as 237 Park Avenue
and 1290 Avenue of the Americas;
WHEREAS, the Debtors defaulted under the Indenture beyond the
expiration of all applicable notice and cure periods;
WHEREAS, the Debtors, JMB LP and the Indemnitors requested
that the Trustee and the holders of the Existing Notes forbear from exercising
C/M: 11764.0004 365919.
<PAGE>
their rights to pursue an action to foreclose the Indenture in order to provide
the Debtors with an opportunity to file a pre-negotiated plan of reorganization
(hereinafter referred to as the "Plan") under the Bankruptcy Code, which Plan
provides for, among other things, (i) a transfer of the Properties to the
Property Owning Partnerships, (ii) the Lower Tier Partnership to own a 99%
interest as a limited partner in each of the Property Owning Partnerships, (iii)
the Upper Tier Partnership to own a 5% interest as a limited partner in the
Lower Tier Partnership, and (iv) JMB LP to own a 99% interest as a limited
partner in the Upper Tier Partnership;
WHEREAS, the Trustee and the holders of the Existing Notes
were willing to forbear from exercising their rights to pursue an action to
foreclose the Indenture and to proceed with the transactions contemplated by the
Plan only if the Indemnitors execute and deliver this Indemnification Agreement
to the Indemnitee and the Plan and the Agreements of Limited Partnership of the
Upper Tier Partnership and the Lower Tier Partnership require that JMB LP cause
the Indemnitors to execute and deliver this Indemnity Agreement to the
Indemnitee;
WHEREAS, the Plan was filed with the Bankruptcy Court on April
23, 1996 and became effective pursuant to an order of the Bankruptcy Court
entered on September 20, 1996 and, pursuant to the terms thereof;
WHEREAS, the Indemnitors will materially benefit from the
consummation of the transactions provided for in the Plan and described above;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt of which is hereby acknowledged,
and in order to induce the Trustee and the holders of the Existing Notes to
forbear from exercising their rights as hereinbefore stated and such parties
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C/M: 11764.0004 365919.
<PAGE>
and the Indemnitee to proceed with the transactions contemplated by the Plan,
the Indemnitors hereby covenant and agree with the Indemnitee as follows:
1. Capitalized terms used but not defined herein shall have
the meanings provided in the Plan.
2. The Indemnitors absolutely and unconditionally agree to
indemnify and to hold Indemnitee harmless from and against any and all losses,
claims, liabilities, damages, costs or expenses (including, without limitation,
reasonable counsel fees) of any nature whatsoever, contingent or otherwise,
foreseen or unforeseen, which Indemnitee may or shall incur as a result of any
of JMB LP, its officers, directors, partners (including without limitation any
Indemnitor), stockholders, agents or affiliates (collectively, the "Controlled
Entities") intentionally interfering with, impeding or preventing (including,
without limitation, the filing by JMB LP of a voluntary petition under the
Bankruptcy Code or any other federal or state bankruptcy or insolvency statute
or any Controlled Entity joining in an involuntary petition against JMB LP under
the Bankruptcy Code or such other statute) (x) the exercise by the Indemnitee of
the Purchase Right (as defined in Section 12.2A of the Lower Tier Partnership
Agreement) or (y) any disposition, mortgage, pledge, encumbrance, hypothecation
or exchange of the Properties by the Property Owning Partnerships or the
Property Owning Partnership Interests (as defined in the Lower Tier Partnership
Agreement) by the Lower Tier Partnership or the merger or other combination of
the Property Owning Partnerships or the Lower Tier Partnership with or into
another entity, in accordance with the terms of the Lower Tier Partnership
Agreement, provided that such disposition, mortgage, pledge, encumbrance,
hypothecation, exchange, merger or other combination does not constitute an
Adverse Transaction as defined in the agreement of limited partnership of the
Lower Tier Partnership ("Prohibited Actions"), and provided that any such
Prohibited Action is not revoked or rescinded within the time period provided in
paragraph 3 below.
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C/M: 11764.0004 365919.
<PAGE>
3. In the event that any Indemnitor or Controlled Entity takes
any Prohibited Action (including, without limitation, the filing by or against
JMB LP of a petition under the Bankruptcy Code or any other federal or state
bankruptcy or insolvency statute), the Indemnitors (x) acknowledge (and
Indemnitee, by its acceptance of this Indemnification Agreement, acknowledges)
that the damage to be suffered by Indemnitee shall be difficult or impossible to
ascertain and (y) if the Prohibited Action is not revoked or rescinded within
sixty (60) days after notice by Indemnitee to Indemnitors so as to permit the
consummation of the transaction described in clause (x) or (y) of paragraph 2
above unimpeded by any actions by JMB LP or any of the Controlled Entities,
absolutely and unconditionally agree to pay to Indemnitee upon demand the
Maximum Indemnitors' Liability Amount (as hereinafter defined) as full
liquidated damages for, and in satisfaction of, the undersigned's obligations
under this Indemnification Agreement, including but not limited to the
Indemnitors' obligations under paragraph 2 hereof. The Indemnitor acknowledges
and agrees that (and Indemnitee, by its acceptance of this Indemnification
Agreement, acknowledges and agrees that) the payment of the Maximum Indemnitors'
Liability Amount is a fair and reasonable remedy for Indemnitee if any of the
events set forth in paragraph 2 of this Indemnification Agreement shall occur,
as any such event will result in Indemnitee incurring damages which cannot now
be determined with any degree of certainty. The foregoing shall not limit the
remedies Indemnitee may have against any other party, including without
limitation, JMB LP and the right of the Indemnitors to seek injunctive relief
with respect to the Prohibited Action or specific performance of the underlying
obligation.
4. The term "Maximum Indemnitors' Liability Amount" as used in
this Indemnification Agreement shall mean an amount equal to $25,000,000,
provided that the Maximum Indemnitors' Liability Amount shall be reduced on a
dollar for dollar basis for each dollar actually received by Indemnitee in
-4-
C/M: 11764.0004 365919.
<PAGE>
respect of the JMB Collateral (as defined in the Lower Tier Partnership
Agreement).
5. The Indemnitors hereby consent that from time to time,
before or after the taking of any Prohibited Action by any Indemnitor or
Controlled Party, with or without further notice to or assent from the
Indemnitors, any security at any time held by or available to Indemnitee with
respect to any obligation of JMB LP, or any security at any time held by or
available to Indemnitee for any obligation of any other person or party
secondarily or otherwise responsible for the compliance by JMB LP of its
obligations under the Upper Tier and Lower Tier Partnership Agreements
(hereinafter referred to as the "Obligations"), may be exchanged, surrendered or
released and any obligation of JMB LP, or of any such other person or party, may
be changed, altered, renewed, extended, continued, surrendered, compromised,
waived or released in whole or in part, or any default with respect thereto
waived, and Indemnitee may release, in whole or in part, the JMB Collateral or
any balance of any deposit account or credit on its books in favor of JMB LP, or
of any such other person or party, and may generally deal with JMB LP or any
such security or other person or party as Indemnitee may see fit; and the
Indemnitors shall remain bound under this Indemnification Agreement
notwithstanding any such exchange, surrender, release, change, alteration,
renewal, extension, continuance, compromise, waiver, inaction or other dealing.
6. This is an agreement to pay liquidated damages and not an
agreement of collection and the Indemnitor further waives any right to require
that any action be brought against JMB LP or any other person or party or to
require that resort be had to any security or to any balance of any deposit
account or credit on the books of Indemnitee in favor of JMB LP or any other
person or party.
-5-
C/M: 11764.0004 365919.
<PAGE>
7. Each reference herein to Indemnitee shall be deemed to
include its successors and assigns, in whose favor the provisions of this
Indemnification Agreement shall also inure. This Indemnification Agreement shall
be binding upon, and shall inure to the benefit of, Indemnitee and each
Indemnitor and the respective heirs, executors, administrators, legal
representatives, successors and assigns of Indemnitee and each Indemnitor;
provided, however, that the Indemnitors shall in no event or under any
circumstance have the right without obtaining the prior written consent of
Indemnitee to assign or transfer the Indemnitors' obligations and liabilities
under this Indemnification Agreement, in whole or in part, to any other person,
party or entity.
8. The term "Indemnitor" as used herein shall, if this
Indemnification Agreement is signed by more than one party, mean the
"Indemnitors and each of them" and each undertaking herein contained shall be
their joint and several undertaking, provided, however, that in the next
succeeding paragraph hereof the term "Indemnitor" shall mean the "Indemnitors or
any of them".
9. No delay on the part of Indemnitee in exercising any right
or remedy under this Indemnification Agreement or failure to exercise the same
shall operate as a waiver in whole or in part of any such right or remedy. No
notice to or demand on the Indemnitor shall be deemed to be a waiver of the
obligation of the Indemnitor or of the right of Indemnitee to take further
action without notice or demand as provided in this Indemnification Agreement.
10. This Indemnification Agreement may only be modified,
amended, changed or terminated by an agreement in writing signed by Indemnitee
and the Indemnitors. No waiver of any term, covenant or provision of this
Indemnification Agreement shall be effective unless given in writing by
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C/M: 11764.0004 365919.
<PAGE>
Indemnitee and if so given by Indemnitee shall only be effective in the specific
instance in which given.
11. The Indemnitors acknowledge that this Indemnification
Agreement and the Indemnitors' obligations under this Indemnification Agreement
are and shall at all times continue to be absolute and unconditional in all
respects. This Indemnification Agreement sets forth the entire agreement and
understanding of Indemnitee and the Indemnitors, and, except as otherwise herein
set forth, the Indemnitors absolutely, unconditionally and irrevocably waive any
and all right to assert any setoff, counterclaim or crossclaim of any nature
whatsoever with respect to this Indemnification Agreement or the obligations of
the Indemnitors under this Indemnification Agreement or the obligations of any
other person or party (including, without limitation, JMB LP) relating to this
Indemnification Agreement or the obligations of the Indemnitors hereunder in any
action or proceeding brought by Indemnitee to enforce the obligations of the
Indemnitors under this Indemnification Agreement. Nothing contained in this
paragraph 11 shall limit the right of the Indemnitors to assert a defense or
maintain a separate action against Indemnitee with respect to any matter
irrespective of whether it relates to this Indemnification Agreement or the
obligations of the Indemnitors under this Indemnification Agreement. The
Indemnitors acknowledge and Indemnitee, by its acceptance hereof, acknowledges
that no oral or other agreements, understandings, representations or warranties
exist with respect to this Indemnification Agreement or with respect to the
obligations of the Indemnitors under this Indemnification Agreement except as
specifically set forth in this Indemnification Agreement or otherwise in writing
by Indemnitee and the Indemnitors.
12. THE INDEMNITORS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE, AND INDEMNITEE BY ITS ACCEPTANCE OF THIS INDEMNIFICATION AGREEMENT
IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION,
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C/M: 11764.0004 365919.
<PAGE>
SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO
THIS INDEMNIFICATION AGREEMENT.
13. If at any time (i) any payment, or portion thereof, made
by, or for the account of, the Indemnitors on account of the obligations under
this Indemnification Agreement, or (ii) any transaction described in clause (x)
or (y) of paragraph 2 hereof, or (iii) the consummation of the transfer of the
interest of JMB LP in the Upper Tier Partnership pursuant to the JMB Put Right
under Section 7.7 of the partnership agreement of the Upper Tier Partnership or
of the interest of the Upper Tier Partnership in the Lower Tier Partnership
pursuant to the Put Right under Section 12.2C of the partnership agreement of
the Lower Tier Partnership, is set aside by any court or trustee having
jurisdiction as a voidable preference, fraudulent transfer or otherwise as being
subject to avoidance or recovery under the provisions of the Bankruptcy Code or
under any other applicable Federal or state bankruptcy law or similar law, the
Indemnitor hereby agrees that this Indemnification Agreement (x) shall continue
and remain in full force and effect, or (y) if previously terminated as a result
of the Indemnitors having fulfilled its obligations hereunder in full or as a
result of Indemnitee having released the Indemnitors from their obligations and
liabilities hereunder, shall without further act or instrument be reinstated and
shall thereafter remain in full force and effect, in either case with the same
force and effect as though such payment or transaction had not been made, and if
applicable, as if such previous termination had not occurred.
14. The Indemnitor hereby waives all defenses it may have
based upon any election of remedies by Indemnitee which destroys or impairs the
Indemnitors' subrogation rights or the Indemnitors' right to proceed against JMB
LP or any other person for reimbursement. The foregoing waivers include any
requirement of law that Indemnitee exhaust any security for the Obligations
before proceeding under this Indemnification Agreement. In
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C/M: 11764.0004 365919.
<PAGE>
addition to the foregoing, the Indemnitors hereby waive and relinquish the
following rights and remedies accorded by applicable law to indemnitors and
agree not to assert or take advantage of any such rights or remedies: (a) any
defense that may arise by reason of the incapacity, lack of authority, death or
disability of any other person or persons; (b) demand, protest and, except as
set forth therein, notice of any kind; (c) any defense based upon any statute or
rule of law which provides that the obligation of a surety must be neither
larger in amount nor in other respects more burdensome than that of the
principal; and (d) any duty on the part of Indemnitee to disclose to the
Indemnitors any facts Indemnitee may now or hereafter know about JMB LP,
regardless of whether Indemnitee has reason to believe that any such facts
materially increase the risk beyond that which the Indemnitor intends to assume
or has reason to believe that such facts are unknown to Indemnitors or has a
reasonable opportunity to communicate such facts to Indemnitors.
15. Any notice, request or demand given or made under this
Indemnification Agreement shall be in writing and shall be hand delivered or
sent by Federal Express or other reputable overnight national courier service,
and shall be deemed given when received at the following addresses whether hand
delivered or sent by Federal Express or other reputable overnight national
courier service:
If to Indemnitee:
c/o Victor Capital Group, L.P.
885 Third Avenue - 12th Floor
New York, New York 10022
Attention: John Klopp
With a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Kenneth Friedman
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C/M: 11764.0004 365919.
<PAGE>
If to the Indemnitors:
900 North Michigan Avenue - 19th Floor
Chicago, Illinois 60611
Attention: Stuart C. Nathan
Gary Nickele
With a copy to:
Pircher, Nichols & Meeks
1999 Avenue of the Americas
Los Angeles, California 90067
Attention: Leo Pircher
Each party to this Indemnification Agreement may designate a change of address
by notice given to the other party fifteen (15) days prior to the date such
change of address is to become effective.
16. This Indemnification Agreement is, and shall be deemed to
be, a contract entered into under and pursuant to the laws of the State of New
York and shall be in all respects governed, construed, applied and enforced in
accordance with the laws of the State of New York. No defense given or allowed
by the laws of any other state or country shall be interposed in any action or
proceeding hereon unless such defense is also given or allowed by the laws of
the State of New York.
17. The Indemnitor agrees to submit to personal jurisdiction
in the State of New York in any action or proceeding arising out of this
Indemnification Agreement and, in furtherance of such agreement, the Indemnitor
hereby agrees and consents that without limiting other methods of obtaining
jurisdiction, personal jurisdiction over the Indemnitor in any such action or
proceeding may be obtained within or without the jurisdiction of any federal
court located in New York (and any such court shall have jurisdiction over the
subject matter hereof) and that any process or notice of motion or other
application to any such court in connection with any such action or proceeding
may be served upon the Indemnitor, by registered or certified mail to or by
personal service at the last known address of the Indemnitor, whether
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C/M: 11764.0004 365919.
<PAGE>
such address be within or without the jurisdiction of any such court. In
addition to and in furtherance of the foregoing, the Indemnitor hereby consents
to venue being held in either of the Southern District of New York.
18. This Indemnification Agreement may be executed in one or
more counterparts by some or all of the parties hereto, each of which
counterparts shall be an original and all of which together shall constitute a
single indemnification agreement. The failure of any party listed below to
execute this Indemnification Agreement, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder.
19. Except as set forth in paragraph 13 of this
Indemnification Agreement, the obligations and liabilities of the Indemnitors
under this Indemnification Agreement shall terminate on the earlier to occur of
(i) the date upon which the transactions described in clause (x) of paragraph 2
hereof have been consummated, (ii) the date upon which the Properties have been
sold or transferred by the Property Owning Partnerships or the Property Owning
Partnership Interests have been sold or transferred by the Lower Tier
Partnership in accordance with the provisions of the Lower Tier Partnership
Agreement, or (iii) the date upon which the interest of JMB LP in the Upper Tier
Partnership or of the Upper Tier Partnership in the Lower Tier Partnership has
been transferred pursuant to the JMB Put Right under Section 7.7 of the
partnership agreement of the Upper Tier Partnership or the Put Right under
Section 12.2C of the partnership agreement of the Lower Tier Partnership.
20. If any term, covenant, condition or provision of this
Indemnification Agreement or the application thereof to any circumstance or to
the Indemnitors shall be invalid or unenforceable to any extent, the remaining
terms, covenants, conditions and provisions of this Indemnification Agreement
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<PAGE>
shall not be affected thereby and shall remain valid and enforceable to the
fullest extent permitted by law.
21. Notwithstanding any provision in this Indemnification
Agreement, no present or future partner, officer, director or shareholder of the
Indemnitors shall have any personal liability under this Indemnification
Agreement, provided, however, that the foregoing shall not limit or impair any
rights of Indemnitee (i) to enforce this Indemnification Agreement against the
Indemnitors and any assets of the Indemnitors, (ii) to seek and enforce other
equitable relief against the Indemnitors or against any such partner, officer,
director or shareholder, or (iii) to initiate proceedings at law or in equity
for the purpose of determining any rights of the Indemnitee hereunder, so long
as, in each such case, the same cannot result in personal liability of any
present or future partner, officer, director or shareholder of Indemnitors.
IN WITNESS WHEREOF, the Indemnitors have duly executed this
Indemnification Agreement the day and year first above set forth.
PROPERTY PARTNERS, L.P.
By: CARLYLE INVESTORS, INC.
as its general partner
By: ________________________
Name:
Title:
CARLYLE-XIII ASSOCIATES, L.P.
By: CARLYLE INVESTORS, INC.
as its general partner
By: ________________________
Name:
Title:
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C/M: 11764.0004 365919.
<PAGE>
CARLYLE-XIV ASSOCIATES, L.P.
By: CARLYLE INVESTORS, INC.
as its general partner
By: ________________________
Name:
Title:
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C/M: 11764.0004 365919.
<PAGE>
[ACKNOWLEDGEMENTS TO BE ADDED]
C/M: 11764.0004 365919.
MODIFICATION OF OPERATING AGREEMENT OF
237 PARK AVENUE ASSOCIATES, L.L.C.
AMENDMENT, dated as of October 10, 1996, among JMB/NYC Office
Building Associates, L.P., an Illinois limited partnership ("Investor"), O&Y
Equity Company, L.P., as debtor and debtor in possession, a Delaware limited
partnership ("Equity"), and O&Y NY Building Corp., a New York corporation
("Building").
WHEREAS, as of October 10, 1995 Investor, Equity, and Building
formed 237 Park Avenue Associates, L.L.C., a Delaware limited liability company
(the "Company") pursuant to an Operating Agreement (the "Operating Agreement"),
Agreement of Conversion, and Certificate of Conversion of Partnership to a
Limited Liability Company, all dated as of October 10, 1995;
WHEREAS, pursuant to the Chapter 11 Plan of Reorganization of
the Company and 1290 Associates, L.L.C. approved by order of the United States
Bankruptcy Court for the Southern District of New York dated September 20, 1996
(the "Plan"), (i) the Company will merge into 237/1290 Upper Tier Associates,
L.P., a Delaware limited partnership (the "Upper Tier Partnership"), and (ii)
the property known as 237 Park Avenue, New York, New York will be transferred by
the Upper Tier Partnership to 237 Park Partners, L.P., a Delaware limited
partnership, as directed by 237/1290 Lower Tier Associates, L.P., a Delaware
limited partnership (the "Lower Tier Partnership"); and
WHEREAS, pursuant to the 237 Assumption and Security
Agreement, Equity and Building will assume the obligation of the Company and
1290 Associates, L.L.C. to pay the portion of the Excess Amount allocable by
Investor, Equity and Building to 237 Park Avenue, which obligation shall
thereafter be released; and
WHEREAS, the parties desire to modify and amend the Operating
Agreement in the manner hereafter provided.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the parties hereto agree as follows:
1. Terms used in this Amendment and not defined herein
shall have the meaning set forth in the Plan.
2. All items of income, gain, loss or deduction attributable
to the assumption or reduction of the 237 Excess Amount occurring on or about
the date hereof and provided for in the Plan shall be allocated solely to Equity
and Building, in such manner as they shall agree.
C/M: 11764.0001 350641.8
<PAGE>
3. Except as set forth in paragraph 2 hereof, the interest in
profits, losses and distributions of the Company shall continue to be governed
by the provisions of the Operating Agreement.
4. The undersigned hereby consent to the merger of the Company
into the Upper Tier Partnership and the subsequent transfer of the 237 Property
by the Upper Tier Partnership to 237 Park Partners, L.P. at the direction of the
Lower Tier Partnership, in exchange for the issuance by 237 Park Partners, L.P.
to the Lower Tier Partnership of a 99% limited partnership interest in 237 Park
Partners, L.P. and the issuance by the Lower Tier Partnership to the Upper Tier
Partnership of a 5% limited partnership interest in the Lower Tier Partnership,
all as more specifically set forth in the Plan.
-2-
C/M: 11764.0001 350641.8
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the date first above written.
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
By: Carlyle Managers, Inc., General
Partner
By:
Name:
Title:
O&Y EQUITY COMPANY, L.P. as debtor and
debtor in possession
By: O&Y Equity General Partner Corp.,
General Partner, as debtor and
debtor in possession
By:
Name:
Title:
O&Y NY BUILDING CORP.
By:
Name:
Title:
-3-
C/M: 11764.0001 350641.8
NOTEHOLDERS CONTRIBUTION AND PARTICIPATION AGREEMENT
NOTEHOLDERS CONTRIBUTION AND PARTICIPATION AGREEMENT (the
"Agreement") dated as of October 10, 1996, by and between Metropolis Realty
Trust, Inc., a Maryland corporation (the "Company") and Bankers Trust Company, a
New York corporation (the "Trustee") acting on behalf of the holders of the
Existing Notes (the "Noteholders"). Capitalized terms not otherwise defined
herein shall have the meaning ascribed to such terms in the Joint Plan of
Reorganization of 237 Park Avenue Associates, LLC and 1290 Associates, LLC,
filed under title 11 of the United States Code, 11 U.S.C.
Sections 101 et seq (the "Plan").
WHEREAS, this Agreement is being entered into pursuant to the
terms and conditions of the Plan; and
WHEREAS, pursuant to the Plan, the Trustee, acting on behalf
of the holders of the Existing Notes, is required to contribute to the Company
an undivided interest in $280,000,000 of Existing Notes (the "Contributed Debt")
in exchange for 11,160,000 shares of the common stock of the Company (the
"Shares"), as hereinafter set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and
the respective agreements herein contained, and other good and valuable
consideration, the parties hereto agree as follows:
1. Subscription. The Trustee, on behalf of the Noteholders in
accordance with the Plan, hereby subscribes for, and the Company hereby issues
and delivers to the Trustee, on behalf of and for distribution to the
Noteholders in accordance with the Plan, the Shares, in consideration of the
contribution to the Company described in Section 2 below.
2. Contribution. In consideration of the subscription for the
Shares described in Section 1 above, the Trustee hereby contributes, assigns,
transfers, grants and delivers, to the Company an undivided interest in
$280,000,000 of Existing Notes (the "Contributed Debt").
3. Representations and Warranties. Each of the Trustee and the
Company represents and warrants to the other as follows:
(i) It is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation or
incorporation and has full power and authority, and has taken all
action necessary, to execute and deliver this Agreement and to fulfill
its obligations under, and to consummate the transactions contemplated
by, this Agreement.
C/M: 11764.0001 350718.6
<PAGE>
(ii) This Agreement has been duly executed and delivered by it
and constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms.
(iii) All approvals, authorizations or other actions by, or
filings with, any governmental authority necessary for the validity or
enforceability of its obligations under this Agreement have been made
or obtained.
4. Amendments. This Agreement and the terms and conditions
hereof may not be altered, amended, waived, terminated or otherwise modified in
any respect, unless the same shall be in writing and signed by or on behalf of
each party affected thereby.
5. Further Assurances. The Company and the Trustee at any time
or from time to time, upon request of either party, will execute such additional
instruments, documents or certificates as either party deems reasonably
necessary in order to effect or confirm the transactions contemplated hereby.
6. Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors, legal
representatives and permitted assigns, but this Agreement may not be assigned by
either party without the written consent of the other party.
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in New York.
8. Counterparts. This Agreement may be executed in any number
of counterparts, all of which when taken together shall constitute one
agreement.
-2-
C/M: 11764.0001 350718.6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed or
caused this Agreement to be duly executed as of the date first written above.
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
METROPOLIS REALTY TRUST, INC.
By:
Name:
Title:
-3-
C/M: 11764.0001 350718.6
DEBT CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT (the "Agreement") dated as of October
10, 1996, by and between METROPOLIS REALTY TRUST, INC., a Maryland corporation
(the "REIT"), 237/1290 LOWER TIER ASSOCIATES, L.P., a Delaware limited
partnership (the "Partnership"), 237 PARK PARTNERS, L.P., a Delaware limited
partnership (the "237 Partnership") and 1290 PARTNERS, L.P., a Delaware limited
partnership (the "1290 Partnership", the 237 Partnership and the 1290
Partnership being collectively referred to as the "Property Owning
Partnerships"). Capitalized terms not otherwise defined herein shall have the
meaning ascribed to such terms in the Joint Plan of Reorganization of 237 Park
Avenue Associates, L.L.C. and 1290 Associates, L.L.C., filed under title 11 of
the United States Code, 11 U.S.C. Sections 101 et seq (the "Plan").
WHEREAS, this Agreement is entered into pursuant to the terms
and conditions of the Plan, the Agreement of Limited Partnership of the
Partnership, dated as of October 10, 1996 (the "Partnership Agreement") and the
Agreement of Limited Partnership of each of the 237 Partnership and the 1290
Partnership, each dated as of October 10, 1996 (the "Property Owning
Partnership Agreements");
WHEREAS, pursuant to the Plan and the Noteholders Contribution
and Participation Agreement, the Indenture Trustee, acting on behalf of the
holders of the Existing Notes, contributed to the REIT an undivided interest in
$280,000,000 of Existing Notes (the "Debt");
WHEREAS, pursuant to the Plan and the Partnership Agreement,
the REIT desires to contribute the Debt to the Partnership in exchange for a 95%
interest, as a general partner, in the Partnership (the "Partnership Interest")
and the Partnership desires to contribute (i) $119,940,916 of the Debt (the "237
Contributed Debt") to the 237 Partnership in exchange for a 99% interest, as a
limited partner, in the 237 Partnership (the "237 Partnership Interest"), and
(ii) $160,059,084 of the Debt (the "1290 Contributed Debt", the 237 Contributed
Debt and the 1290 Contributed Debt being collectively referred to as the
"Contributed Debt") to the 1290 Partnership in exchange for a 99% interest, as a
limited partner in the 1290 Partnership (the "1290 Partnership Interest", the
237 Partnership Interest and the 1290 Partnership Interest being collectively
referred to as the "Property Owning Partnership Interests"), all as hereinafter
set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the respective agreements herein contained, and other good and valuable
consideration, the parties hereto agree as follows:
1. Subscription. (a) Upon the terms and subject to the
conditions of this Agreement, the REIT hereby subscribes for, and the
Partnership hereby issues, effective as of
C/M: 11764.0001 350668.7
<PAGE>
the Effective Date, to the REIT, the Partnership Interest, in consideration of
the contribution to the Partnership described in Section 2(a) below.
(b) Upon the terms and subject to the conditions of this
Agreement, the Partnership hereby subscribes for, and the Property Owning
Partnerships hereby issue, effective as of the Effective Date, to the
Partnership, the Property Owning Partnership Interests, in consideration of the
contributions to the Property Owning Partnerships described in Section 2(b)
below and in the Property Contribution Agreements.
2. Contribution. (a) In consideration of the subscription for
the Partnership Interest described in Section 1 above, the REIT hereby
contributes, assigns, transfers, grants and delivers to the Partnership on the
Effective Date all of the REIT's right, title and interest in and to the Debt.
(b) In consideration of the subscription for the Property
Owning Partnership Interests described in Section 1 above, the Partnership
hereby contributes, assigns, transfers, grants and delivers to the 237 Property
Owning Partnership and the 1290 Property Owning Partnership on the Effective
Date all of the Partnership's right, title and interest in and to the 237
Contributed Debt and the 1290 Contributed Debt, respectively.
3. Effective Date; Extinguishment of the Contributed Debt. The
contribution of the Debt to be made by the REIT and the contribution of the
Contributed Debt to be made by the Partnership all as set forth in Section 2,
the issuance of the Partnership Interest by the Partnership and the Property
Owning Partnership Interests by the Property Owning Partnerships set forth in
Section 1, and the consummation of the other transactions contemplated hereby,
shall take place on the Effective Date in accordance with the Plan. Upon
consummation of the transactions contemplated hereby, the Contributed Debt shall
be deemed extinguished.
4. Representations and Warranties. Each of the parties hereto
represents and warrants to the other as follows:
(i) It is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation or
incorporation and has full power and authority, and has taken all
action necessary, to execute and deliver this Agreement and to fulfill
its obligations under, and to consummate the transactions contemplated
by, this Agreement.
(ii) This Agreement has been duly executed and delivered by it
and constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms.
-2-
C/M: 11764.0001 350668.7
<PAGE>
(iii) All approvals, authorizations or other actions by, or
filings with, any governmental authority necessary for the validity or
enforceability of its obligations under this Agreement have been made
or obtained.
5. Amendments. This Agreement and the terms and conditions
hereof may not be altered, amended, waived, terminated or otherwise modified in
any respect, unless the same shall be in writing and signed by or on behalf of
each party affected thereby.
6. Further Assurances. Each of the parties hereto, on the
Effective Date, or at any time or from time to time thereafter, upon request of
any other party hereto, will execute such additional instruments, documents or
certificates as such other party deems reasonably necessary in order to effect
or confirm the transactions contemplated hereby.
7. Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors, legal
representatives and permitted assigns, but this Agreement may not be assigned by
either party without the written consent of the other party.
8. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in New York.
9. Counterparts. This Agreement may be executed in any number
of counterparts, all of which when taken together shall constitute one
agreement.
-3-
C/M: 11764.0001 350668.7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed or
caused this Agreement to be duly executed as of the date first written above.
METROPOLIS REALTY TRUST, INC.
By:
Name:
Title:
237 PARK PARTNERS, L.P.
By: 237 GP CORP., as general partner
By:
Name:
Title:
1290 PARTNERS, L.P.
By: 1290 GP CORP., as general partner
By:
Name:
Title:
237/1290 LOWER TIER ASSOCIATES, L.P.
By: METROPOLIS REALTY TRUST, INC.,
as general partner
By:
Name:
Title:
-4-
C/M: 11764.0001 350668.7
==============================================================================
-------------------------------
DEBT ASSUMPTION, RELEASE AND SECURITY AGREEMENT
(237 Excess Amount)
-------------------------------
Dated: October 10, 1996
==============================================================================
C/M: 11764.0001 374509.4
<PAGE>
DEBT ASSUMPTION, RELEASE AND SECURITY AGREEMENT
(237 Excess Amount)
THIS DEBT ASSUMPTION, RELEASE AND SECURITY AGREEMENT (this
"Agreement") made as of the 10th day of October, 1996, between 237 PARK AVENUE
ASSOCIATES, L.L.C., a New York limited liability company and 1290 ASSOCIATES,
L.L.C., a New York limited liability company (collectively referred to
hereinafter as the "Companies"), and O&Y NY BUILDING CORP., a Delaware
corporation and O&Y EQUITY COMPANY, L.P., a Delaware limited partnership, as
debtor and debtor in possession, both having an address c/o Olympia & York
(U.S.A.), 237 Park Avenue, New York, New York 10017 (collectively referred to
hereinafter as the "O&Y Members"), and BANKERS TRUST COMPANY, a New York
corporation having an office at Four Albany Street, New York, New York 10006
(the "Trustee").
W I T N E S S E T H:
WHEREAS, the Companies were the Debtors under Chapter 11 Case
Nos. 96B42177 and 96B42178 filed with the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court");
WHEREAS, the Companies are the obligors under certain notes
(the "Notes") in the original aggregate principal amount of $970,000,000, which
Notes are secured by a first mortgage encumbering the properties described on
Exhibit A attached hereto and made a part hereof (the "Properties") pursuant to
a certain Mortgage Spreader and Consolidation Agreement and Trust Indenture
dated as of March 20, 1984 between Fame Associates, O&Y Equity Corp., Olympia &
York Holdings Corporation (the predecessors-in-interest to the Companies),
Olympia & York 2 Broadway Land Company, Olympia & York 2 Broadway Company and
Manufacturers Hanover Trust Company (the predecessor-in-interest to the
Trustee), as the same may have and may be amended from time to time (the
"Indenture");
WHEREAS, the O&Y Members are members of the Companies;
WHEREAS, pursuant to the order dated September 20, 1996,
entered by the Bankruptcy Court confirming the plan of reorganization of the
Companies under Chapter 11 of the United States Bankruptcy Code (the "Plan of
Reorganization"), the Companies, the O&Y Members and the Trustee are entering
into this Agreement to evidence (i) the assumption by the O&Y Members of the
Companies' obligation to pay $60,000,000 (the "237 Excess Amount") of the
aggregate of all principal, interest, fees and charges due and owing as of April
23, 1996 (the "Petition Date") under the Indenture, the Notes and all documents
and instruments related thereto, (ii) the release by the Trustee of the
Companies from the obligation to repay the 237 Excess Amount assumed by the O&Y
Members hereunder, and (iii) the granting by the O&Y Members to the Trustee of a
security interest in their interests as members in the Companies to secure their
obligation to pay the amounts assumed hereunder; and
WHEREAS, all terms not defined herein shall be as defined in
the Plan of Reorganization;
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Companies, the O&Y Members and
the Trustee covenant and agree as follows:
C/M: 11764.0001 374509.4
<PAGE>
1. Assumption of Debt. The O&Y Members, pursuant to the Plan
of Reorganization, hereby assume the obligations of the Companies to repay the
237 Excess Amount and all interest and other charges which may hereafter accrue
thereon (the "Assumed Debt"), on a pro rata basis with the Companies' obligation
to pay the remaining amount evidenced by the Notes and secured by the Indenture.
2. Security Interest. As security for the O&Y Members'
obligation to repay the Assumed Debt in accordance with this Agreement, and the
observance and performance by the O&Y Members of all of the terms, covenants and
provisions of this Agreement on the part of the O&Y Members to be observed and
performed, the O&Y Members hereby transfer, pledge, assign, set over and grant
to the Trustee, for the benefit of the Noteholders, a first priority perfected
security interest in and to the following collateral wherever located, whether
now existing or hereafter created or acquired (collectively, the "Collateral"):
(a) all of the O&Y Members' share, right, title or interest in and to
the Companies and in and to the assets of the Companies and the business
thereof, including without limitation, all tangible and intangible property and
assets of any nature whatsoever owned by the Companies or in which the Companies
have an interest, and the Companyies' goodwill, capital, profits and assets;
(b) all contract rights, accounts, instruments, documents, chattel
papers, general intangibles, claims, powers, privileges, benefits and remedies
of the O&Y Members arising under or from any provision of the operating
agreement of the Companies or arising out of the O&Y Members' membership in the
Companies; and
(c) all cash or non-cash proceeds of any of the foregoing.
3. Release from Debt. The Trustee (for itself and on behalf of
the Noteholders) hereby releases the Companies and each Member thereof (other
than the O&Y Members) from any obligation to repay any portion of the Assumed
Debt (including, but not limited to, any obligation of a Member based on a
deficit capital account of such Member). The foregoing release is without effect
to the Companies' obligation to pay the remaining outstanding principal balance
and interest, fees and charges due and owing under the Notes and secured by the
Indenture and all interest and other charges which may hereafter accrue thereon
or be payable in connection therewith. The Trustee hereby agrees that the
obligation of the O&Y Members to repay the Assumed Debt will no longer be
secured by the lien of the Indenture encumbering the Properties.
4. Covenants. The O&Y Members jointly and severally covenant
and agree with the Trustee as follows:
(a) The O&Y Members shall observe and perform each and every term,
covenant and provision to be observed and performed by the O&Y Members pursuant
to the terms of the operating agreements of the Companies and the Indenture
applicable to them or any other agreement, mortgage, deed of trust, lease or
recorded instrument affecting or pertaining to the O&Y Members or the Companies.
(b) The O&Y Members shall give the Trustee immediate notice of (i) the
occurrence of any Event of Default (as hereinafter defined) under this
Agreement, (ii) the occurrence of any event which with the lapse of time or
notice or both would constitute an Event of Default or cause a dissolution of
the Companies, or (iii) any action or proceeding to which the O&Y Members or the
Companies are a party, or affecting the O&Y Members or the Companies, an adverse
determination of which would
-2-
C/M: 11764.0001 374509.4
<PAGE>
affect the O&Y Members, the Companies or the Collateral in a materially
adverse manner.
5. Defaults. Any default by the O&Y Members or the Companies
under this Agreement (including a failure to pay the Assumed Debt when due)
which continues beyond five (5) days after written notice thereof by the Trustee
to the O&Y Members and the Companies (without duplication of any cure period
under the Indenture) shall constitute an Event of Default hereunder.
6. Rights and Remedies of Trustee. If an Event of Default
shall occur, then the Trustee may, without the requirement of any notice declare
any or all of the Assumed Debt to be immediately due and payable, and may
immediately and without demand exercise any of its rights under the Uniform
Commercial Code of the State of New York, it being expressly agreed that the
Trustee may, at its sole option, exercise such right with respect to less than
all of the Collateral, such as, more specifically but without limitation, with
respect only to distributions and proceeds of the Companies, leaving unexercised
its rights with respect to the remainder of the Collateral; provided, however,
that such partial exercise shall in no way be deemed a waiver of the Trustee's
right to exercise its rights with respect to all or another portion of the
remainder of the Collateral at a later time or times. Notwithstanding anything
to the contrary contained in this Agreement, the Trustee's sole recourse shall
be to the Collateral and the obligations in respect of the Assumed Debt shall be
non-recourse to the O&Y Members.
7. No Assumptions of Duties; Limitation on Liabilities.
Nothing herein contained shall be construed to constitute the Trustee as either
the O&Y Members' or the Companies' agent or as a member in the Companies for any
purpose whatsoever except for the limited purposes of receiving the Collateral
as provided herein. The Trustee does not by anything contained herein assume any
of the O&Y Members' or the Companies' obligations under any contract, agreement,
document or instrument relating to or binding upon the O&Y Members or the
Companies or constituting a part of or relating to the Collateral and the
Trustee will not be responsible in any way for the O&Y Members' or the
Companies' performance of any of the terms and conditions thereof. Neither the
Trustee nor any of its directors, officers, agents or employees shall be liable
to any person or entity for any action taken or omitted by the Trustee or its
officers, directors, agents or employees hereunder or with respect to any
transaction contemplated by this Agreement except for the Trustee's or such
officers', directors', agents' or employees' gross negligence or wilful
misconduct.
8. Cessation of Liability of O&Y Partners. Notwithstanding
anything to the contrary contained in this Agreement, upon execution by the
Trustee of the Excess Amount Release, any and all liabilities and obligations of
the O&Y Members under this Agreement shall cease, including, without limitation,
with respect to any breaches of covenants or failures to perform any obligations
of the O&Y Members prior to the execution of the Excess Amount Release.
9. Non-Waiver by Trustee. Neither failure nor delay on the
part of the Trustee to exercise any right, remedy, power or privilege provided
for herein or pursuant to the Plan of Reorganization or by statute or at law or
in equity shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. No modification or waiver of any provision of this Agreement, nor
consent to any departure by the O&Y Members therefrom shall be effective unless
the same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on the O&Y Members in any case shall, of
itself, entitle the O&Y Members to any other or further notice
-3-
C/M: 11764.0001 374509.4
<PAGE>
or demand in similar or other circumstances. If any notice is required by law to
be given to the O&Y Members by the Trustee, five (5) days notice given by mail
and addressed to the O&Y Members, at the addresses herein set forth shall be
deemed for all purposes to be reasonable notice.
10. Companies Consent. The Companies consent in all respects
to the transactions effected by this Agreement, and agree to be bound by all of
the terms, covenants and provisions of this Agreement, including, without
limitation, the right of the Trustee to declare the Assumed Debt immediately due
and payable in accordance with the provisions hereof.
11. Notices. Any notice, request, demand, statement or consent
made hereunder shall be in writing and shall be sent by registered or certified
mail, return receipt requested, and shall be deemed given when postmarked and
addressed as follows:
If to the O&Y Members or to the Companies:
c/o Olympia & York Companies
237 Park Avenue
New York, New York 10017
Attention: Managing Attorney
If to the Trustee:
Bankers Trust Company
Four Albany Street
New York, NY 10006
Attention: Corporate Trust and Agency Group
Mr. Kevin Weeks
With a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: David E. Retter, Esq.
Each party may designate a change of address by notice to the other party given
at least 15 days before such change of address is to become effective.
12. No Oral Change. This Agreement may not be modified,
amended, changed, discharged or terminated except by an agreement in writing
signed by the parties hereto.
13. Severability. If any term, covenant or provision of this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be construed without such term, covenant or provision.
14. Parties Bound. This Agreement shall be binding upon and
inure to the benefit of the O&Y Members and the Trustee and their respective
heirs, executors, administrators, legal representatives, successors and assigns,
including without limitation any successor or co-trustee appointed in accordance
with the provisions of the Indenture.
-4-
C/M: 11764.0001 374509.4
<PAGE>
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in New York.
16. Counterparts. This Agreement may be executed in any number
of counterparts and each such counterpart shall be deemed to constitute but one
and the same instrument.
-5-
C/M: 11764.0001 374509.4
<PAGE>
IN WITNESS WHEREOF, the O&Y Members, the Companies and the
Trustee have duly executed this Agreement the day and year first written.
237 PARK AVENUE ASSOCIATES, L.L.C.
By: O&Y NY Building Corp.,
Managing Member
By:
Name:
Title:
1290 ASSOCIATES, L.L.C.
By: O&Y NY Building Corp.,
Managing Member
By:
Name:
Title:
O&Y NY BUILDING CORP.
By:
Name:
Title:
O&Y EQUITY COMPANY, L.P., as debtor
and debtor in possession
By: O&Y Equity General Partner
Corp., General Partner as
debtor and debtor in
possession
By:
Name:
Title:
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
-6-
C/M: 11764.0001 374509.4
<PAGE>
ACKNOWLEDGEMENTS
(to be attached)
C/M: 11764.0001 374509.4
<PAGE>
EXHIBIT A
(Property Description)
C/M: 11764.0001 374509.4
==============================================================================
-------------------------------
DEBT ASSUMPTION, RELEASE AND SECURITY AGREEMENT
(1290 Excess Amount)
-------------------------------
Dated: October 10, 1996
==============================================================================
C/M: 11764.0001 346143.8
<PAGE>
DEBT ASSUMPTION, RELEASE AND SECURITY AGREEMENT
THIS DEBT ASSUMPTION, RELEASE AND SECURITY AGREEMENT (this
"Agreement") made as of the 10th day of October, 1996, between 237/1290 UPPER
TIER ASSOCIATES, L.P., a Delaware limited partnership (the "Company"), and O&Y
NY BUILDING CORP., a Delaware corporation and O&Y EQUITY COMPANY, L.P., a
Delaware limited partnership, as debtor and debtor in possession, both having an
address c/o Olympia & York (U.S.A.), 237 Park Avenue, New York, New York 10017
(collectively referred to hereinafter as the "O&Y Partners"), and BANKERS TRUST
COMPANY, a New York corporation having an office at Four Albany Street, New
York, New York 10006 (the "Trustee").
W I T N E S S E T H:
WHEREAS, 237 Park Avenue Associates, L.L.C. and 1290
Associates, L.L.C. (collectively, the "Debtors") were the Debtors under Chapter
11 Case Nos. 96B42177 and 96B42178 filed with the United States Bankruptcy Court
for the Southern District of New York (the "Bankruptcy Court");
WHEREAS, the Debtors were the obligors under certain notes
(the "Notes") in the original aggregate principal amount of $970,000,000, which
Notes are secured by a first mortgage encumbering the properties described on
Exhibit A attached hereto and made a part hereof (the "Properties") pursuant to
a certain Mortgage Spreader and Consolidation Agreement and Trust Indenture
dated as of March 20, 1984 between Fame Associates, O&Y Equity Corp., Olympia &
York Holdings Corporation (the predecessors-in-interest to the Company), Olympia
& York 2 Broadway Land Company, Olympia & York 2 Broadway Company and
Manufacturers Hanover Trust Company (the predecessor-in-interest to the
Trustee), as the same may have and may be amended from time to time (the
"Indenture");
WHEREAS, the O&Y Partners are partners of the Company;
WHEREAS, pursuant to the order dated September 20, 1996,
entered by the Bankruptcy Court confirming the plan of reorganization of the
Debtors under Chapter 11 of the United States Bankruptcy Code (the "Plan of
Reorganization"), (i) the O&Y Partners assumed the obligation of the Debtors to
pay the 237 Excess Amount (being an amount equal to $60,000,000) pursuant to the
237 Assumption and Security Agreement and the Debtors were released from their
obligation to repay such amount, (ii) the Debtors merged into the Company
pursuant to the Merger Agreement and the Company thereby became the obligor
under the Notes, and (iii) the Company, the O&Y Partners and the Trustee are
entering into this Agreement to evidence (a) the assumption by the O&Y Partners
of the Company's obligation to pay an amount (the "1290 Excess Amount") equal to
the excess of (x) the full amount in the aggregate of all principal, interest,
fees and charges due and owing as of April 23, 1996 (the "Petition Date") under
the Indenture, the Notes and all documents and instruments related thereto after
the prior assumption by the O&Y Partners of the 237 Excess Amount, over (y)
$700,000,000, representing $202,603,492 of the $902,603,492 outstanding
principal under the Indenture as of the Petition Date and all interest, fees and
charges due and owing as of the Petition Date less the 237 Excess Amount
previously assumed by the O&Y Partners, (b) the release by the Trustee of the
Company from the obligation to repay the 1290 Excess Amount assumed by the O&Y
Partners hereunder, and (c) the granting by the O&Y Partners to the Trustee of a
security interest in their interests as partners
C/M: 11764.0001 346143.8
<PAGE>
in the Company to secure their obligation to pay the amounts assumed
hereunder; and
WHEREAS, all terms not defined herein shall be as defined in
the Plan of Reorganization;
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company, the O&Y Partners and
the Trustee covenant and agree as follows:
1. Assumption of Debt. The O&Y Partners, pursuant to the Plan
of Reorganization, hereby assume the obligations of the Company to repay the
1290 Excess Amount and all interest and other charges which may hereafter accrue
thereon (the "Assumed Debt"), on a pro rata basis with the Company's obligation
to pay the remaining amount evidenced by the Notes and secured by the Indenture.
2. Security Interest. (a) As security for the O&Y Partners'
obligation to repay the Assumed Debt in accordance with this Agreement, and the
observance and performance by the O&Y Partners of all of the terms, covenants
and provisions of this Agreement on the part of the O&Y Partners to be observed
and performed, the O&Y Partners hereby transfer, pledge, assign, set over and
grant to the Trustee, for the benefit of the Noteholders, a first priority
perfected security interest in and to the following collateral wherever located,
whether now existing or hereafter created or acquired (collectively, the
"Collateral"):
(i) all of the O&Y Partners' share, right, title or interest in and to
the Company and in and to the assets of the Company and the business thereof,
including without limitation, all tangible and intangible property and assets of
any nature whatsoever owned by the Company or in which the Company has an
interest, and the Company's goodwill, capital, profits and assets;
(ii) all contract rights, accounts, instruments, documents, chattel
papers, general intangibles, claims, powers, privileges, benefits and remedies
of the O&Y Partners arising under or from any provision of the agreement of
limited partnership of the Company or arising out of the O&Y Partners'
partnership interests in the Company; and
(iii) all cash or non-cash proceeds of any of the foregoing.
(b) The O&Y Partners agree that the security interests granted
by them under the 237 Assumption and Security Agreement in and to their
membership interests in the Debtors shall attach to their interests in the
Collateral and shall be co-equal in lien and priority with the security
interests granted in paragraph (a) above.
3. Release from Debt. The Trustee (for itself and on behalf of
the Noteholders) hereby releases the Company and each partner thereof from any
obligation to repay any portion of the Assumed Debt (including, but not limited
to, any obligation of a partner based on a deficit capital account of such
partner). The foregoing release is without effect to the Company's obligation to
pay the remaining outstanding principal balance under the Notes and secured by
the Indenture (i.e. $700,000,000) and all interest and other charges which may
hereafter accrue thereon or be payable in connection therewith. The Trustee
hereby agrees that the obligation of the O&Y Partners to repay the Assumed Debt
will no longer be secured by the lien of the Indenture encumbering the
Properties.
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<PAGE>
4. Covenants. The O&Y Partners jointly and severally covenant
and agree with the Trustee as follows:
(a) The O&Y Partners shall observe and perform each and every term,
covenant and provision to be observed and performed by the O&Y Partners pursuant
to the terms of the operating agreements of the Company and the Indenture
applicable to them or any other agreement, mortgage, deed of trust, lease or
recorded instrument affecting or pertaining to the O&Y Partners or the Company.
(b) The O&Y Partners shall give the Trustee immediate notice of (i) the
occurrence of any Event of Default (as hereinafter defined) under this
Agreement, (ii) the occurrence of any event which with the lapse of time or
notice or both would constitute an Event of Default or cause a dissolution of
the Company, or (iii) any action or proceeding to which the O&Y Partners or the
Company are a party, or affecting the O&Y Partners or the Company, an adverse
determination of which would affect the O&Y Partners, the Company or the
Collateral in a materially adverse manner.
5. Defaults. Any default by the O&Y Partners or the Company
under this Agreement (including a failure to pay the Assumed Debt when due)
which continues beyond five (5) days after written notice thereof by the Trustee
to the O&Y Partners and the Company (without duplication of any cure period
under the Indenture) shall constitute an Event of Default hereunder.
6. Rights and Remedies of Trustee. If an Event of Default
shall occur, then the Trustee may, without the requirement of any notice declare
any or all of the Assumed Debt to be immediately due and payable, and may
immediately and without demand exercise any of its rights under the Uniform
Commercial Code of the State of New York, it being expressly agreed that the
Trustee may, at its sole option, exercise such right with respect to less than
all of the Collateral, such as, more specifically but without limitation, with
respect only to distributions and proceeds of the Company, leaving unexercised
its rights with respect to the remainder of the Collateral; provided, however,
that such partial exercise shall in no way be deemed a waiver of the Trustee's
right to exercise its rights with respect to all or another portion of the
remainder of the Collateral at a later time or times. Notwithstanding anything
to the contrary contained in this Agreement, the Trustee's sole recourse shall
be to the Collateral and the obligations in respect of the Assumed Debt shall be
non-recourse to the O&Y Partners.
7. No Assumptions of Duties; Limitation on Liabilities.
Nothing herein contained shall be construed to constitute the Trustee as either
the O&Y Partners' or the Company's agent or as a partner in the Company for any
purpose whatsoever except for the limited purposes of receiving the Collateral
as provided herein. The Trustee does not by anything contained herein assume any
of the O&Y Partners' or the Company's obligations under any contract, agreement,
document or instrument relating to or binding upon the O&Y Partners or the
Company or constituting a part of or relating to the Collateral and the Trustee
will not be responsible in any way for the O&Y Partners' or the Company's
performance of any of the terms and conditions thereof. Neither the Trustee nor
any of its directors, officers, agents or employees shall be liable to any
person or entity for any action taken or omitted by the Trustee or its officers,
directors, agents or employees hereunder or with respect to any transaction
contemplated by this Agreement except for the Trustee's or such officers',
directors', agents' or employees' gross negligence or wilful misconduct.
8. Cessation of Liability of O&Y Partners. Notwithstanding
anything to the contrary contained in this Agreement, upon execution by the
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<PAGE>
Trustee of the Excess Amount Release, any and all liabilities and obligations of
the O&Y Partners under this Agreement shall cease, including, without
limitation, with respect to any breaches of covenants or failures to perform any
obligations of the O&Y Partners prior to the execution of the Excess Amount
Release.
9. Non-Waiver by Trustee. Neither failure nor delay on the
part of the Trustee to exercise any right, remedy, power or privilege provided
for herein or pursuant to the Plan of Reorganization or by statute or at law or
in equity shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. No modification or waiver of any provision of this Agreement, nor
consent to any departure by the O&Y Partners therefrom shall be effective unless
the same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on the O&Y Partners in any case shall, of
itself, entitle the O&Y Partners to any other or further notice or demand in
similar or other circumstances. If any notice is required by law to be given to
the O&Y Partners by the Trustee, five (5) days notice given by mail and
addressed to the O&Y Partners, at the addresses herein set forth shall be deemed
for all purposes to be reasonable notice.
10. Company Consent. The Company consents in all respects to
the transactions effected by this Agreement, and agrees to be bound by all of
the terms, covenants and provisions of this Agreement, including, without
limitation, the right of the Trustee to declare the Assumed Debt immediately due
and payable in accordance with the provisions hereof.
11. Notices. Any notice, request, demand, statement or consent
made hereunder shall be in writing and shall be sent by registered or certified
mail, return receipt requested, and shall be deemed given when postmarked and
addressed as follows:
If to the O&Y Partners or to the Company:
c/o Olympia & York Companies
237 Park Avenue
New York, New York 10017
Attention: Managing Attorney
If to the Trustee:
Bankers Trust Company
Four Albany Street
New York, NY 10006
Attention: Corporate Trust and Agency Group
Mr. Kevin Weeks
With a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: David E. Retter, Esq.
Each party may designate a change of address by notice to the other party given
at least 15 days before such change of address is to become effective.
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<PAGE>
12. No Oral Change. This Agreement may not be modified,
amended, changed, discharged or terminated except by an agreement in writing
signed by the parties hereto.
13. Severability. If any term, covenant or provision of this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be construed without such term, covenant or provision.
14. Parties Bound. This Agreement shall be binding upon and
inure to the benefit of the O&Y Partners, the Company and the Trustee and their
respective heirs, executors, administrators, legal representatives, successors
and assigns, including without limitation any successor or co-trustee appointed
in accordance with the provisions of the Indenture.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in New York.
16. Counterparts. This Agreement may be executed in any number
of counterparts and each such counterpart shall be deemed to constitute but one
and the same instrument.
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C/M: 11764.0001 346143.8
<PAGE>
IN WITNESS WHEREOF, the O&Y Partners, the Company and the
Trustee have duly executed this Agreement the day and year first written.
237/1290 UPPER TIER ASSOCIATES, L.P.
By: O&Y NY Building Corp.,
General Partner
By:
Name:
Title:
O&Y NY BUILDING CORP.
By:
Name:
Title:
O&Y EQUITY COMPANY, L.P., as debtor
and debtor in possession
By: O&Y Equity General Partner
Corp., General Partner as
debtor and debtor in
possession
By:
Name:
Title:
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
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<PAGE>
ACKNOWLEDGEMENTS
(to be attached)
C/M: 11764.0001 346143.8
<PAGE>
EXHIBIT A
(Property Description)
C/M: 11764.0001 346143.8
RELEASE OF ASSUMED DEBT AND TERMINATION OF SECURITY INTEREST
THIS RELEASE OF ASSUMED DEBT AND TERMINATION OF SECURITY
INTEREST (this "Agreement") dated as of the 10th day of October, 1996 is made by
BANKERS TRUST COMPANY, a New York corporation having an office at Four Albany
Street, New York, New York 10006 (the "Trustee") for the benefit of O&Y NY
BUILDING CORP., a Delaware corporation, and O&Y EQUITY COMPANY, L.P., a Delaware
limited partnership, as debtor and debtor in possession, each having an address
at c/o Olympia & York (U.S.A.), 237 Park Avenue, New York, New York 10017
(collectively, the "O&Y Partners").
W I T N E S S E T H :
WHEREAS, 237 Park Avenue Associates, L.L.C. and 1290
Associates, L.L.C. (collectively, the "Debtors") were the debtors under Chapter
11 Case Nos. 96B42177 and 96B42178 filed with the United States Bankruptcy Court
for the Southern District of New York (the "Bankruptcy Court");
WHEREAS, in accordance with the order entered by the
Bankruptcy Court confirming the joint plan of reorganization of the Debtors
under Chapter 11 of the United States Bankruptcy Code (the "Plan of
Reorganization") (i) the O&Y Partners assumed the obligations of the Debtors to
repay $60,000,000 of the principal, interest, fees and charges due and owing as
of April 23, 1996 (the "Petition Date") under the Indenture, the Existing Notes
and all documents and instruments related thereto (the "237 Assumed Debt")
pursuant to the 237 Assumption and Security Agreement, (ii) the Debtors merged
into 237/1290 Upper Tier Associates, L.P., a Delaware limited partnership (the
"Company"), which thereby became the obligor under the Existing Notes, and (iii)
the O&Y Partners assumed the obligation of the Company to repay the portion of
the $902,603,492 outstanding principal balance under the Indenture
C/M: 11764.0001 346148.7
<PAGE>
as of the Petition Date and all interest, fees and charges due and owing as of
such date under the Indenture, the Existing Notes and all documents and
instruments related thereto in excess of $700,000,000 (after giving affect to
the prior assumption of the 237 Assumed Debt), and all interest and other
charges which may hereafter accrue thereon (the "1290 Assumed Debt") pursuant to
the 1290 Assumption and Security Agreement; and
WHEREAS, pursuant to the Plan of Reorganization and the order
confirming such plan, the Trustee is executing this Agreement to evidence its
agreement to release the O&Y Partners from their obligation to repay the 237
Assumed Debt and the 1290 Assumed Debt and to terminate the security interests
granted by the O&Y Partners to the Trustee in the 237 Assumption and Security
Agreement and the 1290 Assumption and Security Agreement to secure their
obligation to repay the 237 Assumed Debt and the 1290 Assumed Debt.
NOW THEREFORE, in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the O&Y Partners and the
Trustee agree as follows:
1. Definitions. All capitalized terms not defined herein shall
be as defined in the Plan of Reorganization.
2. Release of Assumed Debt and Security Interests. The 237
Assumption and Security Agreement and the 1290 Assumption and Security Agreement
are hereby terminated, discharged, cancelled and declared to be of no further
force or effect and the Trustee (for itself and on behalf of the Noteholders)
hereby forever releases the O&Y Partners from the 1290 Assumed Debt and the 237
Assumed Debt and any and all liabilities or obligations thereunder whether past,
present or future.
3. Release of Collateral. The Trustee agrees to execute,
deliver and file such termination statements and other instruments as shall be
required under the Plan of Reorganization for purposes of releasing each of the
Collateral (as defined in the 237 Assumption and Security Agreement and
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C/M: 11764.0001 346148.7
<PAGE>
the 1290 Assumption and Security Agreement) and the Trustee's security
interests therein.
4. Binding Effect; Benefits. This Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by the O&Y Partners
and their respective successors, assigns, heirs and legal representatives.
5. Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed as to both validity and
performance and enforced in accordance with and governed by the laws of the
State of New York applicable to agreements made and to be performed in New York.
C/M: 11764.0001 346148.7
<PAGE>
IN WITNESS WHEREOF, the Trustee and the O&Y Partners have
caused this Agreement to be duly executed as of the day and year first written
above.
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
O&Y NY BUILDING CORP.,
By:
Name:
Title:
O&Y EQUITY COMPANY, L.P., as debtor and debtor
in possession
By: O&Y Equity General Partner Corp.,
General Partner
By:
Name:
Title:
C/M: 11764.0001 346148.7
237 PROPERTY CONTRIBUTION AGREEMENT
between
237/1290 UPPER TIER ASSOCIATES, L.P.
237/1290 LOWER TIER ASSOCIATES, L.P.
and
237 PARK PARTNERS, L.P.
Dated as of October 10, 1996
C/M: 11764.0001 345765.9
<PAGE>
237 PROPERTY CONTRIBUTION AGREEMENT
AGREEMENT, dated as of October 10, 1996, between 237/1290
UPPER TIER ASSOCIATES, L.P., a Delaware limited partnership having an office c/o
Olympia & York Companies (U.S.A.), 237 Park Avenue, 12th Floor, New York, New
York 10017 (the "Grantor"), 237/1290 LOWER TIER ASSOCIATES, L.P., a Delaware
limited partnership having an office c/o Victor Capital Group, L.P., 885 Third
Avenue - 12th Floor, New York, New York 10022, Attn: John Klopp (the "Limited
Partner") and 237 PARK PARTNERS, L.P., a Delaware limited partnership having an
office c/o Victor Capital Group, L.P., 885 Third Avenue - 12th Floor, New York,
New York 10022, Attn: John Klopp (the "Partnership").
W I T N E S S E T H:
WHEREAS, Grantor is the fee owner of the land commonly known
as 237 Park Avenue, New York, New York and more particularly described in
Exhibit A annexed hereto (the "Land") and the improvements located thereon;
WHEREAS, on April 23, 1996, cases were commenced against 1290
Associates, L.L.C. and 237 Park Avenue Associates, L.L.C. (collectively, the
"Debtors") under Chapter 11 of title 11 of the United States Code in the United
States Bankruptcy Court for the Southern District of New York (the "Bankruptcy
Court");
WHEREAS, pursuant to the Second Amended Joint Plan of
Reorganization of the Debtors filed with the Bankruptcy Court (the "Plan"), (i)
the Debtors have merged into Grantor pursuant to that certain Agreement and Plan
of Merger dated as of the date hereof (the "Merger Agreement"), and (ii)
Grantor, as successor to the Debtors, has agreed to transfer and contribute its
right, title and interest in and to the Land, the improvements thereon and the
other property described herein to the Limited Partner and the Limited Partner
agreed to issue to Grantor a five percent (5%) interest as a limited partner in
the Limited Partner;
WHEREAS, pursuant to the Plan, the Limited Partner has agreed
to transfer and contribute to the Partnership the Limited Partner's right, title
and interest in and to the property contributed by Grantor to the Limited
Partner and the Partnership has agreed to issue to the Limited Partner a
ninety-nine percent (99%) interest as a limited partner in the Partnership; and
WHEREAS, by order dated September 20, 1996, the Bankruptcy
Court confirmed the Plan and authorized the transactions contemplated hereby
(the "Confirmation Order").
NOW, THEREFORE, in consideration of the mutual promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor, the Limited Partner and
the Partnership hereby agree as follows:
C/M: 11764.0001 345765.9
<PAGE>
ARTICLE I
CONTRIBUTION OF THE PROPERTY
Section 1.1 Transfer of the Property. Grantor, concurrently
herewith, shall transfer, assign, convey and contribute to the Limited Partner
(subject to the direction of the Limited Partner provided in paragraph 1.2(b)
below to make such transfer directly to the Partnership) all of Grantor's right,
title and interest, free and clear of any liens, charges, encumbrances, security
interests, options or rights or claims with respect thereto (except for
encumbrances and other matters permitted hereunder), in and to the following
real and personal property (herein collectively referred to as the "Property"):
(a) the Land and the buildings and improvements situated
thereon (the "Improvements", the Land and the Improvements being collectively
referred to as the "Real Property");
(b) any land lying in the bed of any highway, street, road or
avenue, open or proposed, in front of or adjoining all or any part of the Real
Property, to the center line thereof, and to any award made, or to be made, in
lieu thereof, and in and to any unpaid award for damage to the Real Property by
reason of change of grade of any such highway, street, road or avenue;
(c) easements, rights and appurtenances belonging or
appertaining to the Real Property, including, without limitation, all
development rights, air rights, zoning rights and any adjacent vaults, alleys,
strips or gores of land, sidewalks, driveways and parking areas;
(d) all fixtures, machinery, equipment and supplies located at
or used in connection with the Real Property and all intangible personal
property owned by Grantor in connection with the ownership, development,
leasing, management, use or operation of the Real Property, including but not
limited to assignable contract rights, brochures, manuals, advertising material,
the trade name "Park Avenue Atrium" and the right to pursue any pending tax
certiorari proceedings relating to the Real Property and to commence such
proceedings with respect to the period prior to the date hereof, but excluding
the proprietary computer software program used by Grantor and the "O&Y" or
"Olympia & York" trade names (collectively, the "Personalty");
(e) all of Grantor's right, title and interest as lessor in
all leases, licenses and other agreements to occupy all or any part of the Real
Property, together with any separate guaranties of such leases, licenses and
other agreements (collectively, the "Leases") together with all rents and other
sums due, accrued or to become due under each such Lease and all lease security
deposits and notes or other evidences of indebtedness from tenants under Leases
and related thereto;
(f) all of Grantor's right, title and interest in and to all
service, supply and maintenance contracts, equipment leases and all other
contracts and agreements (including purchase orders) relating to the ownership,
development, leasing, operation, management or maintenance of the Real Property,
other than the Property Management Agreement with O&Y Management Corp. which is
being terminated pursuant to the Plan (the "Contracts");
(g) all surveys, plans, specifications, drawings and the like
used in the construction, improvement, alteration or repair of the Improvements
(the "Plans and Specifications") and all
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C/M: 11764.0001 345765.9
<PAGE>
unexpired claims, warranties, guarantees, and sureties, if any, received in
connection with the construction or improvement or fixtures or equipment on the
Real Property, if and to the extent assignable ("Warranties"); and
(h) all licenses, permits, certificates of occupancy, and
franchises (including, without limitation, those listed on Exhibit B attached
hereto and incorporated herein) issued by any federal, state, county or
municipal authority relating to the use, maintenance, or operation of the Real
Property (the "Permits"), running to, or in favor of Grantor or the Real
Property, but only to the extent such transfer is not prohibited by law.
Section 1.2 Issuance of Partnership Interest. (a) In
consideration of the contribution of the Property by Grantor to or at the
direction of the Limited Partner, and in reliance upon the representations,
warranties and covenants made herein by Grantor, the Limited Partner is issuing
to Grantor a five percent (5%) interest as a limited partner in the Limited
Partner as more fully set forth in the agreement of limited partnership of the
Limited Partner (the "Upper Tier LP Interest").
(b) The Limited Partner hereby directs Grantor to transfer the
Property directly to the Partnership with the purpose and intent of such
transfer constituting the contribution of the Property by the Limited Partner to
the Partnership. In consideration, in part, of the contribution of the Property
by the Limited Partner to the Partnership, and in reliance upon the
representations, warranties and covenants made herein by Grantor, the
Partnership is issuing to the Limited Partner a ninety-nine percent (99%)
interest as a limited partner in the Partnership as more fully set forth in the
agreement of limited partnership of the Partnership (the "Lower Tier LP
Interest").
ARTICLE II
THE CLOSING
Section 2.1 Closing. The Closing shall be held concurrently
herewith.
Section 2.2 Conditions to the Partnership's Obligations. (a)
The Limited Partner's and the Partnership's obligation to accept the Property
and issue the Upper Tier LP Interest and the Lower Tier LP Interest,
respectively, are subject to the satisfaction by Grantor (or waiver by the
Limited Partner and the Partnership) of each of the following conditions:
(i) Representations and Warranties Correct; Covenants
Performed. All representations and warranties of Grantor made in, or pursuant
to, this Agreement shall be true and correct in all material respects and
Grantor shall have performed all of its covenants hereunder in all material
respects.
(ii) Acquisition of the Property, Title Insurance. The
Partnership shall acquire good and valid title to the Property free and clear of
any liens, charges, encumbrances, security interests, options or rights or
claims with respect thereto (collectively, "Encumbrances"), other than those
matters affecting title to the Real Property described on Exhibit C annexed
hereto ("Permitted Encumbrances"). To the extent the Partnership elects, a
nationally recognized title company or title companies (the "Title Company")
shall issue a policy of title insurance (the "Title Policy") in an amount
reasonably satisfactory to the Partnership insuring in the
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C/M: 11764.0001 345765.9
<PAGE>
Partnership, all right, title and interest in and to the Real Property in fee
simple absolute, subject only to the Permitted Encumbrances.
(iii) Plan Confirmation, No Injunction. The Bankruptcy
Court shall have issued its order confirming the Plan and there shall not be in
effect any preliminary or permanent injunction, decree or other order
restraining or prohibiting the consummation of the transactions contemplated by
this Agreement.
(iv) No Hazardous Material. No Hazardous Material (as
defined in Section 3.14 below) shall be present at the Property other than those
customarily used, stored and contained in quantities, and in such manner, that
do not violate any law or regulation relating thereto (including, without
limitation, heating oil, cleaning fluids and supplies, refrigerants and paint)
or as otherwise disclosed in Section 3.13 below or in Exhibit P hereto.
(v) Other Conditions. All other conditions to Closing
set forth in this Agreement have been satisfied.
(b) Notwithstanding the provisions of paragraph (a) above and
Section 1.1, the Limited Partner and the Partnership shall be obligated to
accept the Property if there is an Encumbrance (other than a Permitted
Encumbrance) affecting title to the Property which the Title Company is
unwilling to omit as an exception in the Title Policy, if there are Hazardous
Materials at the Property, provided that the aggregate of (i) the amount
required to satisfy, discharge or otherwise remove the Encumbrance (or if less,
the reduction in value of the Property occurring by reason of the existence of
such Encumbrance), (ii) the amount required to remediate to a level required by
the applicable governmental authority in a manner reasonably acceptable to the
Partnership (but only to the extent such remediation is legally required) any
environmental matter (x) not disclosed in the Environmental Report (as defined
in Section 3.13 below) or in Exhibit P to the form of this Agreement which was
filed on August 22, 1996 together with the Plan or (y) with respect to which a
tenant, utility or a governmental agency is responsible, and together with (iii)
all such amounts similarly outstanding under the Contribution Agreement of even
date herewith relating to the property known as 1290 Avenue of the Americas, New
York, New York, does not exceed $3,000,000.
Section 2.3 Grantor's Closing Deliveries. Grantor shall
deliver the following documents to the Partnership at the Closing:
(a) a recordable bargain and sale deed without covenants
against grantor's acts in New York statutory form, executed and acknowledged by
Grantor conveying the Real Property to the Partnership in the form annexed
hereto as Exhibit D;
(b) an assignment of all right, title and interest of Grantor
under the Leases, which shall include the Partnership's assumption of Grantor's
obligations under the Leases accruing from and after the date hereof and prior
to the date hereof (but only to the extent not discharged under the Plan and the
Confirmation Order), in the form annexed hereto as Exhibit E;
(c) an assignment of all right, title and interest of Grantor
under the Contracts, which shall include the Partnership's assumption of
Grantor's obligations under the Contracts accruing from and after the date
hereof and prior to the date hereof (but only to the extent not discharged under
the Plan and the Confirmation Order), in the form annexed hereto as Exhibit F;
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<PAGE>
(d) a bill of sale conveying Grantor's right title and
interest in and to the Personalty, in the form annexed hereto as Exhibit G;
(e) the RET Return and the RPT Return (all as defined in
Section 2.6 below), executed and acknowledged by Grantor, together with the
payment, if any, required by Section 2.6 below which shall be paid from closing
cash under the Plan;
(f) such further instruments as may be necessary to be
executed by Grantor to record the deed;
(g) a copy of the order of the Bankruptcy Court approving the
transfer of the Property to the Partnership;
(h) a letter to tenants under Leases and vendors under
Contracts in the form annexed hereto as Exhibit H, advising them of the transfer
of the Property to the Partnership and directing them to make all payments and
to render performance to the Partnership;
(i) to the extent in the possession or control of Grantor, its
United States affiliates and agents, originals (or copies to the extent that
originals are not available) of all Leases, Contracts, Warranties, Permits and
Plans and Specifications;
(j) copies of the most recently issued real estate tax bills
for the Premises, Grantor's files and records regarding pending tax certiorari
claims relating to the Real Property, all other books, records, bills, invoices,
lease files, credit reports and other documents related to the ownership,
development, operation, management, use, maintenance or leasing of the Real
Property in the possession of Grantor, its United States affiliates and agents
that the Partnership, in its reasonable discretion, requires.
(k) a written certification ("FIRPTA Certificate") in form
annexed hereto as Exhibit I, which certification shall be in compliance with the
Tax Reform Act of 1984 (the "Act") and the regulations thereunder that are
imposed by the Foreign Investment in Real Property Tax Act ("FIRPTA") and
certifying that Grantor is not a person or entity subject to withholding under
FIRPTA and the Act;
(l) Such customary and reasonable affidavits, documents or
instruments as the Title Company may require in order to issue the Title Policy;
(m) such evidence as may be reasonably required by the Title
Company and the Partnership of the due authorization, execution and delivery of
this Agreement and the other documents to be executed in connection with this
Agreement, including, without limitation, a certified copy of Grantor's articles
of organization or operating agreement;
(n) all security deposits delivered to Grantor under the
Leases which have not been previously applied or repaid to the tenants
thereunder;
(o) all keys and security alarm codes, if any, to the Real
Property in the possession of Grantor, its United States affiliates and agents;
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(p) a letter from the actuary for the defined benefit pension
plan covering the union employees described in Exhibit O that participate in any
such plan stating that there is no withdrawal liability assuming a withdrawal as
of June 30, 1996 or, if there is any, it is not greater than $100,000 (together
with any similar liability with respect to 1290 Avenue of the Americas),
provided that if such actuary is unable to deliver such a letter due to
information not then being available, Grantor shall deliver such a letter with
respect to a withdrawal as of a date not earlier than June 30,1995 and shall
deliver evidence that it has made all contributions required of it to such plan
since such date; and
(q) copies of all lien waivers, if any, relating to material
work currently being performed at the Property.
Section 2.4 The Limited Partner's Closing Deliveries. (a) The
Limited Partner shall deliver to Grantor at the Closing copies of the Limited
Partner's Agreement of Limited Partnership and Certificate of Limited
Partnership.
(b) The Partnership's Closing Deliveries. The Partnership
shall deliver the following documents to Grantor at the Closing:
(A) The Partnership's executed counterparts of the assignment
and assumption documents referenced in Section 2.3(b);
(B) The RET Return and the RPT Return, executed and
acknowledged by the Partnership;
(C) copies of the Partnership's Agreement of Limited
Partnership and Certificate of Limited Partnership; and
(D) unless the Partnership shall assume such obligations in
the assignment and assumption agreement referenced in Section 2.3(c), an
assumption by the Partnership or the Partnership's property manager of the labor
agreements described in Exhibit O annexed hereto. The Partnership hereby agrees
to offer or to cause the Partnership's property manager to offer to the
non-union employees of Grantor described in Exhibit O (other than the property
manager described therein) the choice of (A) employment (i) at the same wages
and rate of vacation and severance accrual as is currently applicable to such
employees as described in Exhibit O, (ii) with such other benefits as are
customarily paid by the Partnership or its property manager (and its
affiliates), and (iii) with assumption by the Partnership or such property
manager of such employee's existing benefits of accrued vacation and severance,
or (B) payment of the severance and accrued vacation costs described therein
except to the extent any such non-union employee rejects employment with the
Partnership or its property manager and accepts employment with any United
States affiliate of Grantor. The Grantor of the Partnership acknowledges that
the Debtors, on or about the date hereof, shall pay from the moneys held under
the Cash Collateral Stipulation the accrued salary, vacation and severance costs
described in Exhibit O hereto for the property manager.
Section 2.5 Further Assurances. Grantor, the Limited Partner
and the Partnership, at the Effective Date, or at any time or from time to time
thereafter, upon request of the other party, will execute such additional
instruments, documents or certificates as such other party reasonably requests
in order to effectuate the transactions contemplated hereby.
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Section 2.6 Closing Expenses.
(a) Title and Survey. The Partnership shall bear all costs of
obtaining the Title Policy, as well as any costs in updating the existing survey
of the Real Property.
(b) Real Estate Transfer Tax. Grantor, the Limited Partner and
the Partnership agree to comply timely with the requirements of Article 31 of
the New York Tax Law and the regulations applicable thereto, as the same may be
amended from time to time with respect to the transactions contemplated by the
Merger Agreement and this Agreement. Grantor and, if required, the Limited
Partner and the Partnership shall swear to and deliver the return required by
said statute and the regulations issued pursuant to the authority thereof (the
"RET Return"), it being acknowledged by the parties that Grantor intends to file
an RET Return stating that, pursuant to the provisions of Section 1146(c) of the
federal Bankruptcy Code, the transfer of the Property pursuant to the Merger
Agreement and this Agreement shall be exempt from the Real Estate Transfer Tax
imposed by said Article 31.
(c) Real Property Transfer Tax. Grantor, Limited Partner and
the Partnership agree to comply timely with the requirements of Chapter 21 of
Title 11 of the Administrative Code of the City of New York and the regulations
applicable thereto, as the same may be amended from time to time with respect to
the transactions contemplated by the Merger Agreement and this Agreement.
Grantor and, if required, the Limited Partner and the Partnership shall swear to
and deliver the return required by said statute and the regulations issued
pursuant to the authority thereof (the "RPT Return"), it being acknowledged by
the parties that Grantor intends to file an RPT Return stating that, pursuant to
the provisions of Section 1146(c) of the federal Bankruptcy Code, the transfer
of the Property pursuant to the Merger Agreement and this Agreement shall be
exempt from the Real Estate Transfer Tax imposed by said Chapter 21.
(d) Recording Charges. Grantor shall pay all recording charges
payable in connection with the recording of the deed and other documents to be
recorded hereunder.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF GRANTOR
Grantor hereby represents, warrants and covenants to the
Partnership that the following statements are true and accurate:
Section 3.1 Due Organization and Authority. Grantor is a
limited liability company duly organized, validly existing and in good standing
under the law of the State of New York and has the power and authority to enter
into and to perform this Agreement. The execution, delivery and performance of
this Agreement by Grantor has been duly authorized by all requisite actions and
proceedings of Grantor, subject to issuance by the Bankruptcy Court of an order
confirming the Plan.
Section 3.2 Performance and Enforceability. The execution,
delivery and performance by Grantor of this Agreement and any related
instruments and documents do not and will not (i) contravene the articles of
organization or the operating agreement of Grantor or (ii) result in any
violation by Grantor of any law, rule or regulation applicable to it or the
Property or result in the
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creation of any lien, charge, encumbrance, security interest, option or right or
claim with respect thereto other than a Permitted Encumbrance.
Section 3.3 Consents and Filings. No consent, license, permit,
approval, order or authorization of, or filing with any governmental or judicial
authority is required to be obtained or made in connection with the execution,
delivery or performance by Grantor of this Agreement or the consummation of the
transactions to be consummated by Grantor hereunder other than an order of the
Bankruptcy Court confirming the Plan.
Section 3.4 Grantor's Ownership of the Property. Grantor is
the sole legal and beneficial owner, with sole power to dispose of, the
Property. Grantor is not a "foreign person" within the meaning of FIRPTA.
Section 3.5 Rent Roll and Leases. As of the date hereof, there
are no leases or occupancy agreements affecting the Property or any part thereof
in which the owner of the Property is the landlord/licensor except for the
Leases identified on Exhibit J annexed hereto. There are no leases, subleases or
other occupancy agreements affecting the Property under which Grantor or any
affiliate is the tenant, subtenant or licensee other than with respect to the
12th and 13th floors of the Premises. The Rent Roll annexed hereto as Exhibit J
is complete and correct in all material respects as of the date thereof and
accurately reflects all arrearages as of such date. No option or other right to
purchase all or any portion of the Property has been granted to any tenant or
other party other than the right of first offer contained in the lease with
Swiss Re America Holding Corporation et. al. described in Exhibit J hereto.
Exhibit J accurately reflects all security deposits currently held by Grantor
under the Leases.
To Grantor's knowledge, Grantor has delivered to the
Partnership true, correct and complete original counterparts of all the Leases
and all modifications, amendments and supplements thereof in its possession or
in the possession of its agents or United States affiliates. To Grantor's
knowledge, all of the leases identified in Exhibit J annexed hereto are in full
force and effect and Grantor is the lawful holder of the lessor's interest in
Leases.
Section 3.6 Contracts. To the knowledge of Grantor, Exhibit K
annexed hereto accurately reflects all Contracts affecting the ownership or
operation of the Property or the Personalty that are being assumed by Grantor
under the Plan and by the Partnership hereunder, including Contracts for work
being performed at the Property and brokerage agreements.
Section 3.7 Real Estate Taxes. No tax certiorari proceedings
are currently pending with respect to the Property or Grantor except as
described on Exhibit L hereto.
Section 3.8 Brokerage Commissions. To the knowledge of
Grantor, all brokerage commissions which are on the date hereof due and payable
with respect to any Leases have been fully paid or have been released under the
Plan, except for the brokerage commissions set forth in Exhibit M annexed
hereto.
Section 3.9 Condemnation. To the knowledge of Grantor, there
is no pending condemnation, expropriation, eminent domain, or similar proceeding
affecting all or any portion of the Property nor has Grantor received any notice
that any such proceeding is threatened.
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Section 3.10 Litigation. All actions, suits or proceedings
brought by Grantor or its affiliated predecessors in interest relating to the
Property, any Lease or Contract or relating to or arising out of the ownership,
management or operation of the Property, and pending in any court or before or
by any federal, state, county or municipal department, commission, board, bureau
or agency or other governmental instrumentality are described in Exhibit N
hereto. Grantor shall, at the Partnership's request, take such action as may be
required to assign its rights under such actions, suits or proceedings to the
Partnership and to cause the Partnership to be substituted as a named party
therein.
Section 3.11 Zoning. To the knowledge of Grantor, there are no
petitions, actions or hearings relating to or affecting the zoning or use of the
Real Property except as disclosed in writing to the Partnership concurrently
herewith.
Section 3.12 Employees. There are no persons at the Real
Property who are presently employed by Grantor other than those listed on
Exhibit O attached hereto and, other than as shown on Exhibit O, none of the
persons who are presently employed by Grantor are employed under any union or
other employment contract, written or otherwise.
Section 3.13 Environmental Matters. Grantor has received
copies of the Phase I Environmental Report dated April 15, 1996 prepared by
AquaTerra with respect to the environmental condition of the Property (the
"Environmental Report"). To the actual knowledge of Grantor: (i) except as noted
in the Environmental Report or in Exhibit P hereto, no portion of the Property
contains any hazardous, toxic or harmful material, substance, waste or
contamination, whether man-made or naturally occurring ("Hazardous Materials")
which is in need of remediation in order to prevent injury to persons, material
damage to property or criminal liability and (ii) Grantor and its affiliated
predecessors have received no written notice from any governmental unit or other
person that the Property is not or has not been in compliance with Environmental
Laws which has not been cured.
The term "Environmental Laws" shall mean and include all
federal, state and local statutes, ordinances, regulations and rules in effect
on the date hereof relating to environmental quality, contamination and
clean-up, including, without limitation, the Clean Air Act, 42 U.S.C. Section
7401 et seq.; the Clean Water Act, 33 U.S.C. Section 1251 et seq., and the Water
Quality Act of 1987; the Federal Insecticide, Fungicide, and Rodenticide Act 7
U.S.C. Section 136 et seq.; the Marine Protection, Research, and Sanctuaries
Act, 33 U.S.C. Section 1401 et seq.; the National Environmental Policy Act, 42
U.S.C. Section 4321 et seq.; the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq.; the Resource Conservation and Recovery Act 42 U.S.C.
Section 6901 et seq., as amended by the Hazardous and Solid Waste Amendments of
1984; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; the
Comprehensive Environmental Response, Compensation and Liability Act 42 U.S.C.
Section 9601 et seq., as amended by the Superfund Amendments and Reauthorization
Act, the Emergency Planning and Community Right-to-Know Act and the Radon Gas
and Indoor Air Quality Research Act; the Toxic Substances Control Act 15 U.S.C.
Section 2601 et seq.; the Atomic Energy Act, 42 U.S.C. Section 2011 et seq., and
the Nuclear Waste policy Act of 1982, 42 U.S.C. Section 10101 et seq.; and state
and local environmental statutes and ordinances, with implementing regulations
and rules in effect on the date hereof.
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Section 3.14 Personal Property. To the knowledge of Grantor,
the personal property being conveyed pursuant to the terms hereof is being
transferred free and clear of liens and encumbrances, except for the lien of
that certain Mortgage Spreader and Consolidation Agreement and Trust Indenture
dated as of March 20, 1984 between Fame Associates, O&Y Equity Corp., Olympia &
York Holdings Corporation (the predecessors-in-interest to Assignor), Olympia &
York 2 Broadway Land Company, Olympia & York 2 Broadway Company and
Manufacturers Hanover Trust Company, as the same may have been amended from time
to time.
Section 3.15 The term "knowledge" as used in this Article III
shall mean the actual knowledge of John Greve, John Moore, and Roman Mykytink
and with respect to Sections 3.5 and 3.8 only, Thomas Falus.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Notices. All notices, requests, demands and other
communications made hereunder shall be in writing and shall be deemed duly given
when personally delivered against receipt or after deposit with the post office
by registered or certified mail, postage prepaid and return receipt requested,
as follows, or to such other address or person as a party may hereafter
designate by notice to the other party:
If to Grantor: 237 Park Avenue Associates, L.L.C.
c/o Olympia & York Companies (U.S.A.)
237 Park Avenue, 12th Floor
New York, New York 10017
Attention: Managing Attorney
with a copy to: Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, New York 10153
Attention: Brian S. Rosen, Esq.
and: Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Joshua Mermelstein, Esq.
and: JMB/NYC Office Building Associates, L.P.
900 North Michigan Avenue
Suite 1900
Chicago, Illinois 60611
Attention: Gary Nickele
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If to the Limited Partner: 237/1290 Lower Tier Associates, L.P.
c/o Victor Capital Group, L.P.
885 Third Avenue - 12th Floor
New York, New York 10022
Attention: John Klopp
with a copy to: Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Kenneth Friedman
If to the Partnership: 237 Park Partners, L.P.
c/o Victor Capital Group, L.P.
885 Third Avenue - 12th Floor
New York, New York 10022
Attn: John Klopp
with a copy to: Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Kenneth Friedman
Section 4.2 Survival; As Is. Except for the provisions of
Section 2.5 and 4.8 hereof, none of the provisions of this Agreement shall
survive the Closing. Except as otherwise provided herein, the Property is being
transferred to the Partnership on an "as-is, where-is" basis. The acceptance by
the Partnership of the Deed and other documents to be delivered by Grantor
hereunder at the Closing pursuant to Section 2.3 shall be deemed to be full
performance and discharge of every obligation on the part of Grantor to be
performed hereunder and all provisions of this Agreement shall merge in the
Deed, except as specifically provided herein to the contrary.
Section 4.3 Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors, legal
representatives and permitted assigns, but this Agreement may not be assigned by
either party without the written consent of the other party or pursuant to an
order of the Bankruptcy Court.
Section 4.4 Captions; Counterparts. The captions in this
Agreement are for convenience of reference only, do not form a part hereof and
do not in any way modify, interpret or construe the intentions of the parties.
This Agreement may be executed in two or more counterparts, all of which shall
constitute one and the same instrument.
Section 4.5 Enforceability; Severability. If any one or more
of the provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remaining
provisions of this Agreement shall not be affected thereby. To the extent
permitted by applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
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Section 4.6 Entire Agreement. This Agreement sets forth the
entire understanding of the parties. This Agreement may be modified only by
written instrument duly executed by each party. No breach of any agreement,
warranty or representation shall be deemed waived unless expressly waived in
writing by the party who might assert such breach.
Section 4.7 Applicable Law. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of New
York without giving effect to its conflict of laws rules.
Section 4.8 Cooperation. The Partnership (at no cost or
expense to the Partnership) shall provide reasonable cooperation to Grantor, its
U.S. affiliates and their insurance carriers with respect to any insured claims
which may be brought against any such entity. Such cooperation shall include (i)
making personnel (including building managers previously employed by Grantor or
its U.S. Affiliates) available to meet with representatives of such insurance
carrier and attend depositions and/or trials at reasonable times, on reasonable
notice and at no cost to the Partnership for so long as such personnel are
employed by the Partnership (or its managing agent), and (ii) providing access
to (and copies of) building books and records, including building logs and
service contracts attributable to the period of Grantor's and its predecessors
in interest's period of ownership (to the extent available) as may be reasonably
requested and on reasonable notice and at no cost to the Partnership.
The provisions of this Section 4.8 shall survive the Closing.
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IN WITNESS WHEREOF, the parties hereto have duly executed or
caused this Agreement to be duly executed on the day and year first above
written.
237/1290 UPPER TIER ASSOCIATES, L.P.
By: O&Y NY Building Corp., its general partner
By:
Name:
Title:
237/1290 LOWER TIER ASSOCIATES, L.P.
By: Metropolis Realty Trust, Inc., its
general partner
By:
Name:
Title:
237 PARK PARTNERS, L.P.
By: 237 GP Corp., its general partner
By:
Name:
Title:
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EXHIBIT A
LEGAL DESCRIPTION OF THE PREMISES
ALL that certain lot, piece or parcel of land, excepting so much thereof as is
excepted and reserved herein, situate, lying and being in the Borough of
Manhattan, City, County and State of New York, bounded and described as follows:
BEGINNING at the corner formed by the intersection of the Northerly side of East
45th Street with the Westerly side of Lexington Avenue; running
THENCE Northerly along the Westerly side of Lexington Avenue 200 feet 10 inches
to the Southerly side of East 46th Street;
THENCE Westerly along the Southerly side of East 46th Street 325 feet;
THENCE Southerly parallel with the Westerly side of Lexington Avenue 200 feet 10
inches to the Northerly side of East 45th Street; and
THENCE Easterly along the Northerly side of East 45th Street 325 feet to the
corner aforesaid, the point or place of BEGINNING.
EXCEPTING therefrom so much of the described premises as was reserved to the
grantor (Trustees of Penn Central) by deed recorded in Reel 442 P. 1353.
TOGETHER with the easements set forth in said deed.
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EXHIBIT B
LIST OF PERMITS
[To be completed on Effective Date]
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EXHIBIT C
PERMITTED ENCUMBRANCES
A. All Leases identified in Exhibit J and the rights of tenants
thereunder, all subleases, if any, from such tenants, all
sub-subleases, if any, and all rights of Persons claiming directly or
indirectly through tenants identified in Exhibit J (e.g., a UCC-1
financing statement of a secured lender to a tenant, whether or not
such security interest or the recordation of such instrument is
permitted under such tenant's Lease or a mechanic's lien against the
tenant's interest in the Property in connection with work performed for
a tenant). No such party shall have any right or option to purchase all
or any portion of the Property.
B. Any non-disturbance agreement or other agreement between Trustee and
any tenant, subtenant or other person with an interest in the
Property.
C. Any violation of a legal requirement.
D. The Indenture, as the same may be amended and restated in accordance
with the Plan and any Financing Documents running to the benefit of the
Trustee under the Indenture and any replacement mortgage and related
documents executed pursuant to the Plan.
E. Liens of any governmental authorities for taxes, assessments, rents,
charges, fees and other amounts payable with respect to the Property.
F. State of facts shown on survey by Earl B. Lovell-S.P. Belcher, Inc.
dated 12/7/82 amended 1/20/84 and such further facts as an inspection
of the Property might show.
G. Any other matter the Title Company is willing to delete as an
exception to title at no additional cost or premium.
H. Liens of mechanics, materialmen and laborers which pursuant to the
Plan the Partnership is to take title to the Property subject to.
I. "General", "standard" or "printed" exceptions in the Partnership's
title insurance commitment provided that the rights of tenants shall
be limited to their rights as tenants only under leases and without
any right or option to purchase the Property.
J. Any exceptions to title created by the Partnership or relating to the
Partnership.
K. Any matter which was consented to by the Trustee or a Majority of the
Noteholders.
L. The following additional title exceptions:
1. The most westerly 50 feet of the described premises lies in
the bed of a former private way between 45th and 46th Streets.
Easement on and over premises by reason thereof, but policy
insures that notwithstanding same the existing buildings and
improvements may remain undisturbed as long as buildings
stand.
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2. Easements contained in amended easement agreement dated
3-12-84, recorded 3-15-84 in Reel 774 Page 323, between O & Y
EQUITY CORP., OLYMPIA & YORK HOLDINGS CORPORATION, f/k/a
Olympia & York Investments Corporation, and FAME ASSOCIATES,
as tenants-in-common (collectively, "Olympia & York"), and 230
PARK AVENUE ASSOCIATES, affecting the most westerly 52 feet of
the premises, buy policy insures that notwithstanding same the
existing buildings and improvements may remain undisturbed as
long as the building stands.
3. Easements and Reservations contained in Deeds recorded in
Reel 361 P. 418 and Reel 361 P. 443 as set forth in Paragraph
27 of the 1st deed and Incorporated by reference in the
second deed, which deeds convey the land and building of
premises known as 230 Park Avenue as such easements and
reservations may affect the premises described herein, but
policy insures that the premises insured in Schedule A do not
violate the easements and reservations set forth in deed
recorded in Reel 361 P. 418 and Reel 361 P. 443 (hereinafter
the 230 Easements) and policy further insures that said 230
Easements will not be enforced against the building located
on the insured premises from the underside of the beams and
girders supporting the lobby floor and upward or otherwise.
4. Covenants and Restrictions recorded in Liber 2356 cp 273,
Liber 911 cp 408, Liber 1738 cp 419, Liber 892 cp 385, Liber
1198 cp 523, and Liber 892 cp 380, Liber 2256 cp 53 and Liber
2075 cp 471, Liber 917 cp 275 referred to in Liber 968 cp 512
as the same may be modified by Liber 175 cp 279 Sec. 5.
Policy insures that the aforesaid covenants and restrictions
will not be enforced so as to prohibit the maintenance and
use of the existing improvements and that there is no
condition or right of re-entry or other provision for
forfeiture under which the mortgagee can be cut off,
subordinated or otherwise disturbed in the use of the insured
premises and the buildings and other improvements erected
thereon.
5. Terms, conditions, rights and obligations contained in the
unrecorded lease by and between the Trustees of the property
of Penn Central Transportation Company (Trustees) and the
Metropolitan Transportation Authority (MTA) dated 5/26/72 and
as modified by Letters dated 10/6/72 and 6/2/75 and
clarifying letter of MTA dated 6/12/78 collectively (The
"Lease") but notwithstanding same, this policy insures that
the easements and right granted, given or assigned to the
Grantee in the Deed within and with respect to the Retained
Property as set forth in the Deed to Olympia & York Plaza
Company recorded in Reel 442 P. 1353 from The Trustees of the
Property of Penn Central Transportation Company (The Deed)
are valid and effective in accordance with the Terms and
Conditions of the Deed and are recognized by and not limited
or cut-off by the MTA Lease.
6. Terms, reservations, covenants, restrictions, easements and
agreements contained in the Closing Deed being Deed made by
Robert W. Blanchette, Richard C. Bond, John H. McArthur,
solely in their capacity as Trustees of the Property of Penn
Central Transportation Company to Olympia & York Plaza
Company, dated June 16, 1978, recorded in Reel 442 P. 1353.
Policy does not insure the location of or the dimensions of
the easements insured in Schedule A. Policy insures that the
aforesaid covenants and restrictions will not be enforced so
as to prohibit the maintenance and
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use of the existing improvements and that there is no
condition or right of re-entry or other provision for
forfeiture under which the mortgagee can be cut off,
subordinated or otherwise disturbed in the use of the insured
premises and the building and other improvements erected
thereon. Policy further insures that the said Covenants and
Restrictions do not prohibit the construction of a
replacement building provided said building is constructed in
the same footprint as the existing building and the
construction of same is in accordance with the provisions of
the Closing deed.
7. Declaration of Restrictions by O & Y Equity Corp., Olympia &
York Investments Corporation and Fame Associates dated
2/11/82, recorded 3/2/82 in Reel 610 P. 490, which
Declaration limits the maximum floor area of the premises and
waives development rights. Policy insures that the
restrictions will not be enforced so as to prohibit the
maintenance and use of the existing improvements and that
there is no condition or right of re-entry or other provision
for forfeiture under which the mortgage can be cut off,
subordinated or otherwise disturbed in the use of the insured
premises and the buildings and other improvements erected
thereon.
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EXHIBIT D
FORM OF DEED
BARGAIN AND SALE DEED
WITHOUT COVENANT AGAINST GRANTOR'S ACTS
237 PARK AVENUE ASSOCIATES, L.L.C,
TO
237 PARK PARTNERS, L.P.
SECTION: 1
BLOCK: 1300
LOT: 6 AND 14
COUNTY: NEW YORK
ADDRESS: 237 PARK AVENUE
NEW YORK, NEW YORK
RECORD AND RETURN TO:
Attn:
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DEED
THIS INDENTURE, made as of the day of , 1996, between 237 PARK AVENUE
ASSOCIATES, L.L.C., a New York limited liability company having an office c/o
Olympia & York Companies (U.S.A.), 237 Park Avenue, New York, New York 10017,
collectively, party of the first part, and 237 PARK PARTNERS, L.P., a Delaware
limited partnership, having its principal address at , party of the second part,
WITNESSETH, that the party of the first part, in consideration of the sum of ten
dollars and other valuable consideration paid by the party of the second part,
does hereby grant and release unto the party of the second part, the heirs or
successors and assigns of the party of the second part forever,
ALL that certain plot, piece, or parcel of land, buildings and improvements
thereon erected, situate, lying and being in the Borough and County of
Manhattan, bounded and described on Schedule A annexed hereto.
TOGETHER with all right, title and interest, if any, of the party of the first
part in and to any streets and roads abutting the above described premises to
the center lines thereof;
TOGETHER with the appurtenances and all the estate and rights of the party of
the first part in and to said premises;
TO HAVE AND TO HOLD the premises herein granted unto the party of the second
part, the heirs or successors and assigns of the party of the second part
forever.
AND the party of the first part, in compliance with Section 13 of the Lien Law,
covenants that the party of the first part will receive the consideration for
this conveyance and will hold the right to receive such consideration as a trust
fund to be applied first for the purpose of paying the cost of the improvement
and will apply the same first to the payment of the cost of the improvement
before using any part of the total of the same for any other purpose.
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The word "party" shall be construed as if it read "parties" whenever the sense
of this indenture so requires.
This transfer is made pursuant to a Plan of Reorganization which was confirmed
on , 1996 by order of the United States Bankruptcy Court for the Southern
District of New York (Case No.
).
IN WITNESS WHEREOF, the party of the first part has duly executed this deed on
the day and year first above written.
237 PARK AVENUE ASSOCIATES, L.L.C.
By: O&Y NY Building Corp., managing member
By:___________________________
Name:
Title:
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Acknowledgement
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SCHEDULE A
Legal Description
ALL that certain lot, piece or parcel of land, excepting so much thereof as is
excepted and reserved herein, situate, lying and being in the Borough of
Manhattan, City, County and State of New York, bounded and described as follows:
BEGINNING at the corner formed by the intersection of the Northerly side of East
45th Street with the Westerly side of Lexington Avenue; running
THENCE Northerly along the Westerly side of Lexington Avenue 200 feet 10 inches
to the Southerly side of East 46th Street;
THENCE Westerly along the Southerly side of East 46th Street 325 feet;
THENCE Southerly parallel with the Westerly side of Lexington Avenue 200 feet 10
inches to the Northerly side of East 45th Street; and
THENCE Easterly along the Northerly side of East 45th Street 325 feet to the
corner aforesaid, the point or place of BEGINNING.
EXCEPTING therefrom so much of the described premises as was reserved to the
grantor (Trustees of Penn Central) by deed recorded in Reel 442 P. 1353.
TOGETHER with the easements set forth in said deed.
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EXHIBIT E
ASSIGNMENT OF LEASES
ASSIGNMENT AND ASSUMPTION OF LEASES
237 PARK AVENUE ASSOCIATES, L.L.C., a New York limited
liability company ("Assignor"), for and in consideration of the sum of Ten
Dollars ($10.00), and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, does hereby grant, transfer and
assign unto 237 PARK PARTNERS, L.P., a Delaware limited partnership
("Assignee"), having an office at , all of Assignor's right, title and interest
in and to those certain leases, tenancies and other occupancy arrangements
described on Exhibit A attached hereto (hereinafter, the "Leases"), relating to
the buildings and other improvements located at or about 237 Park Avenue, New
York, New York, as more particularly described in Exhibit B attached hereto (the
"Property") and all right, title and interest of Assignor under the Leases,
including, without limitation, all rents, however denominated, whether past due,
currently due or to become due under the Leases, all claims, rights and suits
inuring to the benefit of lessor under the Leases and all cash or securities
including, without limitation, letters of credit, deposited under the Leases to
secure performance by the lessees of their obligations thereunder, whether such
cash or securities including, without limitation, letters of credit, are to be
held until the expiration of the terms of the Leases, or applied to one or more
of the installments of rent coming due prior to the expiration of such terms.
Assignor hereby represents and warrants to Assignee that to
Assignor's knowledge, Assignor has delivered to Assignee true, correct and
complete original counterparts of all the Leases and all modifications,
amendments and supplements thereof in its possession or in the possession of its
agents or United States affiliates; that to Assignor's knowledge the only
deposits, security deposits,
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<PAGE>
prepayments of rents, and similar deposits regarding the Leases are set forth on
Exhibit C; that, except as set forth on Exhibit C, to Assignor's knowledge, all
of the Leases are in full force and effect; and that Assignor is the lawful
holder of the lessor's interest in the Leases.
Assignee hereby accepts the foregoing assignment and assumes
any executory obligations of Assignor in connection with the Leases described on
Exhibit A hereto relating to the period from and after the date hereof and prior
to the date hereof to the extent not released pursuant to the Assignor's Plan of
Reorganization.
Assignor further assigns to Assignee, Assignor's rights under
expired or terminated Leases, including, without limitation, the right to
receive from the tenants thereunder any underpayment of operating expense and
real estate tax payments, and Assignee hereby assumes any obligation under such
expired or terminated Leases to reimburse such tenants for any overpayment of
such amounts.
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<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have executed and
delivered this Assignment this 10th day of October, 1996.
ASSIGNOR:
237 PARK AVENUE ASSOCIATES, L.L.C., a New York
limited liability company
By: O&Y NY Building Corp., managing member
By:_______________________________
Name:
Title:
ASSIGNEE:
237 PARK PARTNERS, L.P., a Delaware limited
partnership
By: 237 GP Corp. Inc., general partner
\
By:_______________________________
Name:
Title:
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<PAGE>
Exhibit A
Leases
Tenant
This exhibit will list all Leases to be assumed pursuant to
the Plan and Leases entered into during the bankruptcy case in accordance with
the terms of the Cash Collateral Stipulation or otherwise consented to by the
Trustee or a Majority of the Noteholder.
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<PAGE>
Exhibit B
Property Description
ALL that certain lot, piece or parcel of land, excepting so much thereof as is
excepted and reserved herein, situate, lying and being in the Borough of
Manhattan, City, County and State of New York, bounded and described as follows:
BEGINNING at the corner formed by the intersection of the Northerly side of East
45th Street with the Westerly side of Lexington Avenue; running
THENCE Northerly along the Westerly side of Lexington Avenue 200 feet 10 inches
to the Southerly side of East 46th Street;
THENCE Westerly along the Southerly side of East 46th Street 325 feet;
THENCE Southerly parallel with the Westerly side of Lexington Avenue 200 feet 10
inches to the Northerly side of East 45th Street; and
THENCE Easterly along the Northerly side of East 45th Street 325 feet to the
corner aforesaid, the point or place of BEGINNING.
EXCEPTING therefrom so much of the described premises as was reserved to the
grantor (Trustees of Penn Central) by deed recorded in Reel 442 P. 1353.
TOGETHER with the easements set forth in said deed.
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Exhibit C
Deposits
To be Inserted on Effective Date
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<PAGE>
EXHIBIT F
ASSIGNMENT OF CONTRACTS
ASSIGNMENT AND ASSUMPTION AGREEMENT
(237 Park Contracts)
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment")
is made as of October 10, 1996, by and between 237 PARK AVENUE
ASSOCIATES, L.L.C., a New York limited liability company ("Assignor"), and 237
PARK PARTNERS, L.P., a Delaware limited partnership ("Assignee").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and
sufficiency of which are hereby acknowledged, Assignor hereby grants, sells,
conveys, transfers and assigns unto Assignee all of Assignor's rights, title and
interest in, to and under any and all of the following items, to the extent that
they are related to that certain real property located in New York, New York,
which real property is more particularly described on Exhibit A attached hereto
and incorporated herein by this reference (the "Real Property"):
(a) those contracts and agreements described on Exhibit B
attached hereto and incorporated herein by this reference;
(b) warranties, guarantees and indemnities (including,
without limitation, those for workmanship, materials and performance)
which exist or may hereafter exist, from, by or against any contractor,
subcontractor, manufacturer, laborer or supplier of labor, materials or
other services relating to the Real Property or any improvements
located thereon;
(c) plans, drawings, and specifications for the improvements
located on the Real Property
(d) all trademarks, tradenames (excluding the tradenames
"O&Y" or "Olympia & York"), contract rights, guarantees, licenses,
approvals, certificates, permits or warranties used or useful in
connection with the foregoing; and
(e) any tax certiorari proceedings (the "Tax Proceedings"),
if any, which may be pending with respect to the Real Property and any
improvements thereon, and all refunds of real estate taxes payable in
respect of the Real Property as a result of the Tax Proceedings now
pending or hereafter brought and relating to the period prior to the
date hereof.
Assignee hereby accepts the foregoing assignment and assumes
any executory obligations of Assignor in connection with the contracts and
agreements described in paragraph (a) above and relating to the period after the
date hereof and prior to the date hereof to the extent not released pursuant to
the Assignor's Plan of Reorganization.
Assignor hereby covenants that it will, at any time and from
time to time upon written request therefor, at Assignee's sole expense and
without the assumption of any additional liability therefor, execute and deliver
to Assignee, and its successors and assigns, any new or confirmatory instruments
and take such further acts as Assignee may reasonably request to fully evidence
the assignment contained herein and to enable Assignee, and its successors and
assigns, to fully realize and enjoy the rights and interests assigned hereby,
including, but not limited to Assignor taking any action as Assignee may
reasonably require in connection with the substitution of Assignee as the named
party in the Tax Proceedings.
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The provisions of this Assignment shall be binding upon, and
shall inure to the benefit of, the successors and assigns of Assignor and
Assignee, respectively.
Except as set forth herein, this Assignment is made without
recourse, representation or warranty.
This Assignment may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which when taken together
shall constitute one and the same instrument. The signature page of any
counterpart may be detached therefrom without impairing the legal effect of the
signature(s) thereon, provided such signature page is attached to any other
counterpart identical thereto except having additional signature pages executed
by other parties to this Assignment attached thereto.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment to be duly executed, as of the day and year first above written.
ASSIGNOR:
237 PARK AVENUE ASSOCIATES, L.L.C., a
New York limited liability company
By: O&Y NY Building Corp., managing member
By:_________________________
Name:
Title:
ASSIGNEE:
237 PARK PARTNERS, L.P., a
Delaware limited partnership
By: Metropolis Realty Trust, Inc., general
partner
By:_________________________
Name:
Title:
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Exhibit A
Description of Property
ALL that certain lot, piece or parcel of land, excepting so much thereof as is
excepted and reserved herein, situate, lying and being in the Borough of
Manhattan, City, County and State of New York, bounded and described as follows:
BEGINNING at the corner formed by the intersection of the Northerly side of East
45th Street with the Westerly side of Lexington Avenue; running
THENCE Northerly along the Westerly side of Lexington Avenue 200 feet 10 inches
to the Southerly side of East 46th Street;
THENCE Westerly along the Southerly side of East 46th Street 325 feet;
THENCE Southerly parallel with the Westerly side of Lexington Avenue 200 feet 10
inches to the Northerly side of East 45th Street; and
THENCE Easterly along the Northerly side of East 45th Street 325 feet to the
corner aforesaid, the point or place of BEGINNING.
EXCEPTING therefrom so much of the described premises as was reserved to the
grantor (Trustees of Penn Central) by deed recorded in Reel 442 P. 1353.
TOGETHER with the easements set forth in said deed.
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Exhibit B
Contracts assumed by Assignor pursuant to the Plan and by Assignee
pursuant to the Contribution Agreement, including service, brokerage and labor
agreements
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EXHIBIT G
BILL OF SALE
BILL OF SALE
(237 Park)
KNOW ALL MEN BY THESE PRESENTS, 237 PARK AVENUE ASSOCIATES, L.L.C., a
New York limited liability company, ("Seller"), for and in consideration of the
sum of Ten ($10) Dollars, the receipt of which is hereby acknowledged, paid by
237 PARK PARTNERS, L.P., a Delaware limited partnership ("Purchaser"), has
granted, sold, transferred and delivered, and does grant, sell, transfer and
deliver unto Purchaser, its successors and assigns, the following
All machinery, apparatus, equipment, fixtures, fittings,
furniture, furnishings and other personal property of every
kind and nature owned by Seller or in which Seller has or
shall have an interest now or hereafter located on that
certain real property located in New York, New York, which
real property is more particularly described on Exhibit A
attached hereto and incorporated herein by this reference, or
appurtenances thereto and usable in connection with the
present or future operation and occupancy of said building and
property, excluding trade fixtures owned by tenants,
subtenants, lessees, sublessees, concessionaires, licensees
and other occupants of said building and excluding equipment
owned by utilities or contractors and Seller's proprietary
computer software.
To have and to hold the same unto Purchaser forever.
Seller represents and warrants to Purchaser that the Personal
Property being conveyed hereby is being transferred free and clear of liens and
encumbrances, except for the lien of that certain Mortgage Spreader and
Consolidation Agreement and Trust Indenture dated as of March 20, 1984 between
Fame Associates, O&Y Equity Corp., Olympia & York Holdings Corporation (the
predecessors-in-interest to Assignor), Olympia & York 2 Broadway Land Company,
Olympia & York 2 Broadway Company and Manufacturers Hanover Trust Company, as
the same may have been amended form time to time.
Seller hereby covenants that it will, at any time and from
time to time upon written request therefor, at Purchaser's sole expense and
without the assumption of any additional liability thereby, execute and deliver
to Purchaser, its nominees, successors and/or assigns, any new or confirmatory
instruments and do and perform any other acts which Purchaser, its nominees,
successors and/or assigns, may reasonably request in order to fully assign and
transfer to and vest in Purchaser, its nominees, successors and/or assigns all
of the Personal Property intended to be transferred and assigned hereby.
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All references to "Seller" and "Purchaser" herein shall be
deemed to include their respective nominees, successors and/or assigns, where
the context permits.
Dated:October 10, 1996
SELLER: 237 PARK AVENUE ASSOCIATES, L.L.C., a
New York limited liability company
By: O&Y NY Building Corp., managing member
By:________________________
Name:
Title:
PURCHASER: 237 PARK PARTNERS, L.P., a
Delaware limited partnership
By: Metropolis Realty Trust, Inc., general
partner
By:___________________________
Name:
Title:
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Acknowledgements
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EXHIBIT A
Legal Description
ALL that certain lot, piece or parcel of land, excepting so much thereof as is
excepted and reserved herein, situate, lying and being in the Borough of
Manhattan, City, County and State of New York, bounded and described as follows:
BEGINNING at the corner formed by the intersection of the Northerly side of East
45th Street with the Westerly side of Lexington Avenue; running
THENCE Northerly along the Westerly side of Lexington Avenue 200 feet 10 inches
to the Southerly side of East 46th Street;
THENCE Westerly along the Southerly side of East 46th Street 325 feet;
THENCE Southerly parallel with the Westerly side of Lexington Avenue 200 feet 10
inches to the Northerly side of East 45th Street; and
THENCE Easterly along the Northerly side of East 45th Street 325 feet to the
corner aforesaid, the point or place of BEGINNING.
EXCEPTING therefrom so much of the described premises as was reserved to the
grantor (Trustees of Penn Central) by deed recorded in Reel 442 P. 1353.
TOGETHER with the easements set forth in said deed.
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EXHIBIT H
LETTERS TO TENANTS AND VENDORS
237 PARK AVENUE ASSOCIATES, L.L.C.
c/o Olympia & York Companies (U.S.A.)
237 Park Avenue
New York, New York 10017
____________ ___, 1996
All Tenants of 237 Park Avenue
New York, New York
Re: 237 Park Avenue, New York, New York
Ladies and Gentlemen:
Please take notice that the property known as 237 Park Avenue,
New York, New York (the "Property") has been transferred to 237 Park Partners,
L.P. and in connection therewith, the undersigned has assigned to 237 Park
Partners, L.P. all of its right, title and interest in your lease at the
Property.
All notices and future rental or other payments under your
lease (including any payments now due or overdue) shall be made payable to 237
Park Partners, L.P., and be delivered to:
237 Park Partners, L.P.
Attn:
Furthermore, please be advised that (i) any security deposit
under your lease has been transferred to 237 Park Partners, L.P. and (ii) 237
Park Partners, L.P. needs to be added as an additional insured to the insurance
policies which you are required to carry under your lease. Certificates of
insurance
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<PAGE>
naming 237 Park Partners, L.P. as additional insured should be delivered to
landlord immediately.
Very truly yours,
237 PARK AVENUE ASSOCIATES, L.L.C.
By: O&Y NY Building Corp., managing member
By:___________________________
Name:
Title:
ACKNOWLEDGED:
237 PARK PARTNERS, L.P.
By: Metropolis Realty Trust, Inc.,
general partner
By:______________________
Name:
Title:
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EXHIBIT I
FIRPTA CERTIFICATE
FIRPTA Affidavit
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, a Notary Public in and for the State and County
shown above, personally appeared , who, by me being first duly
sworn, deposes and says as follows:
I understand that Section 1445 of the Internal Revenue Code
provides that a transferee of a U.S. real property interest must withhold tax if
the transferor is a foreign person. To inform 237 Park Partners, L.P., a
Delaware limited partnership ("Transferee"), that withholding of tax is not
required upon disposition of a U.S. real property interest in 237 Park Avenue
Associates, L.L.C. ("Transferor"), the undersigned hereby swears, affirms and
certifies the following:
1. That I am of Transferor;
2. Transferor is not a foreign person, foreign corporation,
foreign partnership, foreign trust or foreign estate (as such terms are defined
in the Internal Revenue Code Income Tax Regulations);
3. Transferor's U.S. employer identification number is ;
4. Transferor's address is c/o Olympia & York Companies
(U.S.A.), 237 Park Avenue, New York, New York 10017.
I understand that this certification may be disclosed to the
Internal Revenue Service by Transferee and that any false statement contained
herein may be punished by fine, imprisonment or both.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign these documents on
behalf of Transferor.
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IN WITNESS WHEREOF, Transferor has duly executed this Affidavit on the
date written below.
237 PARK AVENUE ASSOCIATES, L.L.C., a
New York limited liability company
By: O&Y NY Building Corp., managing member
By:__________________________
Name:
Title:
Sworn to before me this
day of , 1996
- -------------------------------
Notary Public
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EXHIBIT J
SCHEDULE OF LEASES/RENT ROLL
To reflect Leases to be assumed by the 237 Debtor pursuant to
the Plan or entered into in accordance with the Cash
Collateral Stipulation. Rent roll will be prepared by LLC as
of a date within ten (10) days of the Effective Date.
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EXHIBIT K
CONTRACTS
To reflect Contracts to be assumed by the 237 Debtor pursuant
to the Plan or entered into in the ordinary course of
business, and not in violation of the Cash Collateral
Stipulation.
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EXHIBIT L
TAX CERTIORARI PROCEEDINGS
[To be provided by LLC as of the Effective Date]
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EXHIBIT M
BROKERAGE COMMISSIONS
NONE
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EXHIBIT N
PENDING LITIGATION
[To be provided by LLC as of the Effective Date]
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EXHIBIT O
EMPLOYEES/LABOR AGREEMENTS
Terms of Employment of Non-Union Employees
1. Vacation. An employee is entitled to ten days vacation each year,
fifteen days after five years and twenty days after twenty years.
2. Holidays. The office is closed for nine major holidays and each
employee is also entitled to three floating holidays.
3. Personal and Sick Days. Each employee is entitled to three personal
days and ten paid sick days.
4. Termination/Severance Pay. In case of a termination for reasons other
than malfeasance, an employee is to receive termination pay equal to
one week's salary per full six months of employment up to five years.
Above five years, severance pay is based on a scheduled number of weeks
which can be increased at the discretion of the employer.
The current accrued vacation and severance pay for non-union employees
of 237 Park and 1290 Avenue of the Americas is set forth on the
attached schedule.
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EXHIBIT P
ENVIRONMENTAL MATTERS
NONE
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<TABLE>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE I CONTRIBUTION OF THE PROPERTY............................................. 2
Section 1.1 Transfer of the Property............................................. 2
Section 1.2 Issuance of Partnership Interest..................................... 3
ARTICLE II THE CLOSING.............................................................. 3
Section 2.1 Closing.............................................................. 3
Section 2.2 Conditions to the Partnership's Obligations.......................... 3
Section 2.3 Grantor's Closing Deliveries......................................... 4
Section 2.4 The Limited Partner's Closing Deliveries............................. 6
Section 2.5 Further Assurances................................................... 6
Section 2.6 Closing Expenses..................................................... 7
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF GRANTOR..................... 7
Section 3.1 Due Organization .................................................... 7
Section 3.2 Performance and Enforceability....................................... 7
Section 3.3 Consents and Filings................................................. 8
Section 3.4 Grantor's Ownership of the Property.................................. 8
Section 3.5 Rent Roll and Leases................................................. 8
Section 3.6 Contracts............................................................ 8
Section 3.7 Real Estate Taxes.................................................... 8
Section 3.8 Brokerage Commissions................................................ 8
Section 3.9 Condemnation......................................................... 8
Section 3.10 Litigation........................................................... 9
Section 3.11 Zoning............................................................... 9
Section 3.12 Employees............................................................ 9
Section 3.13 Environmental Matters................................................ 9
Section 3.14 Personal Property.................................................... 10
Section 3.15...................................................................... 10
ARTICLE IV MISCELLANEOUS............................................................ 10
Section 4.1 Notices.............................................................. 10
Section 4.2 Survival; As Is...................................................... 11
Section 4.3 Assignment........................................................... 11
Section 4.4 Captions; Counterparts............................................... 11
Section 4.5 Enforceability; Severability......................................... 11
Section 4.6 Entire Agreement..................................................... 12
Section 4.7 Applicable Law....................................................... 12
Section 4.8 Cooperation.......................................................... 12
EXHIBITS
EXHIBIT A LEGAL DESCRIPTION OF THE PREMISES............................... 1
EXHIBIT B LIST OF PERMITS................................................. 1
EXHIBIT C PERMITTED ENCUMBRANCES.......................................... 1
EXHIBIT D FORM OF DEED.................................................... 1
EXHIBIT E ASSIGNMENT OF LEASES............................................ 1
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EXHIBIT F ASSIGNMENT OF CONTRACTS......................................... 1
EXHIBIT G BILL OF SALE.................................................... 1
EXHIBIT H LETTERS TO TENANTS AND VENDORS.................................. 1
EXHIBIT I FIRPTA CERTIFICATE
EXHIBIT J SCHEDULE OF LEASES/RENT ROLL.................................... 1
EXHIBIT K CONTRACTS....................................................... 1
EXHIBIT L TAX CERTIORARI PROCEEDINGS...................................... 1
EXHIBIT M BROKERAGE COMMISSIONS........................................... 1
EXHIBIT N PENDING LITIGATION.............................................. 1
EXHIBIT O EMPLOYEES/LABOR AGREEMENTS...................................... 1
EXHIBIT P ENVIRONMENTAL MATTERS........................................... 1
</TABLE>
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-ii-
1290 PROPERTY CONTRIBUTION AGREEMENT
among
237/1290 UPPER TIER ASSOCIATES, L.P.,
237/1290 LOWER TIER ASSOCIATES, L.P.
and
1290 PARTNERS, L.P.
Dated as of October 10, 1996
C/M: 11764.0001 359505.8
<PAGE>
1290 PROPERTY CONTRIBUTION AGREEMENT
AGREEMENT, dated as of October 10, 1996, between 237/1290
UPPER TIER ASSOCIATES, L.P., a Delaware limited partnership having an office c/o
Olympia & York Companies (U.S.A.), 237 Park Avenue, 12th Floor, New York, New
York 10017 (the "Grantor"), 237/1290 LOWER TIER ASSOCIATES, L.P., a Delaware
limited partnership having an office c/o Victor Capital Group, L.P., 885 Third
Avenue - 12th Floor, New York, New York 10022, Attn: John Klopp (the "Limited
Partner") and 1290 PARTNERS, L.P., a Delaware limited partnership having an
office c/o Victor Capital Group, L.P., 885 Third Avenue - 12th Floor, New York,
New York 10022, Attn: John Klopp (the "Partnership").
W I T N E S S E T H:
WHEREAS, Grantor is the fee owner of the land commonly known
as 1290 Avenue of the Americas, New York, New York and more particularly
described in Exhibit A annexed hereto (the "Land") and the improvements located
thereon;
WHEREAS, on April 23, 1996, cases were commenced against 1290
Associates, L.L.C. and 237 Park Avenue Associates, L.L.C. (collectively, the
"Debtors") under Chapter 11 of title 11 of the United States Code in the United
States Bankruptcy Court for the Southern District of New York (the "Bankruptcy
Court");
WHEREAS, pursuant to the Second Amended Joint Plan of
Reorganization of the Debtors filed with the Bankruptcy Court (the "Plan"), (i)
the Debtors have merged into Grantor pursuant to that certain Agreement and Plan
of Merger dated as of the date hereof (the "Merger Agreement"), and (ii)
Grantor, as successor to the Debtors, has agreed to transfer and contribute its
right, title and interest in and to the Land, the improvements thereon and the
other property described herein to the Limited Partner and the Limited Partner
has agreed to issue to Grantor a five percent (5%) interest as a limited partner
in the Limited Partner;
WHEREAS, pursuant to the Plan, the Limited Partner has agreed
to transfer and contribute to the Partnership the Limited Partner's right, title
and interest in and to the property contributed by Grantor to the Limited
Partner and the Partnership has agreed to issue to the Limited Partner a
ninety-nine percent (99%) interest as a limited partner in the Partnership; and
WHEREAS, by order dated September 20, 1996, the Bankruptcy
Court confirmed the Plan and authorized the transactions contemplated hereby
(the "Confirmation Order").
NOW, THEREFORE, in consideration of the mutual promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor, the Limited Partner and
the Partnership hereby agree as follows:
C/M: 11764.0001 359505.8
<PAGE>
ARTICLE I
CONTRIBUTION OF THE PROPERTY
Section 1.1 Transfer of the Property. Grantor, concurrently
herewith, shall transfer, assign, convey and contribute to the Limited Partner
(subject to the direction of the Limited Partner provided in paragraph 1.2(b)
below to make such transfer directly to the Partnership), all of Grantor's
right, title and interest, free and clear of any liens, charges, encumbrances,
security interests, options or rights or claims with respect thereto (except for
encumbrances and other matters permitted hereunder), in and to the following
real and personal property (herein collectively referred to as the "Property"):
(a) the Land and the buildings and improvements situated
thereon (the "Improvements", the Land and the Improvements being collectively
referred to as the "Real Property");
(b) any land lying in the bed of any highway, street, road or
avenue, open or proposed, in front of or adjoining all or any part of the Real
Property, to the center line thereof, and to any award made, or to be made, in
lieu thereof, and in and to any unpaid award for damage to the Real Property by
reason of change of grade of any such highway, street, road or avenue;
(c) easements, rights and appurtenances belonging or
appertaining to the Real Property, including, without limitation, all
development rights, air rights, zoning rights and any adjacent vaults, alleys,
strips or gores of land, sidewalks, driveways and parking areas;
(d) all fixtures, machinery, equipment and supplies located at
or used in connection with the Real Property and all intangible personal
property owned by Grantor in connection with the ownership, development,
leasing, management, use or operation of the Real Property, including but not
limited to assignable contract rights, brochures, manuals, advertising material,
the trade name "Park Avenue Atrium" and the right to pursue any pending tax
certiorari proceedings relating to the Real Property and to commence such
proceedings with respect to the period prior to the date hereof, but excluding
the proprietary computer software program used by Grantor and the "O&Y" or
"Olympia & York" trade names (collectively, the "Personalty");
(e) all of Grantor's right, title and interest as lessor in
all leases, licenses and other agreements to occupy all or any part of the Real
Property, together with any separate guaranties of such leases, licenses and
other agreements (collectively, the "Leases") together with all rents and other
sums due, accrued or to become due under each such Lease and all lease security
deposits and notes or other evidences of indebtedness from tenants under Leases
and related thereto;
(f) all of Grantor's right, title and interest in and to all
service, supply and maintenance contracts, equipment leases and all other
contracts and agreements (including purchase orders) relating to the ownership,
development, leasing, operation, management or maintenance of the Real Property,
other than the Property Management Agreement with O&Y Management Corp. which is
being terminated pursuant to the Plan (the "Contracts");
(g) all surveys, plans, specifications, drawings and the like
used in the construction, improvement, alteration or repair of the Improvements
(the "Plans and Specifications") and all
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unexpired claims, warranties, guarantees, and sureties, if any, received in
connection with the construction or improvement or fixtures or equipment on the
Real Property, if and to the extent assignable ("Warranties"); and
(h) all licenses, permits, certificates of occupancy, and
franchises (including, without limitation, those listed on Exhibit B attached
hereto and incorporated herein) issued by any federal, state, county or
municipal authority relating to the use, maintenance, or operation of the Real
Property (the "Permits"), running to, or in favor of Grantor or the Real
Property, but only to the extent such transfer is not prohibited by law.
Section 1.2 Issuance of Partnership Interests. (a) In
consideration of the contribution of the Property by Grantor to or at the
direction of the Limited Partner, and in reliance upon the representations,
warranties and covenants made herein by Grantor, the Limited Partner is issuing
to Grantor a five percent (5%) interest as a limited partner in the Limited
Partner as more fully set forth in the agreement of limited partnership of the
Limited Partner (the "Upper Tier LP Interest").
(b) The Limited Partner hereby directs Grantor to transfer the
Property directly to the Partnership with the purpose and intent of such
transfer constituting the contribution of the Property by the Limited Partner to
the Partnership. In consideration, in part, of the contribution of the Property
by the Limited Partner to the Partnership, and in reliance upon the
representations, warranties and covenants made herein by Grantor, the
Partnership is issuing to the Limited Partner a ninety-nine percent (99%)
interest as a limited partner in the Partnership as more fully set forth in the
agreement of limited partnership of the Partnership (the "Lower Tier LP
Interest")
ARTICLE II
THE CLOSING
Section 2.1 Closing. The Closing shall be held concurrently
herewith.
Section 2.2 Conditions to the Partnership's Obligations. (a)
The Limited Partner's and the Partnership's obligations to accept the Property
and issue the Upper Tier LP Interest and the Lower Tier LP Interest,
respectively, are subject to the satisfaction by Grantor (or waiver by the
Limited Partner and the Partnership) of each of the following conditions:
(i) Representations and Warranties Correct; Covenants
Performed. All representations and warranties of Grantor made in, or pursuant
to, this Agreement shall be true and correct in all material respects and
Grantor shall have performed all of its covenants hereunder in all material
respects.
(ii) Acquisition of the Property, Title Insurance. The
Partnership shall acquire good and valid title to the Property free and clear of
any liens, charges, encumbrances, security interests, options or rights or
claims with respect thereto (collectively, "Encumbrances"), other than those
matters affecting title to the Real Property described on Exhibit C annexed
hereto ("Permitted Encumbrances"). To the extent the Partnership elects, a
nationally recognized title company or title companies (the "Title Company")
shall issue a policy of title insurance (the "Title Policy") in an amount
reasonably satisfactory to the Partnership insuring in the Partnership, all
right, title and
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interest in and to the Real Property in fee simple absolute, subject only to the
Permitted Encumbrances.
(iii) Plan Confirmation, No Injunction. The Bankruptcy Court
shall have issued its order confirming the Plan and there shall not be in effect
any preliminary or permanent injunction, decree or other order restraining or
prohibiting the consummation of the transactions contemplated by this Agreement.
(iv) No Hazardous Material. No Hazardous Material (as defined
in Section 3.14 below) shall be present at the Property other than those
customarily used, stored and contained in quantities, and in such manner, that
do not violate any law or regulation relating thereto (including, without
limitation, heating oil, cleaning fluids and supplies, refrigerants and paint)
or as otherwise disclosed in Section 3.13 below or in Exhibit P hereto.
(v) Other Conditions. All other conditions to Closing set
forth in this Agreement have been satisfied.
(b) Notwithstanding the provisions of paragraph (a) above and Section
1.1, the Limited Partner and the Partnership shall be obligated to accept the
Property if there is an Encumbrance (other than a Permitted Encumbrance)
affecting title to the Property which the Title Company is unwilling to omit as
an exception in the Title Policy or if there are Hazardous Materials at the
Property, provided that the aggregate of (i) the amount required to satisfy,
discharge or otherwise remove the Encumbrance (or if less, the reduction in
value of the Property occurring by reason of the existence of such Encumbrance),
(ii) the amount required to remediate to a level required by the applicable
governmental authority in a manner reasonably acceptable to the Partnership (but
only to the extent such remediation is legally required) any environmental
matter (x) not disclosed in the Environmental Report (as defined in Section 3.13
below) or in Exhibit P to the form of this Agreement which was filed on August
22, 1996, together with the Plan or (y) with respect to which a tenant, utility
or a governmental agency is responsible, and together with (iii) all such
amounts similarly outstanding under the Contribution Agreement of even date
herewith relating to the property known as 237 Park Avenue, New York, New York,
does not exceed $2,625,000.
Section 2.3 Grantor's Closing Deliveries. Grantor shall
deliver the following documents to the Partnership (as directed by the Limited
Partner herein) at the Closing:
(a) a recordable bargain and sale deed without covenants
against grantor's acts in New York statutory form, executed and acknowledged by
Grantor conveying the Real Property to the Partnership in the form annexed
hereto as Exhibit D;
(b) an assignment of all right, title and interest of Grantor
under the Leases, which shall include the Partnership's assumption of Grantor's
obligations under the Leases accruing from and after the date hereof and, to the
extent not discharged under the Plan and Confirmation Order, prior to the date
hereof, in the form annexed hereto as Exhibit E;
(c) an assignment of all right, title and interest of Grantor
under the Contracts, which shall include the Partnership's assumption of
Grantor's obligations under the Contracts accruing from and after the date
hereof and, to the extent not discharged under the Plan and Confirmation Order,
prior to the date hereof, prior to the date hereof, in the form annexed hereto
as Exhibit F;
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(d) a bill of sale conveying Grantor's right title and
interest in and to the Personalty, in the form annexed hereto as Exhibit G;
(e) the RET Return and the RPT Return (all as defined in
Section 2.6 below), executed and acknowledged by Grantor, together with the
payment, if any, required by Section 2.6 below which shall be paid from closing
cash under the Plan;
(f) such further instruments as may be necessary to be
executed by Grantor to, or for the benefit of, the Debtors or the Partnership to
record the deed;
(g) a copy of the order of the Bankruptcy Court approving the
transfer of the Property to the Partnership;
(h) a letter to tenants under Leases and vendors under
Contracts in the form annexed hereto as Exhibit H, advising them of the transfer
of the Property to the Partnership and directing them to make all payments and
to render performance to the Partnership;
(i) to the extent in the possession or control of Grantor, its
United States affiliates and agents, originals (or copies to the extent that
originals are not available) of all Leases, Contracts, Warranties, Permits and
Plans and Specifications;
(j) copies of the most recently issued real estate tax bills
for the Premises, Grantor's files and records regarding pending tax certiorari
claims relating to the Real Property, all other books, records, bills, invoices,
lease files, credit reports and other documents related to the ownership,
development, operation, management, use, maintenance or leasing of the Real
Property in each case in the possession of Grantor, its United States affiliates
and agents that the Partnership, in its reasonable discretion, requires.
(k) a written certification ("FIRPTA Certificate") in form
annexed hereto as Exhibit I, which certification shall be in compliance with the
Tax Reform Act of 1984 (the "Act") and the regulations thereunder that are
imposed by the Foreign Investment in Real Property Tax Act ("FIRPTA") and
certifying that Grantor is not a person or entity subject to withholding under
FIRPTA and the Act;
(l) such customary and reasonable affidavits, documents or
instruments as the Title Company may require in order to issue the Title Policy;
(m) such evidence as may be reasonably required by the Title
Company and the Partnership of the due authorization, execution and delivery of
this Agreement and the other documents to be executed in connection with this
Agreement, including, without limitation, a certified copy of Grantor's
certificate of limited partnership and agreement of limited partnership;
(n) all security deposits delivered to Grantor under the
Leases which have not been previously applied or repaid to the tenants
thereunder;
(o) all keys and security alarm codes, if any, to the Real
Property in the possession of Grantor, its United States affiliates and agents;
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(p) a letter from the actuary for any defined benefit pension
plan covering the union employees described in Exhibit O that participate in any
such plan stating that there is no withdrawal liability assuming a withdrawal as
of June 30, 1996 or, if there is any, it is not greater than $100,000 (together
with any similar liability with respect to 237 Park Avenue), provided that if
such actuary is unable to deliver such a letter due to information not then
being available, Grantor shall deliver such a letter with respect to a
withdrawal as of a date not earlier than June 30,1995 and shall deliver evidence
that it has made all contributions required of it to such plan since such date;
and
(q) copies of all lien waivers, if any, in the possession or
control of Grantor, its United States affiliates and agents relating to material
work currently being performed at the Property.
Section 2.4 The Limited Partner's Closing Deliveries. (a) The
Limited Partner shall deliver to Grantor at the Closing copies of the Limited
Partner's Agreement of Limited Partnership and Certificate of Limited
Partnership.
(b) The Partnership's Closing Deliveries. (i) The Partnership
shall deliver the following documents to Grantor at the Closing:
(A) The Partnership's executed counterparts of the assignment
and assumption documents referenced in Section 2.3(b);
(B) The RET Return and the RPT Return, executed and
acknowledged by the Partnership; and
(C) unless the Partnership shall assume such obligations in
the assignment and assumption agreement referenced in Section 2.3(c), an
assumption by the Partnership or the Partnership's property manager of the labor
agreements described in Exhibit O annexed hereto. The Partnership hereby agrees
to offer and to cause the Partnership's property manager to offer to the
non-union employees of Grantor described in Exhibit O (other than the property
manager described therein) the choice of (x) employment (i) at the same wages
and rate of vacation and severance accrual as is currently applicable to such
employees as described in Exhibit O, (ii) with such other benefits as are
customarily paid by the Partnership or its property manager (and its
affiliates), and (iii) with assumption by the Partnership or such property
manager of such employee's existing benefits of accrued vacation and severance,
or (y) payment of the severance and accrued vacation costs described therein
except to the extent any such non-union employee rejects employment with the
Partnership or its property manager and accepts employment with any United
States affiliate of Grantor. The Grantor and the Partnership acknowledged that
the Debtor, on or about the date hereof, shall pay from the moneys held under
the Cash Collateral Stipulation, the accrued salary, vacation and severance
costs described in Exhibit O hereto for the property manager.
(ii) The Partnership shall deliver to the Limited Partner at
the Closing copies of the Partnership's Agreement of Limited Partnership and
Certificate of Limited Partnership.
Section 2.5 Further Assurances. Grantor, the Limited Partner
and the Partnership, at the Effective Date, or at any time or from time to time
thereafter, upon request of another party, will execute such additional
instruments, documents or certificates as such other party reasonably requests
in order to effectuate the transactions contemplated hereby.
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Section 2.6 Closing Expenses.
(a) Title and Survey. The Partnership shall bear all costs of
obtaining the Title Policy, as well as any costs in updating the existing survey
of the Real Property.
(b) Real Estate Transfer Tax. Grantor, Limited Partner and the
Partnership agree to comply timely with the requirements of Article 31 of the
New York Tax Law and the regulations applicable thereto, as the same may be
amended from time to time, with respect to the transactions contemplated by the
Merger Agreement and this Agreement. Grantor and, if required, Limited Partner
and the Partnership shall swear to and deliver the return required by said
statute and the regulations issued pursuant to the authority thereof (the "RET
Return"), it being acknowledged by the parties that Grantor intends to file an
RET Return stating that, pursuant to the provisions of Section 1146(c) of the
federal Bankruptcy Code, the transfer of the Property pursuant to the Merger
Agreement and this Agreement shall be exempt from the Real Estate Transfer Tax
imposed by said Article 31.
(c) Real Property Transfer Tax. Grantor, Limited Partner and
the Partnership agree to comply timely with the requirements of Chapter 21 of
Title 11 of the Administrative Code of the City of New York and the regulations
applicable thereto, as the same may be amended from time to time, with respect
to the transactions contemplated by the Merger Agreement and this Agreement.
Grantor, and, if required, Limited Partner and the Partnership shall swear to
and deliver the return required by said statute and the regulations issued
pursuant to the authority thereof (the "RPT Return"), it being acknowledged by
the parties that Grantor intends to file an RPT Return stating that, pursuant to
the provisions of Section 1146(c) of the federal Bankruptcy Code, the transfer
of the Property pursuant to the Merger Agreement and this Agreement shall be
exempt from the Real Estate Transfer Tax imposed by said Chapter 21.
(d) Recording Charges. Grantor shall pay as an administrative
expense all recording charges payable in connection with the recording of the
deed and other documents to be recorded hereunder.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF GRANTOR
Grantor hereby represents, warrants and covenants to the
Partnership that the following statements are true and accurate:
Section 3.1 Due Organization and Authority. Grantor is a
limited partnership duly organized, validly existing and in good standing under
the law of the State of Delaware and has the power and authority to enter into
and to perform this Agreement. The execution, delivery and performance of this
Agreement by Grantor has been duly authorized by all requisite actions and
proceedings of Grantor, subject to issuance by the Bankruptcy Court of an order
confirming the Plan.
Section 3.2 Performance and Enforceability. The execution,
delivery and performance by Grantor of this Agreement and any related
instruments and documents do not and will not (i) contravene the agreement of
limited partnership of Grantor or (ii) result in any violation by
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Grantor of any law, rule or regulation applicable to it or the Property or
result in the creation of any lien, charge, encumbrance, security interest,
option or right or claim with respect thereto other than a Permitted
Encumbrance.
Section 3.3 Consents and Filings. No consent, license, permit,
approval, order or authorization of, or filing with any governmental or judicial
authority is required to be obtained or made in connection with the execution,
delivery or performance by Grantor of this Agreement or the consummation of the
transactions to be consummated by Grantor hereunder other than an order of the
Bankruptcy Court confirming the Plan.
Section 3.4 Grantor's Ownership of the Property. Grantor is
the sole legal and beneficial owner, with sole power to dispose of, the
Property. Grantor is not a "foreign person" within the meaning of FIRPTA.
Section 3.5 Rent Roll and Leases. As of the date hereof, there
are no leases or occupancy agreements affecting the Property or any part thereof
in which the owner of the Property is the landlord/licensor except for the
Leases identified on Exhibit J annexed hereto. There are no leases, subleases or
other occupancy agreements affecting the Property under which Grantor or any
affiliate is the tenant, subtenant or licensee. To the knowledge of Grantor, the
Rent Roll annexed hereto as Exhibit J is complete and correct in all material
respects as of the date thereof and accurately reflects all arrearages as of
such date. No option or other right to purchase all or any portion of the
Property has been granted by Grantor or an affiliated predecessor in interest to
any tenant or other party and Grantor has no knowledge of any such option or
other right having been granted by any other prior owner of the Property.
Exhibit J accurately reflects all security deposits currently held by Grantor
under the Leases.
To Grantor's knowledge, Grantor has delivered to the
Partnership true, correct and complete original counterparts of all the Leases
and all modifications, amendments and supplements thereof in its possession or
in the possession of its agents or United States affiliates. To Grantor's
knowledge, all of the leases identified in Exhibit J annexed hereto are in full
force and effect and Grantor is the lawful holder of the lessor's interest in
Leases.
Section 3.6 Contracts. To the knowledge of Grantor, Exhibit K
annexed hereto accurately reflects all Contracts affecting the ownership or
operation of the Property or the Personalty that are being assumed by the
Debtors under the Plan and by the Partnership hereunder, including Contracts for
work being performed at the Property and brokerage agreements.
Section 3.7 Real Estate Taxes. No tax certiorari proceedings
are currently pending with respect to the Property or Grantor except as
described on Exhibit L hereto.
Section 3.8 Brokerage Commissions. To the knowledge of
Grantor, all brokerage commissions which are on the date hereof due and payable
with respect to any Leases have been fully paid or have been released under the
Plan, except for the brokerage commissions set forth in Exhibit M annexed
hereto.
Section 3.9 Condemnation. To the knowledge of Grantor, there
is no pending condemnation, expropriation, eminent domain, or similar proceeding
affecting all or any portion of the Property nor has Grantor received any notice
that any such proceeding is threatened.
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Section 3.10 Litigation. All actions, suits or proceedings
brought by Grantor or its affiliated predecessors in interest relating to the
Property, any Lease or Contract or relating to or arising out of the ownership,
management or operation of the Property, and pending in any court or before or
by any federal, state, county or municipal department, commission, board, bureau
or agency or other governmental instrumentality are described in Exhibit N
hereto. Grantor shall, at the Partnership's request, take such action as may be
required to assign its rights under such actions, suits or proceedings to the
Partnership and to cause the Partnership to be substituted as a named party
therein.
Section 3.11 Zoning. To the knowledge of Grantor, there are no
petitions, actions or hearings relating to or affecting the zoning or use of the
Real Property except as disclosed in writing to the Partnership concurrently
herewith.
Section 3.12 Employees. There are no persons at the Real
Property who are presently employed by Grantor other than those listed on
Exhibit O attached hereto and, other than as shown on Exhibit O, none of the
persons who are presently employed by Grantor are employed under any union or
other employment contract, written or otherwise.
Section 3.13 Environmental Matters. Grantor has received
copies of the Phase I Environmental Report dated June 27, 1994 as updated April
16, 1996 prepared by AquaTerra with respect to the environmental condition of
the Property (the "Environmental Report"). To the knowledge of Grantor: (i)
except as noted in the Environmental Report or in Exhibit P hereto, no portion
of the Property contains any hazardous, toxic or harmful material, substance,
waste or contamination, whether man-made or naturally occurring ("Hazardous
Materials") which is in need of remediation in order to prevent injury to
persons, material damage to property or criminal liability and (ii) Grantor and
its affiliated predecessors have received no written notice from any
governmental unit or other person that the Property is not or has not been in
compliance with Environmental Laws which has not been cured.
The term "Environmental Laws" shall mean and include all
federal, state and local statutes, ordinances, regulations and rules in effect
on the date hereof relating to environmental quality, contamination and
clean-up, including, without limitation, the Clean Air Act, 42 U.S.C. Section
7401 et seq.; the Clean Water Act, 33 U.S.C. Section 1251 et seq., and the Water
Quality Act of 1987; the Federal Insecticide, Fungicide, and Rodenticide Act 7
U.S.C. Section 136 et seq.; the Marine Protection, Research, and Sanctuaries
Act, 33 U.S.C. Section 1401 et seq.; the National Environmental Policy Act, 42
U.S.C. Section 4321 et seq.; the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq.; the Resource Conservation and Recovery Act 42 U.S.C.
Section 6901 et seq., as amended by the Hazardous and Solid Waste Amendments of
1984; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; the
Comprehensive Environmental Response, Compensation and Liability Act 42 U.S.C.
Section 9601 et seq., as amended by the Superfund Amendments and Reauthorization
Act, the Emergency Planning and Community Right-to-Know Act and the Radon Gas
and Indoor Air Quality Research Act; the Toxic Substances Control Act 15 U.S.C.
Section 2601 et seq.; the Atomic Energy Act, 42 U.S.C. Section 2011 et seq., and
the Nuclear Waste policy Act of 1982, 42 U.S.C. Section 10101 et seq.; and state
and local environmental statutes and ordinances, with implementing regulations
and rules in effect on the date hereof.
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Section 3.14 Personal Property. To the knowledge of Grantor,
the personal property being conveyed pursuant to the terms hereof is being
transferred free and clear of liens and encumbrances, except for the lien of
that certain Mortgage Spreader and Consolidation Agreement and Trust Indenture
dated as of March 20, 1984 between Fame Associates, O&Y Equity Corp., Olympia &
York Holdings Corporation (the predecessors-in-interest to Assignor), Olympia &
York 2 Broadway Land Company, Olympia & York 2 Broadway Company and
Manufacturers Hanover Trust Company, as the same may have been amended from time
to time.
Section 3.15 The term "knowledge" as used in this Article III
shall mean the actual knowledge of John Greve, John Moore, Roman Mykytink and,
with respect to Sections 3.5 and 3.8 only, Thomas Falus.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Notices. All notices, requests, demands and other
communications made hereunder shall be in writing and shall be deemed duly given
when personally delivered against receipt or after deposit with the post office
by registered or certified mail, postage prepaid and return receipt requested,
as follows, or to such other address or person as a party may hereafter
designate by notice to the other party:
If to Grantor: 237 Park Avenue Associates, L.L.C.
c/o Olympia & York Companies (U.S.A.)
237 Park Avenue, 12th Floor
New York, New York 10017
Attention: Managing Attorney
with a copy to: Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, New York 10153
Attention: Brian S. Rosen, Esq.
and: Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Joshua Mermelstein, Esq.
and: JMB/NYC Office Building Associates, L.P.
900 North Michigan Associates
Suite 1900
Chicago, Illinois 60611
Attention: Gary Nickele
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If to the Limited Partner: 237/1290 Lower Tier Associates, L.P.
c/o Victor Capital Group, L.P.
885 Third Avenue - 12th Floor
New York, New York 10022
Attention: John Klopp
with a copy to: Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Kenneth Friedman
If to the Partnership: 1290 Partners, L.P.
c/o Victor Capital Group, L.P.
885 Third Avenue - 12th Floor
New York, New York 10022
Attention: John Klopp
with a copy to: Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Kenneth Friedman
Section 4.2 Survival; As Is. Except for the provisions of
Section 2.5 and 4.8 hereof, none of the provisions of this Agreement or of any
document entered into pursuant to this Agreement shall survive the Closing.
Except as otherwise provided herein, the Property is being transferred to the
Partnership on an "as-is, where-is" basis. The acceptance by the Partnership of
the Deed and other documents to be delivered by Grantor hereunder at the Closing
pursuant to Section 2.3 shall be deemed to be full performance and discharge of
every obligation on the part of Grantor to be performed hereunder and all
provisions of this Agreement shall merge in the Deed, except as specifically
provided herein to the contrary.
Section 4.3 Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors, legal
representatives and permitted assigns, but this Agreement may not be assigned by
either party without the written consent of the other party or pursuant to an
order of the Bankruptcy Court.
Section 4.4 Captions; Counterparts. The captions in this
Agreement are for convenience of reference only, do not form a part hereof and
do not in any way modify, interpret or construe the intentions of the parties.
This Agreement may be executed in two or more counterparts, all of which shall
constitute one and the same instrument.
Section 4.5 Enforceability; Severability. If any one or more
of the provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remaining
provisions of this Agreement shall not be affected thereby. To the extent
permitted by applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
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Section 4.6 Entire Agreement. This Agreement sets forth the
entire understanding of the parties. This Agreement may be modified only by
written instrument duly executed by each party. No breach of any agreement,
warranty or representation shall be deemed waived unless expressly waived in
writing by the party who might assert such breach.
Section 4.7 Applicable Law. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of New
York without giving effect to its conflict of laws rules.
Section 4.8 Cooperation. The Partnership (at no cost or
expense to the Partnership) shall provide reasonable cooperation to Grantor, its
U.S. affiliates and their insurance carriers with respect to any insured claims
which may be brought against any such entity. Such cooperation shall include (i)
making personnel (including building managers previously employed by Grantor or
its U.S. Affiliates) available to meet with representatives of such insurance
carrier and attend depositions and/or trials at reasonable times, on reasonable
notice and at no cost to the Partnership for so long as such personnel are
employed by the Partnership (or its managing agent), and (ii) providing access
to (and copies of) building books and records, including building logs and
service contracts attributable to the period of Grantor's and its predecessors
in interest's period of ownership (to the extent available) as may be reasonably
requested and on reasonable notice and at no cost to the Partnership.
The provisions of this Section 4.8 shall survive the Closing.
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IN WITNESS WHEREOF, the parties hereto have duly executed or
caused this Agreement to be duly executed on the day and year first above
written.
237/1290 UPPER TIER ASSOCIATES, L.P.
By: O&Y NY Building Corp., its general partner
By:
Name:
Title:
237/1290 LOWER TIER ASSOCIATES, L.P.
By: Metropolis Realty Trust, Inc., its general
partner
By:
Name:
Title:
1290 PARTNERS, L.P.
By: 1290 GP Corp., its general partner
By:
Name:
Title:
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EXHIBIT A
LEGAL DESCRIPTION OF THE PREMISES
All that certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:
BEGINNING at the corner formed by the intersection of the Northerly side of West
51st Street with the Easterly side of Avenue of the Americas (formerly Sixth
Avenue); running
THENCE Easterly along the Northerly side of West 51st Street, 448 feet to a
point distant 472 feet Westerly from the corner formed by the intersection of
the Northerly side of West 51st Street with the Westerly side of Fifth Avenue;
THENCE Northerly parallel with Fifth Avenue and part of the distance through a
party wall, 100 feet 5 inches to the center line of the block between West 51st
Street and West 52nd Street;
THENCE Westerly along the center line of the block 2.0 feet to a point;
THENCE Northerly parallel with Fifth Avenue and part of the distance through a
party wall, 100 feet 5 inches to the Southerly side of West 52nd Street, at a
point therein distant 474 feet Westerly from the Southwest corner of West 52nd
Street and Fifth Avenue; running
THENCE Westerly along the Southerly side of West 52nd Street, 446 feet to the
Easterly side of Avenue of the Americas;
THENCE Southerly along the Easterly side of Avenue of the Americas 200 feet 10
inches to the Northerly side of West 51st Street at the point or place of
BEGINNING.
A-1
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<PAGE>
EXHIBIT B
LIST OF PERMITS
[To be completed on Effective Date]
B-1
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<PAGE>
EXHIBIT C
PERMITTED ENCUMBRANCES
A. All Leases identified in Exhibit J and the rights of tenants
thereunder, all subleases, if any, from such tenants, all
sub-subleases, if any, and all rights of Persons claiming directly or
indirectly through tenants identified in Exhibit J (e.g., a UCC-1
financing statement of a secured lender to a tenant, whether or not
such security interest or the recordation of such instrument is
permitted under such tenant's Lease or a mechanic's lien against the
tenant's interest in the Property in connection with work performed for
a tenant). No such party shall have any right or option to purchase all
or any portion of the Property.
B. Any non-disturbance agreement or other agreement between Trustee and
any tenant, subtenant or other person with an interest in the Property.
C. Any violation of a legal requirement.
D. The Indenture, as the same may be amended and restated in accordance
with the Plan and any Financing Documents running to the benefit of the
Trustee under the Indenture and any replacement mortgage and related
documents executed pursuant to the Plan.
E. Liens of any governmental authorities for taxes, assessments, rents,
charges, fees and other amounts payable with respect to the Property.
F. State of facts shown on survey by Earl B. Lovell-S.P. Belcher, Inc.
dated 6/7/63 and redated by Peter C. Hanson to 1/11/84 and such further
facts as an inspection of the Property might show.
G. Any other matter the Title Company is willing to delete as an exception
to title at no additional cost or premium.
H. Liens of mechanics, materialmen and laborers which pursuant to the Plan
the Partnership is to take title to the Property subject to.
I. "General", "standard" or "printed" exceptions in the Partnership's
title insurance commitment provided that the rights of tenants shall be
limited to their rights as tenants only under leases and without any
right or option to purchase the Property.
J. Any exceptions to title created by the Partnership or relating to the
Partnership.
K. Any matter which was consented to by the Trustee or a Majority of the
Noteholders.
L. The following additional title exceptions:
1. Covenants and Restrictions recorded in L. 826 Cp. 73, L. 936 Cp. 468,
L. 953 Cp. 200, L. 986 Cp. 316, L. 988 Cp. 200. Policy insures that the
aforesaid covenants and restrictions will not be enforced so as to
prohibit the maintenance and use of the
C-1
C/M: 11764.0001 359505.8
<PAGE>
existing improvements and that there is no condition or right
of re-entry or other provision for forfeiture therein under
which the Mortgagee can be cut off, subordinated or otherwise
disturbed in the use of the insured premises and the buildings
and other improvements erected thereon.
2. Party Wall Agreement recorded in Liber 1076 Cp. 496 affecting the most
easterly wall.
C-2
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<PAGE>
EXHIBIT D
FORM OF DEED
BARGAIN AND SALE DEED
WITHOUT COVENANT AGAINST GRANTOR'S ACTS
237/1290 UPPER TIER ASSOCIATES, L.P.,
TO
1290 PARTNERS, L.P.
SECTION: 1
BLOCK: 1267
LOT: 1
COUNTY: NEW YORK
ADDRESS: 1290 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK
RECORD AND RETURN TO:
Attn:
D-1
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<PAGE>
DEED
THIS INDENTURE, made as of the day of , 1996, between 237/1290 Upper Tier
Associates, L.P., a Delaware limited partnership (successor by merger to 1290
Associates, L.L.C.) having an office c/o Olympia & York Companies (U.S.A.), 237
Park Avenue, New York, New York 10017, collectively, party of the first part,
and 1290 Partners, L.P., a Delaware limited partnership, having its principal
address at , party of the second part,
WITNESSETH, that the party of the first part, in consideration of the sum of ten
dollars and other valuable consideration paid by the party of the second part,
does hereby grant and release unto the party of the second part, the heirs or
successors and assigns of the party of the second part forever,
ALL that certain plot, piece, or parcel of land, buildings and improvements
thereon erected, situate, lying and being in the Borough and County of
Manhattan, bounded and described on Schedule A annexed hereto.
TOGETHER with all right, title and interest, if any, of the party of the first
part in and to any streets and roads abutting the above described premises to
the center lines thereof;
TOGETHER with the appurtenances and all the estate and rights of the party of
the first part in and to said premises;
TO HAVE AND TO HOLD the premises herein granted unto the party of the second
part, the heirs or successors and assigns of the party of the second part
forever.
AND the party of the first part, in compliance with Section 13 of the Lien Law,
covenants that the party of the first part will receive the consideration for
this conveyance and will hold the right to receive such consideration as a trust
fund to be applied first for the purpose of paying the cost of the improvement
and will apply the same first to the payment of the cost of the improvement
before using any part of the total of the same for any other purpose.
D-2
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<PAGE>
The word "party" shall be construed as if it read "parties" whenever the sense
of this indenture so requires.
This transfer is made pursuant to a Plan of Reorganization which was confirmed
on , 1996 by order of the United States Bankruptcy Court for the Southern
District of New York (Case No.
).
IN WITNESS WHEREOF, the party of the first part has duly executed this deed on
the day and year first above written.
237/1290 UPPER TIER ASSOCIATES, L.P.
By: O&Y NY Building Corp., general partner
By: ___________________________
Name:
Title:
D-3
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<PAGE>
[Acknowledgement]
C/M: 11764.0001 359505.8
<PAGE>
SCHEDULE A
Legal Description
All that certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:
BEGINNING at the corner formed by the intersection of the Northerly side of West
51st Street with the Easterly side of Avenue of the Americas (formerly Sixth
Avenue); running
THENCE Easterly along the Northerly side of West 51st Street, 448 feet to a
point distant 472 feet Westerly from the corner formed by the intersection of
the Northerly side of West 51st Street with the Westerly side of Fifth Avenue;
THENCE Northerly parallel with Fifth Avenue and part of the distance through a
party wall, 100 feet 5 inches to the center line of the block between West 51st
Street and West 52nd Street;
THENCE Westerly along the center line of the block 2.0 feet to a point;
THENCE Northerly parallel with Fifth Avenue and part of the distance through a
party wall, 100 feet 5 inches to the Southerly side of West 52nd Street, at a
point therein distant 474 feet Westerly from the Southwest corner of West 52nd
Street and Fifth Avenue; running
THENCE Westerly along the Southerly side of West 52nd Street, 446 feet to the
Easterly side of Avenue of the Americas;
THENCE Southerly along the Easterly side of Avenue of the Americas 200 feet 10
inches to the Northerly side of West 51st Street at the point or place of
BEGINNING.
C/M: 11764.0001 359505.8
<PAGE>
EXHIBIT E
ASSIGNMENT OF LEASES
ASSIGNMENT AND ASSUMPTION OF LEASES
237/1290 UPPER TIER ASSOCIATES, L.P., a Delaware limited
partnership ("Assignor"), for and in consideration of the sum of Ten Dollars
($10.00), and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, does hereby grant, transfer and assign unto
1290 PARTNERS, L.P., a Delaware limited partnership ("Assignee"), having an
office at , all of Assignor's right, title and interest in and to those certain
leases, tenancies and other occupancy arrangements described on Exhibit A
attached hereto (hereinafter, the "Leases"), relating to the buildings and other
improvements located at or about 1290 Avenue of the Americas, New York, New
York, as more particularly described in Exhibit B attached hereto (the
"Property") and all right, title and interest of Assignor under the Leases,
including, without limitation, all rents, however denominated, whether past due,
currently due or to become due under the Leases, all claims, rights and suits
inuring to the benefit of lessor under the Leases and all cash or securities
including, without limitation, letters of credit, deposited under the Leases to
secure performance by the lessees of their obligations thereunder, whether such
cash or securities including, without limitation, letters of credit, are to be
held until the expiration of the terms of the Leases, or applied to one or more
of the installments of rent coming due prior to the expiration of such terms.
Assignee hereby accepts the foregoing assignment and assumes
any executory obligations of Assignor in connection with the Leases described on
Exhibit A hereto relating to the period from and after the date hereof and prior
to the date hereof to the extent not released pursuant to the Assignor's Plan of
Reorganization.
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<PAGE>
Assignor further assigns to Assignee, Assignor's rights under
expired or terminated Leases, including, without limitation, the right to
receive from the tenants thereunder any underpayment of operating expense and
real estate tax payments, and Assignee hereby assumes any obligation under such
expired or terminated Leases to reimburse such tenants for or refund to such
tenants any overpayment of such amounts.
This Assignment and Assumption of Leases is made without
recourse.
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<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have executed and
delivered this Assignment this __ day of , 1996.
ASSIGNOR:
237/1290 UPPER TIER ASSOCIATES, L.P., a Delaware
limited partnership
By: O&Y NY Building Corp., general partner
By:_______________________________
Name:
Title:
ASSIGNEE:
1290 PARTNERS, L.P., a Delaware limited partnership
By: 1290 GP Corp., general partner
By:_______________________________
Name:
Title:
E-3
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<PAGE>
Exhibit A
Leases
tenant
This exhibit will list all Leases to be assumed pursuant to
the Plan and Leases entered into during the bankruptcy case in accordance with
the terms of the Cash Collateral Stipulation or otherwise consented to by the
Trustee or a Majority of the Noteholders.
C/M: 11764.0001 359505.8
<PAGE>
Exhibit B
Property Description
All that certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:
BEGINNING at the corner formed by the intersection of the Northerly side of West
51st Street with the Easterly side of Avenue of the Americas (formerly Sixth
Avenue); running
THENCE Easterly along the Northerly side of West 51st Street, 448 feet to a
point distant 472 feet Westerly from the corner formed by the intersection of
the Northerly side of West 51st Street with the Westerly side of Fifth Avenue;
THENCE Northerly parallel with Fifth Avenue and part of the distance through a
party wall, 100 feet 5 inches to the center line of the block between West 51st
Street and West 52nd Street;
THENCE Westerly along the center line of the block 2.0 feet to a point;
THENCE Northerly parallel with Fifth Avenue and part of the distance through a
party wall, 100 feet 5 inches to the Southerly side of West 52nd Street, at a
point therein distant 474 feet Westerly from the Southwest corner of West 52nd
Street and Fifth Avenue; running
THENCE Westerly along the Southerly side of West 52nd Street, 446 feet to the
Easterly side of Avenue of the Americas;
THENCE Southerly along the Easterly side of Avenue of the Americas 200 feet 10
inches to the Northerly side of West 51st Street at the point or place of
BEGINNING.
C/M: 11764.0001 359505.8
<PAGE>
Exhibit C
Deposits
[To be Inserted on Effective Date]
C/M: 11764.0001 359505.8
<PAGE>
EXHIBIT F
ASSIGNMENT OF CONTRACTS
ASSIGNMENT AND ASSUMPTION AGREEMENT
(1290 Contracts)
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment")
is made as of ________________ ___, 1996, by and between 237/1290 UPPER TIER
ASSOCIATES, L.P., a Delaware limited partnership ("Assignor"), and 1290
PARTNERS, L.P., a Delaware limited partnership ("Assignee").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and
sufficiency of which are hereby acknowledged, Assignor hereby grants, sells,
conveys, transfers and assigns unto Assignee all of Assignor's rights, title and
interest in, to and under any and all of the following items, to the extent that
they are related to that certain real property located in New York, New York,
which real property is more particularly described on Exhibit A attached hereto
and incorporated herein by this reference (the "Real Property"):
(a) those contracts and agreements described on Exhibit B
attached hereto and incorporated herein by this reference;
(b) warranties, guarantees and indemnities (including,
without limitation, those for workmanship, materials and performance)
which exist or may hereafter exist, from, by or against any contractor,
subcontractor, manufacturer, laborer or supplier of labor, materials or
other services relating to the Real Property or any improvements
located thereon;
(c) plans, drawings, and specifications for the improvements
located on the Real Property
(d) all trademarks, tradenames (excluding the tradenames
"O&Y" or "Olympia & York"), contract rights, guarantees, licenses,
approvals, certificates, permits or warranties used or useful in
connection with the foregoing; and
(e) any tax certiorari proceedings (the "Tax Proceedings"), if
any, which may be pending with respect to the Real Property and any
improvements thereon, and all refunds of real estate taxes payable in
respect of the Real Property as a result of the Tax Proceedings now
pending or hereafter brought and relating to the period prior to the
date hereof.
Assignee hereby accepts the foregoing assignment and assumes
any executory obligations of Assignor in connection with the contracts and
agreements described in paragraph (a) above and relating to the period after the
date hereof and prior to the date hereof to the extent not released pursuant to
the Assignor's Plan of Reorganization.
Assignor hereby covenants that it will, at any time and from
time to time upon written request therefor, at Assignee's sole expense and
without the assumption of any additional liability therefor, execute and deliver
to Assignee, and its successors and assigns, any new or confirmatory instruments
and take such further acts as Assignee may reasonably request to fully evidence
the assignment contained herein and to enable Assignee, and its successors and
assigns, to fully realize and enjoy the rights and interests assigned hereby,
including, but not limited to Assignor taking any action as Assignee may
reasonably require in connection with the substitution of Assignee as the named
party in the Tax Proceedings.
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<PAGE>
The provisions of this Assignment shall be binding upon, and
shall inure to the benefit of, the successors and assigns of Assignor and
Assignee, respectively.
Except as set forth herein, this Assignment is made without
recourse, representation or warranty.
This Assignment may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which when taken together
shall constitute one and the same instrument. The signature page of any
counterpart may be detached therefrom without impairing the legal effect of the
signature(s) thereon, provided such signature page is attached to any other
counterpart identical thereto except having additional signature pages executed
by other parties to this Assignment attached thereto.
F-2
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment to be duly executed, as of the day and year first above written.
ASSIGNOR:
237/1290 ASSOCIATES, L.P., a
Delaware limited partnership
By: O&Y NY Building Corp., general partner
By:_________________________
Name:
Title:
ASSIGNEE:
1290 PARTNERS, L.P., a
Delaware limited partnership
By: 1290 GP Corp., general partner
By:_________________________
Name:
Title:
F-3
C/M: 11764.0001 359505.8
<PAGE>
Exhibit A
Description of Property
All that certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:
BEGINNING at the corner formed by the intersection of the Northerly side of West
51st Street with the Easterly side of Avenue of the Americas (formerly Sixth
Avenue); running
THENCE Easterly along the Northerly side of West 51st Street, 448 feet to a
point distant 472 feet Westerly from the corner formed by the intersection of
the Northerly side of West 51st Street with the Westerly side of Fifth Avenue;
THENCE Northerly parallel with Fifth Avenue and part of the distance through a
party wall, 100 feet 5 inches to the center line of the block between West 51st
Street and West 52nd Street;
THENCE Westerly along the center line of the block 2.0 feet to a point;
THENCE Northerly parallel with Fifth Avenue and part of the distance through a
party wall, 100 feet 5 inches to the Southerly side of West 52nd Street, at a
point therein distant 474 feet Westerly from the Southwest corner of West 52nd
Street and Fifth Avenue; running
THENCE Westerly along the Southerly side of West 52nd Street, 446 feet to the
Easterly side of Avenue of the Americas;
THENCE Southerly along the Easterly side of Avenue of the Americas 200 feet 10
inches to the Northerly side of West 51st Street at the point or place of
BEGINNING.
C/M: 11764.0001 359505.8
<PAGE>
Exhibit B
[Contracts assumed by Assignor pursuant to the Plan and by Assignee
pursuant to the Contribution Agreement, including service, brokerage and labor
agreements and any Conventional Financing Alternative commitment letter]
C/M: 11764.0001 359505.8
<PAGE>
EXHIBIT G
BILL OF SALE
BILL OF SALE
(1290)
KNOW ALL MEN BY THESE PRESENTS, 237/1290 ASSOCIATES, L.P., a Delaware
limited partnership, ("Seller"), for and in consideration of the sum of Ten
($10) Dollars, the receipt of which is hereby acknowledged, paid by 1290
PARTNERS, L.P., a Delaware limited partnership ("Purchaser"), has granted, sold,
transferred and delivered, and does grant, sell, transfer and deliver unto
Purchaser, its successors and assigns, the following
All machinery, apparatus, equipment, fixtures, fittings,
furniture, furnishings and other personal property of every
kind and nature owned by Seller or in which Seller has or
shall have an interest now or hereafter located on that
certain real property located in New York, New York, which
real property is more particularly described on Exhibit A
attached hereto and incorporated herein by this reference, or
appurtenances thereto and usable in connection with the
present or future operation and occupancy of said building and
property, excluding trade fixtures owned by tenants,
subtenants, lessees, sublessees, concessionaires, licensees
and other occupants of said building and excluding equipment
owned by utilities or contractors and Seller's proprietary
computer software.
To have and to hold the same unto Purchaser forever.
Seller hereby covenants that it will, at any time and from
time to time upon written request therefor, at Purchaser's sole expense and
without the assumption of any additional liability thereby, execute and deliver
to Purchaser, its nominees, successors and/or assigns, any new or confirmatory
instruments and do and perform any other acts which Purchaser, its nominees,
successors and/or assigns, may reasonably request in order to fully assign and
transfer to and vest in Purchaser, its nominees, successors and/or assigns all
of the Personal Property intended to be transferred and assigned hereby.
This Bill of Sale is made without recourse.
All references to "Seller" and "Purchaser" herein shall be
deemed to include their respective nominees, successors and/or assigns, where
the context permits.
Dated:________________, 1996
SELLER: 237/1290 ASSOCIATES, L.P., a
Delaware limited partnership
By: O&Y NY Building Corp., general partner
By:________________________
Name:
Title:
G-1
C/M: 11764.0001 359505.8
<PAGE>
PURCHASER: 1290 PARTNERS, L.P., a
Delaware limited partnership
By: 1290 GP Corp., general partner
By:___________________________
Name:
Title:
G-2
C/M: 11764.0001 359505.8
<PAGE>
Acknowledgements
G-3
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<PAGE>
EXHIBIT A
Legal Description
All that certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:
BEGINNING at the corner formed by the intersection of the Northerly side of West
51st Street with the Easterly side of Avenue of the Americas (formerly Sixth
Avenue); running
THENCE Easterly along the Northerly side of West 51st Street, 448 feet to a
point distant 472 feet Westerly from the corner formed by the intersection of
the Northerly side of West 51st Street with the Westerly side of Fifth Avenue;
THENCE Northerly parallel with Fifth Avenue and part of the distance through a
party wall, 100 feet 5 inches to the center line of the block between West 51st
Street and West 52nd Street;
THENCE Westerly along the center line of the block 2.0 feet to a point;
THENCE Northerly parallel with Fifth Avenue and part of the distance through a
party wall, 100 feet 5 inches to the Southerly side of West 52nd Street, at a
point therein distant 474 feet Westerly from the Southwest corner of West 52nd
Street and Fifth Avenue; running
THENCE Westerly along the Southerly side of West 52nd Street, 446 feet to the
Easterly side of Avenue of the Americas;
THENCE Southerly along the Easterly side of Avenue of the Americas 200 feet 10
inches to the Northerly side of West 51st Street at the point or place of
BEGINNING.
C/M: 11764.0001 359505.8
<PAGE>
EXHIBIT H
LETTERS TO TENANTS AND VENDORS
237/1290 ASSOCIATES, L.P.
c/o Olympia & York Companies (U.S.A.)
237 Park Avenue
New York, New York 10017
____________ ___, 1996
All Tenants of 1290 Avenue of the Americas
New York, New York
Re: 1290 Avenue of the Americas, New York, New York
Ladies and Gentlemen:
Please take notice that the property known as 1290 Avenue of
the Americas, New York, New York (the "Property") has been transferred to 1290
Partners, L.P. and in connection therewith, the undersigned has assigned to 1290
Partners, L.P. all of its right, title and interest in your lease at the
Property.
All notices and future rental or other payments under your
lease (including any payments now due or overdue) shall be made payable to 1290
Partners, L.P., and be delivered to:
1290 Partners, L.P.
Attn:
Furthermore, please be advised that (i) any security deposit
under your lease has been transferred to 1290 Partners, L.P. and (ii) 1290
Partners, L.P. needs to be added as an additional insured to the insurance
policies which you are required to carry under your lease. Certificates of
insurance
H-1
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<PAGE>
naming 1290 Partners, L.P. as additional insured should be delivered to
landlord immediately.
Very truly yours,
237/1290 UPPER TIER ASSOCIATES, L.P.
(successor by merger to 1290 Associates, L.L.C.)
By: O&Y NY Building Corp., general partner
By:___________________________
Name:
Title:
ACKNOWLEDGED:
1290 PARTNERS, L.P.
By: 1290 GP Corp.,
general partner
By:______________________
Name:
Title:
H-2
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<PAGE>
EXHIBIT I
FIRPTA CERTIFICATE
FIRPTA Affidavit
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, a Notary Public in and for the State and County
shown above, personally appeared , who, by me being first duly
sworn, deposes and says as follows:
I understand that Section 1445 of the Internal Revenue Code
provides that a transferee of a U.S. real property interest must withhold tax if
the transferor is a foreign person. To inform 1290 Partners, L.P., a Delaware
limited partnership ("Transferee"), that withholding of tax is not required upon
disposition of a U.S. real property interest by 237/1290 Upper Tier Associates,
L.P. ("Transferor"), the undersigned hereby swears, affirms and certifies the
following:
1. That I am of Transferor;
2. Transferor is not a foreign person, foreign corporation,
foreign partnership, foreign trust or foreign estate (as such terms are defined
in the Internal Revenue Code Income Tax Regulations);
3. Transferor's U.S. employer identification number is ;
4. Transferor's address is c/o Olympia & York Companies
(U.S.A.), 237 Park Avenue, New York, New York 10017.
I understand that this certification may be disclosed to the
Internal Revenue Service by Transferee and that any false statement contained
herein may be punished by fine, imprisonment or both.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign these documents on
behalf of Transferor.
I-1
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<PAGE>
IN WITNESS WHEREOF, Transferor has duly executed this Affidavit on the
date written below.
237/1290 UPPER TIER ASSOCIATES, L.P., a
Delaware limited partnership
By: O&Y NY Building Corp., general partner
By:___________________________________
Name:
Title:
Sworn to before me this
day of , 1996
- -------------------------------
Notary Public
I-2
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<PAGE>
EXHIBIT J
SCHEDULE OF LEASES/RENT ROLL
[To reflect Leases to be assumed by the 1290 Debtor pursuant
to the Plan or entered into in accordance with the Cash
Collateral Stipulation. Rent roll will be prepared by Grantor
as of a date within ten (10) days of the Effective Date.]
J-1
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<PAGE>
EXHIBIT K
CONTRACTS
[To reflect Contracts to be assumed by the 1290 Debtor
pursuant to the Plan or entered into in the ordinary course of
business, and not in violation of the Cash Collateral
Stipulation.]
K-1
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<PAGE>
EXHIBIT L
TAX CERTIORARI PROCEEDINGS
[To be provided by Grantor as of the Effective Date]
L-1
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<PAGE>
EXHIBIT M
BROKERAGE COMMISSIONS
[To be provided by Grantor on Effective Date]
M-1
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<PAGE>
EXHIBIT N
PENDING LITIGATION
[To be provided by Grantor as of the Effective Date]
N-1
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<PAGE>
EXHIBIT O
EMPLOYEES/LABOR AGREEMENTS
Terms of Employment of Non-Union Employees
1. Vacation. An employee is entitled to ten days vacation each year,
fifteen days after five years and 20 days -------- after 10 years.
2. Holidays. The office is closed for nine major holidays and each
employee is also entitled to three floating holidays.
3. Personal and Sick Days. Each employee is entitled to three personal
days and ten paid sick days.
4. Termination/Severance Pay. In case of a termination for reasons other
than malfeasance, an employee is to receive termination pay equal to
one week's salary per full six months of employment up to five years.
Above five years, severance pay is based on a scheduled number of weeks
which can be increased at the discretion of the employer.
The current accrued vacation and severance pay for non-union employees
of 237 Park and 1290 Avenue of the Americas is set forth on the
attached schedule.
O-1
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<PAGE>
EXHIBIT P
ENVIRONMENTAL MATTERS
NONE
P-1
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<TABLE>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE I CONTRIBUTION OF THE PROPERTY.......................................................... 2
Section 1.1 Transfer of the Property.......................................................... 2
Section 1.2 Issuance of Partnership Interests................................................. 3
ARTICLE II THE CLOSING........................................................................... 3
Section 2.1 Closing........................................................................... 3
Section 2.2 Conditions to the Partnership's Obligations....................................... 3
Section 2.3 Grantor's Closing Deliveries...................................................... 4
Section 2.4 The Limited Partner's Closing Deliveries.......................................... 6
Section 2.5 Further Assurances................................................................ 6
Section 2.6 Closing Expenses.................................................................. 7
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF ......................................... 7
Section 3.1 Due Organization ................................................................. 7
Section 3.2 Performance and Enforceability.................................................... 7
Section 3.3 Consents and Filings.............................................................. 8
Section 3.4 Grantor's Ownership of the Property............................................... 8
Section 3.5 Rent Roll and Leases.............................................................. 8
Section 3.6 Contracts......................................................................... 8
Section 3.7 Real Estate Taxes................................................................. 8
Section 3.8 Brokerage Commissions............................................................. 8
Section 3.9 Condemnation...................................................................... 8
Section 3.10 Litigation........................................................................ 9
Section 3.11 Zoning............................................................................ 9
Section 3.12 Employees......................................................................... 9
Section 3.13 Environmental Matters............................................................. 9
Section 3.14 Personal Property................................................................. 10
Section 3.15................................................................................... 10
ARTICLE IV MISCELLANEOUS......................................................................... 10
Section 4.1 Notices........................................................................... 10
Section 4.2 Survival; As Is................................................................... 11
Section 4.3 Assignment........................................................................ 11
Section 4.4 Captions; Counterparts............................................................ 11
Section 4.5 Enforceability; Severability...................................................... 11
Section 4.6 Entire Agreement.................................................................. 12
Section 4.7 Applicable Law.................................................................... 12
Section 4.8 Cooperation....................................................................... 12
</TABLE>
EXHIBIT A LEGAL DESCRIPTION OF THE PREMISES
EXHIBIT B LIST OF PERMITS
EXHIBIT C PERMITTED ENCUMBRANCES
EXHIBIT D FORM OF DEED
EXHIBIT E ASSIGNMENT OF LEASES
EXHIBIT F ASSIGNMENT OF CONTRACTS
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EXHIBIT G BILL OF SALE
EXHIBIT H LETTERS TO TENANTS AND VENDORS
EXHIBIT I FIRPTA CERTIFICATE
EXHIBIT J SCHEDULE OF LEASES/RENT ROLL
EXHIBIT K CONTRACTS
EXHIBIT L TAX CERTIORARI PROCEEDINGS
EXHIBIT M BROKERAGE COMMISSIONS
EXHIBIT N PENDING LITIGATION
EXHIBIT O EMPLOYEES/LABOR AGREEMENTS
EXHIBIT P ENVIRONMENTAL MATTERS
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C/M: 11764.0001 359505.8
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CREDIT AGREEMENT
dated as of October 10, 1996
among
1290 PARTNERS, L.P.
and
237 PARK PARTNERS, L.P.
as Borrowers,
THE LENDERS LISTED HEREIN
and
THE CHASE MANHATTAN BANK
as Agent
=========================================================
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of October 10, 1996, among 1290 PARTNERS,
L.P., 237 PARK PARTNERS, L.P. (collectively, the "Borrowers" and individually,
each a "Borrower"), the LENDERS listed on the signature pages hereof and THE
CHASE MANHATTAN BANK, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms, as used herein, have the
following meanings:
"Adjusted London Interbank Offered Rate" has
the meaning set forth in Section 2.6(b).
"Administrative Questionnaire" means, with respect to each Lender,
an administrative questionnaire in the form prepared by the Agent and submitted
to the Agent (with a copy to the Borrowers) duly completed by such Lender.
"Agent" means The Chase Manhattan Bank in its capacity as agent for
the Lenders hereunder, and its successors in such capacity appointed in
accordance with Section 7.8 hereof.
"Agreement" means this Credit Agreement as the same may from time to
time hereafter be modified, supplemented or amended.
"Alterations" has the meaning set forth in the
Mortgage.
"Alternate Base Rate Loan" means a Loan Tranche to be made by a
Lender as an Alternate Base Rate Loan in accordance with the applicable Notice
Interest Rate Election or pursuant to Article VIII.
"Alternate Base Rate" means, for any day, a
rate per annum equal to the higher of (i) the Prime Rate
<PAGE>
for such day or (ii) the sum of 1.565% plus the Federal
Funds Effective Rate.
"Annual Budget" means the annual operating and capital improvement
budget for the Properties, as the same may be revised from time to time pursuant
to the provisions hereof.
"Applicable Lending Office" means, with respect to any Lender, (i)
in the case of its Alternate Base Rate Loans, its Domestic Lending Office and
(ii) in the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
Approved Banks: means banks or other financial institutions which
have a minimum long-term unsecured S&P debt rating of at least "A" or its
equivalent by at least two of the Rating Agencies; provided that at least one of
such Rating Agencies shall be either S&P or Moody's (as such terms are
hereinafter defined in the definition of "Rating Agencies").
"Asset Management Agreement" means the Asset Management Agreement,
dated as of October 10, 1996, between the Asset Manager and the REIT.
"Asset Manager" means 970 Management LLC, an affiliate of Victor
Capital Group, L.P., or any permitted successor.
"Assignee" has the meaning set forth in Section
9.6(c).
"Assignment of Leases and Rents" means the Assignment of Leases,
Rents and Security Deposits, dated as of even date hereof, by and among
Borrowers and Agent.
"Bankruptcy Code" means Title 11 of the United States Code, entitled
"Bankruptcy", as amended from time to time, and any successor statute or
statutes.
"Bankruptcy Court" has the meaning set forth in
Section 3.1(m).
"Benefit Arrangement" means, at any time, an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and
2
<PAGE>
which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrowers" means collectively the 237 Park Borrower, a Delaware
limited partnership, and the 1290 Borrower, a Delaware limited partnership, and
their permitted successors and assigns.
"Budget" means the operating and capital improvement budget for the
Properties for the remainder of 1996 prepared and delivered by Borrowers to
Agent prior to the date hereof and approved by the Agent.
"Building" and "Buildings" has the meaning set
forth in the recitals of the Mortgage.
"Capital Expenditures" means, for any period, the sum of all
expenditures made by or on behalf of the Borrowers, including payments of Tenant
Work Allowances and Tenant Expenses and the cost of any Tenant Improvements
performed by or on behalf of Borrowers, which are capitalized on the balance
sheet of the Borrowers in conformity with GAAP, other than capitalized interest
expense.
"Cash Collateral Agreement" means the Cash Collateral Account
Security Pledge and Assignment Agreement, dated as of the date hereof, among
Borrowers and the Agent.
"Cash Flow Letter of Credit" has the meaning
set forth in Section 2.15(b).
"Closing Date" has the meaning set forth in
Section 3.1.
"Collateral" means all property and interests in property now owned
or hereafter acquired in or upon which a Lien has been or is purported or
intended to have been granted to the Agent on behalf of the Lenders under the
Mortgage and each of the Loan Documents.
"Collection Accounts" has the meaning set forth
in the Cash Collateral Agreement.
"Collection Costs" has the meaning set forth in
Section 9.3(a).
3
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"Commitment" means, with respect to each Lender, the amounts set
forth opposite the name of such Lender on the signature pages hereof.
"Committee" has the meaning set forth in Sec-
tion 3.1(s).
"Consent and Subordination of Asset Management Agreement" means the
Consent and Subordination of Asset Management Agreement, dated as of the date
hereof, among Asset Manager, Borrowers and Agent.
"Consent and Subordination of Property Management Agreement" means
the Consent and Subordination of Property Management Agreement, dated as of the
date hereof, among Manager, Borrowers and Agent.
"Consumer Price Index" means the "Consumer Price Index-- For all
Items for the New York-Northern New Jersey Area (1982-1984=100)", published
monthly in the "Monthly Labor Review" of the Bureau of Labor Statistics of the
United States Department of Labor. If at any time the Consumer Price Index is no
longer available, then the term "Consumer Price Index" shall be an index
selected by Agent which, in the opinion of Agent, is comparable to the Consumer
Price Index.
"Counterparty" means The Chase Manhattan Bank.
"Debtors" has the meaning set forth in Section
3.1(s).
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Defaulting Lender" has the meaning set forth
in Section 9.17(c)(i).
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Domestic Lending Office" means, as to each
Lender, its office located at its address set forth in
its Administrative Questionnaire (or identified in its
4
<PAGE>
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Lender may hereafter designate as its Domestic Lending Office by
notice to the Borrowers and the Agent.
"Eligible Assignee" means (a) a commercial bank, trust company,
insurance company, investment bank or pension fund organized under the laws of
the United States of America, or any state thereof, and having total assets in
excess of $5,000,000,000; (b) a savings and loan association or savings bank
organized under the laws of the United States of America, or any state thereof,
and having a tangible net worth of at least $500,000,000; (c) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development ("OECD"), or a political
subdivision of any such country, and having total assets in excess of
$10,000,000,000, provided that such bank is acting through a branch or agency
located in the United States of America; or (d) the central bank of any country
which is a member of the OECD.
"Engineering Report" has the meaning set forth
in Section 4.27.
"Environmental Affiliate" means any partnership or joint venture,
trust or corporation in which an equity interest is owned by the Borrowers or
the REIT (with respect to matters relating to the Properties), either directly
or indirectly.
"Environmental Approvals" means any permit, license, approval,
ruling, variance, exemption or other authorization required under applicable
Environmental Laws.
"Environmental Claim" means, with respect to any Person, any written
notice, claim, demand or similar written communication by any other Person
alleging potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damage, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Hazardous Substance at
any Property, whether or not owned by such Person or (ii) circumstances forming
the basis of any violation, or alleged violation, of any Environmental
5
<PAGE>
Law, in each case as to which there is a reasonable probability of an adverse
determination with respect thereto and which, if adversely determined, would
have a Material Adverse Effect.
"Environmental Guaranty" means the Joint and Several Hazardous
Material Guaranty and Indemnification Agreement, dated as of the date hereof,
made by the
General Partners and the Borrowers.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"Environmental Report" has the meaning set
forth in Section 4.7.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute.
"ERISA Group" means the Borrowers and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Borrowers, are treated as a single
employer under Section 414 of the Internal Revenue Code.
"Escrow Sub-Account" has the meaning set forth
in Section 3.1(w).
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
6
<PAGE>
"Euro-Dollar Illegality Event" has the meaning
set forth in Section 8.2.
"Euro-Dollar Lending Office" means, as to each Lender, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Lender as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrowers and the Agent.
"Euro-Dollar Loan" means a Loan Tranche which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Interest Rate Election.
"Euro-Dollar Margin" has the meaning set forth
in Section 2.6(b).
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.6(b) on the basis of an Adjusted London Interbank Offered Rate.
"Euro-Dollar Reference Bank" means the princi-
pal London offices of The Chase Manhattan Bank.
"Euro-Dollar Reserve Percentage" has the mean-
ing set forth in Section 2.6(b).
"Event of Default" has the meaning set forth in
Section 6.1.
"Expiring Lease Costs" means, with respect to space at the Buildings
currently demised to Tenants pursuant to Leases with terms that expire during
the period commencing on January 1, 2001 and ending on December 31, 2003 as set
forth on Exhibit I attached hereto and made a part hereof, the aggregate of
Tenant Expenses, costs of Tenant Improvements and Tenant Work Allowances
(exclusive of free rent) actually incurred by the Borrowers in connection with
reletting such space or extending such Leases.
"Expiring Lease Costs Reserve Sub-Account" has
the meaning set forth in Section 2.15(a).
7
<PAGE>
"Extended Mandatory Prepayment Date" has the
meaning set forth in Section 2.8(e).
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to The Chase Manhattan Bank on such day on
such transactions as determined by the Agent.
"Federal Reserve Board" means the Board of
Governors of the Federal Reserve System as constituted
from time to time.
"Fee Letter" means the letter, dated August 14, 1996, among Agent,
1290 Associates, L.L.C., 237 Park Avenue Associates, L.L.C., and the Olympia &
York
Noteholders Ad Hoc Committee.
"Fifth Loan Year" means the twelve month period commencing on the
fourth anniversary of the Closing Date.
"FIRREA" means Financial Institution Reform
Recovery and Enforcement Act of 1989.
"First Payment Date" means October 7, 1997.
"Fiscal Quarter" means any fiscal quarter of a
fiscal year of the Borrowers.
"Fourth Loan Year" means the twelve month period commencing on the
third anniversary of the Closing Date.
8
<PAGE>
"GAAP" means generally accepted accounting principles in the United
States as in effect from time to time.
"General Partners" means, collectively, 1290 GP Corp., a Delaware
corporation and the sole general partner of the 1290 Borrower (holding a one
percent (1%) ownership interest), and 237 GP Corp., a Delaware corporation and
the sole general partner of the 237 Park Borrower (holding a one percent (1%)
ownership interest).
"Governmental Authority" means any Federal, state or local
government or any other political subdivision thereof or agency exercising
executive, legislative, judicial, regulatory or administrative functions having
jurisdiction over Borrowers or the Properties.
"Group of Loans" means, at any time, a group of Loan Tranches
consisting of (i) all Loan Tranches which are Alternate Base Rate Loans at such
time, or (ii) all Loan Tranches which are Euro-Dollar Loans having the same
Interest Period at such time; provided that, if a Loan Tranche of any particular
Lender is converted to or made as an Alternate Base Rate Loan pursuant to
Section 8.2 or 8.4, such Loan Tranche shall be included in the same Group or
Groups of Loans from time to time as it would have been in if it had not been so
converted or made.
"Hazardous Substance" means any material, waste
or substance which is:
(i) included within the definition of "hazardous
substances," "hazardous materials," "toxic substances," or "solid waste"
in or pursuant to any Environmental Law, or subject to regulation under
any Environmental Law;
(ii) listed in the United States Department of
Transportation Optional Hazardous Materials Table, 49 C.F.R. ss. 172.101,
as enacted as of the date hereof, or in the United States Environmental
Protection Agency List of Hazardous Substances and Reportable Quantities,
40 C.F.R. Part 302, as enacted as of the date hereof or as hereafter
amended; or
9
<PAGE>
(iii) explosive, radioactive, asbestos, a
polychlorinated biphenyl, corrosive or other hazardous substances
including oil or petroleum, its derivatives, by-products or other
hydrocarbons or any constituent elements displaying any of the foregoing
characteristics.
"Impositions" has the meaning set forth in the
Mortgage.
"Improvements" has the meaning set forth in the
Mortgage.
"Indemnitee" has the meaning set forth in
Section 9.3(b).
"Initial Notice of Interest Rate Election" shall be the first Notice
of Interest Rate Election delivered by the Borrowers to the Agent no less than
three (3) Euro-Dollar Business Days before the Closing
Date.
"Institutional Lender" means (a) a commercial bank, trust company,
insurance company, investment bank or pension fund organized under the laws of
the United States of America, or any state thereof, and having total assets in
excess of $5,000,000,000; (b) a savings and loan association or savings bank
organized under the laws of the United States of America, or any state thereof,
and having a tangible net worth of at least $500,000,000; or (c) a commercial
bank organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development ("OECD"), or a political
subdivision of any such country, and having total assets in excess of
$10,000,000,000, provided that such bank is acting through a branch or agency
located in the United States of America.
"Interest Period" means: (1) with respect to each Euro-Dollar Loan,
the period commencing on the Closing Date or on the date specified in the
applicable Notice of Interest Rate Election and ending one, two, three or six
months thereafter, as the Borrowers may elect in the applicable Notice of
Interest Rate Election; provided that:
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(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on
the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month;
(c) if any Interest Period includes a date on which a payment of
principal of the Loan is required to be made under Section 2.10 but does
not end on such date and sufficient funds are not then outstanding under
any Alternate Base Rate Loan, then (x) the principal amount (if any) of
each Euro-Dollar Loan required to be repaid on such date shall have an
Interest Period ending on such date and (y) the remainder (if any) of each
such Euro-Dollar Loan shall have an Interest Period determined as set
forth above; and
(d) any Interest Period shall always be for the same period as under
the Swap Agreement.
(2) with respect to each Alternate Base Rate Loan, the period commencing on the
Closing Date or on the date specified (or deemed specified) in the applicable
Notice of Interest Rate Election and ending on the last Domestic Business Day of
the calendar month in which such Notice of Interest Rate Election was made (or
deemed made); provided that if any Interest Period includes a date on which a
payment of principal of the Loan is required to be made under Section 2.10 but
does not end on such date, then (i) the principal amount (if any) of each
Alternate Base Rate Loan required to be repaid on such date shall have an
Interest Period ending on such date and (ii) the remainder (if any) of each such
Alternate Base Rate Loan shall have an Interest Period determined as set forth
above.
11
<PAGE>
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Invalid Law" has the meaning set forth in
Section 8.3(c).
"Leases" has the meaning set forth in Granting
Clause IV of the Mortgage.
"Lender" means each lender listed on the signature pages hereof,
each Assignee which becomes a Lender pursuant to Section 9.6(c), and their
respective successors.
"Letter of Credit" means an irrevocable, unconditional,
transferable, clean sight draft letter of credit in favor of the Agent and
entitling the Agent to draw thereon in New York, New York, issued by an Approved
Bank and upon terms and in a form acceptable to Agent. Borrowers shall deliver
to Agent a replacement Letter of Credit at least ten (10) Domestic Business Days
prior to the expiration of any outstanding Letter of Credit. If at any time the
bank issuing any such Letter of Credit shall cease to be an Approved Bank, the
Agent shall have the right immediately to draw down the same in full and hold
the proceeds of such draw in accordance with the applicable provisions hereof,
unless the Borrowers shall deliver a replacement Letter of Credit within thirty
(30) days after the Agent delivers written notice to the Borrowers that such
bank shall have ceased to be an Approved Bank.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind (other than a Permitted
Lien) in respect of such asset. For the purposes of this Agreement, the
Borrowers or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan" means the loan in the amount of Four Hundred Twenty Million
Dollars ($420,000,000) to be made to the Borrowers by the Lenders to fund the
costs of the
acquisition of the Properties.
12
<PAGE>
"Loan Amount" has the meaning set forth in
Section 2.1.
"Loan Documents" means this Agreement, the Notes, the Mortgage, the
Swap Pledge, the Assignment of Leases and Rents, the Environmental Guaranty, the
Consent and Subordination of Property Management Agreement, the Consent and
Subordination of Asset Management Agreement, the Note Pledge and the Cash
Collateral Agreement and the other documents executed by the Borrowers that are
incidental or otherwise related thereto.
"Loan Tranche" means an Alternate Base Rate
Loan or a Euro-Dollar Loan and "Loan Tranches" means
Alternate Base Rate Loans or Euro-Dollar Loans or any
combination of the foregoing.
"London Interbank Offered Rate" has the meaning
set forth in Section 2.6(b).
"Lower Tier LP" means 237/1290 Lower Tier Associates, L.P., a
Delaware limited partnership, which is the ninety-nine percent (99%) limited
partner of each Borrower and which has as its 95% general partner, the REIT, and
its five percent (5%) limited partner, the Upper Tier LP.
"Major Alteration" means an Alteration or series of Alterations
which affects the structural portion, the building systems, the lobby, the
facade, the plaza or the elevators of either Building excluding (i) normal and
customary tenant work primarily within the demised space under Leases (whether
performed by Borrowers or the Tenant), (ii) repair and maintenance, (iii)
replacements of equal or greater utility for building systems and equipment
only, (iv) work which is decorative or cosmetic in nature and (v) the 1290 Lobby
Work (as defined in the Cash Collateral Agreement).
"Major Lease" means a Lease at a Property demising in the aggregate
of all such Leases with such Tenant, no less than 40,000 rentable square feet.
"Manager" means Tishman Speyer Properties, L.P.
and its permitted successors.
13
<PAGE>
"Mandatory Prepayment Date" has the meaning set
forth in Section 2.8(e).
"Mandatory Prepayment Event" has the meaning
set forth in Section 2.8(e).
"Margin Stock" has the meaning provided such term in Regulation U
and Regulation G of the Federal Reserve Board.
"Material Adverse Effect" means a material adverse effect upon (i)
the business, operations, financial condition, properties or assets of either or
both of the Borrowers, (ii) the operation or condition of either or both of the
Properties or (iii) the ability of the Borrowers to pay interest and principal
on the Loan when due.
"Material Contract" means (i) the Property
Management Agreement and (ii) the Asset Management Agree-
ment.
"Material Plan" means, at any time, a Plan or Plans having aggregate
Unfunded Liabilities in excess of $1,000,000.
"Monthly Amount" means (i) with respect to each of the Second Loan
Year and the Third Loan Year, the amount of $625,000, of which amount
$333,333.33 shall be allocated to the 1290 Property and $291,666.67 shall be
allocated to the 237 Park Property; (ii) with respect to the Fourth Loan Year,
the amount of $833,333.34, of which amount $445,416.67 shall be allocated to the
1290 Property and $387,916.67 shall be allocated to the 237 Park Property and
(iii) with respect to the Fifth Loan Year, the amount of $1,250,000, of which
amount $666,666.67 shall be allocated to the 1290 Property and $583,333.33 shall
be allocated to the 237 Park Property.
"Monthly Operating Statement" means the monthly operating statement
prepared by the Manager in accordance with Section 8(c) of the Property
Management Agreement or such similar form for any permitted successor Manager
pursuant to the terms hereof.
"Monthly Report" has the meaning set forth in
Section 5.1(j).
14
<PAGE>
"Mortgage" means the Mortgage Modification, Restatement and Security
Agreement, dated as of the date hereof, among Borrowers, as mortgagors, and
Agent, as mortgagee, as the same may be hereafter amended.
"Mortgaged Property" has the meaning set forth
in the Mortgage.
"Multiemployer Plan" means, at any time, an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making, or accruing an obligation to make, contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"Net Cash Flow" means, for the relevant measuring period, (i) all
Property Income minus (ii) all Property Expenses as adjusted by (without
duplication) (x) all interest expenses, required principal amortization and
payments made by Borrowers pursuant to the Swap Agreement with respect to the
Loan for such period, (y) Capital Expenditures actually incurred for such
period, and (z) normal and customary reserves maintained during such period
whether or not required pursuant to the Loan Documents; provided that for the
purpose of this definition, Property Expenses such as Taxes (as defined in the
Mortgage) and premiums which are payable less frequently than monthly shall be
computed as if payable in twelve equal monthly installments and with respect to
items not annualized, such periodic installments as are appropriate.
"Notes" means promissory notes of the Borrowers, substantially in
the form of Exhibit "A" hereto, evidencing the obligation of Borrowers to repay
the Loan and "Note" means any one of such promissory notes.
"Note Pledge" means the Note Pledge and Security Agreement, dated
the date hereof, made by the Borrowers, as pledgors, in favor of Agent, as
pledgee, in connection with the Pledged Notes.
"Notice of Interest Rate Election" has the
meaning set forth in Section 2.2.
15
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"Obligations" means all obligations, liabilities and indebtedness of
every nature of the Borrowers, from time to time owing to any Lender under or in
connection with this Agreement or any other Loan Document.
"Officer's Certificate" means a certificate delivered to Agent by a
Borrower or such Borrower's General Partner which is signed by the president,
chief financial officer, chief operating officer or vice president of such
General Partner.
"Parent" means, with respect to any Lender, any
Person controlling such Lender.
"Payment in Full" has the meaning set forth in
Section 9.17(c)(iii).
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Payment Date" means the seventh (7th) day of each calendar month,
provided that if such day is not a Euro-Dollar Business Day, the Payment Date
shall be the next succeeding Euro-Dollar Business Day, commencing on November 7,
1996 and ending on the Termination Date.
"Period Fraction" means, with respect to any period of time, a
fraction, the numerator of which is the actual number of days in such period,
and the denominator of which is three hundred and sixty (360).
"Permitted Liens" means those matters set forth in Schedule B of the
Title Policy issued by the Title Insurer in connection with the transactions
contemplated herein and attached hereto as Exhibit "G", as well as the Lien of
the Mortgage.
"Permitted Owners" means (i) any investment fund managed by or other
entity controlled by (A) Apollo Realty Advisors, L.P. (which fund or entity
would include without limitation Apollo Real Estate Investment Fund I, L.P.),
(B) Whitehall Street Real Estate, L.P. (which fund or entity would include
without limitation WSB Realty, LLC), (C) Oaktree Capital Management, LLC (which
fund or entity would include without limitation TCW Special Credits Fund and
other related funds thereof), or (D)
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Tishman Speyer Properties, L.P., (ii) Nyprop L.L.C., so long as Tishman family
members, Crown family members and/or senior management or senior employees of
Tishman Speyer Crown Equities or Tishman Speyer Properties, Inc. shall own
directly or indirectly more than fifty percent (50%) of the interests therein,
(iii) such REIT shareholders as are either, in each case as certified to Agent
by Borrowers in the form of certificate attached hereto as Exhibit J (and
verified to Agent's reasonable satisfaction): (A) investors (or entities
controlled by investors) having, as of the date such investor or entity is
proposed as a Permitted Owner, (x) investment management experience in
commercial real estate, (y) a current net worth, as determined in accordance
with GAAP (exclusive of good will) or on an audited tax basis if GAAP is not
available, of no less than $100,000,000, exclusive of its interest in the REIT,
and (z) ownership of assets and/or assets under management with an aggregate
fair market value of no less than $200,000,000, exclusive of its interest in the
REIT, (B) an investment vehicle advised by an investment manager or advisor,
which investment manager or advisor has, as of the date such investor or entity
is proposed as a Permitted Owner, (x) investment management experience in
commercial real estate, (y) a current net worth and/or investment vehicles under
management having a current net worth, as determined in accordance with GAAP
(exclusive of good will) or on an audited tax basis if GAAP is not available, of
no less than $100,000,000, exclusive of its interest in the REIT, in the
aggregate, and (z) ownership of assets and/or assets under management with an
aggregate fair market value of no less than $200,000,000, exclusive of its
interest in the REIT, (C) a pension fund, account or trust, commercial bank,
investment bank, savings and loan, savings bank or real estate investment trust
or an investment vehicle established by such an entity, which pension fund,
account trust fund, commercial bank, investment bank, savings and loan, savings
bank or real estate investment trust or investment vehicle has, as of the date
such investor or entity is proposed as a Permitted Owner, (y) a current net
worth, as determined in accordance with GAAP (exclusive of good will) or on an
audited tax basis if GAAP is not available, of no less than $100,000,000,
exclusive of its interest in the REIT, in the aggregate, and (z) ownership of
assets and/or assets under management with an aggregate fair market value of no
less than $200,000,000, exclusive of its
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interest in the REIT; and, as are approved as a Permitted Owner by the Agent and
the Super Required Lenders, which consent shall not be unreasonably withheld or
delayed, and (iv) such other REIT shareholders as are approved as a Permitted
Owner by the Agent and the Super Required Lenders in their sole and absolute
discretion. For purposes of applying the thirty percent (30%) ownership test set
forth in Section 2.8(d) hereof, any REIT shareholder which is approved by Agent
and the Super Required Lenders as a Permitted Owner pursuant to the provisions
hereof shall be deemed to have been a Permitted Owner from the date it acquired
REIT shares. Notwithstanding the foregoing, if at any time Agent shall determine
that any certification made by any Permitted Owner pursuant to this definition
was materially false or misleading when made, such party shall be deemed to not
be a Permitted Owner from the date such false or misleading certificate was
made.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Plan" means, at any time, an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Pledged Notes" means, collectively, the War-
burg Note and the Robinson Note.
"Prime Rate" means the rate of interest publicly announced by The
Chase Manhattan Bank in New York City from time to time as its Prime Rate.
"Principal Letter of Credit" has the meaning
set forth in Section 2.8(d).
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"Proceeds" has the meaning set forth in the
Mortgage.
"Property" and "Properties" have the meanings
set forth in the Mortgage.
"Property Expenses" means, with respect to the Properties the
following items without duplication thereof (provided however, that Property
Expenses shall not include debt service, non-cash items such as depreciation and
amortization and any extraordinary expenditures not considered operating
expenses in accordance with GAAP):
(A) all expenses for the operation of the Properties incurred by
Borrowers including asset and property management fees, accounting costs and
legal fees and all insurance expenses but not including any expenses incurred in
connection with a sale or other capital or interim capital transaction;
(B) Taxes, water charges, property taxes, sewer rents, other than
fines, penalties, interest or such Taxes (or portions thereof) that are payable
by reason of the failure by the owner of the Properties to pay a Tax timely;
(C) the cost of routine maintenance (the cost of which may be
expenses), repairs and minor alterations, the cost of which can be expensed
under GAAP;
(D) Tenant Improvements, Tenant Work Allowances and Tenant Expenses
(to the extent actually incurred);
(E) all reasonable and customary expenses incurred by the REIT
directly relating to the ownership of the Properties, such as asset and property
management fees and insurance expenses, and also including accounting costs,
legal fees, and "D&O" insurance (but excluding other costs not directly related
to ownership of the Properties), provided that if the REIT owns properties other
than the Properties any such expense not directly related to the ownership of
the Properties but permitted as a Property expense under this paragraph (E)
shall be included only to the extent equitably allocable to the Properties; and
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(F) all commercially reasonable expenses incurred by Borrowers in
connection with the takeover of any leases in connection with Leases entered
into in accordance with the terms hereof.
"Property Income" means, for the Properties, all gross income and
Rentals paid to the owner of such Property from the ownership and operation of
such Property, service fees and charges, rebates, refunds, all tenant expense
reimbursement income, all amounts paid from the Robinson Note, the Warburg Note
and the Swap Agreement and all insurance and condemnation proceeds net of costs
permitted under the Mortgage and not included in Property Expenses but excluding
(i) any proceeds resulting from a Transfer and (ii) security deposits received
from Tenants until forfeited.
"Property Management Agreement" means collectively, the Management
and Leasing Agreement, dated as of October 10, 1996, between Manager and the
1290 Borrower and the Management and Leasing Agreement, dated as of October 10,
1996, between Manager and 237 Park Borrower.
"Rating Agencies" means Standard & Poor's Rat- ings Services
("S&P"), Duff & Phelps Credit Rating Co., Moody's Investors Services, Inc.
("Moody's") or Fitch Investor Services, L.P. or, if such corporations shall for
any reason no longer perform the functions of a securities rating agency, any
other nationally recognized statistical rating agency designated by the Agent.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REIT" shall mean Metropolis Realty Trust, Inc. or other entity
which will be the 95% general partner of the Lower Tier LP, the organization,
ownership, capital structure and documentation of which trust or other entity
shall be satisfactory to the Agent.
"Release" means any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, deposit, discharge, leaching or migration.
"Release Date" has the meaning set forth in Section 2.9(d).
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"Released Property" has the meaning set forth in Section 2.9(d).
"Release Price" means as of the applicable Release Date (i) with
respect to the 237 Park Property, an amount equal to 1.10 times the 237 Park
Allocated Loan Amount, as such 237 Park Allocated Loan Amount has been reduced,
as of such date, by payments of the Monthly Amount allocated to the 237 Park
Property and voluntary prepayments made more than ninety (90) days prior to such
Release Date and applied to the 237 Park Allocated Loan Amount and involuntary
prepayments applied by Agent (e.g. casualty proceeds) to the 237 Park Allocated
Loan Amount and (ii) with respect to the 1290 Property, an amount equal to 1.10
times the 1290 Allocated Loan Amount, as such 1290 Allocated Loan Amount has
been reduced, as of such date, by payments of the Monthly Amount allocated to
the 1290 Property and voluntary prepayments made more than ninety (90) days
prior to such Release Date and applied to the 1290 Allocated Loan Amount and
involuntary prepayments applied by Agent (e.g. casualty proceeds) to the 1290
Allocated Loan Amount.
"Rentals" has the meaning set forth in Section
2.14(a).
"Required Lenders" means at any time Lenders holding Notes
evidencing at least 51% of the aggregate unpaid principal amount of the Notes
held by Lenders which are entitled to vote pursuant to the terms hereof.
"Requirements" means all present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, injunctions, rules, regulations and
requirements of every Governmental Authority having jurisdiction over either
Property and all restrictive covenants applicable to either Property.
"Reserve Portion" has the meaning set forth in
Section 2.9(e).
"Robinson Note" means the promissory note in favor of O&Y Financial
Company made by Robinson, Silverman, Pearce, Aronsohn & Berman dated as of April
1, 1989 in the original principal amount of $6,500,000.
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"Second Loan Year" means the twelve month period commencing on the
first anniversary of the Closing Date.
"Senior Debt" has the meaning set forth in Section 9.17(c)(iv).
"Settlement Agreement" has the meaning set forth in Section 3.1(m).
"Single Purpose Entity" means a Person, other than an individual,
which is formed or organized for the purpose of holding, directly, an ownership
interest in a Property or a Borrower, does not engage in any business unrelated
to a Property, does not have any material assets other than those related to its
interest in a Property or a Borrower or any indebtedness for borrowed money
other than as permitted by this Agreement, has its own separate books and
records, maintains customary formalities with regard to its existence (in
corporate or partnership form) and has its own accounts which are separate and
apart from the books and records and accounts of any other Person, and holds
itself out as being a Person, separate and apart from any other Person.
"Solvent" as to any Person means that such Person is not "insolvent"
within the meaning of Section 101(32) of the Bankruptcy Code or Section 271 of
the Debtor and Creditor Law of the State of New York.
"Subordinated Debt" has the meaning set forth in Section 9.17(c)(v).
"Subsidiary" means, with respect to any Person, at any date, any
corporation or other entity which is directly or indirectly controlled by such
Person and of which at least fifty-one percent (51%) of the outstanding shares
of capital stock or other equity interests having ordinary voting power is at
the time, directly or indirectly, owned by such Person, including, without
limitation, any subsidiaries which are consolidated with such Person for GAAP
purposes.
"Super Required Lenders" means at any time Lenders holding Notes
evidencing at least 662/3% of the aggregate unpaid principal amount of the Notes
held by
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Lenders which are entitled to vote pursuant to the terms hereof.
"Swap Agreement" means the interest rate exchange transaction
pursuant to the Master Agreement, dated as of the date hereof, between the
Counterparty and the Borrowers, as it may be amended, modified, extended or
supplemented, with the consent of the Agent, from time to time, and any similar
interest rate exchange, cap, collar or floor agreement subsequently entered into
by Borrowers and pledged to Agent pursuant to the Swap Pledge, the term of which
shall be the same as the Term.
"Swap Pledge" means the Interest Rate Agreement Pledge and Security
Agreement, dated as of the date hereof, between the Borrowers, as pledgor, and
the Agent, as pledgee, and consented to by the Counterparty to the Swap
Agreement, as it may be amended, modified, extended or supplemented from time to
time.
"Syndication Period" has the meaning set forth in Section 9.6(b).
"Tenant" has the meaning set forth in the Mortgage.
"Tenant Expenses" means the costs of brokerage commissions, legal
fees, fees to other outside consultants (and such other costs as provided for in
the Budget) paid in connection with tenant leases of space in the Buildings.
"Tenant Improvements" means tenant improvement work to be funded by
Borrowers pursuant to the terms of the Budget in connection with tenant leases
of space in the Buildings.
"Tenant Work Allowances" means any allowances (including free rent
periods) to be paid to the tenants of the Buildings by the Borrowers pursuant to
any initial Lease, regardless of their intended purpose or use.
"Term" has the meaning set forth in Section 2.8(a).
"Termination Date" has the meaning set forth in Section 2.8(a).
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"Third Loan Year" means the twelve month period commencing on the
second anniversary of the Commencement Date.
"Title Insurer" means, collectively, First American Title Insurance
Company of New York, Chicago Title Insurance Company, Commonwealth Land Title
Insurance Company, Fidelity National Title Insurance Company of New York,
Stewart Title Insurance Company of New York, Lawyers Title Insurance Corporation
and Old Republic National Title Insurance Company of New York.
"Title Policy" has the meaning set forth in Section 3.1(ee).
"Transactions" means each of the transactions contemplated by the
Loan Documents.
"Transfer" means, without limitation, a sale, assignment,
contribution, bequest, conveyance, transfer, disposition, mortgage, pledge,
grant of security interest, hypothecation, or encumbrance whether by operation
of law or otherwise.
"1290 Allocated Loan Amount" has the meaning set forth in Section
2.1.
"1290 Borrower" means 1290 Partners, L.P., a Delaware limited
partnership, the owner of the fee simple title to the 1290 Property.
"1290 Permitted Liens" means Permitted Liens that affect only the
1290 Property.
"1290 Property" has the meaning ascribed to it in the Mortgage.
"237 Park Allocated Loan Amount" has the meaning set forth in
Section 2.1.
"237 Park Borrower" means 237 Park Partners, L.P., a Delaware
limited partnership, the owner of the fee simple title to the 237 Park Property.
"237 Park Permitted Liens" means Permitted Liens that affect only
the 237 Park Property.
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"237 Park Property" has the meaning ascribed to it in the Mortgage.
"UCC Searches" has the meaning set forth in Section 3.1(cc).
"Unfunded Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Upper Tier LP" means 237/1290 Upper Tier Associates, L.P., a
Delaware limited partnership, which is the five percent (5%) limited partner of
the Lower Tier LP.
"Warburg Note" means the promissory note in favor of O&Y Equity
Corp., Olympia & York Holdings Corp. and Fame Associates, as tenants in common,
made by E.M. Warburg Pincus & Co., Inc., dated August 20, 1985 in the original
principal of $4,354,758.09.
SECTION 1.2 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with GAAP as
in effect from time to time, applied on a basis consistent (except for changes
concurred in by the Borrowers' independent public accountants); provided that,
if the Borrowers notify the Agent that the Borrowers wish to amend any covenant
in Article V to eliminate the effect of any change in GAAP on the operation of
such covenant (or if the Agent notifies the Borrowers that the Required Lenders
wish to amend Article
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V for such purpose), then the Borrowers' compliance with such covenant shall be
determined on the basis of GAAP in effect immediately before the relevant change
in GAAP became effective, until either such notice is withdrawn or such covenant
is amended in a manner satisfactory to the Borrowers and the Required Lenders.
ARTICLE II
THE CREDITS
SECTION 2.1 Commitments to Lend. Each Lender severally agrees, on the
terms and conditions set forth in this Agreement, to make the Loan to Borrowers
in accordance with the amount of its Commitment on the Closing Date. The Loan
shall be in the principal amount of Four Hundred Twenty Million Dollars
($420,000,000) (the "Loan Amount") of which Two Hundred Fifty Million
($250,000,000) shall be allocated to the 1290 Property (the "1290 Allocated Loan
Amount") and One Hundred Seventy Million ($170,000,000) shall be allocated to
the 237 Park Property (the "237 Park Allocated Loan Amount"). The Loan shall be
made from the several Lenders ratably in proportion to their respective
Commitments. The proceeds of the Loan shall be disbursed to Borrowers on the
Closing Date, subject to the provisions of this Agreement. The Loan will be
evidenced by the Notes (as provided in Section 2.4) and secured by the Mortgage.
SECTION 2.2 Method of Electing Interest Rates. (a) The Loan shall bear
interest initially at the type of rate or rates specified by the Borrowers in
the Initial Notice of Interest Rate Election delivered no less than three (3)
Euro-Dollar Business Days prior to the Closing Date. Thereafter, the Borrowers
may from time to time elect to change or continue the type of interest rate
borne by each Group of Loans (subject in each case to the provisions of Article
VIII), as follows:
(i) if such Loan Tranches are Alternate Base Rate Loans, the
Borrowers may elect to convert such Loan Tranches to Euro-Dollar Loans as of any
Euro-Dollar Business Day;
(ii) if such Loan Tranches are Euro-Dollar Loans, the Borrowers may
elect to convert such Loan Tranches to Alternate Base Rate Loans or elect to
contin-
26
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ue such Loan Tranches as Euro-Dollar Loans for an additional Interest Period, in
each case effective on the last day of the then current Interest Period
applicable to such Loan Tranches.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent at least three (3) Euro-Dollar Business Days before
the conversion or continuation selected in such notice is to be effective
(unless the relevant Loan Tranches are to be continued as Alternate Base Rate
Loans, in which case such notice shall be delivered to the Agent at least three
(3) Domestic Business Days before such continuation is to be effective). A
Notice of Interest Rate Election may, if it so specifies, apply to only a
portion of the aggregate principal amount of the relevant Group of Loans;
provided that (i) such portion is allocated ratably among the Loan Tranches
comprising such Group, (ii) the portion to which such Notice applies, and the
remaining portion to which it does not apply, are each $5,000,000 or any larger
multiple of $100,000, (iii) there shall be no more than six (6) Loan Tranches
comprised of Euro-Dollar Loans outstanding at any time, (iv) no Loan Tranche may
be continued as, or converted into, a Euro-Dollar Loan when any Event of Default
has occurred and is continuing, and (v) no Interest Period shall extend beyond
the Termination Date.
(b) Each Notice of Interest Rate Election (including the Initial
Notice of Interest Rate Election) shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable clause of
subsection (a) above;
(iii) if the Loan Tranches comprising such Group are to be
converted, the new type of Loan Tranches and, if such new Loan Tranches are
Euro-Dollar Loans, the duration of the initial Interest Period applicable
thereto; and
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(iv) if such Loan Tranches are to be continued as Euro-Dollar Loans
for an additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrowers pursuant to subsection (a) above, the Agent shall promptly notify each
Lender the same day as it receives such Notice of Interest Rate Election of the
contents thereof and such notice shall not thereafter be revocable by the
Borrowers. If the Borrowers fail to deliver a timely Notice of Interest Rate
Election to the Agent for any Group of Euro-Dollar Loans, such Euro-Dollar Loans
shall be converted into Alternate Base Rate Loans on the last day of the then
current Interest Period applicable thereto.
SECTION 2.3 Notice to Lenders; Funding of Loan.
(a) The Agent shall give the Lenders not less than three (3)
Domestic Business Days prior written notice of the Closing Date.
(b) Not later than 12:00 Noon (New York City time) on the Closing
Date, each Lender shall make available its Commitment, in Federal or other funds
immediately available in New York City, to the Agent at its address referred to
in Section 9.1. Unless the Agent determines that any applicable condition
specified in Article III has not occurred, the Agent will make the funds
(subject to the provisions of Section 2.1) so received from the Lenders
available to the Borrowers at the Agent's aforesaid address on or before 1:00
P.M. (New York City time) on the Closing Date. Notwithstanding the foregoing,
Agent hereby agrees to fund any Commitment not funded by any Lender on the
Closing Date provided any applicable condition specified in Article III hereof
has occurred.
SECTION 2.4 Promissory Notes.
(a) The Loan shall be evidenced by the Notes, each of which shall be
payable to the order of each Lender for the account of its Applicable Lending
Office in an amount equal to each such Lender's Commitment.
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(b) Upon receipt of each Lender's Note pursuant to Section 3.1(a),
the Agent shall forward such note to such Lender. Each Lender shall record the
date, amount, type and maturity of the portion of the Loan made by it and the
date and amount of each payment of principal made by the Borrowers with respect
thereto, and may, if such Lender so elects in connection with any transfer or
enforcement of its Note, endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding; provided that the failure of any Lender to make any
such recordation or endorsement shall not affect the obligations of the
Borrowers hereunder or under the Notes. Each Lender is hereby irrevocably
authorized by the Borrowers so to endorse its Note and to attach to and make a
part of its Note a continuation of any such schedule as and when required.
SECTION 2.5 Maturity of the Loan. The Loan shall mature, and the
outstanding principal balance thereof shall be due and payable, on the
Termination Date.
SECTION 2.6 Interest Rates.
(a) Each Alternate Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Alternate
Base Rate Loan is made until it becomes due, at a rate per annum equal to the
Alternate Base Rate for such day. Such interest shall be payable for each
Interest Period on the last Domestic Business Day thereof and, with respect to
the principal amount of any Alternate Base Rate Loan converted to a Euro-Dollar
Loan, on each date an Alternate Base Rate Loan is so converted, for the period
through the day immediately preceding the date of such conversion. Any overdue
principal of or interest on any Alternate Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 3% plus the Alternate Base Rate for such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin plus the
Adjusted London Interbank Offered Rate applicable to such Interest Period. Such
interest shall be payable on the last Euro-Dollar Business Day of each Interest
Period, except that with respect to any Interest Period that
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<PAGE>
is longer than one month, interest shall be payable on the last Euro-Dollar
Business Day of each one (1) month period. Any overdue principal of or interest
on any Euro-Dollar Loan shall bear interest, payable on demand, for each day
until paid, at a rate per annum equal to the sum of 3% plus the Alternate Base
Rate for such date.
"Euro-Dollar Margin" means 1.565%
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the product arrived at by
multiplying the London Interbank Offered Rate applicable to such Interest Period
by a fraction (expressed as a decimal, and hereinafter referred to as the
"Euro-Dollar Reserve Percentage"), the numerator of which shall be the number
one and the denominator of which shall be the number one minus the aggregate
reserve percentages (expressed as a decimal) from time to time established by
the Board of Governors of the Federal Reserve System of the United States and
any other banking authority to which the Agent is now or hereafter subject,
including, but not limited to any reserve on Eurocurrency Liabilities as defined
in Regulation D of the Board of Governors of the Federal Reserve System of the
United States at the ratios provided in such Regulation from time to time, it
being agreed that each Euro- Dollar Loan shall be deemed to constitute
Eurocurrency Liabilities, as defined by such Regulation, and it being further
agreed that such Eurocurrency Liabilities shall be deemed to be subject to such
reserve requirements without benefit of or credit for prorations, exceptions or
offsets that may be available to the Agent from time to time under such
Regulation and irrespective of whether the Agent actually maintains all or any
portion of such reserve.
The "London Interbank Offered Rate" applicable to a particular
Interest Period shall mean a rate per annum equal to the rate for U.S. dollar
deposits with maturities comparable to such Interest Period which appears on
Telerate Page 3750 as of 11:00 a.m., London time, two (2) Euro-Dollar Business
Days prior to the commencement of such Interest Period, provided, however, that
if such rate does not appear on Telerate Page 3750, the "London Interbank
Offered Rate" applicable to a particular Interest Period shall mean a rate per
annum equal to the rate at which U.S. dollar deposits in an amount approximately
equal to the applicable Euro-Dollar
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Loan(s), and with maturities comparable to the last day of the Interest Period
with respect to which such London Interbank Offered Rate is applicable, are
offered in immediately available funds in the London Interbank Market to the
London office of the Agent by leading banks in the Eurodollar market at 11:00
a.m., London time, two (2) Euro-Dollar Business Days prior to the commencement
of the Interest Period to which such London Interbank Offered Rate is
applicable.
"Telerate Page 3750" means the display designated as "Page 3750" on
the Associated Press-Dow Jones Telerate Service (or such other page as may
replace Page 3750 on the Associated Press-Dow Jones Telerate Service or such
other service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Banker's Association
interest settlement rates for U.S. Dollar deposits). Any London Interbank
Offered Rate determined on the basis of the rate displayed on Telerate Page 3750
in accordance with the provisions hereof shall be subject to corrections, if
any, made in such rate and displayed by the Associated Press-Dow Jones Telerate
Service within one hour of the time when such rate is first displayed by such
Service.
(c) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to Borrowers and the
participating Lenders of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
SECTION 2.7 Fees. All fees set forth in the Fee Letter shall be deemed to
have been earned on the date set forth in the Fee Letter in accordance with the
provisions thereof and shall be non-refundable. The obligation of Borrowers to
pay such fees in accordance with the provisions of the Fee Letter shall be
binding upon Borrowers regardless of whether the Loan is actually made. Except
as set forth in the Fee Letter or as otherwise specifically set forth in this
Agreement, the Mortgage, any other Loan Document or elsewhere in writing, there
are no other fees payable by Borrowers in connection with the transactions
contemplated hereby.
SECTION 2.8 Amortization of Principal; Mandatory Termination or Prepayment
of Loans.
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(a) The term (the "Term") of the Loan shall terminate on October 10,
2001 (the "Termination Date"). If the Loan is outstanding on the Termination
Date, the same shall be due and payable (together with accrued interest thereon)
on the Termination Date, and Borrowers shall repay the same in full.
(b) Subject to the provisions of Section 2.11 hereof, commencing on
the First Payment Date and continuing until the Termination Date, on each
Payment Date, Borrowers shall make forty-eight (48) installments of principal in
the applicable Monthly Amount. Each monthly installment of principal shall be
due and payable on each Payment Date and shall be applied to the principal due
hereunder as allocated in the definition of "Monthly Amount".
(c) If a Termination Event or an Event of Default (as such terms are
defined in the Swap Agreement) has occurred under the Swap Agreement, payments
made by Borrowers to Agent hereunder shall be applied pro rata (based on the
outstanding balances then due) (i) to the principal due hereunder and (ii) to
the Counterparty for any payments due under the Swap Agreement as a result of
such Termination Event or Event of Default.
(d) Notwithstanding anything to the contrary contained in Section
2.8(b) above, in the event that any scheduled amortization payment required
pursuant to Section 2.8(b) would, in the reasonable opinion of counsel to the
Borrowers (which opinion may be based on financial projections provided by
Borrowers and which are reasonably satisfactory to Agent), cause the Borrowers
to fail to comply with the requirements of Section 857(a)(1)(A) of the Internal
Revenue Code with respect to such fiscal year, the Borrowers shall be permitted,
upon ten (10) Domestic Business Days prior written notice to the Agent, in lieu
of making such scheduled amortization payment, to deliver to the Agent a Letter
of Credit in the amount of such scheduled amortization payment (each such Letter
of Credit, a "Principal Letter of Credit") which Principal Letter of Credit
shall permit Agent to draw the entire amount of such Letter of Credit upon the
earlier to occur of an Event of Default hereunder or the Termination Date and
which Letter of Credit shall be appropriately reduced to reflect the release of
either Property pursuant to Section 2.9(d). In the event that on any Payment
Date, Borrowers shall deliver a Principal
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Letter of Credit in lieu of making a scheduled amortization payment, the
outstanding principal balance of the Loan shall not be reduced until such time
as (i) provided an Event of Default is then occurring, the Agent draws the
entire amount of such Principal Letter of Credit (which amounts may be applied
at Agent's discretion to obligations other than the outstanding principal
balance of the Loan, as provided in Section 6.2 hereof) or (ii) on any
subsequent Payment Date, the Borrowers deliver immediately available funds to
Agent in the face amount of such Principal Letter of Credit (in which event the
Agent shall return such Principal Letter of Credit to the Borrowers).
(e) If at any time from and after the Closing Date, Permitted Owners
shall, in the aggregate, own less than thirty percent (30%) of the outstanding
shares of common stock of the REIT, then, upon notice of such event by the Agent
upon the written direction of the Required Lenders to the Borrowers, the
Commitments shall terminate and the Borrowers shall be required to prepay the
Loan and any other Obligations in their entirety on the Mandatory Prepayment
Date as if the Mandatory Prepayment Date were the Termination Date (such event
being a "Mandatory Prepayment Event"). The "Mandatory Prepayment Date" shall be
the date which is 180 days after the Agent's notice provided, however, that if
such condition shall not have occurred more than one prior time within the
eighteen (18) month period prior to the Agent's notice thereof to the Borrowers,
then the Mandatory Prepayment Event shall not be deemed to have occurred if
Permitted Owners shall own not less than 30% of the REIT stock at any time prior
to the expiration of such one hundred eighty (180) day period, in which event
the Termination Date shall be reinstated as the maturity date of the Loan. The
Borrowers shall make such prepayment on the Mandatory Prepayment Date together
with interest accrued to the date of the prepayment on the principal amount
prepaid together with all other Obligations. Notwithstanding the foregoing, the
Mandatory Prepayment Date (as so extended, the "Extended Mandatory Prepayment
Date") shall be extended for a period of ninety (90) days provided the Borrowers
shall deliver to Agent prior to the Mandatory Prepayment Date a binding
commitment (subject only to customary conditions) from one or more Institutional
Lenders to refinance the Loan in its entirety, which commitment shall be
satisfactory to Agent in its sole discretion. Notwithstanding anything to the
con-
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trary contained herein, upon the third occurrence of a Mandatory Prepayment
Event within any eighteen (18) month period, the Borrowers shall be required to
prepay the Loan in its entirety on or before the Mandatory Prepayment Date, as
such date may be extended for ninety (90) days as provided above, and the
Borrowers shall have no right to cure such Mandatory Prepayment Event as
provided above.
SECTION 2.9 Optional Prepayments; Property Release.
(a) The Borrowers may, upon at least five (5) Domestic Business
Days' notice to the Agent, prepay, without premium or penalty, any Alternate
Base Rate Loan in whole at any time, or from time to time in part, in amounts
aggregating at least Five Hundred Thousand Dollars ($500,000), by paying the
principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay
ratably the Alternate Base Rate Loans of the several Lenders included in such
Borrowing and shall be applied in inverse order of maturity of such Loans pro
rata to each of the 237 Park Allocated Loan Amount and the 1290 Allocated Loan
Amount until such time as the Loan is repaid in full.
(b) Subject to Section 2.11, Borrowers may, upon at least five (5)
Euro-Dollar Business Days' notice to the Agent, prepay without premium or
penalty, any Euro-Dollar Loan in whole at any time, or from time to time in
part, in amounts aggregating at least Five Hundred Thousand Dollars ($500,000)
by paying the principal amount to be prepaid together with accrued interest
thereon to the date of prepayment and Borrowers shall also pay any applicable
expenses pursuant to Section 2.11. Each such optional prepayment shall be
applied to prepay ratably the Euro-Dollar Loans of the several Lenders included
in such borrowing and except as provided in Section 2.9(e), shall be applied in
inverse order of maturity of such Loans pro rata to each of the 237 Park
Allocated Loan Amount and the 1290 Allocated Loan Amount until such time as the
Loan is repaid in full.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Lender of the contents thereof and of such
Lender's ratable share (if any) of such prepayment and such notice shall not
thereafter be revocable by Borrowers.
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(d) Except as set forth in this Section 2.9(d), no repayment of
principal of any Note shall cause, give rise to a right to require or otherwise
result in, the release of the Lien of the Mortgage on any Property. The
Borrowers may obtain the release (in whole, but not in part) of one of the
Properties (as selected by Borrowers in their sole discretion) from the Lien of
the Mortgage and the Assignment of Leases upon satisfaction of the applicable
conditions in this Section 2.9(d) and each of the following conditions (such
Property, the "Released Property"):
(i) immediately prior to and after giving effect to the
proposed release, no Event of Default or Default pursuant to
Section 6.1(i) shall have occurred and be continuing or
Mandatory Prepayment Event shall have occurred and be
continuing;
(ii) not later than 12:00 Noon (New York City time) on the
date of such release (any such date, the "Release Date"), the
Borrowers deliver by wire transfer to the Agent, in Federal or
other funds immediately available in New York City, the
applicable Release Price together with all interest accrued
and unpaid thereon;
(iii) not later than 12:00 Noon (New York City time) on the
date of such release, the Borrowers shall deliver by wire
transfer to the Agent, in Federal or other funds immediately
available in New York City, any amounts due to the Agent and
the Lenders pursuant to Section 2.11 together with any other
fees and reasonable out-of pocket expenses (including Agent's
reasonable attorneys' fees and disbursements) incurred in
connection with such release then due and payable hereunder;
(iv) not later than fifteen (15) Domestic Business Days prior
to the date of such release, a notice to the Agent specifying
or including the following:
(A) the Property to be released;
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(B) the Release Price;
(C) the date of the release (which shall be
irrevocable);
(D) an Officer's Certificate certifying that the
conditions under this Agreement to such release will be
satisfied on the date of such release (which Officer's
Certificate shall be updated and delivered to the Agent
on the date of such release); (E) all documentation
required to be delivered by this Agreement to Agent to
effect such release, together with an Officer's
Certificate certifying that such documentation (x) is in
compliance with all Requirements (as defined in the
Mortgage) and (y) will effect such release in accordance
with the terms of this Agreement; and
(v) on the release date, the Borrowers shall deliver to the
Agent a paid endorsement to the Title Policy confirming (in
the Agent's sole satisfaction) that the release of the
Released Property shall not affect the Lien of the Mortgage on
the Property which is not released.
In the event the Released Property is the 1290 Property, in addition
to releasing the Lien of the Mortgage and the Assignment of Leases with respect
to the 1290 Property, Agent shall also release (i) the 1290 Borrower with
respect to the Notes and the other Loan Documents other than matters relating to
the 1290 Property stated to survive the repayment of the Loan, (ii) the Lien of
the Note Pledge with respect to the Robinson Note (and shall return the Robinson
Note to the 1290 Borrower), (iii) any funds held in the Expiring Lease Costs
Reserve Sub-Account (or Letters of Credit, if any, held in lieu of such funds)
in excess of Six Million Dollars ($6,000,000), other than any Reserve Portion to
be held in accordance with Section 2.9(e) hereof and (iv) any funds held in the
Imposition Sub-Account and the Insurance Sub-Account (as such terms are defined
in the Cash Collateral Agreement) relating to the 1290 Property.
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In the event the Released Property is the 237 Park Property, in
addition to releasing the Lien of the Mortgage and the Assignment of Leases with
respect to the 237 Park Property, Agent shall also release (i) the 237 Park
Borrower with respect to the Notes and the other Loan Documents other than
matters relating to the 237 Park Property stated to survive the repayment of the
Loan, (ii) the Lien of the Note Pledge with respect to the Warburg Note (and
shall return the Warburg Note to the 237 Park Borrower), (iii) any funds held in
the Expiring Lease Costs Reserve Sub-Account (or Letters of Credit, if any, held
in lieu of such funds) in excess of Nine Million Dollars ($9,000,000) and (iv)
any funds held in the Imposition Sub-Account and the Insurance Sub-Account
relating to the 237 Park Property.
(e) In the event of a release of a Property pursuant to Section
2.9(d), the Release Price shall be applied as follows:
(i) Notwithstanding anything to the contrary contained herein,
in the event the 1290 Property is the Property that is released from
the Lien of the Mortgage, the Agent with the consent of the Required
Lenders shall have the option, exercisable on the date of such
release, to require that up to Ten Million Dollars ($10,000,000) of
the Release Price (such amount, being the "Reserve Portion") be
deposited into the Expiring Lease Costs Reserve Sub- Account of the
Cash Collateral Account as additional collateral for the Loan, to be
disbursed pursuant to the terms of the Cash Collateral Agreement.
Notwithstanding the foregoing, in the event (A) such release is
consummated either (x) prior to the third anniversary of the Closing
Date or (y) subsequent to the date that the Expiring Lease Costs
have been fully funded (as determined by the Agent in its sole
discretion) or (B) at anytime after such release, the Expiring Lease
Costs have been fully funded (as determined by the Agent in its sole
discretion), provided no Event of Default has occurred and is then
continuing, the remaining Reserve Portion shall be applied to the
then outstanding Loan Amount; and
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(ii) provided no Event of Default has occurred and is then
continuing, the remaining Release Price (less the Reserve Portion,
if any) shall be applied by the Agent to reduce the outstanding
principal amount of the Loan in accordance with Section 2.10 of this
Agreement.
(f) Any amounts so prepaid pursuant to this Section 2.9 may not be
reborrowed or reinstated.
SECTION 2.10 General Provisions as to Payments.
(a) The Borrowers shall make each payment of principal of, and
interest on, the Loan not later than 12:00 Noon (New York City time) on the date
when due, in Federal or other funds immediately available in New York City, to
the Agent at its address referred to in Section 9.1. The Agent will distribute
to each Lender on the same day as receipt its ratable share of each such payment
received by the Agent for the account of the Lenders. Whenever any payment of
principal of, or interest on, the Alternate Base Rate Loans or of fees shall be
due on a day which is not a Domestic Business Day, the date for payment thereof
shall be extended to the next succeeding Domestic Business Day. Whenever any
payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar Business Day. If the
date for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrowers
prior to the date on which any payment is due to the Lenders hereunder that the
Borrowers will not make such payment in full, the Agent may assume that the
Borrowers has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent that the Borrowers shall not have so made such payment, each Lender shall
repay to the Agent forthwith on demand such amount distributed to such Lender
together with interest there-
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on, for each day from the date such amount is distributed to such Lender until
the date such Lender repays such amount to the Agent, at the Federal Funds Rate.
SECTION 2.11 Funding Losses. If the Borrowers make any payment of
principal with respect to any Euro-Dollar Loan (pursuant to Sections 2.8, 2.9,
Article VI or VIII or otherwise) on any day other than the last day of the
Interest Period applicable thereto, or if the Borrowers fail to borrow or prepay
any Euro-Dollar Loans after notice has been given to any Lender in accordance
with Sections 2.3(a), 2.8 or 2.9, the Borrowers shall reimburse each Lender
within fifteen (15) days after demand for any resulting loss or expense
reasonably incurred by it as reasonably determined by such Lender, including
(without limitation) any loss incurred in obtaining, liquidating or employing
deposits from third parties, but excluding loss of margin for the period after
any such payment or conversion or failure to borrow or prepay, provided that
such Lender shall have delivered to the Borrowers a certificate setting forth in
reasonable detail the calculation as to the amount of such loss or expense,
which certificate shall be conclusive in the absence of manifest error.
SECTION 2.12 Computation of Interest and Fees. Interest based on the Prime
Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days
in a leap year) and paid for the actual number of days elapsed (including the
first day but excluding the last day). All other interest and fees shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day).
SECTION 2.13 Intentionally Omitted.
SECTION 2.14 Cash Collateral Account.
(a) Concurrently with the execution of this Agreement and the other
Loan Documents, the Borrowers and the Agent are entering into the Cash
Collateral Agreement. Commencing on the Closing Date and continuing throughout
the Term, the Borrowers shall direct and cause all Tenants making payments under
their Leases and all other Persons making payments to the Borrowers (other than
capital contributions or loans made by the partners to the Borrowers), whether
constituting rents, royalties,
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issues, profits, insurance proceeds (except as otherwise provided in the
Mortgage), condemnation proceeds, refunds, rebates, escalations, option
payments, applications of security deposits, collection proceeds and other
payments of whatever type or nature, foreseen or unforeseen (collectively,
"Rentals") whether such Rentals are in payment of past, present or future Rental
obligations, to make such payments directly to the Agent for deposit in the Cash
Collateral Account to be disbursed pursuant to the terms of the Cash Collateral
Agreement.
(b) Concurrently with the execution of this Agreement and the other
Loan Documents, the Borrowers are delivering to the Agent for deposit in the
Cash Collateral Account to be disbursed pursuant to the terms of the Cash
Collateral Agreement any and all funds and to the extent not deposited for
collection or negotiated, all checks, drafts and other instruments, in each case
received on account of payments of Rentals which are in the Borrowers'
possession or control whether or not such payments are for past (other than
Rentals due prior to the Closing Date), present or future Rental obligations.
(c) All disbursements from the Sub-Accounts (as defined in the Cash
Collateral Agreement) established pursuant to the Cash Collateral Agreement
shall be made in accordance with the terms of the Cash Collateral Agreement.
SECTION 2.15 Expiring Lease Costs Reserve.
(a) Commencing in the Fourth Loan Year, Borrowers shall deposit
fifty percent (50%) of the Net Cash Flow for the first month thereof and for
each month thereafter during the remainder of the Term into a reserve
sub-account of the Cash Collateral Account (the "Expiring Lease Costs Reserve
Sub-Account") on the fifteenth day of the next succeeding month; provided that
if the fifteenth day of any month is not a Domestic Business Day, the next
succeeding Domestic Business Day of such month, until the balance of the
Expiring Lease Costs Reserve Sub-Account shall total Fifteen Million Dollars
($15,000,000) in the aggregate (subject to the terms of Section 2.9(d) hereof
and the terms of the Cash Collateral Agreement). All amounts deposited into the
Expiring Lease Costs Reserve Sub-Account shall be held in the Expiring Lease
Costs Reserve Sub-Account pursuant to the terms of the Cash Collateral
Agreement, as additional
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security for the Loan, and shall be disbursed by Agent only for such Expiring
Lease Costs as have been approved by the Agent in its reasonable discretion or
as otherwise provided in the Cash Collateral Agreement.
(b) Notwithstanding the foregoing, the Borrowers shall have the
right, in lieu of making the cash deposit required pursuant to Section 2.15(a)
above, to deliver a Letter of Credit in the amount of 50% of the Net Cash Flow
for such month and Borrowers may at any time during the Fourth Loan Year and the
Fifth Loan Year, deliver to Agent a Letter of Credit in substitution for cash on
deposit in the Expiring Lease Costs Reserve Sub- Account (each such Letter of
Credit, a "Cash Flow Letter of Credit"), to be held as additional security for
the Loan, which Cash Flow Letter of Credit shall permit Agent to draw the entire
amount of such Cash Flow Letter of Credit upon the earlier to occur of an Event
of Default hereunder, the Termination Date, or at such time as may be necessary
to fund Expiring Lease Costs in accordance with the Cash Collateral Agreement.
In the event that at any time during the Term, the Borrowers deliver funds to
the Agent in the face amount of such Cash Flow Letter of Credit, provided no
Event of Default has occurred and is then continuing, the Agent shall return
such Cash Flow Letter of Credit to the Borrowers and shall deposit such funds
into the Expiring Lease Costs Reserve Sub-account.
ARTICLE III
CONDITIONS
SECTION 3.1 Closing. The closing hereunder shall occur on the date (the
"Closing Date") when each of the following conditions is satisfied (or waived by
the Agent), each document to be dated the Closing Date unless otherwise
indicated:
(a) each Borrower shall have executed and delivered to the Agent the
Notes for the account of each Lender dated on or before the Closing Date
complying with the provisions of Section 2.4;
(b) the Borrowers shall have executed and delivered to the Agent the
Mortgage;
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(c) each Borrower shall have executed and delivered to the Agent
this Agreement;
(d) each Borrower and each General Partner shall have executed and
delivered to the Agent the Envi- ronmental Guaranty;
(e) each Borrower shall have entered into the Swap Agreement with
the Counterparty, for the Term;
(f) each Borrower shall have executed and delivered to the Agent the
Swap Pledge;
(g) each Borrower shall have executed and delivered to Agent the
Assignment of Leases and Rents;
(h) each Borrower shall have executed and delivered to the Agent the
Cash Collateral Agreement;
(i) each Borrower shall have executed and delivered to the Agent the
Note Pledge;
(j) the Borrowers shall have delivered the original Pledged Notes to
the Agent;
(k) the Manager and each Borrower shall have executed and delivered
to the Agent the Consent and Subordination of the Property Management Agreement;
(l) the Asset Manager and each Borrower shall have executed and
delivered to the Agent the Consent and Subordination of the Asset Management
Agreement;
(m) the Settlement Agreement, dated as of January 12, 1996 (the
"Settlement Agreement") with respect to the disposition of the Properties to the
Borrowers shall have been executed and delivered by all parties thereto and the
Agent shall have received an unappealable order of the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court") in form and
substance reasonably satisfactory to the Agent approving the Settlement
Agreement;
(n) the Agent shall have received satisfactory executed estoppels
(in a form previously approved by Agent) from all Tenants leasing in the
aggregate 15,000 or more rentable square feet under one or more Leases;
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(o) the Agent shall have received executed subordination and
attornment agreements (in a form previously approved by Agent) from the Tenants
set forth in Exhibit H attached hereto;
(p) the Agent shall have received an independent, third party "MAI"
appraisal for the Properties, performed in compliance with FIRREA, acceptable to
Agent in all respects, and stating an aggregate market value for the Properties
of not less than $600,000,000 and Borrowers shall have paid all costs incurred
in connection with such appraisal;
(q) the Agent shall have received an opinion of Battle Fowler LLP,
counsel for Borrowers, acceptable to the Agent, the Lenders and their counsel;
(r) the Agent shall have received and approved all documents the
Agent may reasonably request relating to the existence of Borrowers, the Lower
Tier LP, the Upper Tier LP, the REIT and each General Partner, the authority for
this Agreement and the other Loan Documents, and any other matters relevant
hereto, all in form and substance reasonably satisfactory to the Agent; such
documentation shall include, without limitation, the certificates of limited
partnership and the partnership agreements of Borrowers, the Lower Tier LP and
the Upper Tier LP, as amended, modified or supplemented prior to the Closing
Date, certified to be true, correct and complete by the General Partners or the
REIT, as applicable, as of a date not more than ten (10) days prior to the
Closing Date, together with a good standing certificate from the Secretaries of
State (or the equivalent thereof) of New York (other than with respect to the
Upper Tier LP and the REIT) and Delaware and with respect to the REIT, Maryland,
to be dated not more than ten (10) days prior to the Closing Date, the
certificate of incorporation, and all amendments thereto, certified by the
Secretary of State of the State of Delaware or Maryland, as applicable, and
by-laws of each General Partner and the REIT certified by an officer thereof to
be true and complete together with a certificate of the Secretary of State (or
the equivalent thereof) of the State of Delaware or Maryland, as applicable, to
the effect that such corporation is in good standing therein, and resolutions of
the boards of directors of each General Partner and the REIT, authorizing the
transactions contemplated hereby;
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(s) the Second Amended Joint Plan of Reorganization of 237 Park
Avenue Associates, L.L.C. and 1290 Associates, L.L.C. (the "Debtors") and the
Olympia & York Noteholders Ad Hoc Committee (the "Committee") shall have been
amended to provide for Borrowers' agreement to assume the obligations of the
Debtors and the Committee under the Fee Letter and the Commitment Letter or the
Borrowers shall have otherwise agreed to assume the obligations of the Debtors
and the Committee under the Fee Letter and the Commitment Letter;
(t) the Agent shall have received an order of the Bankruptcy Court
in form and substance reasonably satisfactory to the Agent approving the
transactions and provisions of the Fee Letter and the Commitment Letter;
(u) the Agent shall have received all certificates, agreements and
other documents and papers referred to in this Section 3.1 and Section 3.2,
unless otherwise specified, in sufficient counterparts, reasonably satisfactory
in form and substance to the Agent;
(v) the Agent shall have received and approved all information and
documentation necessary to evidence the organization, ownership and structure of
the REIT;
(w) the Escrow Sub-Account (as defined in the Cash Collateral
Agreement) shall have been funded in the amount of $5,508,000 in accordance with
the terms of the Cash Collateral Agreement;
(x) the Agent shall have received a copy of the Environmental Report
(as hereinafter defined) and shall be reasonably satisfied that the Borrowers
and the Properties are not subject to any present or contingent environmental
liability which could have a Material Adverse Effect;
(y) the Agent shall have received wire transfer instructions from
Borrowers in connection with the Loan to be made on the Closing Date;
(z) the Borrowers shall have entered into the Swap Agreement in form
and substance reasonably satisfactory to Agent.
(aa) the Agent shall have received copies of all material consents,
licenses and approvals, if any,
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required as of the date hereof in connection with the execution, delivery and
performance by the Borrowers, and the validity and enforceability, of the Loan
Documents, or in connection with any of the transactions contemplated thereby,
and such consents, licenses and approvals shall be in full force and effect;
(bb) the Agent shall have received certificates of insurance
satisfying insurance coverages, amounts and other requirements set forth in
Section 5 of the Mortgage;
(cc) the Agent shall have received satisfactory reports of UCC
(collectively, the "UCC Searches"), tax lien, judgment and litigation searches
conducted by a search firm acceptable to the Agent with respect to the
Properties, the Borrowers, the Upper Tier LP, the Lower Tier LP and the REIT in
each of the locations reasonably specified by the Agent;
(dd) the Borrowers shall have executed and delivered to the Agent
UCC-1 financing statements, as debtor, naming the Agent as secured party;
(ee) the Agent shall have received in form and substance
satisfactory to the Agent a paid title insurance policy (the "Title Policy") on
mortgagee's ALTA Form 1992 (with a New York rider) provided by each Title
Insurer in such amounts as Agent shall reasonably approve, in the aggregate
amount of the Loan, insuring the Mortgage as of the Closing Date to be a valid
first lien on the Properties, free and clear of all defects and encumbrances
except Permitted Liens. The Title Policy shall contain:
(i) full coverage against mechanics' liens;
(ii) no survey exceptions not theretofore approved by the Agent and
its counsel; and
(iii) such endorsements as Agent shall require, including but not
limited to, endorsements with respect to extended coverage,
comprehensive, survey, tax lot, variable rate, usury, doing
business, tie-in, creditors' rights and first loss;
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(ff) the Agent shall have received a visually inspected and redated
survey of the Properties acceptable to the Agent, certified to Borrowers, the
Agent and Title Insurer in a form satisfactory to Agent;
(gg) the Agent shall have received a copy of the Engineering Report
(as hereinafter defined) with respect to the Properties, satisfactory to the
Agent;
(hh) all representations and warranties of Borrowers set forth
herein shall be true and correct in all material respects;
(ii) the Agent shall have received an Initial Notice of Interest
Rate Election as required by Section 2.2;
(jj) the Agent shall have received and ap- proved the Property
Management Agreement;
(kk) the Agent shall have received and ap- proved the Asset
Management Agreement;
(ll) the Agent shall have received all Leases and received and
approved all Major Leases;
(mm) the Agent shall have received a valid Certificate of Occupancy
for each Property;
(nn) the Agent shall have received the Budget;
(oo) the Agent shall have received from the Borrowers executed
notices to Tenants notifying the Tenants that all Rentals shall be deposited
into the Collection Accounts; and
(pp) no event shall have occurred which could have a Material
Adverse Effect.
The Agent shall promptly notify Borrowers and the Lenders of the
Closing Date, and such notice shall be conclusive and binding on all parties
hereto.
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ARTICLE IV
BORROWERS' REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and each of the other Lenders which may
become a party to this Agreement to make the Loan, each Borrower makes the
following representations and warranties as of the Closing Date. Such
representations and warranties shall survive the effectiveness of this
Agreement, the execution and delivery of the other Loan Documents and the making
of the Loan.
SECTION 4.1 Existence and Power.
(a) Each Borrower is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware and has
all powers and all material governmental licenses, authorizations, consents and
approvals required to own its property and assets and carry on its business as
now conducted, or as it presently proposes to conduct it as of the date hereof,
and upon completion of its publication requirements (which Borrowers shall
complete with diligence) will be duly qualified to do business and in good
standing in the State of New York and in every other jurisdiction in which the
failure to be so qualified and/or in good standing is likely to have a Material
Adverse Effect.
(b) Each General Partner is a corporation duly formed, validly
existing and in good standing under the laws of the State of Delaware and has
all powers and all material governmental licenses, authorizations, consents and
approvals required to own its property and assets and carry on its business as
now conducted, or as it presently proposes to conduct it as of the date hereof,
and has been duly qualified to do business and is in good standing in the State
of New York, and in every other jurisdiction in which the failure to be so
qualified and/or in good standing is likely to have a Material Adverse Effect.
(c) The REIT is a corporation duly formed, validly existing and in
good standing under the laws of the State of Maryland and has all powers and all
material governmental licenses, authorizations, consents and approvals required
to own its property and assets and carry on its business as now conducted, or as
it present-
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ly proposes to conduct it as of the date hereof, and has made application to
qualify to do business in the State of New York (which the REIT will complete
with due diligence) and is in good standing and in every other jurisdiction in
which the failure to be so qualified and/or in good standing is likely to have a
Material Adverse Effect.
(d) The Lower Tier LP is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware and has
all powers and all material governmental licenses, authorizations, consents and
approvals required to own its property and assets and carry on its business as
now conducted, or as it presently proposes to conduct it as of the date hereof,
and upon completion of its publication requirements (which the Lower Tier LP
shall complete with diligence) will be duly qualified to do business and is in
good standing in the State of New York, and in every other jurisdiction in which
the failure to be so qualified and/or in good standing is likely to have a
Material Adverse Effect.
(e) The Upper Tier LP is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware and has
all powers and all material governmental licenses, authorizations, consents and
approvals required to own its property and assets and carry on its business as
now conducted, or as it presently proposes to conduct it as of the date hereof,
and has been duly qualified to do business and is in good standing in every
jurisdiction in which the failure to be so qualified and/or in good standing is
likely to have a Material Adverse Effect.
SECTION 4.2 Power and Authority.
(a) Each Borrower has the full partnership power and authority to execute,
deliver and carry out the terms and provisions of each of the Loan Documents
applicable to such Borrower and has taken all necessary partnership action to
authorize the execution and delivery on behalf of such Borrower and the
performance by or on behalf of such Borrower of such Loan Documents. Each
Borrower has duly executed and delivered each Loan Document applicable to such
Borrower and each such Loan Document constitutes the legal, valid and binding
obligation of such Borrower,
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enforceable in accordance with its terms, except as enforceability may be
limited by applicable insolvency, bankruptcy or other laws affecting creditors'
rights generally or general principles of equity, whether such enforceability is
considered in a proceeding in law or at law.
(b) Each General Partner has the full corporate power and authority to
execute, deliver and carry out the terms and provision of each of the Loan
Documents applicable to such General Partner to which it is a party and has
taken all necessary corporate action to authorize the execution and delivery on
behalf of such General Partner and the performance by or on behalf of such
General Partner of such Loan Documents. Each General Partner has duly executed
and delivered each Loan Document applicable to such General Partner and each
such Loan Document constitutes the legal, valid and binding obligation of such
General Partner, enforceable in accordance with its terms, except as
enforceability may be limited by applicable insolvency, bankruptcy or other laws
affecting creditors' rights generally or general principles of equity, whether
such enforceability is considered in a proceeding in law or at law.
SECTION 4.3 No Violation. Neither the execution, delivery or performance
by or on behalf of each Borrower of the Loan Documents, nor compliance by each
Borrower with the terms and provisions thereof nor the consummation of the
transactions contemplated by the Loan Documents (i) will contravene any
applicable provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental instrumentality or (ii) will
materially conflict with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, the terms of any
material indenture, mortgage, deed of trust, or other agreement or other
instrument to which any Borrower (or of any partnership of which any Borrower is
a partner) is a party or to such Borrower's knowledge by which it or any of its
property or assets is bound or to which it is subject, or result in the creation
or imposition of (or the obligation to create or impose) any Lien (except
pursuant to the Loan Documents) upon any of the property or assets of a Borrower
or (iii) will cause a default by any Borrower under its partnership agreement.
SECTION 4.4 Intentionally Deleted.
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SECTION 4.5 Litigation. There is no action, suit or proceeding pending
against, or to the knowledge of either Borrower threatened against or affecting,
(i) any Borrower, (ii) the Loan Documents or any of the transactions
contemplated by the Loan Documents or (iii) either Property, before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could, individually, or in
the aggregate materially adversely affect the business, financial position or
results of operations of either Borrower or which in any manner draws into
question the validity or enforceability of this Agreement or the other Loan
Documents or the priority of the liens of the Mortgage, the Swap Pledge, the
Note Pledge or the Cash Collateral Agreement.
SECTION 4.6 Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could reasonably result in the imposition of a Lien or the
posting of a bond or other security under ERISA or the Internal Revenue Code, or
(iii) incurred any liability under Title IV of ERISA other than a liability to
the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.7 Environmental Compliance. To the best of each Borrower's
knowledge, except as set forth in the Phase I Environmental Site Assessments
prepared by AquaTerra, dated June 27, 1994, and the Phase I Environmental Site
Assessment Updates prepared by AquaTerra, dated April 15, 1996 (with respect to
the 237 Park Property), and April 16, 1996 (with respect to the 1290 Property),
and delivered to the Agent with respect to the Properties (the "Environmental
Report"), (i) there are in effect all Environmental Approvals which are required
to be obtained under all Environmental Laws with respect to each Property, (ii)
each Borrower is in compliance in all material respects with the terms and
conditions of all
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such Environmental Approvals, and is also in compliance in all material respects
with all other Environmental Laws or any plan, order, decree, judgment,
injunction, notice or demand letter issued, entered or approved thereunder.
Except as set forth in the Environmental Report, to the best
knowledge of each Borrower:
i) There are no Environmental Claims or investigations pending or
threatened by any Governmental Authority with respect to any alleged
failure by either Borrower to have any Environmental Approval required in
connection with the conduct of the business of such Borrower on the
applicable Property, or with respect to any generation, treatment,
storage, recycling, transportation, Release or disposal of any Hazardous
Substances generated by the Borrowers or any lessee on either Property;
ii) No Hazardous Substance has been Released at either Property to
an extent that it may reasonably be expected to have a Material Adverse
Effect;
iii) No PCB (in amounts or concentrations which exceed those set by
applicable Environmental Laws) is present at either Property;
iv) No friable asbestos is present at either Property;
v) There are no underground storage tanks for Hazardous Materials,
active or abandoned, at either Property;
vi) No Environmental Claims have been filed with a Governmental
Authority with respect to either Property, and neither Property is listed
or proposed for listing on the National Priority List promulgated pursuant
to CERCLA, on CERCLIS or on any similar state list of sites requiring
investigation or clean-up;
vii) There are no Liens arising under or pursuant to any
Environmental Laws on either Property, and no government actions have been
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taken or are in process which could subject
either Property to such Liens; and
viii) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or on behalf of, or
which are in the possession of, any Borrower or any General Partner in
relation to either Property which have not been made available to the
Agent.
SECTION 4.8 Taxes. Each Borrower has filed all United States Federal
income tax returns and all other material tax returns which are required to be
filed by it and has paid all taxes due pursuant to such returns or pursuant to
any assessment received by such Borrower, other than those that are reserved
against in accordance with GAAP consistently applied and which are being
contested in good faith by appropriate proceedings. The charges, accruals and
reserves on the books of each Borrower in respect of taxes or other governmental
charges are, in the opinion of each Borrower, adequate given the circumstances
in which such items were taken or established, as the case may be.
SECTION 4.9 Full Disclosure. To the knowledge of the Borrowers, all
written information heretofore furnished by each Borrower and General Partner to
the Agent or any Lender for purposes of or in connection with this Agreement or
the Transactions is, and all such written information hereafter furnished by
Borrowers or any General Partner to the Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is
stated or certified. Each Borrower and each General Partner has disclosed to the
Lenders in writing any and all facts known to it which materially and adversely
affect or may materially and adversely affect the business, operations or
financial condition of either Borrower or the ability of either Borrower to
perform its respective obligations under this Agreement or the other Loan
Documents.
SECTION 4.10 Solvency. On the Closing Date and after giving effect to the
transactions contemplated by the Loan Documents occurring on the Closing Date,
each Borrower will be Solvent.
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SECTION 4.11 Use of Proceeds; Margin Regulations. All proceeds of the Loan
will be used by the Borrowers only in accordance with the provisions hereof. No
part of the proceeds of the Loan will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock. Neither the making of the Loan nor the use of the proceeds
thereof will violate or be inconsistent with the provisions of Regulations G, T,
U or X of the Federal Reserve Board.
SECTION 4.12 Governmental Approvals. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with the
execution, delivery and performance of, any Loan Document or the consummation of
any of the transactions contemplated thereby, other than those that have already
been duly made or obtained and remain in full force and effect.
SECTION 4.13 Investment Company Act; Public Utility Holding Company Act.
Neither Borrower 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 4.14 Single Purpose Entity. Each Borrower
and each General Partner is a Single Purpose Entity.
SECTION 4.15 Patents, Trademarks, etc. Each Borrower has obtained and
holds in full force and effect all patents, trademarks, servicemarks, trade
names, copyrights and other such rights, free from burdensome restrictions,
which are necessary for the operation of its business as presently conducted. To
each Borrower's best knowledge, no material product, process, method, substance,
part or other material presently sold by or employed by any Borrower in
connection with such business infringes any patent, trademark, service mark,
trade name, copyright, license or other such right owned by any
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other Person. There is not pending or, to each Borrower's best knowledge,
threatened, any claim or litigation against or affecting any Borrower contesting
its right to sell or use any such product, process, method, substance, part or
other material.
SECTION 4.16 Ownership of Property. The 1290 Borrower owns fee simple
title to the 1290 Property, subject only to the 1290 Permitted Liens. The 237
Park Borrower owns fee simple title to the 237 Park Property, subject only to
the 237 Park Permitted Liens.
SECTION 4.17 No Default. No Event of Default exists under or with respect
to any Loan Document and to the best knowledge of the Borrowers, no Default
exists under or with respect to any Loan Document. No Borrower is in default
beyond any applicable grace period under or with respect to any other material
agreement, instrument or undertaking to which it is a party or to its knowledge
by which it or any of its property is bound in any respect.
SECTION 4.18 Licenses, etc. The 1290 Borrower has obtained and holds in
full force and effect all franchises, licenses, permits, certificates,
authorizations, registrations, qualifications, accreditations, easements, rights
of way and other consents and approvals to own, use, occupy and operate the 1290
Property as a first-class office building with a retail component. The 237 Park
Borrower has obtained and holds in full force and effect all franchises,
licenses, permits, certificates, authorizations, registrations, qualifications,
accreditations, easements, rights of way and other consents and approvals to
own, use, occupy and operate the 237 Park Property as a first-class office
building with a retail component.
SECTION 4.19 Compliance With Law. Each Borrower and each Property are in
compliance with all laws, rules, regulations, orders, judgments, writs and
decrees, including, without limitation, all building and zoning ordinances and
codes.
SECTION 4.20 No Burdensome Restrictions. No Borrower is a party to any
agreement or instrument or subject to any other obligation or partnership
restriction, which, individually or in the aggregate, is likely to have a
Material Adverse Effect.
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SECTION 4.21 Brokers' Fees. No Borrower has dealt with any broker or
finder with respect to the transactions contemplated by the Loan Documents or
otherwise in connection with this Agreement, and no Borrower has done any acts,
had any negotiations or conversation, or made any agreements or promises which
will in any way create or give rise to any obligation or liability for the
payment by any Borrower of any brokerage fee, charge, commission or other
compensation to any party with respect to the transactions contemplated by the
Loan Documents, other than the fees payable hereunder.
SECTION 4.22 Intentionally Omitted.
SECTION 4.23 Insurance. Each Borrower currently maintains all insurance
which is required to be maintained pursuant to the Mortgage.
SECTION 4.24 Security Interests and Liens. The Mortgage, the Assignment of
Leases and Rents, the Note Pledge, the Cash Collateral Agreement and the Swap
Pledge create, as security for the Obligations, valid and enforceable security
interests in and Liens on all of the Collateral in favor of the Agent as agent
for the ratable benefit of the Lenders, and subject to no other Liens (except
for Permitted Liens), except as enforceability may be limited by applicable
insolvency, bankruptcy or other laws affecting creditors' rights generally, or
general principles of equity, whether such enforceability is considered in a
proceeding in equity or at law. Such security interests in and Liens on the
Collateral shall be superior to and prior to the rights of all third parties in
the Collateral (except for Permitted Liens), and no further recordings or
filings are or will be required in connection with the creation, perfection or
enforcement of such security interests and Liens, other than the filing of
continuation statements in accordance with applicable law.
SECTION 4.25 Organizational Documents. The documents delivered pursuant to
Section 3.1(r) constitute, as of the Closing Date, all of the partnership
agreements and other organizational documents (together with all amendments and
modifications thereof) of each Borrower. The documents delivered pursuant to
Section 3.1(v) constitute, as of the Closing Date, all of the organizational
documents (together with all amendments and modifications thereof) of the REIT.
Each Borrower represents
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that it has delivered to the Agent true, correct and complete copies of each of
the documents set forth in this Section 4.25.
SECTION 4.26 Construction. To the extent that any Borrower or any
Borrowers' contractors shall undertake to perform any construction of Tenant
Improvements, such construction shall be performed in accordance with all
Requirements.
SECTION 4.27 Structural Defects and Violation of Law. To the best of each
Borrower's knowledge and except as set forth in the structural and engineering
report prepared by Merritt & Harris, dated July 12, 1996, and delivered to Agent
with respect to the Properties (as supplemented or amended, the "Engineering
Report"), there are no structural defects in either Building, neither Building
is in violation of any Requirements, and the applicable Borrower's anticipated
use of the Building owned by such Borrower will comply in all material respects
with applicable zoning ordinances, regulations, and restrictive covenants
affecting such Property.
SECTION 4.28 Budget. The Budget presents and each Annual Budget will
present, a reasonably full and complete representation of all costs, expenses
and fees which the Borrowers, after diligent inquiry and analysis by the
Borrowers, expect, as of the date such Annual Budget was prepared or revised, to
pay or to become obligated to pay in connection with Capital Expenditures, the
construction of the Tenant Improvements, demolition work, payment of Tenant
Expenses, Tenant Allowances, Alterations (as defined in the Mortgage), operating
expenses and interest and amortization on the Loan.
SECTION 4.29 Principal Offices. The principal office, chief executive
office and principal place of business of the Borrowers is c/o Victor Capital
Group, L.P., 885 Third Avenue, New York, New York 10022.
ARTICLE V
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Borrower covenants and agrees that, so long as any Obligations
remain unpaid:
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SECTION 5.1 Information. Each Borrower will deliver to Agent:
(a) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of each Borrower, a balance sheet of each
Borrower as of the end of such fiscal year and the related statements of cash
flow and earnings for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, prepared and audited
by Deloitte & Touche or such other independent public accountants of nationally
recognized standing;
(b) as soon as available and in any event within sixty (60) days
after the end of each of the first three quarters of each fiscal year of each
Borrower, a balance sheet of each Borrower as of the end of such quarter and the
related statements of cash flow and earnings for such quarter and for the
portion of each Borrower's fiscal year ended at the end of such quarter, setting
forth in the case of such cash flow and earnings statements in comparative form
the figures for the corresponding quarter and the corresponding portion of each
Borrower's previous fiscal year, all certified as to fairness of presentation,
GAAP and consistency by the chief financial officer or the chief accounting
officer (or an equivalent officer) of the general partners of the Borrowers;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
financial officers or the chief accounting officers (or an equivalent officer)
of the general partners of the Borrowers (i) stating whether any Default or
Event of Default or Mandatory Prepayment Event exists on the date of such
certificate and, if any Default, Event of Default or Mandatory Prepayment Event
then exists, setting forth the details thereof and the action which the
Borrowers are taking or proposes to take with respect thereto and (ii)
representing (x) to the best of their knowledge, after due inquiry, that such
financial statements fairly present the financial condition and the results of
operations of each Borrower on the dates and for the periods indicated, on a
GAAP basis, with respect to the Borrowers subject, in the case of interim
financial statements, to normally recurring year-end adjustments, and (y) that
such officers have reviewed the terms of the Loan Docu-
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ments and have made, or caused to be made under their supervision, a review in
reasonable detail of the business and condition of the Borrowers during the
period beginning on the date through which the last such review was made
pursuant to this Section 5.1(c) (or, in the case of the first certification
pursuant to this Section 5.1(c), the Closing Date) and ending on a date not more
than ten (10) Domestic Business Days prior to the date of such delivery and that
(1) on the basis of such financial statements and such review of the Loan
Documents, no Default, Event of Default or Mandatory Prepayment Event existed as
of the date of said financial statements, and (2) on the basis of such review of
the Loan Documents and the business and condition of Borrowers, to the best
knowledge of such officers, no Default, Event of Default or Mandatory Prepayment
Event under any other provision of Section 6.1 occurred or, if any such Default
or Event of Default has occurred, specifying the nature and extent thereof and,
if continuing, the action Borrowers propose to take in respect thereof.
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements that they have
no actual knowledge that any Default or Event of Default existed on the date of
such statements;
(e) (i) within five (5) days after any Borrower obtains knowledge of
any Default, Event of Default or Mandatory Prepayment Event, if such Default or
Event of Default is then continuing, a notice from the chief financial officers
or the chief accounting officers of the Borrowers setting forth the details
thereof and the action which Borrowers are taking or propose to take with
respect thereto; (ii) promptly and in any event within ten (10) days after any
Borrower obtains knowledge thereof, notice of (x) any litigation or governmental
proceeding pending or threatened against either Borrower or either Property
which, if adversely determined, is likely to, individually or in the aggregate,
result in a Material Adverse Effect, or (y) any other event, act or condition
which is likely to result in a Material Adverse Effect and (iii) promptly and in
any event within ten (10) days after any Borrower obtains knowledge thereof,
copies of any notice received from the Manager with respect to any material
violation of any Requirements;
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(f) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC, (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice, (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice, (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application, (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC, (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice, or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officers or the chief accounting officers of
the Borrowers setting forth details as to such occurrence and action, if any,
which any Borrower or applicable member of the ERISA Group is required or
proposes to take;
(g) promptly and in any event within five (5) Domestic Business Days
after any Borrower obtains actual knowledge of any of the following events, a
notice from such Borrower, executed by an officer of such Borrower, specifying
the nature of such condition and such Borrower's or, if the such Borrower has
actual knowledge thereof, the Environmental Affiliate's proposed initial
response thereto: (i) the receipt by such Borrower, or, if the such Borrower has
actual knowledge thereof, any of the Environmental Affiliates of any written
communication, from a Governmental Authority that alleges that such Borrower,
or, if such Borrower has actual knowledge thereof, any of the Environmental
Affiliates, is not in
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compliance with applicable Environmental Laws, (ii) such Borrower shall obtain
actual knowledge that there exists any Environmental Claim pending or threatened
against such Borrower or any Environmental Affiliate, or (iii) such Borrower
obtains actual knowledge of any release, emission, discharge or disposal of any
Hazardous Substance that is likely to form the basis of any Environmental Claim
against any Borrower or any Environmental Affiliate;
(h) promptly and in any event within five (5) Domestic Business Days
after receipt of any material notices or correspondence from any company or
agent for any company providing insurance coverage to any Borrower relating to
any material loss of any Borrower, copies of such notices and correspondence;
(i) on or before the fifteenth (15th) day of January of each year
during the Term, each Borrower shall deliver to the Agent the Annual Budget and
a copy of the annual Leasing Guidelines (as defined in the Property Management
Agreement) to be delivered by the Manager to the Borrowers pursuant to the terms
of the Property Management Agreement for such Borrower's Property for the
succeeding calendar year; each such Annual Budget shall be in substantially the
same form as the Budget and will contain each Borrower's most accurate estimate
of each budgeting item and only such contingencies and reserves as are
reasonable under the applicable circumstances;
(j) on or before the fifteenth (15th) day of each month during the
Term, Borrower shall deliver to the Agent the following (the "Monthly Report")
for the immediately preceding month: (i) an unaudited monthly operating
statement prepared by the Property Manager, setting forth the Property Income
and Property Expenses of Borrower for such month, including Capital Expenditures
and Tenant Expenses, (ii) a rent roll for each Property, and (iii) a copy of
each Lease entered into during such month; together with, a certificate from the
chief financial officers or chief accounting officers (or equivalent officer) of
each General Partner, certifying that such Monthly Report is true and correct
and accurately reflects the status of each Property and commencing in the Fourth
Loan Year, setting forth the calculations required to establish on a monthly
basis Net Cash Flow to be reserved pursuant to Section 2.15(a);
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(k) as soon as available and in any event within fifteen (15) days
after the end of each calendar quarter, the Borrowers shall deliver to Agent a
leasing status report in the form attached hereto as Exhibit D;
(l) on or before the fifteenth (15th) day of each month during the
Term, and within five (5) Domestic Business Days after the Agent's request
therefor, the Borrowers shall cause the REIT or the transfer agent for the REIT
to deliver to the Agent a list of the then current shareholders of the REIT,
indicating with respect to each shareholder, the number of outstanding shares
owned by it;
(m) at the request of Agent, copies of any plans and specifications
for the Properties which the Borrowers or the Manager may possess; and
(n) from time to time such additional information regarding the
financial position or business of the Borrowers, including, without limitation,
any reports and statements as shall be prepared by the Manager in accordance
with Section 3.8 of the Property Management Agreement as the Agent, at the
request of any Lender, may reasonably request.
SECTION 5.2 Payment of Obligations. Subject to Borrowers' right to contest
as set forth in the Mortgage, Borrowers will pay and discharge, at or before
maturity, all its respective obligations and liabilities including, without
limitation, any obligation pursuant to any agreement by which it or any of its
properties is bound and any tax liabilities, except where such tax liabilities
are being diligently contested in good faith by appropriate proceedings in
accordance with the terms of the Mortgage, and will maintain, in accordance with
GAAP consistently applied, appropriate reserves for the accrual of any of the
same.
SECTION 5.3 Maintenance of Property; Insurance.
(a) Each Borrower will keep its respective Property in good repair,
working order and condition, subject to casualty and ordinary wear and tear and
in accordance with the provisions of the Mortgage.
(b) Each Borrower shall (i) maintain insurance as specified in
Section 5 of the Mortgage with insurers
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meeting the qualifications described therein, and (ii) furnish to Agent from
time to time, upon written request, copies of the policies under which such
insurance is issued, certificates of insurance and such other information
relating to such insurance as Agent may reasonably request. Each Borrower will
deliver to the Agent (x) full information as to the insurance carried, (y)
within five (5) days of receipt of notice from any insurer, a copy of any notice
of cancellation or material change in coverage from that then existing and (z)
forthwith, notice of any cancellation or nonrenewal of coverage by any Borrower.
SECTION 5.4 Conduct of Business and Maintenance of Existence. Each
Borrower will continue to engage in business of the same general type as now
conducted by each Borrower, and will preserve, renew and keep in full force and
effect, its partnership existence and its respective rights, privileges and
franchises necessary or desirable in the normal conduct of business.
SECTION 5.5 Compliance with Laws. Each Borrower will comply in all
material respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (including, without limitation,
Environmental Laws, and all zoning and building codes with respect to the
Properties and ERISA and the rules and regulations thereunder), except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings.
SECTION 5.6 Inspection of Property, Books and Records.
(a) Each Borrower will keep proper books of record and account in
which full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities, and, upon reasonable
notice (except in connection with emergencies), will permit representatives of
any Lender at such Lender's expense to visit and inspect the Properties and all
materials furnished in or about the Buildings, and to examine and make abstracts
from any of its books and records and to discuss its affairs, finances and
accounts with its officers, employees and independent public accountants, all at
such reasonable times and during the business hours of the Borrowers and as
often as may reasonably be desired.
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(b) In addition to the rights granted to the Lenders and the Agent
pursuant to Section 5.6(a), during any period that Net Cash Flow is to be
deposited into the Expiring Lease Costs Reserve Sub-Account pursuant to Section
2.15(a), the Agent shall have the right to review and audit as often as the
Agent reasonably deems necessary or desirable or at the request of the Required
Lenders, at the Borrowers' sole cost and expense, all of the Borrowers' books,
records, bank statements, files and any other accounting and other documents the
Agent deems appropriate in order to confirm (i) the receipt by the Agent of the
Net Cash Flow required to be deposited by Borrowers in accordance with the terms
hereof and the Cash Collateral Agreement (ii) calculations and determinations of
Net Cash Flow (including, without limitation, the computation of Property
Expenses and Property Income).
SECTION 5.7 Existence. Each Borrower shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its existence
and (ii) its patents, trademarks, servicemarks, tradenames, copyrights,
franchises, licenses, permits, certificates, authorizations, qualifications,
accreditations, easements, rights of way and other rights, consents and
approvals necessary for the proper operation of the Properties.
SECTION 5.8 Financial Covenants.
(a) Negative Pledge. None of the Borrower, a General Partner, Lower
Tier LP or the REIT will create, assume or suffer to exist any Lien on the
Properties, the Leases or any other asset now owned or hereafter acquired by any
Borrower or General Partner except for Permitted Liens and any encumbrances
created by the Loan Documents in favor of the Agent and/or the Lenders.
(b) Project Indebtedness. Neither Borrower shall, at any time,
create, incur, assume, guaranty, suffer to exist or otherwise become or remain
directly or indirectly liable with respect to any debt for borrowed money other
than unsecured loans from partners.
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SECTION 5.9 Restriction on Fundamental Changes.
(a) Neither Borrower shall liquidate, wind-up or dissolve (or suffer
any liquidation or dissolution), discontinue its business or convey, lease,
sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or any substantial part of its business or property, whether
now or hereafter acquired. Subject to Agent's consent rights pursuant to Section
5.20 hereof, nothing in this Section shall be deemed to prohibit the leasing of
portions of the Buildings in the ordinary course of business for occupancy by
the space tenants thereunder.
(b) Neither Borrower shall amend its partnership agreement or other
organizational documents in any material manner nor permit the partnership
agreements of the Lower Tier LP or the Upper Tier LP nor the organizational
documents of the REIT to be amended in any material manner without the consent
of the Agent and the Required Lenders, not to be unreasonably withheld or
delayed. For purposes hereof, "material manner" shall mean any amendment or
modification to any such partnership agreement or other organizational document
which would have a Material Adverse Effect.
(c) Except as provided below, there shall be no Transfer of any
direct or indirect beneficial ownership interest in (i) either Borrower as the
same exists as of the date hereof or (ii) any of the partners of the Lower Tier
LP or the Upper Tier LP, as the same exists as of the date hereof, or (iii)
either General Partner as the same exists as of the date hereof or (iv) the REIT
as the same exists as of the date hereof, without the consent of the Super
Required Lenders which may be withheld or granted in their sole and absolute
discretion. Notwithstanding the foregoing, however, no consent shall be required
to a Transfer or any subsequent Transfer of (x) all or any portion of the
limited partnership interests in the Upper Tier LP owned, as of the date hereof,
by JMB/NYC Office Building Associates, L.P. or any interest therein or (y) any
shareholder interests in the REIT, subject to the provisions of Section 2.8(e)
or (z) the interest of the Upper Tier LP in the Lower Tier LP pursuant to
Section 12.2 of the Agreement of Limited Partnership of the Lower Tier LP or a
similar transfer of such interest to or at the direction of the REIT.
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SECTION 5.10 Sale of the Property. Subject to the provisions of Section
2.9(d), the Borrowers shall not sell or otherwise Transfer its interest in all
or any part of the Properties; provided, however, that subject to the provisions
of the Mortgage and Section 5.20 hereof, nothing in this Section shall be deemed
to prohibit the leasing of portions of the Properties in the ordinary course of
business for occupancy by the Tenants thereunder.
SECTION 5.11 Changes in Business. The Borrowers shall not enter into any
other business.
SECTION 5.12 Fiscal Year; Fiscal Quarter. The Borrowers shall not change
their respective fiscal years or any of their respective Fiscal Quarters except
as required by law.
SECTION 5.13 Margin Stock. None of the proceeds of the Loan will be used,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any Margin Stock.
SECTION 5.14 Payments. The Borrowers shall pay all reasonable costs and
expenses required to satisfy the conditions of this Agreement and the closing of
the Loan; without limiting the generality of the foregoing, the Borrowers shall
pay: (i) all out-of-pocket expenses of the Agent (including reasonable fees and
disbursements of Skadden, Arps, Slate, Meagher & Flom ("Skadden"), in connection
with the preparation of this Agreement, the Loan Documents and the documents and
instruments referred to therein, (ii) all fees payable to Agent in connection
with the closing of the Loan pursuant to the Fee Letter, (iii) all taxes and
recording expenses on the Mortgage, if any; (iv) all title insurance charges and
premiums; (v) all costs of surveying the Properties; and (vi) all costs of
procuring an appraisal and engineering and environmental reports, in all cases,
as are required pursuant to this Agreement.
SECTION 5.15 Single Purpose Entity. The Borrowers and each General Partner
shall each remain a Single Purpose Entity.
SECTION 5.16 Liability of Lenders. No Lender shall be liable in any event
whatsoever for any injury or damage to any property or to any Person happening
on, in
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or about the Properties or their appurtenances, or for any injury or damage to
the Properties or to any property belonging to the Borrowers or any other Person
which may arise from any cause whatsoever, unless such injury or damage is
caused by the gross negligence or willful misconduct of such Lender.
SECTION 5.17 Mechanics' Liens. If any mechanic's, public improvement,
laborer's or materialmen's lien at any time shall be filed against either or
both of the Borrower's interest in the Properties or any part thereof, then
Borrowers, within forty-five (45) days after notice to the Borrowers of the
filing thereof, shall cause the same to be discharged of record by payment,
deposit, bond, order of a court of competent jurisdiction or otherwise;
provided, however, that Borrowers shall have the right to contest any such lien
in accordance with the provisions of Section 7(c) of the Mortgage.
SECTION 5.18 Intentionally Deleted.
SECTION 5.19 Major Alterations.
(a) The Borrowers shall not undertake any Major Alteration without
the consent of the Agent, and with respect to any Major Alteration in which the
aggregate estimated cost equals or exceeds $10,000,000, the consent of the
Required Lenders, which consent shall not in each case be unreasonably withheld.
The Borrowers shall deliver to the Agent no less than thirty (30) days prior to
the commencement by the Borrowers of any Major Alteration, a written request for
the Agent's or, if applicable, the Required Lender's, consent to such proposed
Major Alteration together with (collectively, a "Major Alteration Package"):
(i) complete final plans and specification prepared by an
architect (or engineer where applicable) licensed in the State
and City of New York (which architect or engineer shall
reasonably satisfactory to the Agent);
(ii) a signed estimate prepared and signed by the supervising
architect;
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(iii) a proposed budget certified as true, correct and
complete by an officer of the Borrowers; and
(iv) such additional information as the Agent shall reasonably
request.
Within thirty (30) days after the Agent shall have received a Major Alteration
Package, the Agent or, if applicable, the Required Lenders, shall either consent
or refuse to consent to such Major Alteration. If the Agent or, if applicable,
the Required Lenders, shall refuse to consent to any proposed Major Alteration,
the Agent shall set forth in reasonable detail the reasons for such refusal. If
the Agent shall fail to respond within such thirty (30) day period, Borrowers
may notify the Agent of such failure, specifying that the failure to respond
within three (3) Domestic Business Days thereafter will be deemed to be consent
hereunder, and if the Agent shall fail to respond within three (3) Domestic
Business Days after receipt of such second notice, the Agent or, if applicable,
the Required Lenders, shall be deemed to have consented to such proposed Major
Alteration.
(b) The Borrowers shall not commence any Major Alteration prior to
the delivery by Borrowers to the Agent of the following:
(i) evidence of the Borrowers' receipt of
all applicable governmental approvals
required in connection with such Major
Alteration;
(ii) copies of all permits, contracts,
purchase orders or work orders relating to
the Major Alteration; and
(iii) for any Major Alteration costing in excess of $750,000,
a payment and performance bond and/or guaranty for the payment
for and completion of the Major Alteration in an amount equal
to not less than 110% of the supervising architect's estimate
of the entire cost of completing such Major Alteration or
other evidence satisfactory to Agent as to adequate reserves
for the payment for and completion of such Major Alteration.
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(c) After the completion of a Major Alteration, the Borrowers shall
promptly (but in no event later than thirty (30) days after the completion of
such Major Alterations) deliver to the Agent the following:
(i) a certificate of the supervising architect certifying that
the Major Alterations have been satisfactory completed
substantially in accordance with the approved plans and
specifications; and
(ii) waivers of lien executed by all contractors providing
labor, materials or services with respect to the Major
Alterations.
SECTION 5.20 Leases. (a) The Borrowers shall not enter into, renew (except
pursuant to renewal rights contained in existing Major Leases), terminate or
amend (other than as required by a Lease, e.g. confirming delivery or
commencement dates, etc.) in any material respect any Major Lease after the date
hereof without first obtaining the prior written consent of the Required
Lenders, which consent shall not be unreasonably withheld or delayed, provided
that each Major Lease entered into after the date hereof shall contain such
subordination and attornment provisions as are required by the Mortgage. Prior
to entering into any Major Lease (or a renewal (except pursuant to renewal
rights contained in then existing Major Leases), material amendment or
termination thereof), the Borrowers shall deliver to the Agent the following
(collectively, the "Major Lease Term Sheet Package"): (i) a final term sheet in
a form reasonably acceptable to Agent (the "Major Lease Term Sheet") containing
all the material terms of the proposed Major Lease, including, without
limitation, the identity of the proposed tenant and (ii) such information with
respect to the prospective Tenant as shall permit the Agent to assess such
proposed Tenant's business, character and creditworthiness. Agent shall promptly
upon receipt deliver a copy of any Major Lease Term Sheet Package to each
Lender. Within fifteen (15) Domestic Business Days after the Agent shall have
received a Major Lease Term Sheet Package, the Required Lenders shall either
consent or refuse to consent to such Major Lease Term Sheet. If the Required
Lenders shall refuse to consent to any proposed Major Lease Term Sheet, the
Agent shall promptly forward to the Borrowers in reasonable detail the reasons
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for such refusal. If the Agent shall fail to respond within such fifteen (15)
Domestic Business Day period, Borrowers may notify the Agent of such failure and
if the Agent shall fail to respond within three (3) Domestic Business Days after
receipt of such second notice, the Required Lenders shall be deemed to have not
consented to such proposed Major Lease Term Sheet. If the Required Lenders shall
approve the Major Lease Term Sheet, Borrowers shall deliver to Agent the first
draft of the proposed Major Lease and all subsequent drafts of such proposed
Major Lease. Within seven (7) Domestic Business Days after the Agent shall have
received the final draft of the proposed Major Lease, provided such final draft
is on substantially the same economic terms as the approved Major Lease Term
Sheet, Agent only (without the Required Lenders) shall either consent or refuse
to consent to such Major Lease. If the Agent shall refuse to consent to any
proposed Major Lease, it shall set forth in reasonable detail its reasons for
such refusal, which may not be terms which were approved in the Major Lease Term
Sheet. If the Agent shall fail to respond within such seven (7) Domestic
Business Day period, Borrowers may notify the Agent of such failure and if the
Agent shall fail to respond within three (3) Domestic Business Days after
receipt of such second notice, the Agent shall be deemed to have not consented
to such proposed Major Lease. If Borrowers fail to deliver drafts of a proposed
Major Lease as aforesaid, the foregoing seven (7) Domestic Business Day period
shall be increased to fifteen (15) Domestic Business Days.
(b) All Leases (regardless of whether it is a Major Lease) shall (i)
be on commercially reasonable terms, (ii) provide for market rents (which shall
be determined taking into account the applicable operating expense and real
estate tax provisions, Tenant Work Allowance, Tenant Expenses and free rent),
and contain normal and customary subordination and attornment provisions as
required by the Mortgage. Agent shall deliver its customary form of
subordination, non-disturbance and attornment agreement to Major Lease Tenants
and certain other Tenants at Agent's reasonable discretion.
SECTION 5.21 Construction Consultant. If the Agent shall so elect, the
Agent may retain, at the Borrowers' expense, a construction consultant to review
plans and specifications submitted to it pursuant to Section 5.19.
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SECTION 5.22 Property Manager. The Borrowers shall not retain any manager
for the Property other than Tishman Speyer Properties, L.P. or any affiliate
thereof without the prior written consent of the Required Lenders. Agent's
consent shall be required if a controlling interest in such entity is
transferred, sold or otherwise conveyed unless one or more of the current senior
management personnel of such entity shall continue to control the policy and
managerial decisions of such entity. Notwithstanding the foregoing, no Default
shall exist hereunder if Agent denies its consent to any such change of control
if Manager continues to manage the Properties pending approval of a replacement
manager and during any such transition period, provided that Borrowers are
diligently seeking a replacement manager and shall have entered into an
agreement with an approved replacement manager within sixty (60) days.
SECTION 5.23 Leasing Agent. The Borrowers shall not retain any leasing
agent for either of the Properties other than Tishman Speyer Properties, L.P. or
any affiliate thereof without the prior written consent of the Required Lenders.
Agent's consent shall be required if a controlling interest in such entity is
transferred, sold or otherwise conveyed unless one or more of the current senior
management personnel of such entity shall continue to control the policy and
managerial decisions of such entity. Notwithstanding the foregoing, no Default
shall exist hereunder if Agent denies its consent to any such change of control
if the current leasing agent continues to lease the Properties pending approval
of a replacement leasing agent and during any such transition period, provided
that Borrowers are diligently seeking a replacement leasing agent and shall have
entered into an agreement with an approved replacement leasing agent within
sixty (60) days.
SECTION 5.24 Asset Manager. Neither the Borrowers nor the REIT shall
retain an asset manager for either of the Properties other than 970 Management
LLC without the prior written consent of the Required Lenders. Any change of
control relating to the direct or indirect ownership of such entity shall
require the prior written consent of the Agent and the Required Lenders
hereunder. Notwithstanding the foregoing, no Default shall exist hereunder if
Agent denies its consent to any such change of control if the current asset
manager continues to perform services under the Asset Management Agreement
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pending approval of a replacement asset manager and
during any such transition period.
SECTION 5.25 Material Contracts. Neither the Borrowers nor the REIT shall
enter into any Material Contract or modify any material term of or renew (other
than in accordance with the terms thereof) any Material Contract without the
prior written consent of the Agent if such modification or renewal would cause a
Material Adverse Effect.
SECTION 5.26 Security Deposits. Borrowers shall within five (5) Domestic
Business Days after the Closing Date establish an account or accounts with Agent
and deposit therein all security deposits held by Borrowers in connection with
the Property. Borrowers shall maintain such account or accounts with Agent or
such other commercial bank at which the Cash Collateral Account may be
maintained and deposit therein all security deposits received by Borrowers
during the Term.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1 Events of Default. The following shall each constitute an
event of default (an "Event of Default") under this Agreement, the Mortgage and
the other Loan Documents:
(a) the Borrowers shall fail to pay within three (3) Domestic
Business Days after the same is due and telephonic notice has been delivered
during normal business hours on a Domestic Business Day, whether received or
not, to three (3) designated representatives of Borrowers at designated
telephone numbers (as indicated in Section 9.1 hereof) (i) any payment of
interest or principal on the Loan or (ii) any reserve amounts, fees or any other
amounts payable hereunder, under the Fee Letter or any other Loan Document (for
which no specific grace period is provided therein), including, without
limitation, Section 3(i)(iv) of the Cash Collateral Agreement;
(b) the Borrowers shall fail to observe or perform any covenant
contained in Sections 5.3(b)(i), 5.4, 5.9, 5.10, 5.11, 5.13, 5.15, 5.17 or 5.20;
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(c) the Borrowers shall fail to observe or perform any covenant
contained in Sections 5.1, 5.6, 5.7(i), 5.8, 5.8, 5.22, 5.23, 5.24 or 5.25 and
such failure continues for ten (10) Domestic Business Days after written notice
thereof has been given to the Borrowers by the Agent;
(d) the Borrowers shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a) or
(b) or (c) above) for thirty (30) days after written notice thereof has been
given to the Borrowers by the Agent; provided, however, that if such Default is
susceptible of cure but cannot reasonably be cured within thirty (30) days after
notice from the Agent and provided further that the Borrowers shall have
commenced to cure such Default within such thirty (30) day period and thereafter
diligently and expeditiously proceeds to cure the same, such thirty (30) day
period shall be extended for such time as is reasonably necessary for the
Borrowers in the exercise of due diligence to cure such Default (but in no event
longer than one hundred twenty (120) days);
(e) the Borrowers shall fail to correct any representation,
warranty, certification or statement made by the Borrowers in this Agreement or
in any certificate, financial statement or other document delivered pursuant to
this Agreement which shall prove to have been incorrect in any material respect
when made (or deemed made) for ten (10) days after written notice thereof has
been given to the Borrowers by the Agent;
(f) an Event of Default (as defined therein) shall have occurred and
be continuing under the Mortgage;
(g) a default shall occur beyond any applica- ble notice and cure
period and be continuing under any Loan Document;
(h) either Borrower shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced
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against it, or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be commenced
against either Borrower seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of sixty (60) days, or an order for relief
shall be entered against such Borrower under the Federal bankruptcy laws as now
or hereafter in effect;
(j) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $1,000,000 which it shall have become
liable to pay under Title IV of ERISA and for which Borrowers could become
liable and such amount or amounts are not paid within ten (10) days after any
member of the ERISA Group has first received any notice of such failure, or
notice of intent to terminate a Material Plan shall be filed under Title IV of
ERISA by any member of the ERISA Group, any plan administrator or any
combination of the foregoing, or the PBGC shall institute proceedings under
Title IV of ERISA to terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan, or a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated and for which Borrowers could become liable, or
there shall occur a complete or partial withdrawal from, or a default, within
the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA Group to
incur a current payment obligation in excess of $1,000,000 and for which
Borrowers could become liable;
(k) one or more final nonappealable judgments or decrees in an
aggregate amount of Five Million Dollars ($5,000,000) or more shall be entered
by a court or courts of competent jurisdiction against either Borrower and any
such judgments or decrees shall not be stayed,
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discharged, paid, bonded or vacated within ten (10) days
after entry of filing thereof;
(l) (i) an action shall have been instituted with respect to any
Environmental Claim against either Borrower or any Environmental Affiliate or
any Property and the same shall not have been dismissed within ninety (90) days,
(ii) any release, emission, discharge or disposal of any Hazardous Substance
shall have occurred, and such event is reasonably likely to form the basis of an
Environmental Claim against either Borrower or any Environmental Affiliate or
either Property and has not been remedied within the time period provided in
Section 6.1(d) hereof or (iii) either Borrower or the Environmental Affiliates
shall have failed to obtain any Environmental Approval necessary for the
ownership, or operation of its business, property or assets or any such
Environmental Approval shall be revoked, terminated, or otherwise cease to be in
full force and effect and not cured within the time period provided in Section
6.1(d) hereof, in each of clauses (i) through (iii), if the existence of such
condition has had or is reasonably likely to have a Material Adverse Effect;
(m) the Mortgage or any other Loan Document shall for any reason
cease to be effective or cease to be a legally valid, binding and enforceable
obligation of either Borrower in all material respects, or shall cease to give
the Agent the Liens, and the material rights, powers and privileges purported to
be created thereby, including, without limitation, a perfected security interest
in, and Lien on, all of the Collateral in accordance with the terms thereof,
prior to all other Liens other than the Permitted Liens;
(n) the Cash Collateral Agreement shall for any reason cease to be
in full force and effect, or shall cease to give the Agent the Liens, and the
material rights, powers and privileges purported to be created thereby
including, without limitation, an exclusive, perfected first priority security
interest in, and Lien on, all of the Collateral in accordance with the terms
thereof, prior to all other Liens, or the legality, validity or enforceability
thereof shall be contested by either Borrower; or
(o) the occurrence of any event which results in a Material Adverse
Effect, as reasonably determined by the Agent.
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SECTION 6.2 Rights and Remedies.
(a) Upon the occurrence of (i) any Event of Default described in
Sections 6.1(h) or 6.1 (i), or (ii) the occurrence of a Mandatory Prepayment
Event beyond the Mandatory Prepayment Date or Extended Mandatory Prepayment
Date, as applicable, the unpaid principal amount of, and any and all accrued
interest on, the Loan and any and all accrued fees and other Obligations
hereunder shall automatically become immediately due and payable, with all
additional interest from time to time accrued thereon and without presentation,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of intent
to demand or accelerate and notice of acceleration), all of which are hereby
expressly waived by the Borrowers, and upon the occurrence and during the
continuance of any other Event of Default, the Agent may and, upon the written
direction of the Required Lenders, shall (provided that until the Agent receives
such written direction, it may, but shall not be obligated to, take such action,
or refrain from taking such action with respect to such Event of Default as it
shall deem advisable in its sole discretion to preserve any right or claim of
the Lenders hereunder or under any other Loan Document or to protect the
Collateral), by written notice to the Borrowers, declare the unpaid principal
amount of, and any and all accrued and unpaid interest on, the Loan and any and
all accrued fees and other Obligations hereunder to be, and the same shall
thereupon be, immediately due and payable with all additional interest from time
to time accrued thereon and without presentation, demand, or protest or other
requirements of any kind other than as provided in the Loan Documents
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and notice of
acceleration), all of which are hereby expressly waived by Borrowers.
(b) In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal amount of the
Loan and overdue interest in respect of the Loan, shall bear interest, on
demand, for each day until paid or such Event of Default is cured at a rate per
annum equal to the sum of the Alternate Base Rate for such day and three percent
(3%).
(c) In addition to any other rights or reme- dies available to it
under the Mortgage, to the extent
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permitted by law, the Agent or its designees shall be entitled to enter into
possession of either or both of the Properties and perform any and all work and
labor necessary to complete Tenant Improvement Work (to the extent either
Borrower previously was responsible for same) or employ watchmen to protect the
Properties and the Improvements; all sums expended by the Agent for such
purposes (including, without limitation, payment to any contractors initially
hired by Borrowers) shall be deemed to have been advanced to Borrowers pursuant
to the provisions hereof and secured by the Mortgage. For this purpose, each
Borrower hereby constitutes and appoints the Agent its true and lawful
attorney-in-fact with full power of substitution, to the extent permitted by
law, and hereby empowers said attorney or attorneys as follows: to use any funds
of Borrowers for the purpose of meeting any costs incurred with Tenant
Improvement Work; to employ such contractors, subcontractors, agents, architects
and inspectors as shall be required for said purposes; to pay or bond all
existing bills and claims which are or may be liens against the Properties other
than Permitted Liens or may be necessary for the completion of any Tenant
Improvement Work or the clearance of title; to execute all applications and
certificates in the name of Borrowers which may be required by any construction
contract; and to do any and every act with respect to any construction which
Borrowers may do in their own behalf, all only to the extent required to
preserve and protect the Properties and the Lien created by the Loan Documents.
It is understood and agreed that this power of attorney is and shall be deemed
to be a power coupled with an interest which cannot be revoked. Said
attorney-in-fact shall also have power to prosecute and defend all actions or
proceedings in connection with the construction on the Properties and to take
such action and require such performance as is deemed necessary.
(d) Notwithstanding anything contained herein to the contrary, the
Lenders may not individually and other than through the Agent (or through a
court order directing the Agent or another party on behalf of the Agent) declare
a default, accelerate the Loan, institute any proceedings against Borrowers or
exercise any remedies hereunder other than in connection with any bankruptcy
proceedings or otherwise to the extent necessary to preserve the right of any
Lender to exercise any right or claim it may have hereunder or under any other
Loan Document.
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SECTION 6.3 Notice of Default. If the Agent shall not already have given
any notice to the Borrowers under Section 6.1, then the Agent shall give notice
to the Borrowers under Section 6.1 promptly upon being requested to do so by the
Required Lenders and shall thereupon notify all the Lenders thereof.
ARTICLE VII
THE AGENT
SECTION 7.1 Appointment and Authorization. Each Lender irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto. Only the Agent (and not one or more
of the Lenders) shall have the authority to deal directly with the Borrowers
under this Agreement and the Loan Documents and each Lender acknowledges that
all notices, demands or requests from such Lender to Borrowers must be forwarded
to the Agent for delivery to the Borrowers. Each Lender acknowledges that
Borrowers have no obligation to act or refrain from acting on instructions or
demands of one or more Lenders absent written instructions from the Agent in
accordance with its rights and authority hereunder.
SECTION 7.2 Agent and Affiliates. The Chase Manhattan Bank as a Lender
shall have the same rights and powers under this Agreement as any other Lender
and may exercise or refrain from exercising the same as though it were not the
Agent, and The Chase Manhattan Bank and its affiliates (as well as each Lender
and its affiliates) may accept deposits from, lend money to, and generally
engage in any kind of business with the Borrowers or any Subsidiary or affiliate
of the Borrowers, as if it were not the Agent hereunder, and the term "Lender"
and "Lenders" shall include The Chase Manhattan Bank in its individual capacity
for so long as The Chase Manhattan Bank shall hold any interest in the Loan.
SECTION 7.3 Action by Agent. The obligations of the Agent hereunder are
only those expressly set forth herein. Without limiting the generality of the
foregoing, the Agent shall not be required to take any action with respect to
any Default, except as expressly provided
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in Article VI. The Agent shall not have by reason of the execution and delivery
of the Loan Documents, the performance of any of its obligations thereunder, or
by the use of the term "Agent", a fiduciary relationship in respect of any
Lender or any Borrowers. Agent shall perform its duties hereunder in accordance
with the same standard of care as that customarily exercised by the Agent with
respect to the administration of loans held entirely for its own account.
SECTION 7.4 Consultation with Experts. The Agent may consult with legal
counsel (who may be counsel for the Borrowers), independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
SECTION 7.5 Liability of Agent. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be liable to the Lenders for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the Required
Lenders or if required hereby, the Super Required Lenders or (ii) in the absence
of its own gross negligence or willful misconduct. Neither the Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Borrowers; (iii) the satisfaction of any condition specified
in Article III, except receipt of items required to be delivered to the Agent;
or (iv) the validity, effectiveness or genuineness of this Agreement, the other
Loan Documents or any other instrument or writing furnished in connection
herewith. The Agent shall not incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a bank
wire, telex or similar writing) believed in good faith by it to be genuine or to
be signed by the proper party or parties.
SECTION 7.6 Indemnification. Each Lender shall, ratably in accordance with
its Commitment, indemnify the Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by the
Borrowers as may be required under this
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Agreement) against any reasonable cost, expense (including reasonable counsel
fees and disbursements), claim, demand, action, loss or liability (except such
as result from such indemnitees' gross negligence or willful misconduct and
except for the outstanding principal amount of the Loan and the interest accrued
thereon) that such indemnitees may suffer or incur in connection with this
Agreement, the other Loan Documents or any action taken or omitted by such
indemnitees hereunder.
SECTION 7.7 Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.8 Successor Agent. The Agent may resign at any time by giving
twenty (20) Domestic Business Days' notice thereof to the Lenders and the
Borrowers. Furthermore, in the event that at any time The Chase Manhattan Bank
("Chase") is the Agent and Chase assigns its entire interest as a Lender
hereunder to an Assignee as permitted by Section 9.6(c) hereof, which Assignee
is not an affiliate of Chase, then Chase shall offer to resign as Agent, which
resignation shall become effective only if the Required Lenders accept such
resignation in writing within twenty (20) Domestic Business Days after it has
been tendered by Chase. If the Required Lenders do not timely accept such
resignation, then the resignation offer shall be deemed to be withdrawn and
Chase shall continue as Agent pursuant to the terms hereof. Upon any resignation
by the Agent, the Required Lenders shall have the right to appoint a successor
Agent upon prior notice to Borrowers; provided, however, that if no Event of
Default has occurred and is continuing hereunder, the appointment of such
successor Agent shall require the prior approval of the Borrowers, which
approval shall not be unreasonably withheld or delayed. If no successor Agent
shall have been so appointed by the Required Lenders (and, if applicable,
reasonably consented to by Borrowers), and shall have accepted such appointment,
within thirty (30) days after the retiring Agent gives notice of resignation,
then the retiring Agent may, on
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behalf of the Lenders, upon prior notice to Borrowers, appoint a successor
Agent, which shall be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof or under the laws of any
other country that is a member of the OECD (so long as such Lender is acting
through a branch or agency located in the United States) and having a combined
capital and surplus of at least $500,000,000 and total assets of at least
$25,000,000,000 and experienced in the administration of loans secured by
similar collateral; provided, however, that if no Event of Default has occurred
and is continuing hereunder, the appointment of such successor Agent shall
require the prior approval of the Borrowers, which approval shall not be
unreasonably withheld or delayed. Upon the acceptance of its appointment as the
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Agent; provided,
however that to the extent that Agent is liable for any gross negligence or
willful misconduct prior to Agent's resignation hereunder such liability will
survive Agent's resignation.
SECTION 7.9 Documents. Agent shall promptly deliver to each of the Lenders
copies of any and all documents, reports or other materials or notices delivered
to Agent by Borrowers that the Lenders are required to receive under Loan
Documents or any other material documents or notices delivered to Agent by
Borrowers or notices sent to Borrowers by Agent, including, without limitation
any default notice, pursuant to the terms hereof. In addition, Agent shall
promptly notify Lenders in writing of any Default or Event of Default promptly
after obtaining actual knowledge thereof.
SECTION 7.10 Decisions. (a) The Agent or any Lender may request a
decision, consent, waiver approval or other action (collectively, "Decisions")
at any time by making a request for such Decision in writing to each of the
Lenders and delivering the same to each of the Lenders in the manner specified
in Section 9.1 herein. Such request shall (i) contain an adequate description of
the Decision being requested and (ii) specify the reasons for such request.
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(b) Such Decision may also be requested by telephone requests
therefor to each of the Lenders and the Decision thus requested shall be deemed
made if the Lender or the Agent requesting the same has received written
approval for such Decision from the Required Lenders.
(c) If the Properties are foreclosed pursuant to the direction
of the Required Lenders, then after payment of all costs and expenses of
foreclosure and collection, the Agent shall remit to each of the Lenders such
Lender's percentage of all net proceeds received by the Agent as a consequence
of such foreclosure proceeding. If the Agent acquires the Properties through
foreclosure, deed in lieu of foreclosure or otherwise, each of the Lenders shall
have an undivided interest in the Properties equal to such Lender's
proportionate interest in the Loan, notwithstanding the fact that title will be
taken in the name of the Agent alone.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.1 Basis for Determining Interest Rate Inadequate or Unfair. If
on or prior to the first day of any Interest Period for any Euro-Dollar
Borrowing:
(a) the Agent is advised by the Euro-Dollar Reference Bank that
deposits in dollars (in the applicable amounts) are not being offered to the
Euro-Dollar Reference Bank in the relevant market for such Interest Period, or
(b) Lenders having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted London Interbank Offered Rate, as
determined by the Agent, will not adequately and fairly reflect the cost to such
Lenders of funding their Euro-Dollar Loans for such Interest Period, the Agent
shall forthwith give notice thereof to the Borrowers and the Lenders, whereupon
until the Agent notifies the Borrowers that the circumstances giving rise to
such suspension no longer exist, the obligations of such Lenders to make Euro-
Dollar Loans shall be suspended.
SECTION 8.2 Illegality. If, on or after the date of this Agreement, the
adoption of any applicable law,
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rule or regulation, or any change in any applicable law, rule or regulation, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Euro-Dollar Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for any Lender (or its Euro-Dollar Lending Office) to make,
maintain or fund its Euro-Dollar Loans (a "Euro Dollar Illegality Event") and
such Lender shall so notify the Agent, the Agent shall forthwith give notice
thereof to the other Lenders and the Borrowers whereupon until such Lender
notifies the Borrowers and the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Lender to make Euro-Dollar
Loans shall be suspended. With respect to Euro-Dollar Loans, before giving any
notice to the Agent pursuant to this Section, such Lender shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender. If such notice is given, each Euro-Dollar Loan
of such Lender then outstanding shall be converted to an Alternate Base Rate
Loan either (a) on the last day of the then current Interest Period applicable
to such Euro-Dollar Loan if such Lender may lawfully continue to maintain such
Euro-Dollar Loan to such day, or (b) immediately if such Lender shall determine
that it may not lawfully continue to maintain such Loan to such day. If such
Lender shall determine that it may not lawfully continue to maintain any of its
outstanding Euro-Dollar Loans to maturity and shall so specify in such notice,
the Borrowers shall be deemed to have delivered a Notice of Interest Rate
Election and the Borrowers shall be deemed to have been given an Alternate Base
Rate Loan from such Lender in a principal amount equal to the outstanding
balance of the Euro-Dollar Loan so prepaid (on which interest and principal
shall be payable contemporaneously with the related Euro-Dollar Loans of the
other Lenders), and such Lender shall be deemed to have made such an Alternate
Base Rate Loan.
SECTION 8.3 Increased Cost and Reduced Return.
(a) If, on or after the date hereof, the adoption of any applicable
law, rule or regulation, or any change in any applicable law, rule or
regulation, or any
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change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall impose, modify or
deem applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System (but excluding
with respect to any Euro-Dollar Loan any such requirement reflected in an
applicable Euro-Dollar Reserve Percentage)), special deposit, insurance
assessment or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (or its Applicable Lending Office)
or shall impose on any Lender (or its Applicable Lending Office) or on the
London interbank market any other condition affecting its Euro- Dollar Loans,
its Note, or its obligation to make Euro- Dollar Loans, and the result of any of
the foregoing is to increase the cost to such Lender (or its Applicable Lending
Office) of making or maintaining any Euro-Dollar Loan, or to reduce the amount
of any sum received or receivable by such Lender (or its Applicable Lending
Office) under this Agreement or under its Note with respect thereto, by an
amount deemed by such Lender to be material, then, within 15 days after written
demand to Borrowers by Agent on behalf of such Lender, the Borrowers shall pay
to such Lender such additional amount or amounts as will compensate such Lender
for such increased cost or reduction; provided, however, that such amounts shall
be no greater than that which such Lender is generally charging other borrowers
similarly situated to the Borrowers.
(b) If any Lender shall have determined that, after the date hereof,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Lender (or its Parent) as a consequence of such Lender's
obligations hereunder to a level below that which such Lender (or its Parent)
could have
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achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Lender to be material, then from time to time, within 15 days after
written demand to Borrowers by Agent on behalf of such Lender, the Borrowers
shall pay to such Lender such additional amount or amounts as will compensate
such Lender (or its Parent) for such reduction; provided, however, that such
amount shall be no greater than that which such Lender is generally charging
other borrowers similarly situated to the Borrowers.
(c) Each Lender will promptly notify the Borrowers and the Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section and will designate
a different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment of
such Lender, be otherwise disadvantageous to such Lender. A certificate of any
Lender claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error. In determining such amount, such Lender may use any
reasonable and conventional averaging and attribution methods.
SECTION 8.4 Taxes.
(a) Any and all payments by the Borrowers to or for the account of
any Lender or the Agent hereunder or under any other Loan Document shall be made
free and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
United States, any state or local government therein or any other jurisdiction
under the laws of which such Lender or the Agent (as the case may be) is
organized or any political subdivision thereof and, in the case of each Lender,
taxes imposed on its income, and franchise or similar taxes imposed on it, by
the United States, any state or local government therein or any other
jurisdiction of such Lender's Applicable Lending Office or in which Agent
maintains a permanent establishment for tax purposes or any political
subdivision of any such jurisdiction thereof (all such non-excluded taxes,
duties, levies, imposts, deductions, charg-
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es, withholdings and liabilities being hereinafter referred to as "Taxes"). If
the Borrowers shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder or under any Note or participation therein to any
Lender or the Agent, (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 8.4) such Lender or the Agent
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrowers shall make such deductions, (iii) the
Borrowers or shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (iv) the
Borrowers shall furnish to the Agent, at its address referred to in Section 9.1
hereof, the original or a certified copy of a receipt evidencing payment thereof
reasonably satisfactory to the Agent.
(b) In addition, the Borrowers agree to pay any present or future
stamp or documentary taxes and any other excise or property taxes, or charges or
similar levies imposed by the United States, the State of New York or the City
of New York which arise from any payment made hereunder or under any Note or
participation therein or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note or any other Loan Document (hereinafter
referred to as "Other Taxes").
(c) Each Borrower jointly and severally agrees to indemnify each
Lender and the Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 8.4) paid by such Lender or
the Agent and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be made within 15
days from the date such Lender or the Agent makes demand therefor.
(d) Each Lender organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the
Borrowers (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrowers with Internal Revenue
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Service form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Lender is entitled to
benefits under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest or certifying that
the income receivable pursuant to this Agreement is effectively connected with
the conduct of a trade or business in the United States. If the form provided by
a Lender at the time such Lender first becomes a party to this Agreement
indicates a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from "Taxes" as
defined in Section 8.4(a).
(e) For any period with respect to which a Lender has failed to
provide the Borrowers with the appropriate form pursuant to Section 8.4(d)
hereof (unless such failure is due to a change in treaty, law or regulation
occurring subsequent to the date on which a form originally was required to be
provided), such Lender shall not be entitled to indemnification under Section
8.4(a) with respect to Taxes imposed by the United States; provided, however,
that should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrowers shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrowers are required to pay additional amounts to or
for the account of any Lender pursuant to this Section 8.4, then such Lender
will change the jurisdiction of its Applicable Lending Office so as to eliminate
or reduce any such additional payment which may thereafter accrue if such
change, in the judgment of such Lender, is not otherwise disadvantageous to such
Lender.
SECTION 8.5 Alternate Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (i) the obligation of any Lender to make Euro-Dollar Loans has been
suspended pursuant to Section 8.2 or (ii) any Lender has demanded compensation
under Section 8.3 or 8.4 with respect to its Euro-Dollar Loans and the Borrowers
shall, by at least five Euro-Dollar Business Days' prior notice to such Lender
through the Agent, have elected that the provisions of this Section shall apply
to such Lender, then, unless and until such Lender notifies the Borrowers that
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the circumstances giving rise to such suspension or
demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Lender to the
Borrowers as Euro-Dollar Loans shall be made instead as Alternate Base Rate
Loans (on which interest and principal shall be payable contemporaneously with
the related Euro-Dollar Loans of the other Lenders), and
(b) after each of its Euro-Dollar Loans to the Borrowers has been
repaid, all payments of principal which would otherwise be applied to repay such
Euro- Dollar Loans shall be applied to repay its Alternate Base Rate Loans
instead.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire or similar writing) and
shall be given to such party: (x) in the case of the Borrowers or the Agent, at
its address set forth on the signature pages hereof, (y) in the case of any
Lender, at its address set forth in its Administrative Questionnaire or (z) in
the case of any party, such other address or telephone number as such party may
hereafter specify for the purpose by notice to the Agent and the Borrowers. Each
such notice, request or other communication shall be effective (i) if given by
certified mail, return receipt requested, addressed as aforesaid when delivered
(or delivery is refused) as indicated by the receipt or (ii) if given by hand or
reputable overnight courier, when delivered at the address specified in this
Section; provided that notices to the Agent under Article II or Article VIII
shall not be effective until received. Telephonic notices to be delivered
pursuant to Section 6.1(a) hereof shall be delivered to John R. Klopp at
telephone number: (212) 593-5400, Lee Neibart at telephone number: (212)
261-4014, and Andrew Nathan, at telephone number: (212) 715-0375.
SECTION 9.2 No Waivers. No failure or delay by the Agent or any Lender or
Borrowers in exercising any right, power or privilege hereunder or under any
Note shall operate as a waiver thereof nor shall any single or
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partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.3 Expenses; Indemnification.
(a) Each Borrower jointly and severally shall pay (i) all
out-of-pocket expenses of the Agent (including reasonable fees and disbursements
of Skadden), in connection with the preparation of this Agreement, the Loan
Documents and the documents and instruments referred to therein, the
administration and enforcement of the Loan; (ii) all out-of-pocket expenses of
the Agent (including reasonable fees and disbursements of Skadden) in connection
with the review of Leases and subordination, nondisturbance and attornment
agreements; (iii) all reasonable fees incurred in connection with the
transactions contemplated by this Agreement and the other Loan Documents
including but not limited to appraisal fees, engineering fees, consulting
professionals and legal fees; (iv) all of Agent's reasonable costs and expenses
(including reasonable fees and disbursements of Agent's external counsel)
incurred in connection with the syndication of the Loan to the Lenders during
the Syndication Period; (v) any time during the Term, all reasonable costs
payable to third parties with respect to any appraisals, environmental audits
and other reports required from time to time in accordance with any regulatory
requirements or the internal policies of Agent set in accordance with regulatory
requirements, provided that Agent shall not conduct an appraisal more than once
in any twenty-four (24) month period for each Property unless a Default has
occurred and is then continuing or an event has occurred which in the reasonable
judgment of Agent shall have a Material Adverse Effect and provided further
that, to the extent reasonably possible, such appraisals shall be updates of
previously prepared appraisals, and (vi) if an Event of Default occurs and is
continuing, all reasonable out-of-pocket expenses incurred by the Agent and each
of the Lenders, including reasonable fees and disbursements of counsel for the
Agent and each of the Lenders, in connection with the enforcement of the Loan
Documents and the instruments referred to therein and such Event of Default and
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom (collectively, as to all
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expenses incurred pursuant to this clause (vi), the
"Collection Costs").
(b) Each Borrower jointly and severally agrees to indemnify the
Agent and each Lender, their respective affiliates and the respective directors,
officers, agents, shareholders and employees of the foregoing (each an
"Indemnitee") and hold each Indemnitee harmless from and against any and all
liabilities, losses, claims, damages, costs and expenses of any kind, including,
without limitation, the reasonable fees and disbursements of counsel and any
settlement costs, which may be incurred by such Indemnitee in connection with
(i) the Loan and Borrowers' actual or proposed use of any proceeds of the Loan
or Commitments, or (ii) any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) that may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, asserted against or incurred by any Indemnitee
as a result of, or arising out of, or in any way related to or by reason of in
each case, (v) any of the transactions contemplated by the Loan Documents or the
execution, delivery or performance of any Loan Document,(w) any violation by a
Borrower or the Environmental Affiliates of any applicable Environmental Law,
(x) any Environmental Claim arising out of the management, use, control,
ownership or operation of property or assets by the Borrowers or any of the
Environmental Affiliates, including, without limitation, all on-site and
off-site activities involving Hazardous Substances, (y) the breach of any
environmental representation or warranty set forth herein, and (z) the exercise
by the Agent and the Lenders of their rights and remedies (including, without
limitation, foreclosure) under any agreements creating any such Lien. Borrowers'
obligations under this Section shall exclude, as to any Indemnitee, any such
losses, liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements to the extent of any gross negligence
or willful misconduct of such Indemnitee as finally determined by a court of
competent jurisdiction. Borrowers' obligations under this Section shall survive
the termination of this Agreement and the payment of the Obligations.
(c) Each Borrower jointly and severally shall pay, and hold the
Agent and each of the Lenders harmless from and against, any and all present and
future U.S. stamp, recording (including New York mortgage recording
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taxes), transfer and other similar foreclosure related taxes with respect to any
of the Loan Documents or the transactions contemplated thereby and hold the
Agent and each Lender harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to the extent
attributable to such Lender) in paying such taxes.
SECTION 9.4 Sharing of Set-Offs. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to
Borrowers or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (general or
special, time or demand, provisional or final) and any other indebtedness at any
time held or owing by such Lender (including, without limitation, by branches
and agencies of such Lender wherever located) to or for the credit or the
account of Borrowers (but not of any officer, director, employee, partner or
affiliate of Borrowers) against and on account of the Obligations of Borrowers
then due and payable to such Lender under this Agreement or under any of the
other Loan Documents, including, without limitation, all interests in
Obligations purchased by such Lender. Each Lender agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest due with respect
to any Note held by it which is greater than the proportion received by any
other Lender in respect of the aggregate amount of principal and interest due
with respect to any Note held by such other Lender, the Lender receiving such
proportionately greater payment shall purchase such participations in the Notes
held by the other Lenders, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Notes held by the Lenders shall be shared by the Lenders pro rata; provided that
nothing in this Section shall impair the right of any Lender to exercise any
right of set-off or counterclaim it may have and to apply the amount subject to
such exercise to the payment of indebtedness of Borrowers other than its
indebtedness under the Notes.
SECTION 9.5 Amendments and Waivers.
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(a) No amendment or material waiver of any provision of this
Agreement or any other Loan Document nor consent to any material departure by
the Borrowers therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Agent and approved in writing by the Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. For purposes of this
Section 9.5, the Agent shall determine (in its sole discretion) whether or not a
waiver or departure is material, it being the understanding of the parties
hereto that such waiver or departure shall be considered non-material if it is
administrative or technical in nature and does not involve matters of
bankruptcy, payments of interest or principal or amounts in excess of $100,000,
or matters which adversely affect the value of either or both of the Properties.
The parties hereto agree that any non-material waiver of any provision of this
Agreement or any other Loan Document shall be effective upon the execution by
the party so charged of a written agreement to such effect. Agent will give
notice to the Lenders of (i) any material waiver or non-material waiver made in
writing or (ii) any amendment, whether material or non-material.
(b) Notwithstanding anything set forth in sub- paragraph (a) above,
no such amendment or waiver shall, unless signed by all the Lenders, (i)
increase or decrease the Commitment of any Lender (except for a ratable decrease
in the Commitments of all Lenders) or subject any Lender to any additional
obligation, (ii) reduce the principal of or rate of interest on the Loans or any
fees hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for any reduction or termination
of any Commitment, (iv) except as permitted or contemplated by the terms of the
Loan Documents (including, without limitation, Section 2.9(d) and (e) of this
Agreement), release or amend the provisions regarding the release of the Lien of
the Mortgage, the Cash Collateral Agreement, the Swap Pledge or the Note Pledge,
release any Environmental Guaranty or otherwise release any other collateral,
(v) change the definitions of Required Lenders and Super Required Lenders; (vi)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes; or (vii) amend this Section 9.5.
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(c) Each Borrower may rely on any consents, waivers or approvals
furnished in writing by the Agent to such Borrower in connection herewith
believed by it to be genuine or to be signed by the proper party or parties.
SECTION 9.6 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Borrowers may not assign or otherwise transfer any of
their rights under this Agreement or the other Loan Documents without the prior
written consent of all Lenders except as permitted by Section 5.10 hereof and no
Lender may assign or otherwise transfer any of its rights under this Agreement
or the other Loan Documents except as set forth in this Section 9.6.
(b) The Chase Manhattan Bank may, at any time, and any other Lender
may, at any time, except as otherwise provided herein, assign to one or more
banks or other financial institutions (each an "Assignee") all, or a part of
all, of its rights and obligations under this Agreement, the Notes and the other
Loan Documents, provided, that such Assignee shall assume such rights and
obligations, including, without limitation, its rights and obligations as a
Participant pursuant to Section 9.18 hereof, pursuant to an Assignment and
Assumption Agreement in substantially the form attached hereto as Exhibit F
hereto executed by such Assignee and such transferor Lender; and provided,
further, that for the period (the "Syndication Period") commencing on the
Closing Date and ending on the day which is 180 days after the Closing Date, no
Lender other than The Chase Manhattan Bank may assign all or any part of its
rights and obligations under this Agreement, the Notes and the other Loan
Documents to any other party. Each such assignment shall be made with (and
subject to) the subscribed consent of the Borrowers and the Agent, which
consents shall not be unreasonably withheld or delayed (the withholding of such
consent shall not be deemed unreasonable if such Assignee is not an Eligible
Assignee); provided that if an Assignee is a Lender or an Affiliate of such
transferor Lender, no consents shall be required; provided further that, upon
the occurrence and during the continuation of an Event of Default, the Borrowers
shall have no right to consent to such Assignee or any other assignee. Further,
unless and until the occurrence and during the continuation of an Event of
Default, any partial assignment
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shall be in the minimum principal amount of Twenty Million Dollars
($20,000,000); provided, however that any such partial assignment to any Lender
hereunder may be in the minimum principal amount of ($5,000,000). Upon execution
and delivery of such instrument and payment by such Assignee to such transferor
Lender of an amount equal to the purchase price agreed between such transferor
Lender and such Assignee, such Assignee shall be a Lender party to this
Agreement and shall have all the rights and obligations of a Lender with a
Commitment as set forth in such instrument of assumption, and the transferor
Lender shall be released from its obligations hereunder to a corresponding
extent, and no further consent or action by any party shall be required. Upon
the consummation of any assignment pursuant to this subsection (b), the
transferor Lender, the Agent and the Borrowers shall make appropriate
arrangements so that, if required, a new Note is issued to the Assignee and the
existing Note shall be cancelled. In connection with any such assignment after
the Syndication Period, the transferor Lender shall pay to the Agent an
administrative fee for processing such assignment in the amount of $3,500. If
the Assignee is not incorporated under the laws of the United States of America
or a state thereof, it shall deliver to the Borrowers and the Agent
certification as to exemption from deduction or withholding of any United States
federal income taxes in accordance with Section 8.4.
(c) Any Lender may at any time assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Lender from its obligations hereunder.
Promptly upon being notified in writing of such transfer, Agent shall notify
Borrowers thereof.
(d) No Assignee or other transferee of any Lender's rights shall be
entitled to receive any greater payment under Section 8.3 or 8.4 than such
Lender would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrowers' prior written
consent or by reason of the provisions of Section 8.2, 8.3 or 8.4 requiring such
Lender to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
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SECTION 9.7 Collateral. Each of the Lenders represents to the Agent and
each of the other Lenders that it in good faith is not relying upon any "margin
stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.8 Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).
(b) Any legal action or proceeding with respect to this Agreement or
any other Loan Document and any action for enforcement of any judgment in
respect thereof may be brought in and, for the purposes hereof, Borrowers hereby
submit to the nonexclusive jurisdiction of, the courts of the State of New York
located in the City of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Agreement,
the Borrowers hereby accept for themselves and in respect of their property,
generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts and appellate courts from any thereof. Borrowers irrevocably consent to
the service of process out of any of the aforementioned courts in any such
action or proceeding by the hand delivery, or mailing of copies thereof by
registered or certified mail, postage prepaid, to Borrowers at their address set
forth below. Borrowers hereby irrevocably waive any objection which it may now
or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Loan Document brought in the courts referred to above and hereby further
irrevocably waive and agree not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of the Agent or any
Lender to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against Borrowers in any other
jurisdiction.
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SECTION 9.9 Marshalling; Recapture. Neither the Agent nor any Lender shall
be under any obligation to marshall any assets in favor of Borrowers or any
other party or against or in payment of any or all of the Obligations. To the
extent any Lender receives any payment by or on behalf of Borrowers, which
payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to Borrowers or
their estates, trustees, receivers, custodians or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such payment or repayment, the Obligations or part thereof which has
been paid, reduced or satisfied by the amount so repaid shall be reinstated by
the amount so repaid and shall be included within the liabilities of Borrowers
to such Lender as of the date such initial payment, reduction or satisfaction
occurred.
SECTION 9.10 Counterparts; Integration; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective upon receipt by the Agent of counterparts
hereof signed by each of the parties hereto (or, in the case of any party as to
which an executed counterpart shall not have been received, receipt by the Agent
in form satisfactory to it of telegraphic, telex or other written confirmation
from such party of execution of a counterpart hereof by such party).
SECTION 9.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE AGENT AND
THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.12 Survival. Subject to Section 9.14 hereof, all indemnities set
forth herein shall survive the execution and delivery of this Agreement and the
other Loan Documents and the making and repayment of the Loan hereunder.
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SECTION 9.13 Domicile of Loans. Each Lender may transfer and carry its
share of indebtedness evidenced by the Notes at, to or for the account of any
domestic or foreign branch office, subsidiary or affiliate of such Lender,
provided that such transfer does not materially increase the costs incurred by
Borrowers in connection with the Loan.
SECTION 9.14 Limitation of Liability.
(a) No claim may be made by the Borrowers or any other Person
against the Agent or any Lender or the affiliates, directors, officers,
employees, attorneys or agent of any of them for any consequential or punitive
damages in respect of any claim for breach of contract or any other theory of
liability arising out of or related to the transactions contemplated by this
Agreement or by the other Loan Documents, or any act, omission or event
occurring in connection therewith, and the Borrowers hereby waive, release and
agree not to sue upon any claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
(b) The Agent or any Lender may look solely to the Borrowers'
interest in the Properties in seeking to enforce the Borrowers' liability and
obligations hereunder, and the lien of any judgment against any Borrower and any
proceeding instituted on, under or in connection with any Note or any of the
other Loan Documents shall extend to all property now or hereafter owned by any
Borrowers and encumbered by the Loan Documents and any proceeds from the sale of
any Property.
(c) Except as set forth in the Environmental Guaranty and the
Mortgage, no personal liability shall be asserted or enforceable against
Borrowers, any of the partners of the Borrowers, or its directors, officers,
agents, shareholders, partners, members, affiliates or employees (collectively,
the "Non-Recourse Parties") by the Agent or any Lender in respect of the
Obligations, this Agreement or any other Loan Document, or the making, issuance
or transfer thereof, all such liability, if any, being expressly waived by the
Agent or any Lender; provided, however, that nothing in this Agreement or any
other Loan Document shall be construed so as to exonerate or exculpate any
Non-Recourse Party from the payment of any liability, loss or damage suffered by
Agent or any Lender by reason of (a) breach by Borrower of any representations
or warranties contained herein or any Loan
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Document with respect to ERISA, (b) all environmental indemnification provisions
contained herein or in any Loan Document or (c) fraud, gross negligence or
wilful misconduct by any Borrower or any General Partner, including, without
limitation, the misapplication of insurance or condemnation proceeds.
SECTION 9.15 Contracts of Contractors. No contract entered into by the
Borrowers after the Closing Date shall provide that any claim can be made
against the Agent or any Lender under any circumstances whatsoever.
SECTION 9.16 Amounts Payable on Demand. Notwithstanding anything set forth
herein or in any other Loan Documents to the contrary, any amounts payable
hereunder by Borrowers, other than interest or principal payments to be made
hereunder or thereunder, or any administrative fees to be paid hereunder, shall
be payable upon written demand therefore.
SECTION 9.17 Lender's Failure to Fund.
(a) Unless the Agent shall have received notice from a Lender prior
to the Closing Date that such Lender will not make available to the Agent such
Lender's share of the Loan, the Agent may assume that such Lender has made such
share available to the Agent on the Closing Date and the Agent may, in reliance
upon such assumption, make available to the Borrowers on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such share available to the Agent with respect to any funding other than on
the Closing Date and Agent shall, in its sole discretion, have made such
corresponding amount available to Borrowers, such Lender severally agrees and
each Borrower jointly and severally agrees to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrowers until the date such
amount is repaid to the Agent, at (i) in the case of the Borrowers, a rate per
annum equal to the higher of the Federal Funds Rate and the interest rate
applicable thereto pursuant to Section 2.6 and (ii) in the case of such Lender,
the Federal Funds Rate. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Lender's loan
for purposes of this Agreement. Nothing contained in this Section shall be
deemed to reduce the Commitment of any Lender or in any way affect the rights of
Borrowers with respect to any
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Defaulting Lender or Agent. The failure of any Lender to make available to the
Agent such Lender's share of the Loan shall not relieve any other Lender of its
obligations to fund its Commitment.
(b) As used herein, the following terms shall have the meanings set
forth below:
(i) "Defaulting Lender" shall mean any Lender which (x) does not
advance to the Borrowers such Lender's pro rata share of the Loan in accordance
herewith for a period of five (5) Domestic Business Days after notice of such
failure from the Agent, (y) shall otherwise fail to perform such Lender's
obligations under the Loan Documents, including, without limitation, under
Section 9.18 hereof, for a period of five (5) Domestic Business Days after
notice of such failure from the Agent, or (z) shall fail to pay the Agent or any
other Lender, as the case may be, upon demand, such Lender's pro rata share of
any reasonable costs, expenses or disbursements incurred or made by the Agent
pursuant to the terms of the Loan Documents, for a period of five (5) Domestic
Business Days after notice of such failure from the Agent, and in all cases,
such failure is not as a result of a good faith dispute as to whether such
advance is properly required to be made pursuant to the provisions of this
Agreement, or as to whether such other performance or payment is properly
required pursuant to the provisions of this Agreement.
(ii) "Payment in Full" means, as of any date, the receipt by the
Lenders of an amount of cash, in lawful currency of the United States,
sufficient to indefeasibly pay in full all Senior Debt.
(iii) "Senior Debt" means (x) collectively, any and all
indebtedness, obligations and liabilities of the Borrowers to the Lenders who
are not Defaulting Lenders from time to time, whether fixed or contingent,
direct or indirect, joint or several, due or not due, liquidated or
unliquidated, determined or undetermined, arising by contract, operation of law
or otherwise, whether on open account or evidenced by one or more instruments,
and whether for principal, premium, interest (including, without limitation,
interest accruing after the filing of a petition initiating any proceeding
referred to in Section 6.1(h) or (i)), reimbursement for fees, indemnities,
costs, expenses or otherwise, which arise under, in connection with or in
respect of the Loan
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or the Loan Documents or otherwise relate to all or any portion of the
Properties (except for interest due hereunder), and (y) any and all deferrals,
renewals, extensions and refundings of, or amendments, restatements,
rearrangements, modifications or supplements to, any such indebtedness,
obligation or liability.
(iv) "Subordinated Debt" means (x) any and all indebtedness,
obligations and liabilities of Borrowers to one or more Defaulting Lenders from
time to time, whether fixed or contingent, direct or indirect, joint or several,
due or not due, liquidated or unliquidated, determined or undetermined, arising
by contract, operation of law or otherwise, whether on open account or evidenced
by one or more instruments, and whether for principal, premium, interest
(including, without limitation, interest accruing after the filing of a petition
initiating any proceeding referred to in Section 6.1(h) or (i)), reimbursement
for fees, indemnities, costs, expenses or otherwise, which arise under, in
connection with or in respect of the Loan or the Loan Documents or otherwise
relate to all or any portion of the Properties (except for interest due
hereunder), and (y) any and all deferrals, renewals, extensions and refundings
of, or amendments, restatements, rearrangements, modifications or supplements
to, any such indebtedness, obligation or liability.
(c) Immediately upon a Lender's becoming a Defaulting Lender
hereunder and at all times thereafter unless and until such time as a Defaulting
Lender shall fully cure any and all defaults on the part of such Defaulting
Lender under the Loan Documents or otherwise existing in respect of the Loan,
this Agreement or the other Loan Documents, and unconditionally pay to the Agent
such Defaulting Lender's pro rata share of all costs, expenses and disbursements
required to be paid or reimbursed pursuant to the terms of the Loan Documents,
including this Agreement, no Defaulting Lender shall, prior to Payment in Full
of all Senior Debt:
(i) accelerate, demand payment of, sue upon, collect, or receive any
payment upon, in any manner, or satisfy or otherwise discharge, any Subordinated
Debt, whether for principal, interest and otherwise (except for interest due
hereunder);
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(ii) take or enforce any Liens to secure Subordinated Debt or attach
or levy upon any assets of Borrowers, to enforce any Subordinated Debt;
(iii) enforce or apply any security for any Subordinated Debt; or
(iv) incur any debt or liability, or the like, to, or receive any
loan, return of capital, advance, gift or any other property, from, the
Borrowers.
(d) In the event of:
(i) any insolvency, bankruptcy, receivership, liquidation,
dissolution, reorganization, readjustment, composition or other similar
proceeding relating to Borrowers;
(ii) any liquidation, dissolution or other winding-up of any
Borrower, voluntary or involuntary, whether or not involving insolvency,
reorganization or bankruptcy proceedings;
(iii) any assignment by any Borrower for the benefit of creditors;
(iv) any sale or other transfer of all or substantially all assets
of any Borrower; or
(v) any other marshalling of the assets of any Borrower;
each of the Lenders shall first have received Payment in Full of all Senior Debt
before any payment or distribution, whether in cash, securities or other
property, shall be made in respect of or upon any Subordinated Debt. Any payment
or distribution, whether in cash, securities or other property that would
otherwise be payable or deliverable in respect of Subordinated Debt to any
Defaulting Lender but for this Agreement shall be paid or delivered directly to
the Agent for distribution to the Lenders in accordance with this Agreement
until Payment in Full of all Senior Debt. If any Defaulting Lender receives any
such payment or distribution, it shall promptly pay over or deliver the same to
the Agent for application in accordance with the preceding sentence.
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(e) Each Defaulting Lender shall file in any bankruptcy or other
proceeding of any Borrower in which the filing of claims is required by law, all
claims relating to Subordinated Debt that such Defaulting Lender may have
against any Borrower and assign to the Lenders all rights of such Defaulting
Lender thereunder. If such Defaulting Lender does not file any such claim prior
to forty-five (45) days before the expiration of the time to file such claim,
Agent, as attorney-in-fact for such Defaulting Lender, is hereby irrevocably
authorized to do so in the name of such Defaulting Lender or, in Agent's sole
discretion, to assign the claim to a nominee and to cause proof of claim to be
filed in the name of such nominee. The foregoing power of attorney is coupled
with an interest and cannot be revoked. The Agent shall, to the exclusion of
each Defaulting Lender, have the sole right with respect to any Defaulting
Lender, subject to Section 9.5 hereof, to accept or reject any plan proposed in
any such proceeding and to take any other action that a party filing a claim is
entitled to take. In all such cases, whether in administration, bankruptcy or
otherwise, the Person or Persons authorized to pay such claim shall pay to Agent
the amount payable on such claim and, to the full extent necessary for that
purpose, each Defaulting Lender hereby transfers and assigns to the Agent all of
the Defaulting Lender's rights to any such payments or distributions to which
Defaulting Lender would otherwise be entitled.
(f) (i) If any payment or distribution of any character or any
security, whether in cash, securities or other property, shall be received by
any Defaulting Lender in contravention of any of the terms hereof, such payment
or distribution or security shall be received in trust for the benefit of, and
shall promptly be paid over or delivered and transferred to, Agent for
application to the payment of all Senior Debt, to the extent necessary to
achieve Payment in Full. In the event of the failure of any Defaulting Lender to
endorse or assign any such payment, distribution or security, Agent is hereby
irrevocably authorized to endorse or assign the same as attorney-in-fact for
such Defaulting Lender.
(ii) Each Defaulting Lender shall take such action (including,
without limitation, the execution and filing of a financing statement with
respect to this Agreement and the execution, verification, delivery and filing
of proofs of claim, consents, assignments or other instructions that Agent may
require from time to time in
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order to prove or realize upon any rights or claims pertaining to Subordinated
Debt or to effectuate the full benefit of the subordination contained herein) as
may, in Agent's sole and absolute discretion, be necessary or desirable to
assure the effectiveness of the subordination effected by this Agreement.
(g) (i) Each Lender that becomes a Defaulting Lender understands and
acknowledges by its execution hereof that each other Lender is entering into
this Agreement and the Loan Documents in reliance upon the absolute
subordination in right of payment and in time of payment of Subordinated Debt to
Senior Debt as set forth herein
(ii) Only upon the Payment in Full of all Senior Debt shall any
Defaulting Lender be subrogated to any remaining rights of the Lenders which are
not Defaulting Lenders to receive payments or distributions of assets of the
Borrowers made on or applicable to any Senior Debt.
(iii) Notwithstanding the order of filing of any financing
statements or other security instruments, or the physical possession of the
Properties or any of the other collateral, or the order of granting of any
liens, each Defaulting Lender confirms and agrees that any Liens held by such
Defaulting Lender upon property of Borrowers to secure any Subordinated Debt,
whether now existing or hereinafter acquired and all rights, remedies, products
and proceeds related thereto, are and at all times shall be, totally and
absolutely expressly junior and subordinate to the liens in favor of the Lenders
and all rights, remedies, products and proceeds relating thereto.
(iv) Each Defaulting Lender agrees that it will deliver all
instruments or other writings evidencing any Subordinated Debt held by it to the
Agent, promptly after request therefor by the Agent.
(v) Until Payment in Full of all Senior Debt, each Defaulting Lender
hereby irrevocably waives any requirement for marshalling by Agent or the
Lenders of the assets of Borrowers in connection with any foreclosure of the
Liens of the Agent or of the Lenders on any collateral granted to secure the
Subordinated Debt (or the proceeds thereof) or any other realization upon such
collateral.
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(vi) No Defaulting Lender may at any time sell, assign or otherwise
transfer any Subordinated Debt, or any portion thereof, including, without
limitation, the granting of any Lien thereon, unless and until the proposed
transferee shall have assumed in writing the obligation of the Defaulting Lender
to the Lenders under this Agreement, in a form reasonably acceptable to the
Agent.
(vii) If any of the Senior Debt or any Lien securing same, should be
invalidated, avoided or set aside, the subordination provided for herein
nevertheless shall continue in full force and effect and, as between the Lenders
which are not Defaulting Lenders and all Defaulting Lenders, shall be and be
deemed to remain in full force and effect.
(viii) Each Defaulting Lender hereby irrevocably waives, in respect
of Subordinated Debt, all rights (x) under Sections 361 through 365, 502(e) and
509 of the Bankruptcy Code (or any similar sections hereafter in effect under
any other Federal or state laws or legal or equitable principles relating to
bankruptcy, insolvency, reorganizations, liquidations or otherwise for the
relief of debtors or protection of creditors), and (y) to seek or obtain
conversion to a different type of proceeding or to seek or obtain dismissal of a
proceeding, in each case in relation to a bankruptcy, reorganization, insolvency
or other proceeding under similar laws with respect to the Borrowers. Without
limiting the generality of the foregoing, each Defaulting Lender hereby
specifically waives (A) the right to seek relief from the automatic stay under
Section 362 of the Bankruptcy Code in respect of any collateral granted to
secure Subordinated Debt (or the proceeds thereof); (B) the right to seek to
give credit (secured or otherwise) to the Borrowers in any way under Section 364
of the Bankruptcy Code unless the same is subordinated in all respects to Senior
Debt in a manner acceptable to the Agent in its sole and absolute discretion;
(C) the right to take a position inconsistent with or contrary to that of the
Agent (including a position by the Agent to take no action) if Borrowers seek to
use, sell or lease collateral granted to secure Subordinated Debt (or the
proceeds or products thereof); (D) the right to receive any collateral security
(including any "super priority" or equal or "priming" or replacement Lien) for
any Subordinated Debt unless the Lenders which are not Defaulting Lenders have
received a senior position acceptable to such non-Defaulting Lenders in their
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sole and absolute discretion to secure all Senior Debt (in the same collateral
to the extent collateral is involved); and (E) the right to seek adequate
protection in respect of collateral granted to secure Subordinated Debt (or the
proceeds or products thereof) under Section 363 or 361 of the Bankruptcy Code.
(h) (i) In addition to and not in limitation of the subordination
effected by this Section 9.17, the Agent and each of the Lenders which are not
Defaulting Lenders may in their respective sole and absolute discretion, also
exercise any and all other rights and remedies available at law or in equity in
respect of a Defaulting Lender; and
(ii) The Agent shall give each of the Lenders notice of the
occurrence of a default under this Section 9.17 by a Defaulting Lender and if
the Agent and/or one or more of the other Lenders shall, at their option, fund
any amounts required to be paid or advanced by a Defaulting Lender, the other
Lenders who have elected not to fund any portion of such amounts shall not be
liable for any reimbursements to the Agent and/or to such other funding Lenders.
(i) Notwithstanding anything to the contrary contained or implied
herein, a Defaulting Lender shall not be entitled to vote on any matter as to
which a vote by the Lenders is required hereunder, including, without
limitation, any actions or consents on the part of the Agent as to which the
approval or consent of all the Lenders, the Super Required Lenders or the
Required Lenders is required under Section 9.5 or elsewhere, so long as such
Lender is a Defaulting Lender; provided, however, that in the case of any vote
requiring the unanimous consent of the Lenders, if all the Lenders other than
the Defaulting Lender shall have voted in accordance with each other, then the
Defaulting Lender shall be deemed to have voted in accordance with such Lenders.
(j) Each of the Agent and any one or more of the Lenders which are
not Defaulting Lenders may, at their respective option, (i) advance to the
Borrowers such Lender's pro rata share of the Loans not advanced by a Defaulting
Lender in accordance with the Loan Documents, or (ii) pay to the Agent such
Lender's pro rata share of any costs, expenses or disbursements incurred or made
by the Agent pursuant to the terms of this Agreement
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not theretofore paid by a Defaulting Lender. Immediately upon the making of any
such advance by the Agent or any one of the Lenders, such Lender's pro rata
share and the pro rata share of the Defaulting Lender shall be recalculated to
reflect such advance. All payments, repayments and other disbursements of funds
by the Agent to Lenders shall thereupon and, at all times thereafter be made in
accordance with such Lender's recalculated pro rata share unless and until a
Defaulting Lender shall fully cure all defaults on the part of such Defaulting
Lender under the Loan Documents or otherwise existing in respect of the Loans or
this Agreement, at which time the pro rata share of the Lender(s) which advanced
sums on behalf of the Defaulting Lender and of the Defaulting Lender shall be
restored to their original percentages.
SECTION 9.18 Swap Agreement Participation.
(a) Lenders acknowledge that Counterparty and the Borrowers have
entered into the Swap Agreement, pursuant to which the Counterparty and
Borrowers have entered into an interest rate swap transaction on the terms and
conditions set forth in a Confirmation, dated the date hereof (the
"Confirmation"). The Lenders hereby acknowledge that they have reviewed and
approved the Swap Agreement and the Confirmation. Each Lender set forth on
Schedule A attached hereto (each, a "Participant" and collectively, the
"Participants") shall, pursuant to the provisions of this Section 9.18, fund
such Participant's pro rata share (based on such Participant's percentage
interest as set forth on Schedule A attached hereto as the same may be amended
from time to time) of any amount payable by Borrowers under Section 6 of the
Swap Agreement (the "Termination Amount") in respect of the interest rate swap
transaction entered into by the Counterparty and Borrowers pursuant to the
Confirmation (collectively, a "Swap Transaction"), which Termination Amount is
unpaid as of the date when due (or the payment of which Termination Amount is
rescinded or must otherwise be restored or returned by Counterparty upon the
bankruptcy, insolvency, dissolution or reorganization of either Borrower). The
Counterparty shall notify each Participant by facsimile prior to the date upon
which such Termination Amount is to be funded by such Participant, in which
notice Counterparty shall state (i) the aggregate Termination Amount, (ii) the
date when the Termination Amount is to be funded by Participants, and (iii) the
respective amounts of such Termination Amount which are to be funded by each
Participant. Any such
105
<PAGE>
facsimile notice by Counterparty to Participants shall be promptly confirmed by
Counterparty to Participants by telephone or letter. Such notice shall be given
by Counterparty to Participants not less than three (3) Domestic Business Days
before the date such Termination Amount is to be funded by Participants. On the
date specified in such notice each Participant shall transfer to the
Counterparty by Federal funds wire or in other immediately available New York
City funds in United States dollars the amount specified as such Participant's
pro rata share (based on such Participant's percentage interest set forth on
Schedule A attached hereto as the same may be amended from time to time) of the
Termination Amount due as of the date specified in such notice. If a particular
Participant shall fail for any reason to fund its pro rata share of the
Termination Amount, in accordance with this Section 9.18 and the notice given by
the Counterparty to such Participant hereto, such Participant shall pay the
Counterparty interest thereon from the date specified for such funding in such
notice, until paid to the Counterparty, at a rate per annum equal to the Federal
Funds Rate from time to time during such period.
(b) Upon payment by any Participant of its pro rata portion of the
Termination Amount pursuant to subsection (a) above: (i) such Participant shall,
subject to this Agreement, be subrogated to its pro rata share of the rights of
the Counterparty against Borrowers under the Swap Agreement, including, without
limitation, the right to its respective pro rata portion of default interest
accruing on the Termination Amount from time to time under the Swap Agreement
and (ii) the Swap Agreement shall thereafter constitute part of the Loan
Documents, and the Termination Amount shall thereafter be treated as if it were
additional interest on the Indebtedness represented by the Notes and secured by
the Mortgage, subject to the terms hereof, including, without limitation, for
the purpose of reimbursement of expenses and costs and the taking of action by
the Counterparty pursuant to the terms hereof. In such event, and for so long as
the Termination Amount or any portion thereof shall be outstanding, (i) the
term, "Required Lenders" shall be modified to mean at any time Lenders and
Participants holding, as the case may be, Notes and percentage interests in the
Swap Agreement which evidence at least 51% of the aggregate of (x) the unpaid
principal amount of the Notes which are entitled to vote pursuant to the terms
hereof, and (y) the portion of the Termination Amount paid by such Participants
and unpaid by the Borrowers;
106
<PAGE>
and (ii) the term, "Super Required Lenders" shall be modified to mean at any
time Lenders and Participants holding, as the case may be, Notes and percentage
interests in the Swap Agreement which evidence at least 66 2/3% of the aggregate
of (x) the unpaid principal amount of the Notes which are entitled to vote
pursuant to the terms hereof, and (y) the portion of the Termination Amount paid
by such Participants and unpaid by the Borrowers. In the event that the
Counterparty shall be obligated (or, in its sole discretion, shall otherwise
agree) to pay Borrowers an amount pursuant to Section 6 of the Swap Agreement in
respect of an early termination of any Swap Transaction and shall, in lieu of
making such payment, apply the amount of such payment as a set-off in reduction
of the Loans, then each Participant shall be entitled to receive from the
Counterparty payment of an amount equal to its pro rata share (based on such
Participant's percentage interest as set forth on Schedule A attached hereto as
the same may be amended from time to time) of such application. Prior to any
Participant's paying its pro rata portion of the Termination Amount as provided
in this Section 9.18: (i) such Participant shall have no interest in the Swap
Agreement or any Swap Transaction or any payments made by or to Borrower in
connection therewith, and (ii) no consent of such Participant shall be required
for the taking of any action by the Counterparty with respect to the Swap
Agreement or any Swap Transaction, including, without limitation the designation
of an early termination date thereunder; provided, however, that (i) the
Counterparty shall not without the prior consent of a majority in interest of
the Participants make or consent to any materially adverse amendment,
modification or waiver of any of the terms, covenants, provisions or conditions
of the Swap Agreement or any Swap Transaction (once entered into thereunder) and
(ii) the Counterparty shall not without the prior consent of each Participant
release, reconvey or change, in whole or in part, any collateral or security
interest held under the Swap Agreement or any Swap Transaction.
(c) Each Participant's obligations under this Section 9.18 shall
remain in full force and effect, notwithstanding repayment of the Loans and
termination of all Swap Transactions and shall be independent of, and shall
survive, the discharge of the Indebtedness, the release of the Lien created
under the Mortgage, and/or the conveyance of title to the Property to any
purchaser
107
<PAGE>
or designee in connection with a foreclosure of the Mort-
gage or conveyance in lieu of foreclosure.
SECTION 9.19 Confidentiality. Prior to the occurrence and continuance of
an Event of Default, the Agent and each Lender agree to keep confidential all
non-public information provided to it by the Borrowers pursuant to this
Agreement that is designated by the Borrowers as confidential (it being
understood that Leases, any Major Lease Term Sheet, leasing guidelines and
property operating statement are designated as confidential); provided that
nothing herein shall prevent the Agent or any Lender from disclosing any such
information, (a) to the Agent, any other Lender or any affiliate of any Lender,
(b) to any Assignee or prospective Assignee which has agreed in writing to
comply with the provisions of this Section 9.19, (c) to the employees,
directors, agents, attorneys, accountants and other professional advisors of any
Lender, Assignee, prospective Assignee or their respective affiliates, (d) upon
the request or demand of any Governmental Authority having or asserting
jurisdiction over either Agent or any Lender, (e) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any requirement of law, (f) if requested or required to do so in
connection with any litigation or similar proceeding, (g) which has been
publicly disclosed other than in breach of this Section 9.19, (h) in connection
with the exercise of any remedy hereunder or under any other Loan Document or
(i) upon the advice of counsel that such disclosure is required by law.
SECTION 9.20 No Joint Venture. The relationship of the Agent and the
Lenders to the Borrowers is one of a creditor to a debtor, and neither the Agent
nor any Lender is a joint venturer or partner of the Borrowers.
108
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
1290 PARTNERS, L.P.
By: 1290 GP Corp., General Partner
By:
Name:
Title:
237 PARK PARTNERS, L.P.
By: 237 GP Corp., General Partner
By:
Name:
Title:
Commitments
$80,000,000.00 THE CHASE MANHATTAN BANK
By:
Name:
Title:
$80,000,000.00 BANK OF BOSTON
By:
Name: Michael J. Buckley
Title: Vice President
<PAGE>
$80,000,000.00 BHF-BANK AKTIENGESELLSCHAFT
By:
Name: Sylvia Gross
Title: Vice President
By:
Name:
Title:
$80,000,000.00 BAYERISCHE HYPOTHEKENUND
WECHSEL-BANK AKTIENGESELLSCHAFT
By:
Name: Timothy Wagner
Title: Assistant Vice President
By:
Name:
Title:
$50,000,000.00 BANK OF TOKYO-MITSUBISHI, LTD.
By:
Name: Akio Wada
Title: Senior Vice President and
Manager
$50,000,000.00 BANK AUSTRIA
By:
Name: Peter W. Wood
Title: Vice President
By:
Name: Andre K. Dobrowsky
Title: Assistant Treasurer
110
<PAGE>
Total Commitments
$420,000,000.00
THE CHASE MANHATTAN BANK, as Agent
By:
Name:
Title:
Domestic and Euro-Currency
Lending Office:
The Chase Manhattan Bank
380 Madison Avenue
New York, New York 10017
Attention: Mary Elisabeth Swears
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: William C. Viets, Esq.
Funding Instructions:
The Chase Manhattan Bank
Real Estate Finance
ABA # 021000-021
4 New York Plaza
New York, New York 10004
Credit: Chase Real Estate Finance
Account Number: 134-0-58697
Reference: Loan No. 564-4715
111
<PAGE>
EXHIBIT A
NOTE
$ ________________ New York, New York
as of October , 199_
For value received, 1290 PARTNERS, L.P., a Delaware limited partnership,
and 237 PARK PARTNERS, L.P., a Delaware limited partnership, (collectively, the
"Borrowers"), jointly and severally promise to pay to the order of ____________
(the "Lender"), for the account of its Applicable Lending Office, the amount of
_______________ ($_________) (the "Principal Amount") as defined below) on the
dates and in the amounts provided for in the Credit Agreement. The Borrowers
jointly and severally promise to pay interest on the unpaid Principal Amount on
the dates and at the rate or rates provided for in the Credit Agreement. All
such payments of principal and interest shall be made in lawful money of the
United States in Federal or other immediately available funds at the office of
the Agent.
The portion of the Loan made by the Lender, the respective types and
maturities thereof and all repayments of the Principal Amount shall be recorded
by the Lender and, if the Lender so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing information
with respect the Principal Amount then outstanding may be endorsed by the Lender
on the schedule attached hereto, or on a continuation of such schedule attached
to and made a part hereof; provided that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated as
of October __, 1996 among the Borrowers, the banks listed on the signature pages
thereof and The Chase Manhattan Bank, as Agent (as the same may be amended from
time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are
used herein with the same meanings. Reference is made to the Credit Agreement
for provisions for the amortiza-
A-1
<PAGE>
tion of the Principal Amount, prepayment hereof and the acceleration of the
maturity hereof. The provisions of Section 9.14 of the Credit Agreement shall be
deemed to be incorporated herein by reference.
1290 PARTNERS, L.P.
By: 1290 GP Corp., General Partner
By:
Name:
Title:
237 PARK PARTNERS, L.P.
By: 237 GP Corp., General Partner
By:
Name:
Title:
A-2
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------
Type Amount
Amount of of Interest
Date of Loan Loan Principal Period Notation
Tranche Tranche Repaid Expiration Made By
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
B-1
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS............................................ 1
SECTION 1.1 Definitions...................................... 1
SECTION 1.2 Accounting Terms and Determinations.............. 25
ARTICLE II THE CREDITS............................................ 26
SECTION 2.1 Commitments to Lend.............................. 26
SECTION 2.2 Method of Electing Interest Rates................ 26
SECTION 2.3 Notice to Lenders; Funding of Loan............... 28
SECTION 2.4 Promissory Notes................................. 28
SECTION 2.5 Maturity of the Loan............................. 29
SECTION 2.6 Interest Rates................................... 29
SECTION 2.7 Fees............................................. 31
SECTION 2.8 Amortization of Principal; Mandatory
Termination or Prepayment of Loans............... 31
SECTION 2.9 Optional Prepayments; Property Release........... 34
SECTION 2.10 General Provisions as to Payments................ 38
SECTION 2.11 Funding Losses................................... 39
SECTION 2.12 Computation of Interest and Fees................. 39
SECTION 2.13 Intentionally Omitted............................ 39
SECTION 2.14 Cash Collateral Account.......................... 39
SECTION 2.15 Expiring Lease Costs Reserve..................... 40
ARTICLE III CONDITIONS............................................. 41
SECTION 3.1 Closing.......................................... 41
ARTICLE IV BORROWERS' REPRESENTATIONS AND WARRANTIES.............. 47
SECTION 4.1 Existence and Power.............................. 47
SECTION 4.2 Power and Authority.............................. 48
SECTION 4.3 No Violation..................................... 49
SECTION 4.4 Intentionally Deleted............................ 49
SECTION 4.5 Litigation....................................... 50
SECTION 4.6 Compliance with ERISA............................ 50
SECTION 4.7 Environmental Compliance......................... 50
SECTION 4.8 Taxes............................................ 52
SECTION 4.9 Full Disclosure.................................. 52
SECTION 4.10 Solvency......................................... 52
SECTION 4.11 Use of Proceeds; Margin Regulations.............. 53
SECTION 4.12 Governmental Approvals........................... 53
SECTION 4.13 Investment Company Act; Public Utility
Holding Company Act.............................. 53
SECTION 4.14 Single Purpose Entity............................ 53
i
<PAGE>
Page
SECTION 4.15 Patents, Trademarks, etc.......................... 53
SECTION 4.16 Ownership of Property............................. 54
SECTION 4.17 No Default........................................ 54
SECTION 4.18 Licenses, etc..................................... 54
SECTION 4.19 Compliance With Law............................... 54
SECTION 4.20 No Burdensome Restrictions........................ 54
SECTION 4.21 Brokers' Fees..................................... 55
SECTION 4.22 Intentionally Omitted ............................ 55
SECTION 4.23 Insurance......................................... 55
SECTION 4.24 Security Interests and Liens...................... 55
SECTION 4.25 Organizational Documents.......................... 55
SECTION 4.26 Construction...................................... 56
SECTION 4.27 Structural Defects and Violation of Law........... 56
SECTION 4.28 Budget............................................ 56
SECTION 4.29 Principal Offices................................. 56
ARTICLE V AFFIRMATIVE AND NEGATIVE COVENANTS...................... 56
SECTION 5.1 Information....................................... 57
SECTION 5.2 Payment of Obligations............................ 61
SECTION 5.3 Maintenance of Property; Insurance................ 61
SECTION 5.4 Conduct of Business and Maintenance of
Existence......................................... 62
SECTION 5.5 Compliance with Laws.............................. 62
SECTION 5.6 Inspection of Property, Books and Records......... 62
SECTION 5.7 Existence......................................... 63
SECTION 5.8 Financial Covenants............................... 63
SECTION 5.9 Restriction on Fundamental Changes................ 63
SECTION 5.10 Sale of the Property.............................. 65
SECTION 5.11 Changes in Business............................... 65
SECTION 5.12 Fiscal Year; Fiscal Quarter....................... 65
SECTION 5.13 Margin Stock...................................... 65
SECTION 5.14 Payments.......................................... 65
SECTION 5.15 Single Purpose Entity............................. 65
SECTION 5.16 Liability of Lenders.............................. 65
SECTION 5.17 Mechanics' Liens.................................. 66
SECTION 5.18 Intentionally Deleted............................. 66
SECTION 5.19 Major Alterations................................. 66
SECTION 5.20 Leases............................................ 68
SECTION 5.21 Construction Consultant........................... 69
SECTION 5.22 Property Manager.................................. 70
SECTION 5.23 Leasing Agent..................................... 70
SECTION 5.24 Asset Manager..................................... 70
SECTION 5.25 Material Contracts................................ 71
SECTION 5.26 Security Deposits..................................... 71
ii
<PAGE>
Page
ARTICLE VI EVENTS OF DEFAULT...................................... 71
SECTION 6.1 Events of Default................................ 71
SECTION 6.2 Rights and Remedies.............................. 75
SECTION 6.3 Notice of Default................................ 77
ARTICLE VII THE AGENT.............................................. 77
SECTION 7.1 Appointment and Authorization.................... 77
SECTION 7.2 Agent and Affiliates............................. 77
SECTION 7.3 Action by Agent.................................. 77
SECTION 7.4 Consultation with Experts........................ 78
SECTION 7.5 Liability of Agent............................... 78
SECTION 7.6 Indemnification.................................. 78
SECTION 7.7 Credit Decision.................................. 79
SECTION 7.8 Successor Agent.................................. 79
SECTION 7.9 Documents........................................ 80
SECTION 7.10 Decisions........................................ 80
ARTICLE VIII CHANGE IN CIRCUMSTANCES................................ 81
SECTION 8.1 Basis for Determining Interest Rate
Inadequate or Unfair............................. 81
SECTION 8.2 Illegality....................................... 81
SECTION 8.3 Increased Cost and Reduced Return................ 82
SECTION 8.4 Taxes............................................ 84
SECTION 8.5 Alternate Base Rate Loans Substituted
for Affected Euro-Dollar Loans................... 86
ARTICLE IX MISCELLANEOUS.......................................... 87
SECTION 9.1 Notices.......................................... 87
SECTION 9.2 No Waivers....................................... 87
SECTION 9.3 Expenses; Indemnification........................ 88
SECTION 9.4 Sharing of Set-Offs.............................. 90
SECTION 9.5 Amendments and Waivers........................... 90
SECTION 9.6 Successors and Assigns........................... 92
SECTION 9.7 Collateral....................................... 94
SECTION 9.8 Governing Law; Submission to Jurisdiction........ 94
SECTION 9.9 Marshalling; Recapture........................... 95
SECTION 9.10 Counterparts; Integration; Effectiveness......... 95
SECTION 9.11 WAIVER OF JURY TRIAL............................. 95
SECTION 9.12 Survival......................................... 95
SECTION 9.13 Domicile of Loans................................ 96
SECTION 9.14 Limitation of Liability.......................... 96
SECTION 9.15 Contracts of Contractors......................... 97
SECTION 9.16 Amounts Payable on Demand........................ 97
iii
<PAGE>
SECTION 9.17 Lender's Failure to Fund......................... 97
SECTION 9.18 Swap Agreement Participation.................... 105
SECTION 9.19 Confidentiality................................. 108
SECTION 9.20 No Joint Venture................................ 108
Schedule A - Participants
Exhibit A - Note
Exhibit B - Intentionally Omitted
Exhibit C - Intentionally Omitted
Exhibit D - Leasing Status Report
Exhibit E - Intentionally Omitted
Exhibit F - Assignment and Assumption Agreement
Exhibit G - Permitted Liens
Exhibit H - Tenants to execute Subordination Agreements
Exhibit I - Leases subject to Expiring Lease Costs
Exhibit J - Form of Permitted Owner Certificate
iv
CONSOLIDATED, AMENDED AND RESTATED PROMISSORY NOTE
$420,000,000 New York, New York
October 10, 1996
W I T N E S S E T H
WHEREAS the notes and other obligations described in Schedule 1
annexed hereto and made a part hereof (collectively, the "Existing Notes") in
the aggregate unpaid principal amount as of the date hereof of $420,000,000 have
been assigned to The Chase Manhattan Bank, as Agent (together with its
successors and assigns, "Agent");
WHEREAS, Borrowers (as hereinafter defined) and Agent desire to
consolidate and restate the terms and conditions of the Existing Notes in their
entirety, in the manner set forth in this Consolidated, Amended and Restated
Promissory Note (this "Note"), evidencing an indebtedness of $420,000,000;
NOW THEREFORE, by Borrowers' execution and delivery of this Note,
this Note is deemed to consolidate the Existing Notes and the Existing Notes are
hereby amended and restated in their entirety to read as follows:
FOR VALUE RECEIVED, 1290 PARTNERS, L.P., a Delaware limited partnership,
and 237 PARK PARTNERS, L.P., a Delaware limited partnership, (collectively, the
"Borrowers"), jointly and severally promise to pay to the order of The Chase
Manhattan Bank, in its capacity as Agent for the Lenders (as defined in the
Credit Agreement (as hereinafter defined)), and its successors in such capacity
appointed in accordance with the provisions of the Credit Agreement, for the
account of its Applicable Lending Office, the amount of Four Hundred Twenty
Million Dollars ($420,000,000) (the "Principal Amount") on the dates and in the
amounts provided for in the Credit Agreement. The Borrowers jointly and
severally promise to pay interest on the unpaid Principal Amount on the dates
and at the rate or rates provided for in the Credit Agreement. All such payments
of principal and interest shall be made in lawful money of the United States in
0091694.02-New York Server 7a Draft November 11, 1996 - 11:47 am
<PAGE>
Federal or other immediately available funds at the office of the Agent.
The portion of the Loan made by each Lender, the respective types and
maturities thereof and all repayments of the Principal Amount shall be recorded
by Agent and, if any Lender so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing information
with respect to the Principal Amount then outstanding may be endorsed by Agent
on Schedule 2 attached hereto, or on a continuation of such schedule attached to
and made a part hereof; provided that the failure of such Lender or Agent to
make any such recordation or endorsement shall not affect the obligations of the
Borrowers hereunder or under the Credit Agreement.
Terms defined in the Credit Agreement, dated as of October 10, 1996, among
the Borrowers, the Lenders and the Agent (as the same may be amended from time
to time, the "Credit Agreement"), are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the amortization of
the Principal Amount, prepayment thereof and the acceleration of the maturity
thereof. The provisions of Section 9.14 of the Credit Agreement shall be deemed
to be incorporated herein by reference.
1290 PARTNERS, L.P.
By: 1290 GP Corp., General
Partner
By:
Name:
Title:
237 PARK PARTNERS, L.P.
By: 237 GP Corp., General
Partner
0091694.02-New York Server 7a Draft November 11, 1996 - 11:47 am
2
<PAGE>
By:
Name:
Title:
0091694.02-New York Server 7a Draft November 11, 1996 - 11:47 am
3
<PAGE>
SCHEDULE 1
EXISTING NOTES
0091694.02-New York Server 7a Draft November 11, 1996 - 11:47 am
4
<PAGE>
SCHEDULE 2
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------
Type Amount
Amount of of Interest
Date of Loan Loan Principal Period Notation
Tranche Tranche Repaid Expiration Made By
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
0091694.02-New York Server 7a Draft November 11, 1996 - 11:47 am
5
MORTGAGE MODIFICATION, RESTATEMENT AND SECURITY AGREEMENT
from
1290 PARTNERS, L.P.
and
237 PARK PARTNERS, L.P.,
Mortgagors
to
THE CHASE MANHATTAN BANK,
AS AGENT,
Mortgagee
Dated as of October 10, 1996
After recording, please return to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
ATTN: Wallace L. Schwartz, Esq.
237 Park Avenue
New York, New York
Block: 1300
Lots: 6 and 14
Section:
1290 Avenue of the Americas
New York, New York
Block: 1267
Lot: 1
Section:
<PAGE>
MORTGAGE MODIFICATION, RESTATEMENT
AND SECURITY AGREEMENT
THIS MORTGAGE MODIFICATION, RESTATEMENT AND SECURITY AGREEMENT (herein,
together with all amendments and supplements thereto, called this "Mortgage"),
dated as of the 10th day of October, 1996, made by 1290 PARTNERS, L.P., a
Delaware limited partnership ("1290 Mortgagor"), and 237 PARK PARTNERS, L.P., a
Delaware limited partnership ("237 Park Mortgagor"; 1290 Mortgagor and 237 Park
Mortgagor collectively, "Mortgagors" and each individually, a "Mortgagor"), each
having an address at c/o Victor Capital Group, L.P., 885 Third Avenue, New York,
New York 10022, to THE CHASE MANHATTAN BANK, in its capacity as Agent for the
Lenders (as defined the Credit Agreement (as hereinafter defined))
("Mortgagee"), having an address at 380 Madison Avenue, New York, New York
10017-2591.
W I T N E S S E T H :
WHEREAS, the 1290 Mortgagor is the owner of the fee simple interest in the
land described in Exhibit A-1 attached hereto and made a part hereof (the "1290
Land") and the Improvements (as hereinafter defined) located thereon and the 237
Park Mortgagor is the owner of the fee simple interest in the land described in
Exhibit A-2 attached hereto and made a part hereof, (the "237 Park Land") and
the Improvements located thereon. The 1290 Land and the 237 Park Land shall be
collectively referred to herein as the "Land";
WHEREAS, Mortgagee has agreed to make a loan (the "Loan") to Mortgagors
pursuant to the Credit Agreement, dated as of even date herewith, between
Mortgagors, Mortgagee and the other Lenders (the "Credit Agreement"), in the
aggregate principal amount of Four Hundred Twenty Million ($420,000,000) Dollars
(the "Loan Amount");
WHEREAS, Mortgagors are the present holders of the makers' interest under
those certain promissory notes (collectively, the "Existing Notes") as more
particularly described on Exhibit B attached hereto and made a part hereof in
the aggregate unpaid principal amount as of the date hereof of $420,000,000;
<PAGE>
WHEREAS, the Existing Notes are secured by those certain mortgages
(collectively, the "Existing Mortgages") as more particularly described on
Exhibit C attached hereto and made a part hereof, encumbering the Land and
recorded on the dates and in the county land records as set forth in said
Exhibit C;
WHEREAS, immediately prior to the execution and delivery hereof, Bankers
Trust Company, as Indenture Trustee ("Prior Lender") was the holder of the
lender's interest under all of the Existing Mortgages and the Existing Notes,
and pursuant to that certain Assignment, dated as of the date hereof, between
the Prior Lender, as assignor, and Mortgagee, as assignee, immediately prior to
the execution and delivery hereof, the Prior Lender assigned all of its right,
title and interest in and to the Existing Mortgages and the Existing Notes to
Mortgagee;
WHEREAS, on the date hereof, Mortgagors and Mortgagee have agreed (1) to
combine, consolidate and amend and restate in its entirety the indebtedness
evidenced by the Existing Notes and all of such indebtedness as so combined,
consolidated, amended and restated shall constitute a single indebtedness in the
aggregate original principal amount of Four Hundred Twenty Million Dollars
($420,000,000) pursuant to a certain Amended, Restated and Consolidated
Promissory Note (the "Consolidated Note"), (2) that the Existing Mortgages and
the liens thereof constitute in law but one mortgage, a single, first lien
securing the obligations evidenced by the Consolidated Note and (3) to amend and
restate the terms and conditions contained in the Existing Mortgages as
hereinafter set forth;
WHEREAS, Mortgagors and Mortgagee desire to sever and divide the
indebtedness evidenced by the Consolidated Note so that the indebtedness shall
be evidenced by certain separate promissory notes (collectively, the "Notes"),
made by Mortgagors to Mortgagee and the other Lenders; and
WHEREAS, the indebtedness evidenced by the Notes shall be secured by this
Mortgage and the other Loan Documents (as defined in the Credit Agreement).
NOW, THEREFORE, in consideration of the premis- es and for other good and
valuable consideration, the re-
3
<PAGE>
ceipt and sufficiency of which are hereby acknowledged,
Mortgagors hereby agree as follows:
I. The Existing Mortgages and the liens thereof, shall hereafter constitute
in law a valid and enforceable first lien in the amount of $420,000,000 upon the
Mortgaged Property (as hereinafter defined) securing the Indebtedness, together
with interest thereon, the Breakage Indebtedness (as hereinafter defined) and
all other sums secured thereby, and the Borrower shall pay the Indebtedness and
interest thereon at the rate of interest and on the terms provided for the
payment of principal and interest with respect to the Notes secured by this
Mortgage.
II. The Existing Mortgages and the liens thereof are hereby modified so
that all of the terms and conditions of the aforesaid mortgages shall be
restated in their entirety to be on the terms and conditions set forth herein,
and each Mortgagor agrees to comply with and be subject to all of the terms,
covenants and conditions of this Mortgage.
III. The parties hereto certify that this instrument secures the same
indebtedness evidenced by the Existing Notes and secured by the Existing
Mortgages, respectively, and secures no further or other indebtedness or
obligation. Neither this Mortgage nor anything contained herein shall be
construed as a substitution or novation of the Mortgagors' indebtedness to
Mortgagee or of the Existing Mortgages, which shall remain in full force and
effect as hereby confirmed, modified, restated and superseded.
IV. This Mortgage shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and assigns, and shall be deemed
to be effective as of the date hereof.
V. The Existing Mortgages, as modified and restated in their entirety
pursuant to this Mortgage, and the obligations of Mortgagors hereunder, are
hereby ratified and confirmed, and shall remain in full force and effect until
the full performance and satisfaction of all obligations of Mortgagors
thereunder.
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VI. Any reference to the Mortgage in the Notes, the Credit Agreement or any
other Loan Document shall be deemed to refer to this Mortgage.
TO SECURE:
(i) payment and performance of all covenants, conditions, liabilities
and obligations contained in, and payment of the indebtedness evidenced by,
the Notes plus all interest and additional amounts payable thereunder; and
(ii) payment and performance of all covenants, conditions, liabilities
and obligations of Mortgagors to Mortgagee and the other lenders contained
in this Mortgage, the Credit Agreement and any extensions, renewals or
modifications hereof; and
(iii) payment and performance of all covenants, conditions,
liabilities and obligations contained in each of the other Loan Documents;
and
(iv) without limiting the generality of the foregoing, payment of all
indebtedness, liabilities, and amounts from time to time evidenced by the
Notes, and all other indebtedness and liabilities, direct or indirect, of
Mortgagors to Mortgagee, due or to become due hereunder, or under any other
Loan Document (including, without limitation, any protective advances,
disbursements, payments and reimbursements made, and charges, expenses and
costs (including, without limitation, any enforcement and collection costs)
incurred by Mortgagee pursuant to the Notes, this Mortgage, or such other
Loan Documents) to protect the security intended to be provided hereby even
if the aggregate amount of indebtedness outstanding at any one time exceeds
the face amount of the Notes (all of the foregoing indebtedness, monetary
liabilities and obligations set forth in clauses (i)-(iv) above,
collectively, the "Note Indebtedness"; and payment of the Note Indebtedness
together with the performance of all covenants, conditions and obligations
set forth in clauses (i)(iv) above, collectively, the "Note Obligations");
and
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(v) payment of all costs incurred by the Counterparty (as hereinafter
defined) under the Swap Agreement (as defined in the Credit Agreement) in
connection with a Termination Event or an Event of Default thereunder (as
such terms are defined in the Swap Agreement) (all of the foregoing
indebtedness, monetary liabilities and obligations set forth in this clause
(v), collectively, the "Breakage Indebtedness"; the Note Indebtedness and
the Breakage Indebtedness collectively, the "Indebtedness"; and payment of
the Breakage Indebtedness together with the performance of all covenants,
conditions and obligations set forth in this clause (v) above,
collectively, the "Breakage Obligations"; the Note Obligations and the
Breakage Obligations collectively, the "Obligations").
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS MORTGAGE, THE
MAXIMUM AMOUNT OF PRINCIPAL INDEBTEDNESS SECURED BY THIS MORTGAGE AT EXECUTION
OR UNDER ANY CONTINGENCY, WHICH MAY BE SECURED HEREBY AT ANY TIME HEREAFTER IS
$420,000,000.
GRANTING CLAUSES
NOW, THEREFORE, THIS MORTGAGE WITNESSETH: that Mortgagors, in consideration
of the premises, and other good and valuable consideration, the receipt and
suffi- ciency of which is hereby acknowledged (a) have mort- gaged, warranted,
granted, bargained, sold, conveyed, pledged, and assigned and (b) by these
presents do hereby mortgage, warrant, grant a security interest in, grant,
bargain, sell, convey, pledge, and assign unto Mortgagee and its successors and
assigns forever, in the trusts created hereby all of Mortgagors' estate, right,
title and interest now owned or hereafter acquired in, to and under any and all
of the property (herein called the "Mortgaged Property") described in the
following Granting Clauses:
I. The Land, together with the entire right, title and interest of
Mortgagors in and to such Land, subject to Permitted Liens (as hereinafter
defined) together with (a) all right, title and interest of Mortgagors in and to
all buildings, structures and other improvements now standing, or at any time
hereafter constructed or placed, upon the Land, including all of Mortgagors'
right, title and interest in and to all
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equipment and fixtures of every kind and nature on the Land or in any such
buildings, structures or other improvements (such buildings, structures, other
improvements, equipment and fixtures being herein collectively called the
"Improvements"), (b) all right, title and interest of Mortgagors in and to all
and singular tenements, hereditaments, easements, rights of way, rights,
privileges and appurtenances in and to the Land belonging or in any way
appertaining thereto, including without limitation all right, title and interest
of Mortgagors in, to and under any streets, ways, alleys, vaults, gores or
strips of land adjoining the Land and (c) all claims or demands of Mortgagors,
in law or in equity, in possession or expectancy of, in and to the Land together
with rents, income, revenues, issues and profits from and in respect of the
property described above in this Granting Clause I and the present and
continuing right to make claim for, collect, receive and receipt for the same as
hereinafter provided. It is the intention of the parties hereto that, so far as
may be permitted by law, all of the foregoing, whether now owned or hereafter
acquired by Mortgagors, affixed, attached or annexed to the Land shall be and
remain or become and constitute a part of the Mortgaged Property and the
security covered by and subject to the lien of this Mortgage. All such right,
title and interest of 1290 Mortgagor in and to the 1290 Land described on
Exhibit A-1, the interest of 1290 Mortgagor in and to the Improvements located
thereon and such other property with respect thereto described in Granting
Clause I is herein called the "1290 Property". All such right, title and
interest of 237 Park Mortgagor in and to the Land described on Exhibit A-2, the
interest of 237 Park Mortgagor in and to the Improvements located thereon and
such other property with respect thereto described in Granting Clause I is
herein called the "237 Park Property"; the 1290 Property and the 237 Park
Property each, a "Property" and such Properties are collectively called the
"Properties."
II. All right, title and interest of Mortgagors in and to (i) all
extensions, improvements, betterments, renewals, substitutes and replacements of
and on the Properties described in the foregoing Granting Clause I and (ii) all
additions and appurtenances thereto not presently leased to or owned by
Mortgagors and hereafter leased to, acquired by or released to Mortgagors or
constructed, assembled or placed upon the Mortgaged Property (including, but not
limited to, the fee estate
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in the Land) immediately upon such leasing, acquisition, release, construction,
assembling or placement, and without any further grant or other act by
Mortgagors.
III. All the estate, right, title and interest of Mortgagors in and to (i)
all judgments, insurance proceeds, awards of damages and settlements resulting
from condemnation proceedings or the taking of the Properties, or any part
thereof, under the power of eminent domain or for any damage (whether caused by
such taking or otherwise) to the Properties, or any part thereof, or to any
rights appurtenant thereto, and all proceeds of any sales or other dispositions
of the Properties or any part thereof; and Mortgagee is hereby authorized to
collect and receive said awards and proceeds and to give proper receipts and
acquittances thereto, subject to the conditions and limitations hereinafter set
forth; and (ii) all contract rights, general intangibles, actions and rights in
action, relating to the Properties including, without limitation, all rights to
insurance proceeds and unearned premiums arising from or relating to damage to
the Properties; and (iii) all proceeds, products, replacements, additions,
substitutions, renewals and accessions of and to the Properties.
IV. As additional security for the obligations secured hereby, Mortgagors
do hereby pledge and presently and absolutely assign to Mortgagee from and after
the date hereof (including any period of redemption), primarily and on a parity
with said real estate, and not secondarily, all the rents, issues and profits of
the Properties and all rents, issues, profits, revenues, royalties, bonuses,
rights, and benefits due, payable or accruing (including all deposits of money
as advance rent, for security or as earnest money or as down payment for the
purchase of all or any part of the Properties but subject to applicable legal
requirements) (the "Rents") under any and all present and future leases,
subleases, underlettings, concession agreements, licenses, contracts or other
agreements relative to the ownership or occupancy of all or any portion of the
Properties and do hereby transfer and assign to Mortgagee all such leases and
agreements (the "Leases"). Mortgagors agree to cause all Rents (exclusive of
unapplied security deposits) payable under any Leases as they become due to be
deposited in accordance with Section 2.14 of the Credit Agreement and the terms
of the Cash Collateral Agreement. Mortgagors further agree to execute and
deliver such assignments of
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leases or assignments of land sale contracts as Mortgagee may from time to time
request. Upon the occurrence and during the continuance of an Event of Default
(1) Mortgagors agree, upon demand, to deliver to Mortgagee such additional
assignments thereof as Mortgagee may request and agree that Mortgagee may assume
the management of the Properties, and collect the Rents, applying the same upon
the Obligations and (2) Mortgagors hereby authorize and direct all tenants,
purchasers or other persons occupying or otherwise acquiring any interest in any
part of the Properties to pay the Rents due under the Leases to Mortgagee upon
request of Mortgagee. Mortgagors hereby appoint Mortgagee as their true and
lawful attorney in fact to manage said property and collect the Rents, with full
power to bring suit for collection of the Rents and possession of the
Properties, giving and granting unto said Mortgagee full power and authority to
do and perform all and every act and thing whatsoever requisite and necessary to
be done in the protection of the security hereby conveyed; provided, however,
that (i) this power of attorney coupled with an interest and assignment of rents
shall not be construed as an obligation upon Mortgagee to manage said property
or to make or cause to be made any repairs or to take any other action that may
be needful or necessary and (ii) Mortgagee agrees that until such Event of
Default has occurred and while it is continuing as aforesaid, Mortgagee shall
not exercise its rights pursuant to said power of attorney coupled with an
interest and shall permit Mortgagors to perform the aforementioned management
responsibilities. Upon Mortgagee's receipt of the Rents, at Mortgagee's option,
after the occurrence and during the continuance of an event of Default, it may
pay: (1) reasonable charges for collection hereunder, costs of necessary repairs
and other costs requisite and necessary in connection with the management of the
Properties, during the continuance of this power of attorney coupled with an
interest and assignment of rents including general and special taxes and
assessments and insurance premiums and (2) the Indebtedness secured hereby. This
power of attorney coupled with an interest and assignment of leases and rents
shall be irrevocable until this Mortgage shall have been satisfied and all of
the Mortgaged Property released of record and the releasing of this Mortgage
shall act as a revocation of this power of attorney coupled with an interest and
assignment of leases and rents with respect to such portion of the Mortgaged
Property so released. Mortgagee shall have and hereby expressly reserves the
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right and privilege (but assumes no obligation) to demand, collect, sue for,
receive and recover the Rents, or any part thereof, now existing or hereafter
made, and apply the same in accordance with law.
V. All of Mortgagors' right, title and interest in and to all personal and
intangible property and equipment of every nature whatsoever now or hereafter
located in, arising from or on or utilized in connection with the Mortgaged
Property, including but not limited to (a) all screens, window shades, blinds,
wainscoting, storm doors and windows, floor coverings, and awnings; (b) all
apparatus, machinery, accessions, equipment and appliances not included as
fixtures; (c) all items of furniture, furnishings, and personal property; (d)
all extensions, additions, improvements, betterments, renewals, substitutions,
and replacements to or of any of the foregoing (a)-(c) (all of said property in
(a)-(d) being collectively, the "Equipment"); (e) all accounts receivable
arising from the sale or other disposition of all or any of Mortgagors' real
property, buildings, structures and other improvements, fixtures, furniture,
furnishings, apparatus, machinery, appliances or other equipment, and all
extensions, renewals, improvements, substitutions and replacements thereto
whether owned or leased, now or hereafter acquired; (f) all accounts, general
intangibles, chattel paper, cash or monies of Mortgagors, wherever located,
whether in the form of cash or checks, and all cash equivalents including,
without limitation, all deposits and certificates of deposit, instruments,
whether negotiable or non-negotiable, debt notes both certificated and
uncertificated, repurchase obligations for underlying notes of the types
described herein, and commercial paper (i) received in connection with the sale
or other disposition of all or any of Mortgagors' real property, buildings,
structures and other improvements, fixtures, furniture, furnishings, apparatus,
machinery, appliances or other equipment, and all extensions, renewals,
improvements, substitutions and replacements thereto whether owned or leased,
now or hereafter acquired, (ii) maintained by Mortgagors in a segregated account
in trust for the benefit of Mortgagee pursuant to the requirements of the Loan
Documents or (iii) held by Mortgagee; (g) all trade names, trade marks, logos,
copyrights, good will and books and records relating to or used in connection
with the Mortgaged Property or any part thereof; and (h) all proceeds (as
defined in the Uniform Commercial Code) of all of the foregoing; it being
mutually agreed, in-
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tended and declared, that the Mortgaged Property and all of the property rights
and fixtures owned by Mortgagors shall, so far as permitted by law, be deemed to
form a part and parcel of the Land and for the purpose of this Mortgage to be
real estate and covered by this Mortgage, it being also agreed that if any of
the property herein mortgaged is of a nature so that a security interest therein
can be perfected under the Uniform Commercial Code, this instrument shall
constitute a security agreement, fixture filing and financing statement, and
Mortgagors agree to execute, deliver and file or refile any financing statement,
continuation statement, or other instruments Mortgagee may reasonably require
from time to time to perfect or renew such security interest under the Uniform
Commercial Code. To the extent permitted by law, (i) all of the fixtures are or
are to become fixtures on Land; and (ii) this instrument, upon recording or
registration in the real estate records of the proper office, shall constitute a
"fixture-filing" within the meaning of Sections 9-313 and 9-402 of the Uniform
Commercial Code. The remedies for any violation of the covenants, terms and
conditions of the agreements herein contained shall be as prescribed herein or
by general law, or, as to that part of the security in which a security interest
may be perfected under the Uniform Commercial Code, by the specific statutory
consequences now or hereafter enacted and specified in the Uniform Commercial
Code, all at Mortgagee's sole election.
VI. All of Mortgagors' right, title, and interest in, to and under (i) all
contracts, including the Property Management Agreement, Asset Management
Agreement and the Leasing Agency Agreement (as each term is herein defined) and
agreements relating to the Properties, and other documents, books and records
related to the operation of the Properties; (ii) all consents, licenses,
warranties, guaranties and building and other permits required or useful for the
construction, completion, occupancy and operation of the Properties; and (iii)
all plans and specifications, engineering reports, land planning, maps, surveys,
and any other reports, exhibits or plans and specifications used or to be used
in connection with the construction, operation or maintenance of the Properties,
together with all amendments and modifications thereof.
VII. All of Mortgagors' right, title and interest in the Pledged Notes.
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VIII. All of Mortgagors' right, title and interest in all proceeds, both
cash and non-cash, of the foregoing.
IX. The right in the name and on behalf of the Mortgagor, to appear in and
defend any action or proceeding brought with respect to the Mortgaged Property
and to commence any action or proceeding to protect the interest of the
Mortgagee in the Mortgaged Property.
X. All of Mortgagors' rights to encumber the Properties.
1. Definitions. All capitalized terms used but not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement. The words
"herein," "hereof" and "hereunder" and other words of like import refer to this
Mortgage as a whole and not to any particular Section, subsection or other
subdivision. In addition, wherever used in this Mortgage, the following terms,
and the singular and plural thereof, shall have the following meanings:
Affiliate: With respect to 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. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities or other beneficial interest,
by contract or otherwise; and the terms "controlling" and "controlled" have the
meanings correlative to the foregoing.
Alteration: As defined in Section 10(c) here- of.
Asset Management Agreement: As defined in the Credit Agreement.
Cash Collateral Agreement: As defined in the Credit Agreement.
Casualty Amount: As defined in Section 6(b) hereof.
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Closing Date: As defined in the Credit Agreement.
Credit Agreement: As defined in the recitals hereof.
Default: The occurrence or existence of any event or condition which with
or without the giving of notice or the passage of time, or both, would
constitute an Event of Default hereunder.
Default Rate: A rate per annum equal to the sum of the Alternate Base Rate
(as defined in the Credit Agreement) for such day plus three percent (3%).
Domestic Business Day: As defined in the Credit Agreement.
Environmental Certificate: As defined in Section 18(b) hereof.
Environmental Claim: As defined in the Credit Agreement.
Environmental Event: As defined in Section 18(b) hereof.
Environmental Laws: As defined in the Credit Agreement.
Environmental Report: As defined in the Credit Agreement.
Equipment: As defined in Granting Clause V hereof.
ERISA: Shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
Events of Default: The occurrence of any of the following shall constitute
an Event of Default under this Mortgage:
(a) If Mortgagors fail to pay any amount payable pursuant to this
Mortgage when due and payable in accordance with the provisions hereof
and such failure continues for three (3) Domestic
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Business Days after Mortgagee delivers notice there-
of; or
(b) Cancellation of the insurance required by Section 5 of this
Mortgage without substitution of replacement coverage meeting the
requirements thereof; or
(c) Any violation of the terms of Section 7(a) (subject to the
terms of Section 7(c) and paragraph (a) above)), Section 7(b) (subject
to the terms of Section 7(c)) or Section 9(a) through (c) of this
Mortgage; or
(d) An Event of Default (as defined therein) under the Credit
Agreement; or
(e) Any other default in the perfor- mance, or breach, of any
material covenant, representation or warranty of either Mortgagor in
this Mortgage or in any other Loan Document (other than those
specifically dealt with elsewhere in this Section) and continuance of
such default or breach for a period of thirty (30) days after written
notice thereof has been given to Mortgagors by the Agent; provided,
however, that in the case of any such default that is susceptible of
cure but cannot reasonably be cured within thirty (30) days after
notice from the Agent and provided further that Mortgagors shall have
commenced to cure such default within such thirty (30) day period and
thereafter diligently and expeditiously proceeds to cure the same,
such thirty (30) day period shall be extended for such time as is
reasonably necessary for Mortgagors in the exercise of due diligence
to cure such default (but in no event longer than one hundred twenty
(120) days); or
(f) This Mortgage or any other Loan Document or any Lien granted
hereunder or thereunder shall (except in accordance with the terms
hereof or thereof), in whole or in part, terminate, cease to be
effective or cease to be a legally valid, binding and enforceable
obligation of Mortgagors, or any Lien securing the Indebtedness shall,
in whole or in part, cease to be a perfected first priority Lien,
subject to the Permitted Liens; or
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(g) The sale, conveyance, transfer, encumbrance, or disposition,
whether voluntarily, involuntarily or otherwise, of the Improvements
and/or the Land or any interest therein or any interest in either
Mortgagor in violation of the terms of this Mortgage or the Credit
Agreement; or
(h) Any "Event of Default" as de- fined in any other Loan
Documents occurs.
Notwithstanding anything to the contrary contained in this Mortgage, the
Credit Agreement or the Loan Documents, no grace period or right to notice
granted to Mortgagors herein with respect to any Event of Default is intended to
duplicate any other grace period or right to notice granted to Mortgagors
herein, in the Credit Agreement or in the other Loan Documents with respect to
such Event of Default and in the event of any inconsistency, the grace period or
right to notice granted herein shall apply.
GAAP: Shall mean United States generally ac- cepted accounting principles,
consistently applied.
Governmental Authority: As defined in the Credit Agreement.
Grant: Shall mean grant, grant a security interest in, bargain, sell, lien,
mortgage, convey, pledge, hypothecate, assign, transfer, warrant and set over.
Hazardous Substances: As defined in the Credit Agreement.
Impositions: All taxes (including, without limitation, all ad valorem,
sales (including those imposed on lease rentals), use, single business, gross
receipts, value added, intangible transactions, privilege or license or similar
taxes), assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not commenced or completed within the term of this
Mortgage), water, sewer or other rents and charges, excises, levies, fees
(including, without limitation, license, permit, inspection, authorization and
similar fees), and all other governmental charges, in each case whether general
or special,
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ordinary or extraordinary, or foreseen or unforeseen, of every character in
respect of the Mortgaged Property and/or any Rents (including all interest and
penalties thereon), which at any time prior to, during or in respect of the term
hereof may be assessed or imposed on or in respect of or be a Lien upon (a)
Mortgagors (including, without limitation, all income, franchise, single
business or other taxes imposed on Mortgagors for the privilege of doing
business in the State of New York) or Mortgagee arising as a result of or with
respect to its capacity as Mortgagee hereunder, (b) the Mortgaged Property or
any other collateral delivered or pledged to Mortgagee in connection with the
Loan, or any part thereof, or any Rents therefrom or any estate, right, title or
interest therein, or (c) any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with the Mortgaged
Property or the leasing or use of all or any part thereof. Nothing contained in
this Mortgage shall be construed to require Mortgagors to pay any tax,
assessment, levy or charge imposed on Mortgagee in the nature of a franchise,
capital levy, estate, inheritance, succession, income or net revenue tax.
Improvements: As defined in Granting Clause I hereof.
Indebtedness: As defined in the recitals hereof.
Indemnitee: As defined in the Credit Agree- ment.
Independent Architect: An architect selected by Mortgagors, and acceptable
to Mortgagee, such acceptance not to be unreasonably withheld or delayed,
licensed to practice in the State of New York and having at least ten (10) years
of experience.
Insurance Requirements: Shall mean all terms of any insurance policy
required hereunder covering or applicable to the Properties or Equipment or any
part thereof, all requirements of the issuer of any such policy, and all orders,
rules, regulations and other requirements of the National Board of Fire
Underwriters (or any other body exercising similar functions) applicable to or
affecting the Properties or Equipment or any
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part thereof or any use of the Properties or Equipment or
any part thereof.
Land: As defined in the recitals hereof.
Leases: As defined in Granting Clause IV hereof.
Leasing Agency Agreement: As defined in the Credit Agreement.
Legal Requirements: As defined in Section 11.
Lien: As defined in the Credit Agreement.
Loan: As defined in the recitals hereof.
Loan Amount: As defined in the recitals here- of.
Loan Documents: As defined in the Credit Agreement.
Major Alteration: As defined in the Credit Agreement.
Major Lease: As defined in the Credit Agree- ment.
Manager: As defined in the Credit Agreement.
Material Adverse Effect: As defined in the Credit Agreement.
Mortgage: As defined in the recitals hereof.
Mortgage Escrow Amounts: As defined in Section 8(a).
Mortgaged Property: As defined in the Granting Clause to this Mortgage.
Mortgagee: As defined in the recitals hereof.
Mortgagor: As defined in the recitals hereof.
Mortgagors: As defined in the recitals hereof.
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Notes: As defined in the recitals hereof.
Obligations: As defined in the recitals here- of.
Officer's Certificate: As defined in the Credit Agreement.
Permitted Liens: As defined in the Credit Agreement.
Person: Shall mean any individual, corporation, partnership, joint venture,
limited liability company, estate, trust, unincorporated association, any
Federal, state, county or municipal government or any political subdivision
thereof.
Proceeds: As defined in Section 6(b) hereof.
Property or Properties: As defined in Granting Clause I hereof.
Property Management Agreement: As defined in the Credit Agreement.
Rents: As defined in Granting Clause IV here- of.
Taking: Shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the
right of condemnation or eminent domain, of all or any part of the Properties,
or any interest therein or right accruing thereto, including any right of access
thereto or any change of grade affecting the Land or any part thereof.
Tenant: Shall mean any Person leasing any portion of the Properties and
obligated to pay rent pursuant to a Lease.
Transfer: As defined in the Credit Agreement.
Work: As defined in Section 6(b) hereof.
1290 Mortgagor: As defined in the recitals hereof.
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1290 Permitted Liens: Means Permitted Liens that affect only the 1290 Land.
237 Park Permitted Liens: Means Permitted Liens that affect only the 237
Park Land.
237 Park Mortgagor: As defined in the recitals hereof.
2. Warranty.
Each Mortgagor represents and warrants to, and covenants and agrees with,
Mortgagee as follows:
(a) All improvements now being or hereafter constructed on the
Properties shall be completed in a good and workmanlike manner,
substantially in accordance with all applicable governmental laws,
statutes, ordinances, codes, rules, regulations and requirements, and
otherwise in accordance with the provisions of the Credit Agreement
and the other Loan Documents.
(b) This Mortgage upon its due execution and proper recordation
is and will remain a valid, enforceable and perfected first Lien on
and a security interest in the Mortgaged Property subject to the
Permitted Liens.
(c) This Mortgage and each of the Loan Documents executed by each
Mortgagor, is the legal, valid and binding obligation of such
Mortgagor, enforceable against such Mortgagor in accordance with their
terms, subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws affecting
creditor's rights generally in effect from time to time.
(d) The 1290 Mortgagor owns good fee simple and insurable title
to the 1290 Land subject only to the 1290 Permitted Liens. The 237
Park Mortgagor owns good fee simple and insurable title to the 237
Park Lien, subject only to the 237 Park Permitted Liens. Each
Mortgagor will preserve such title to its Property and will forever
warrant and defend same and the validity and priority of the lien
hereof from and against any and all claims whatsoever;
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(e) On the date hereof, to each Mortgagor's knowledge, no portion
of the Improvements at the Properties has been materially damaged,
destroyed or injured by fire or other casualty which is not now fully
restored or in the process of being restored;
(f) Each Mortgagor has and will maintain, in effect at all times
until the Indebtedness and Obligations are satisfied in full, all
necessary material licenses, permits, authorizations, registrations
and approvals to own, use, occupy and operate each Property as a
first-class institutional office building and has full power and
authority to carry on its business at each of the Properties as
currently conducted and has not received any written notice of any
violation of any such licenses, permits, authorizations, registrations
or approvals that materially impair the value of the Properties for
which such notice was given or which would affect the use or operation
of either Property in any material respect;
(g) As of the date hereof, neither Mortgagor has received any
written notice of any Taking or threatened Taking of either Property
or any portion thereof;
(h) The Properties and the Equipment located thereon constitutes
all of the real property, equipment and fixtures currently owned by
either Mortgagor or used in the operation of the business located on
the Properties;
(i) Each Property has adequate access to public streets, roads or
highways;
(j) Each Property constitutes a separate tax lot or lots, with a
separate tax as- sessment, independent of any other land or improve-
ments;
(k) All utility services necessary for the operation of each
Property have been connected and are available in adequate capacities
directly from utility lines and without the need for private easements
not presently existing;
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(l) Each Mortgagor is not and shall not be an "employee benefit
plan" (within the meaning of Section 3(3) of ERISA) to which ERISA
applies and each Mortgagor's assets do not and will not constitute
plan assets;
(m) To the best of each Mortgagor's knowledge, neither Mortgagor
is in material default under the terms, conditions or provisions of
any of the Leases or Agreements described in Section 13 hereof which
affect either Mortgagor;
(n) Each Mortgagor is now, and after giving effect to this
Mortgage, will be in a solvent condition;
(o) Mortgagor is not in default under any note, loan or security
agreement to which it is a party;
(i) The execution and delivery of this Mortgage by Mortgagors
does not constitute a "fraudulent conveyance" within the meaning of
Title 11 of the United States Code as now constituted or under any
other applicable statute;
(p) No bankruptcy or insolvency pro- ceedings are pending or
contemplated by or against either Mortgagor; and
(q) To the best of each Mortgagor's knowledge, there are no
existing, threatened or pending actions or proceedings affecting any
portion of the Mortgaged Property except for possible negligence
actions or proceedings which are fully covered by insurance or
collection actions against tenants disclosed in writing prior to the
date hereof to Agent.
3. Payment and Performance of Obligations Secured. Each Mortgagor shall
jointly and severally promptly pay when due the principal of and interest on the
Indebtedness, any prepayments, late charges and fees provided for in the Notes,
and all other payment Obligations secured by this Mortgage, all in lawful money
of the United States of America, and shall further perform fully and in a timely
manner all Obligations of Mortgagors. All sums payable by Mortgagors hereunder
shall be
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paid without demand (except as otherwise specifically set forth herein or in the
other Loan Documents), counterclaim, offset, deduction or defense all without
relief from valuation and appraisement laws. Mortgagors waive all rights now or
hereafter conferred by statute or otherwise to any such demand (except as so
provided herein or in the other Loan Documents), counterclaim, setoff, deduction
or defense.
4. Negative Covenants. Each Mortgagor cove- nants and agrees that it shall
not:
(a) partition the Properties;
(b) transfer all or portion of the Mortgaged Property or any
interest of either Mortgagor other than pursuant to leases of space
therein in accordance with the terms hereof and the Credit Agreement;
(c) file a petition for voluntary bankruptcy under the Bankruptcy
Code or similar state law;
(d) dissolve, terminate, liquidate, merge with or consolidate
into another Person, except as expressly permitted pursuant to this
Mortgage or the Credit Agreement; or
(e) engage in any activity that would subject it to regulation
under ERISA, other than activity with respect to Plans, Multiemployer
Plans and Benefit Arrangements sponsored or contributed to on the date
hereof, including for this purpose Multiemployer Plans to which the
Borrower will become obligated to contribute upon execution or
assumption of collective bargaining agreements relating to the 237
Park Property and the 1290 Property; provided, however, such
engagement shall not cause the ERISA Group to incur any material
liability in excess of the liabilities that would be incurred under
the terms of such Plans, Multiemployer Plans and Benefit Arrangements
as of the date hereof.
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5. Insurance.
(a) Insurance Coverage Requirements. Mortgagors shall keep, or cause to be
kept insurance with respect to the Properties, in full force and effect of the
types and minimum limits as follows during the term of this Mortgage:
(i) Property Insurance. Insurance with respect to the Properties
and the Equipment against any peril included within the classification
"All Risks of Physical Loss" with extended coverage in an amount equal
to the full insurable value of the Properties and the Equipment
located thereon, the term "full insurable value" to mean the actual
replacement cost of the Improvements and the Equipment at the
Properties (without taking into account any depreciation, and
exclusive of excavations, footings and foundations, landscaping and
paving);
(ii) Liability Insurance. Compre- hensive general liability
insurance, including bodily injury, death and property damage
liability, and umbrella liability insurance against any and all
claims, including all legal liability to the extent insurable imposed
upon Mortgagee and all court costs and attorneys' fees and expenses,
arising out of or connected with the possession, use, leasing,
operation, maintenance or condition of each of the Properties in such
amounts as are generally required by institutional lenders for
properties comparable to the Properties but in no event for limits of
less than $5,000,0000 per occurrence with combined single limit
coverage for bodily injury or property damage;
(iii) Workers' Compensation Insur- ance. Statutory workers'
compensation insurance (to the extent the risks to be covered thereby
are not already covered by other policies of insurance maintained by
or on behalf of Mortgagors), with respect to any work on or about the
Properties;
(iv) Business Interruption. Busi- ness interruption and/or loss
of "rental value" insurance for the Properties in an amount equal to
two (2) years' "rental value" attributable to the Properties and based
on the "rental value" for the immediately preceding year and otherwise
sufficient
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to avoid any co-insurance penalty, the term "rental value" to mean the
sum of (A) the total Rents payable under the Leases at the Properties
and (B) the total amount of all other amounts to be received by
Mortgagors or third parties which are the legal obligation of the
Tenants under their Leases, reduced to the extent such amounts would
not be received because of operating expenses (or other payments to
third parties) not incurred during a period of non-occupancy of that
portion of the Properties then not being occupied;
(v) Indemnification. Contractual Indem- nification Insurance
covering Mortgagors' obligation to indemnify Mortgagee as required
under Section 35 hereof;
(vi) Boiler and Machinery Insurance. Broad form boiler and
machinery insurance (without exclusion for explosion) covering all
boilers or other pressure vessels, machinery and equipment located in,
on or about the Properties and insurance against loss of occupancy or
use arising from any such breakdown in such amounts as are generally
available at commercially reasonable premiums and are generally
required by institutional lenders for properties comparable to the
Properties; and
(vii) Other Insurance. Such other insurance with respect to the
Properties and the Equipment located therein against loss or damage as
are reasonably requested by Mortgagee provided such insurance is of
the kind from time to time customarily insured against and in such
amounts as are generally required by institutional lenders for
properties comparable to the Properties.
(b) Ratings of Insurers. All insurance coverage shall be provided by one or
more domestic primary insurers having an Alfred M. Best Company, Inc. rating of
"A" or better and financial size category of not less than VIII except to the
extent that insurance in force on the date of this Mortgage does not satisfy
such criteria or if otherwise approved by Mortgagee. All insurers providing
insurance required by this Mortgage shall be authorized to issue insurance in
the State of New York.
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(c) Form of Insurance Policies; Endorse- ments. All insurance policies
shall be in such form and with such endorsements as are comparable to the forms
of and endorsements to Mortgagors' insurance policies in effect on the date
hereof or otherwise in accordance with commercially reasonable standards applied
by prudent owners of first-class, institutional office buildings in the City of
New York. Certified copies of all of the above-mentioned insurance policies have
been delivered to and shall be held by Mortgagee. All such policies (other than
for statutory workers' compensation insurance) shall name Mortgagee as an
additional insured/loss payee, shall provide that all Proceeds be payable to
Mortgagee as set forth in Section 6 hereof, and shall contain: (i) a standard
"non-contributory mortgagee" endorsement or its equivalent relating, inter alia,
to recovery by Mortgagee notwithstanding the negligent or willful acts or
omissions of Mortgagors and, with respect to Equipment, contain a lender's loss
payable clause endorsement or any equivalent endorsement; (ii) a waiver of
subrogation endorsement as to Mortgagee providing that no policy shall be
impaired or invalidated by virtue of any act, failure to act, negligence of, or
violation of declarations, warranties or conditions contained in such policy by
Mortgagors, Mortgagee or any other named insured, additional insured or loss
payee, except for the willful misconduct of Mortgagee knowingly in violation of
the conditions of such policy; (iii) an endorsement indicating that neither
Mortgagee nor Mortgagors shall be or be deemed to be a co-insurer with respect
to any risk insured by such policies and shall provide for a deductible per loss
of an amount not more than that which is customarily maintained by prudent
owners of first-class, institutional office buildings in the City of New York,
but in no event in excess of $100,000; (iv) a provision that such policies shall
not be cancelled or materially amended, including, without limitation, any
amendment reducing the scope or limits of coverage, without at least thirty (30)
days prior written notice to Mortgagee in each instance; (v) include effective
waivers by the insurer of all claims for insurance premiums against any loss
payees, additional insureds and named insureds (other than Mortgagors) and (vi)
shall be otherwise in form and substance reasonably satisfactory to Mortgagee.
Certificates of insurance with respect to all renewal and replacement policies
shall be delivered to Mortgagee not less than thirty (30) days prior to the
expiration date of any of the insurance policies required to be main-
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tained hereunder which certificates shall bear notations evidencing payment of
applicable premiums and originals (or certified copies) of such insurance
policies shall be delivered to Mortgagee promptly after Mortgagors' receipt
thereof. If Mortgagors fail to maintain and deliver to Mortgagee the original
policies (or certified copies) or certificates of insurance required by this
Mortgage, Mortgagee may, at its option, procure such insurance, and Mortgagors
shall reimburse Mortgagee for the amount of all premiums paid by Mortgagee
thereon promptly, upon demand by Mortgagee, with interest thereon at the Default
Rate from the date paid by Mortgagee to the date of repayment, and such sum
shall be a part of the Indebtedness secured by this Mortgage. Blanket insurance
policies shall not be acceptable for the purposes of this Section 5 unless
otherwise reasonably approved to the contrary by Mortgagee.
Mortgagee shall not by the fact of approving, disapproving, accepting,
preventing, obtaining or failing to obtain any insurance, incur any liability
for or with respect to the amount of insurance carried, the form or legal
sufficiency of insurance contracts, solvency of insurance companies, or payment
or defense of lawsuits, and Mortgagors hereby expressly assumes full
responsibility therefor and all liability, if any, with respect thereto.
(d) Compliance with Insurance Require- ments. Mortgagors shall comply with
all Insurance Requirements and shall not bring or keep any article upon the
Properties or cause or permit any condition to exist thereon which would be
prohibited by or would invalidate insurance coverage maintained, or required
hereunder to be maintained, by Mortgagors on or with respect to any part of the
Mortgaged Property pursuant to this Section 5.
6. Condemnation and Insurance Proceeds.
(a) Each Mortgagor will promptly notify Mortgagee in writing upon obtaining
knowledge of (i) the institution of any proceedings relating to any Taking of,
or (ii) the occurrence of any casualty, damage or injury to, the Mortgaged
Property or Equipment located thereon or any portion thereof the restoration of
which is estimated by the applicable Mortgagor in good faith to cost more than
$250,000.
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(b) In the event of any Taking of, or casualty or other damage or injury,
to the Mortgaged Property, or Equipment located thereon, Mortgagors' right,
title and interest in and to all compensation, awards, proceeds, damages,
claims, insurance recoveries, causes and rights of action (whether accrued prior
to or after the date hereof) and payments which either Mortgagor may receive or
to which either Mortgagor may become entitled with respect to the Mortgaged
Property or any part thereof (collectively, "Proceeds"), in connection with any
such Taking, casualty or other damage or injury to the Mortgaged Property, or
any part thereof, or Equipment located thereon are hereby assigned to and shall
be paid to Mortgagee. Notwithstanding anything to the contrary set forth in this
Mortgage, to the extent such Proceeds are not in excess of $1,000,000 (the
"Casualty Amount"), then Mortgagee hereby consents to and agrees that such
Proceeds are to be paid directly to Mortgagors to be applied to restoration of
the Mortgaged Property in accordance with the terms hereof. Subject to the
provisions of Sections 6(c) and 6(d) hereof, promptly after the occurrence of
any damage or destruction to all or any portion of the Mortgaged Property or a
Taking of a portion of the Mortgaged Property, Mortgagors shall commence and
diligently prosecute to completion the repair, restoration and rebuilding of the
Mortgaged Property (in the case of a Taking, to the extent it is capable of
being restored) (such repair, restoration and rebuilding are sometimes
hereinafter collectively referred to as the "Work") so damaged, destroyed or
remaining after such Taking in full compliance with all Legal Requirements and
free and clear of any and all Liens except the Permitted Liens; it being
understood, however, that Mortgagors shall not be obligated to restore the
Mortgaged Property to the precise condition of the Mortgaged Property prior to
any Taking, casualty or other damage or injury to the Mortgaged Property, if the
Work actually performed, if any, or failed to be performed, shall have no
material adverse effect on the value of the Mortgaged Property from the value
that the Mortgaged Property would have had if the same had been restored to its
condition immediately prior to such taking or casualty. Mortgagors will, in good
faith and in a commercially reasonable manner, file and prosecute the
adjustment, compromise or settlement of any claim for insurance or Taking
Proceeds and, subject to Mortgagors' right to receive the direct payment of any
Proceeds up to the Casualty Amount subject to the provisions below, will cause
the same to be collected and paid
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over to Mortgagee, to be held and applied in accordance with the provisions of
this Mortgage. Each Mortgagor hereby irrevocably authorizes and empowers
Mortgagee, in the name of such Mortgagor as its true and lawful
attorney-in-fact, to file and prosecute such claim and to collect and to make
receipt for any such payment, and, in the event Mortgagors fail so to act for a
period of ten (10) days following Mortgagors' receipt of written notice from
Mortgagee or if an Event of Default shall have occurred and be continuing, then
in such case Mortgagee may file such claim and prosecute it with counsel
satisfactory to it at the expense of Mortgagors. Mortgagee shall have the right
to approve, such approval not to be unreasonably withheld, any settlement which
might result in any Proceeds in excess of the Casualty Amount, and Mortgagors
will deliver or cause to be delivered to Mortgagee all instruments reasonably
requested by Mortgagee to permit such approval. Mortgagors will pay all costs,
fees and expenses reasonably and actually incurred by Mortgagee (including all
reasonable attorneys' fees and expenses actually incurred, the reasonable fees
of insurance experts and adjusters and reasonable costs incurred in any
litigation or arbitration) in connection with the settlement of any claim for
insurance or Taking Proceeds and seeking and obtaining of any payment on account
thereof in accordance with the foregoing provisions. If any insurance or Taking
Proceeds are received by either Mortgagor, such Proceeds shall be received in
trust for Mortgagee, shall be used to pay for the cost of the Work in accordance
with the terms hereof, and in the event such Proceeds are in excess of the
Casualty Amount shall be forthwith paid to Mortgagee to be held by Mortgagee in
a segregated account in trust for Mortgagors in accordance with the provisions
of the Cash Collateral Agreement, in each case to be applied or disbursed in
accordance with the provisions hereof.
(c) Upon the occurrence and during the continuance of an Event of Default
hereunder, all Proceeds shall be paid over to Mortgagee and shall be applied
first toward reimbursement of Mortgagee's reasonable costs and expenses actually
incurred in connection with recovery of the Proceeds and disbursement of the
Proceeds (as further described below), including, without limitation, reasonable
administrative costs and inspection fees, and then at Mortgagee's option, to
restoration or to the payment or prepayment of the Indebtedness secured hereby
in such order as, Mortgagee shall determine.
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(d) If Proceeds are not required to be applied towards payment of the
Indebtedness pursuant to Section 6(c) above, then Mortgagee shall make the
Proceeds which it is holding pursuant to the terms hereof available to
Mortgagors (after payment of any reasonable expenses actually incurred by
Mortgagee in connection with the collection thereof) for payment of or
reimbursement of Mortgagors' expenses incurred with respect to the Work, upon
the following terms and subject to the following conditions:
(i) there shall be no continuing Event of Default hereunder;
(ii) if the estimated cost of the Work (as estimated by an
Independent Architect) shall exceed the Proceeds available, Mortgagors
shall deliver to Mortgagee a Letter of Credit (as defined in the
Credit Agreement) or other security satisfactory to Mortgagee;
(iii) Mortgagee shall be furnished with an estimate of the cost
of the Work accompanied by an Independent Architect's certification as
to such costs and appropriate plans and specifications for the Work
and that the Work can be completed by the earlier of (x) the date
which is six months prior to the Termination Date (as defined in the
Credit Agreement) or (y) the date which is twenty-four months after
the date such Taking, casualty or other damage or injury to the
Mortgaged Property occurred. The plans and specifications shall
require that the Work be done in a first-class workmanlike manner at
least equivalent to the quality and character of the original work in
the Improvements (provided, however, that in the case of a Taking the
restoration of the Mortgaged Property shall be done to the extent
reasonably practicable after taking into account the consequences of
such Taking), so that upon completion thereof, the Mortgaged Property
shall be at least equal in value to the Mortgaged Property immediately
prior to the damage or destruction. Mortgagors shall restore all
Improvements such that when they are fully restored and/or repaired
that such Improvements and their contemplated use fully comply with
all applicable Legal Requirements including, without limitation,
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zoning, environmental and building laws, codes,
ordinances and regulations.
(e) Disbursement of the Proceeds shall be made from time to time (but not
more frequently than once in any month) by Mortgagee as the Work progresses upon
receipt by Mortgagee of (i) an Officers' Certificate dated not more than thirty
(30) days prior to the application for such payment, requesting such payment or
reimbursement and setting forth the Work performed which is the subject of such
request, the parties which performed such Work and the actual cost thereof, and
also certifying that such Work and materials are free and clear of Liens other
than Permitted Liens and (ii) an Independent Architect's certificate certifying
performance of the Work together with an estimate of the cost to complete the
Work. No payment made prior to the final completion of the Work shall exceed
ninety percent (90%) of the value of the Work performed or materials furnished
and incorporated into the Improvements from time to time (provided that each
trade shall be entitled to payment of its hold-back upon completion of its
component of the Work and satisfactory fulfillment of the requirements herein,
including delivery of final lien waivers), and at all times the undisbursed
balance of said Proceeds together with all amounts deposited, bonded, guaranteed
or otherwise funded pursuant to clause (ii) above, shall be at least sufficient
to pay for the cost of completion of the Work, free and clear of Liens other
than Permitted Liens; final payment shall be made upon receipt by Mortgagee of a
certification by an Independent Architect, as to the completion substantially in
accordance with the submitted plans and specifications, and the receipt by
Mortgagee of final lien waivers from each contractor or materialman. Mortgagee
may at its option require an endorsement to its title insurance policy insuring
the continued priority of the Lien of this Mortgage (subject to Permitted Liens)
as to all sums advanced hereunder, such endorsement to be paid for by
Mortgagors.
(f) In the event that any condition to application of Proceeds to the Work
contained in Section 6(d) above is not satisfied, then Mortgagee may, upon
thirty (30) days prior written notice to Mortgagors, apply all Proceeds with
respect to the Taking of or damage or injury to the Mortgaged Property in
question to the payment or prepayment of all or any portion of the Indebtedness
secured hereby. Notwithstanding the forego-
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ing contained in Section 6(d) above, if the cost of the Work as estimated by the
Independent Architect's certification exceeds $62,500,000 with respect to the
1290 Property, then upon thirty (30) days prior written notice all Proceeds with
respect to the Taking of or damage or injury to the 1290 Property, may, at
Mortgagee's option, be applied by Mortgagee to the payment or prepayment of all
or any portion of the Indebtedness secured hereby with respect to the 1290
Allocated Loan Amount and if the cost of the Work as estimated by the
Independent Architect's certification exceeds $42,500,000 with respect to the
237 Park Property, then upon thirty (30) days prior written notice all Proceeds
with respect to the Taking of or damage or injury to the 237 Park Property, may,
at Mortgagee's option, be applied by Mortgagee to the payment or prepayment of
all or any portion of the Indebtedness secured hereby with respect to the 237
Park Allocated Loan Amount.
(g) In the event that, after the comple- tion of the Work and payment of
all costs of completion, there are excess Proceeds, then upon thirty (30) days
prior written notice such excess Proceeds with respect to the Taking of or
damage or injury to the Mortgaged Property may be applied by Mortgagee to the
payment or pre-payment of all or any portion of the Indebtedness secured hereby.
(h) In the event of a Taking of all of the Mortgaged Property, Mortgagors
shall prepay the Notes in full, whether or not the Proceeds are sufficient.
7. Impositions, Liens and Other Items.
(a) Subject to the right of contest set forth in Section 7(c), Mortgagors
shall pay all Impositions which are attributable to or affect the Properties or
Mortgagors, prior to the date such Impositions shall become delinquent or late
charges may be imposed thereon, directly to the applicable taxing authority with
respect thereto, unless and to the extent Mortgagee shall pay such Impositions
pursuant to the provisions of the Cash Collateral Agreement.
(b) Subject to the right of contest set forth in Section 7(c), each
Mortgagor shall at all times keep the Mortgaged Property and the Equipment
located thereon free from all Liens (other than the Lien hereof
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and Permitted Liens) and shall pay when due and payable all claims and demands
of mechanics, materialmen, laborers and others which, if unpaid, might result in
or permit the creation of a Lien on the Mortgaged Property or any portion
thereof and the Equipment located thereon, whether ranked senior, pari passu or
junior to the priority of the Lien created hereby, and shall in any event cause
the prompt, full and unconditional discharge of all Liens imposed on or against
the Mortgaged Property, or any portion thereof and the Equipment located thereon
within forty-five (45) days after Mortgagors receive notice of the filing
thereof. Each Mortgagor shall do or cause to be done, at the sole cost of such
Mortgagor, everything necessary to fully preserve the first priority of the Lien
of this Mortgage against the Mortgaged Property and the Equipment located
thereon subject to the Permitted Liens. Upon the occurrence and during the
continuance of an Event of Default with respect to its Obligations as set forth
in this Section 7, Mortgagee may (but shall not be obligated to) make such
payment or discharge such Lien, and Mortgagors shall reimburse Mortgagee on
demand for all such advances pursuant to Section 14 hereof.
(c) Nothing contained herein shall be deemed to require Mortgagors to pay,
or cause to be paid, any Imposition, to satisfy any Lien or to comply with any
Legal Requirement or Insurance Requirement so long as Mortgagors are in good
faith, and by proper legal proceedings, diligently contesting the validity,
amount or application thereof, provided that in each case, at the time of the
commencement of any such action or proceeding, and during the pendency of such
action or proceeding (i) no Event of Default shall exist and be continuing
hereunder, (ii) adequate reserves with respect thereto are maintained on
Mortgagors' books in accordance with GAAP, (iii) such contest operates to
suspend collection or enforcement as the case may be, of the contested
Imposition or Lien and such contest is maintained and prosecuted continuously
and with diligence, (iv) in the case of any Insurance Requirement, the failure
of Mortgagors to comply therewith shall not impair the validity of any insurance
required to be maintained by Mortgagors under Section 5 or the right to full
payment of any claims thereunder, and (v) in the case of Impositions and Liens,
during such contest, Mortgagors shall provide security in the form required by
Section 6(d)(ii) assuring the discharge of Mortgagors' obligations being con-
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tested and of any additional interest, charge, or penalty arising from such
contest. Notwithstanding the foregoing, any such reserves or the furnishing of
any bond or other security, Mortgagors promptly shall comply with any contested
Legal Requirement or Insurance Requirement or shall pay any contested Imposition
or Lien, and compliance therewith or payment thereof shall not be deferred, if,
at any time a Property or any portion thereof, or any Equipment located thereon
shall be, in Mortgagee's reasonable judgment, in danger of being forfeited or
lost or Mortgagee may be subject to civil or criminal damages as a result
thereof. If such action or proceeding is terminated or discontinued adversely to
Mortgagors, Mortgagors, upon written demand, shall deliver to Mortgagee
reasonable evidence of Mortgagors' compliance with such contested Imposition,
Lien, Legal Requirements or Insurance Requirements, as the case may be.
8. Funds for Taxes and Insurance.
(a) Subject to the provisions of the Cash Collateral Agreement, Mortgagors
shall deposit in the Cash Collateral Account (as defined in the Cash Collateral
Agreement) amounts sufficient to discharge the obligations of Mortgagors under
Sections 5 and 7 hereof as and when they become due (such amounts, the "Mortgage
Escrow Amounts"). Mortgagors shall initially pay a sum which bears the same
relation to the annual insurance premiums for all insurance required by the
terms hereof and Impositions assessed against the Mortgaged Property for the
insurance period or tax year then in effect, as the case may be, as (i) the
number of months elapsed as of the date hereof since the last preceding
installment of said premiums or Impositions shall have become due and payable
bears to (ii) twelve (12) (if payable annually or such shorter period if payable
in more frequent installments). For the purpose of this computation, the month
in which such last preceding installment of premiums or Impositions became due
and payable and the month in which the Closing Date occurs shall be included and
deemed to have elapsed. During each month thereafter, Mortgagors shall pay with
respect to the Mortgage Escrow Amounts a sum equal to one-twelfth of such
insurance premiums and such Impositions for the then-current insurance period
and tax year, so that as each installment of such premiums and Impositions shall
become due and payable, Mortgagors shall have paid to Mortgagee a sum sufficient
to pay the same. If the amount of such premiums and Impositions has
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not been definitely ascertained at the time when any such monthly deposits are
to be paid, Mortgagors shall pay Mortgage Escrow Amounts based upon the amount
of such premiums and Impositions for the preceding year, subject to adjustment
as and when the amount of such premiums and Impositions are ascertained.
(b) The Mortgage Escrow Amounts shall be held by Mortgagee and shall be
applied to the payment of the obligations in respect of which such Mortgage
Escrow Amounts were retained in accordance with the Cash Collateral Agreement
except upon the occurrence of an Event of Default and the acceleration of the
Notes in which case all or any portion of such Mortgage Escrow Amounts may be so
transferred or otherwise applied to the Indebtedness in such order or priority
as Mortgagee may elect or Mortgagee may exercise any of its rights or remedies
with respect to same hereunder, at law or in equity. Any Mortgage Escrow Amounts
paid to Mortgagee in excess of the actual obligations for which they were
retained, shall be held and credited to the obligations of the Mortgagors
pursuant to paragraph (a) above for the ensuing year or shorter period if
applicable. Nothing herein contained shall be deemed to affect any right or
remedy of Mortgagee under this Mortgage or otherwise at law or in equity to pay
any such amount and to add the amount so paid to the Indebtedness hereby
secured. Any such application of said amounts or any portion thereof to any
Indebtedness secured hereby shall not be construed to cure or waive any Default
or notice of Default hereunder or invalidate any act done pursuant to any such
Default or notice.
(c) Mortgagors shall deliver to Mortgagee all tax bills, bond and
assessment statements, statements of insurance premiums, and statements for any
other obligations referred to above as soon as the same are received by
Mortgagors and Mortgagee shall cause the same to be paid when due to the extent
of Mortgage Escrow Amounts available therefor. It is expressly acknowledged and
agreed that Mortgagee shall have no obligation whatsoever to advance any amounts
in payment of all or any portion of such obligations to the extent that Mortgage
Escrow Amounts paid are insufficient to pay any such obligations as and when the
same become due.
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9. Transfers, Additional Indebtedness and Subordinate Liens.
(a) Except as otherwise permitted under Section 2.9 of the Credit Agreement
and Section 49 hereof, Mortgagors shall not sell or otherwise Transfer any
interest in all or any part of the Properties.
(b) Except as otherwise permitted under Sections 2.8(e) and 5.9 of the
Credit Agreement, there shall be no Transfer of any direct or indirect
beneficial ownership interest in (i) either Mortgagor as the same exists as of
the date hereof or any of the partners of the Lower Tier LP or the Upper Tier
LP, as the same exists as of the date hereof, (ii) either General Partner as the
same exists as of the date hereof or (iii) the REIT as the same exists as of the
date hereof, without the consent of the Super Required Lenders which may be
withheld or granted in their sole and absolute discretion.
(c) Mortgagors shall comply at all times and in all respects with the terms
and provisions of Sections 5.9 and 5.10 of the Credit Agreement.
(d) Any Transfer made in violation of the foregoing provisions shall be an
immediate Event of Default hereunder and shall be void and of no force or effect
as against Mortgagee. Upon any such Transfer made in violation of Section 9(a),
Mortgagee may, at its option and without limiting any other right or remedy
available to Mortgagee hereunder, under any of the other Loan Documents, or
otherwise at law or in equity, accelerate the maturity of the Notes and require
the payment of the then existing outstanding principal balance, accrued interest
and all other Indebtedness due under the Notes and this Mortgage and any and all
other amounts due to Mortgagee. Mortgagors shall reimburse Mortgagee for all
reasonable costs and expenses, including, without limitation, reasonable
attorneys' fees, actually incurred by Mortgagee in connection with the review by
Mortgagee of Mortgagors' request for Mortgagee's consent to a Transfer of all or
any portion of the Mortgaged Property or any interest therein or any interest in
Mortgagors.
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10. Maintenance of Mortgaged Property; Alter- ations; Inspection;
Utilities.
(a) Mortgagors shall keep and maintain the Mortgaged Property and every
part thereof in good condition and repair, subject to casualty and ordinary wear
and tear, and shall not permit or commit any impairment, deterioration (other
than through ordinary wear and tear) or intentional waste of the Mortgaged
Property and the Equipment located thereon. Mortgagors further covenant to do
all other acts which from the character or use of the Mortgaged Property may be
reasonably necessary to protect the security hereof, the specific enumerations
herein not excluding the general. Mortgagors shall not remove or demolish any
Improvement on the Mortgaged Property except as the same may be necessary in
connection with an Alteration or a restoration in connection with a Taking or
casualty, or in the ordinary course of business in accordance with the terms and
conditions hereof.
(b) Except as may be necessary in connec- tion with an Alteration permitted
by Section 10(c) below, Mortgagors shall not make any changes or allow any
changes to be made in the use of the Mortgaged Property as first-class
institutional office buildings including retail space and other ancillary uses
or initiate or acquiesce in any change in any zoning or other land use
classification affecting all or any portion of the Mortgaged Property now or
hereafter in effect and affecting all or any portion thereof.
(c) Provided that no Event of Default shall have occurred and be continuing
hereunder and subject to the provisions of the Credit Agreement, Mortgagors
shall have the right, without Mortgagee's consent, to undertake any alteration,
improvement, demolition or removal (any such alteration, improvement, demolition
or removal, an "Alteration") of its respective Property or any portion thereof
so long as any such Alteration is (i) required pursuant to or in connection with
any Lease or (ii) is not a Major Alteration. If either Mortgagor desires to
perform a Major Alteration to its respective Mortgaged Property then such
Mortgagor shall (i) obtain the Agent's consent which shall not be unreasonably
withheld and (ii) comply with the provisions of Section 5.19 of the Credit
Agreement.
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(d) Mortgagee and any Persons authorized by them may at all reasonable
times and upon reasonable notice enter and examine the Mortgaged Property and
may inspect all work done, labor performed and materials furnished in and about
the Mortgaged Property subject in all instances to the rights of tenants under
Leases. Mortgagee shall not have any duty to make any such inspection and shall
not have any liability or obligation for making or not making any such
inspection.
11. Legal Compliance; Compliance with Covenants and Easements. Mortgagors
and the Mortgaged Property and the Equipment thereon and the use thereof comply
with all Legal Requirements (hereinafter defined). Subject to Mortgagors' right
of contest pursuant to Section 7(c), Mortgagors shall comply with and conform in
all material respects to all present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, injunctions, rules, regulations and
requirements, and irrespective of the nature of the work to be done, of every
Governmental Authority including, without limitation, Environmental Laws,
consumer protection laws and all covenants, restrictions and conditions now or
hereafter of record which may be applicable to it or to the Mortgaged Property
and the Equipment thereon, or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration, repair or reconstruction of the Mortgaged
Property and the Equipment thereon including, without limitation, building and
zoning codes and ordinances and the provisions of the Americans with
Disabilities Act (collectively, the "Legal Requirements"). Each Mortgagor shall
comply with the requirements of all, and shall not modify, amend or terminate
any, easements and restrictive covenants which from time to time affect the
whole or any portion of the Mortgaged Property. Each Mortgagor shall also comply
with the requirements of, and to the extent reasonably within such Mortgagor's
control, maintain, preserve, enforce and renew, all rights of way, easements,
grants, privileges, licenses, franchises and restrictive covenants which from
time to time benefit or pertain to the whole or any portion of the Mortgaged
Property, and Mortgagors shall not modify, amend or terminate, or surrender any
of its rights under, any of such rights of way, easements, grants, privileges,
licenses, franchises or restrictive covenants. Each Mortgagor will not, without
obtaining the prior written consent of the Mortgagee, initiate, join in or
consent to any new private restrictive covenant, zoning ordinance,
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or other public or private restrictions, limiting or affecting the uses which
may be made of the Mortgaged Property or any part thereof.
12. Books and Records, Financial Statements, Reports and Other Information.
(a) Books and Records. Mortgagors will keep and maintain on a fiscal year
basis proper books and records, in which accurate and complete entries shall be
made of all dealings or transactions of or in relation to the Notes and the
Mortgaged Property and the business and affairs of Mortgagors relating to the
Mortgaged Property, in accordance with GAAP and the Credit Agreement. Mortgagee
and its authorized representatives shall have the right at reasonable times and
upon reasonable notice to examine the books and records of Mortgagors relating
to the operation of the applicable Mortgaged Property and to make such copies or
extracts thereof as Mortgagee may reasonably require.
(b) Other Information. Mortgagors will, within a reasonable time after
written request by Mortgagee, furnish or cause to be furnished to Mortgagee, in
such manner and in such detail as may be reasonably requested by Mortgagee, such
reasonable additional information which has been prepared by Mortgagors and/or
the Manager, the Asset Manager or the Leasing Agent in the ordinary course of
business, as may be requested by Mortgagee with respect to the Mortgaged
Property.
13. Compliance with Leases and Agreements.
(a) (i) To the best knowledge of each Mortgagor, the Leases are in full
force and effect, (ii) Mortgagors have neither given to, nor received any
written notice of default from, any Tenants under any Leases and (iii) to the
best knowledge of each Mortgagor, except as described in the estoppel
certificates delivered to Agent on or before the date hereof, no events or
circumstances exist which with or without the giving of notice, the passage of
time or both, may constitute a default under any of the Leases. Mortgagors will
promptly notify Mortgagee upon the occurrence of any of the foregoing events.
(b) Mortgagors shall, at all times, lease the Mortgaged Property in a
first-class manner consistent
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with other first-class institutional office buildings in the City of New York.
All Major Leases entered into after the date hereof shall be subject to the
prior written approval of Mortgagee in accordance with the terms of the Credit
Agreement. Each Lease entered into after the date hereof, regardless of whether
it is a Major Lease (including the renewal or extension on or after the date
hereof of any Lease or Major Lease entered into prior to the date hereof if the
rent payable during such renewal or extension, or a formula to compute such
rent, is not provided for in such Lease, such a renewal or extension a "Renewal
Lease") (A) shall comply with the provisions of Section 5.20 of the Credit
Agreement, and (B) shall otherwise comply with the requirements of the Credit
Agreement applicable thereto.
(c) Mortgagors shall (i) promptly perform and observe all of the material
terms, covenants and conditions required to be performed and observed by
Mortgagors under the applicable Leases; and (ii) collect the Rents under the
Leases when due and collect escalations, percentage rent and other charges in
accordance with the terms of each Lease, subject to the terms of the Cash
Collateral Agreement.
(d) All Leases entered into by Mortgagors after the date hereof shall be
subject and subordinate to this Mortgage, and shall provide that the Tenant
thereunder shall attorn to Mortgagee or any other Person succeeding to the
interest of Mortgagee, on the terms set forth in Section 13(e). All reasonable
actual, out-of-pocket costs and expenses of Mortgagee in connection with the
negotiation, preparation, execution and delivery of any nondisturbance agreement
including, without limitation, reasonable attorneys' fees and disbursements,
shall be paid by Mortgagors.
(e) Except as otherwise approved by Agent, each Lease entered into from and
after the date hereof shall provide that: in the event of the enforcement by
Mortgagee of any remedy under this Mortgage, the Tenant under such Lease shall,
at the option of Mortgagee or of any other Person succeeding to the interest of
Mortgagee as a result of such enforcement, attorn to Mortgagee or to such Person
and shall recognize Mortgagee or such successor in interest as lessor under such
Lease without change in the provisions thereof; provided, however, Mortgagee or
such successor in interest shall
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not be liable for or bound by (i) any payment of an installment of rent or
additional rent which may have been made more than thirty (30) days before the
due date of such installment, (ii) any amendment or modification to or
termination of any such Lease not consented to by Mortgagee, (iii) any act or
omission of or default by Mortgagors under any such Lease, provided that any
successor will be responsible for any default under such Lease from and after
the date such successor succeeds to the interest of lessor, (iv) any credits,
claims, setoffs or defenses which any Tenant may have against Mortgagors or (v)
any security deposits unless actually received. Each such Tenant, upon
reasonable request by Mortgagee or such successor in interest, shall execute and
deliver an instrument or instruments confirming such attornment.
14. Mortgagee's Right to Perform. Upon the occurrence and continuance of an
Event of Default with respect to the performance of any of the Obligations
contained herein, Mortgagee, without waiving or releasing Mortgagors from any
Obligation or Default under this Mortgage, after delivery of notice thereof to
Mortgagors, may (but shall not be obligated to), at any time perform the same,
and the cost thereof, with interest at the Default Rate from the date of payment
by Mortgagee to the date such amount is paid by Mortgagors shall immediately be
due from Mortgagors to Mortgagee, and the same shall be secured by this Mortgage
and shall be a Lien on the Mortgaged Property prior to any right, title to,
interest in or claim upon the Mortgaged Property attaching subsequent to the
Lien of this Mortgage. No payment or advance of money by Mortgagee under this
Section 14 shall be deemed or construed to cure Mortgagors' Default or waive any
right or remedy of Mortgagee hereunder.
15. Mortgagors' Existence; Organization and Authority. Each Mortgagor shall
do all things necessary to preserve and keep in full force and effect its
existence, franchises, rights and privileges as a limited partnership and its
right to own property or transact business in the State of New York. In addition
to the representations and warranties stated elsewhere in this Mortgage, each
Mortgagor hereby represents and warrants that it (a) is a duly organized and
validly existing limited partnership, (b) has the power and authority to own its
properties and to carry on its business as now being conducted and as proposed
to be conducted hereunder and is qualified to do business in the State of New
York,
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and (c) has the power to execute and deliver and perform its obligations under
this Mortgage, the Notes and each Loan Document executed by it. The execution
and delivery by each Mortgagor of this Mortgage, the Notes and each of the other
Loan Documents, each Mortgagor's performance of its respective obligations
thereunder and the creation of the security interest and Liens provided for in
this Mortgage and the other Loan Documents have been duly authorized by all
requisite action on the part of each Mortgagor where required, and will not
violate in any material respect any Legal Requirement, any order of any court or
other Governmental Authority, the partnership agreement of each Mortgagor, or
any other instrument to which each Mortgagor is a party, or by which each
Mortgagor is bound, or be in conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under, or result in the
creation or imposition of any Lien, of any nature whatsoever, upon any of the
property or assets of each Mortgagor except the Liens created hereunder and
under the other Loan Documents. Each Mortgagor is not required to obtain any
consent, approval or authorization from or to file any declaration or statement
with, any Governmental Authority or other agency in connection with or as a
condition to the execution, delivery or performance of this Mortgage, the Notes
or the other Loan Documents other than that which have been already obtained or
filed.
16. Protection of Security; Costs and Expenses. Mortgagors shall appear in
and defend any action or proceeding purporting to affect the security hereof or
the rights or powers of Mortgagee hereunder and shall pay all costs and
expenses, including, without limitation, cost of evidence of title and
reasonable attorneys' fees and disbursements, in any such action or proceeding
in which Mortgagee may appear, and in any suit brought by Mortgagee to foreclose
this Mortgage or to enforce or establish any other rights or remedies of
Mortgagee hereunder. If an Event of Default occurs and is continuing under this
Mortgage, or if any action or proceeding is commenced in which it becomes
necessary to defend or uphold the Lien or priority of this Mortgage or which
adversely affects Mortgagee's interest in the Mortgaged Property, or any part
thereof, including, but not limited to, eminent domain, enforcement of, or
proceedings of any nature whatsoever under any Legal Requirement affecting the
Mortgaged Property or involving either of Mortgagor's bankruptcy, insolvency,
arrangement, reorganization or
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other form of debtor relief, then Mortgagee, upon reasonable notice to
Mortgagors, may, but without obligation to do so and without releasing
Mortgagors from any obligation hereunder, may make such appearances, disburse
such sums and take such action as Mortgagee deems necessary or appropriate to
protect Mortgagee's interest in the Mortgaged Property, including, but not
limited to, disbursement of reasonable attorneys' fees, entry upon the Mortgaged
Property to make repairs or take other action to protect the security hereof,
and payment, purchase, contest or compromise of any encumbrance, charge or lien
which in the judgment of Mortgagee appears to be prior or superior hereto.
Mortgagors jointly and severally further agree to pay all reasonable costs and
expenses of Mortgagee including, without limitation, reasonable fees and
disbursements of Skadden, Arps, Slate, Meagher & Flom or, with respect to clause
(b) only, any other counsel of Mortgagee in connection with (a) the negotiation,
preparation, execution and delivery of this Mortgage, the Notes and the other
Loan Documents, and (b) the performance of their respective obligations and
exercise of their respective rights under this Mortgage, the Notes, the Credit
Agreement or the other Loan Documents; provided that Mortgagors, for so long as
an Event of Default or any event which has a Material Adverse Effect has not
occurred and is continuing, shall be responsible, but not more than once in any
twenty-four (24) month period with respect to each Property, for the reasonable
costs payable to third parties with respect to future appraisals (or, if
appropriate only updates of previous appraisals) and other reports required
prior time to time in accordance with Agent's policies, as set in accordance
with regulatory requirements. All of the costs, expenses and amounts set forth
in this Section 16 shall be payable by Mortgagors on demand, together with
interest thereon at the rate then in effect with respect to the Notes (except
during the continuance of an Event of Default in which case interest shall
accrue at the Default Rate), from the date of any such payment by Mortgagee
until the date of repayment by Mortgagors shall be deemed to be Indebtedness
hereunder and shall be a Lien on the Mortgaged Property prior to any right,
title, interest or claim upon the Mortgaged Property. Nothing contained in this
Section 16 shall be construed to require Mortgagee to incur any expense, make
any appearance, or take any other action.
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17. Management of the Mortgaged Property.
(a) Mortgagors covenant and agree with Mortgagee that the Mortgaged
Property will be managed at all times in a manner consistent with past practice
by the Manager pursuant to the Property Management Agreement or by another
manager reasonably acceptable to Mortgagee. Mortgagors covenant to comply in all
material respects with the Property Management Agreement and the Asset
Management Agreement as in force as of the date hereof. No material amendment to
the Property Management Agreement or the Asset Management Agreement which could
have a Material Adverse Effect may be made without Mortgagee's and the Required
Lender's written consent, which shall not be unreasonably withheld or delayed.
Upon the replacement of the Manager with a new manager, Mortgagee shall have the
right to approve (which approval shall not be unreasonably withheld or delayed)
any new management agreement with such manager, but only to the extent such new
agreement is materially different from the Property Management and Leasing
Agreement and such material difference would have a Material Adverse Effect.
Upon the replacement of the Manager in its capacity as leasing agent for the
Properties, Mortgagee shall have the right to approve (which approval shall not
be unreasonably withheld or delayed) any new leasing agency agreement with such
agent, but only to the extent such new agreement is materially different from
the Property Management and Leasing Agreement and such material difference would
have a Material Adverse Effect. Upon the replacement of the Asset Manager,
Mortgagee shall have the right to approve (which approval shall not be withheld
or delayed) any new asset management agreement with such asset manager but only
to the extent such new agreement is materially different from the Asset
Management Agreement and such material difference would have a Material Adverse
Effect.
(b) It is acknowledged and agreed that the Property Management Agreement
may be terminated at the direction of Mortgagee at any time following the
occurrence and continuance of an Event of Default hereunder, provided that
Lenders shall have appointed a receiver for the Properties, foreclosed upon the
Properties, accepted a deed in lieu of foreclosure, or have otherwise elected to
become a mortgagee in possession or taken control of the operation of the
Properties, pursuant to the Consent and Subordination of Property Management
Agreement and, if the Property Management Agreement is so terminated, a
substitute Manager and a substitute Leasing
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Agent shall be appointed by Mortgagors subject to the prior written consent of
Mortgagee, or, if any Event of Default shall be continuing, by Mortgagee.
(c) It is acknowledged and agreed that the Asset Management Agreement may
be terminated at the direction of Mortgagee at any time following the occurrence
and continuance of an Event of Default hereunder, pursuant to the Consent and
Subordination of Asset Management Agreement and, if the Asset Management
Agreement is so terminated, a substitute Asset Manager may be appointed by the
REIT subject to the prior written consent of Mortgagee.
(d) Mortgagee shall have the rights to terminate the Asset Management
Agreement set forth in the Consent and Subordination of Asset Management
Agreement.
(e) Mortgagee shall have the rights to terminate the Property Management
Agreement set forth in the Consent and Subordination of Property Management
Agreement.
18. Environmental Matters.
(a) Each Mortgagor hereby represents and warrants that except as set forth
in the Environmental Reports delivered to Mortgagee prior to the Closing Date
(i) to the best of each Mortgagor's knowledge, Mortgagors (x) are in compliance
in all material respects with all applicable Environmental Laws, (y) have all
material permits, licenses, approvals, rulings, variances, exemptions or other
authorizations under applicable Environmental Laws to operate the Mortgaged
Property as presently conducted or as reasonably anticipated to be conducted,
(z) has received no written communication, from a Governmental Authority or any
other Person, alleging that Mortgagors are not in full compliance with all
Environmental Laws, and there are no events or circumstances, to Mortgagors'
knowledge, that may prevent or interfere with such full compliance in the
future, (ii) there is no Environmental Claim pending or, to Mortgagors'
knowledge, threatened against Mortgagors, (iii) to Mortgagors' knowledge, there
are no past or present actions, activities, circumstances, conditions, events or
incidents including, without limitation, the release, emission, discharge or
disposal of any Hazardous Substance, that could form the basis of any
Environmental Claim against
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Mortgagors, (iv) without in any way limiting the generality of the foregoing and
except as disclosed in the Environmental Reports (A) there are no sites on the
Mortgaged Property in which Mortgagors have stored (except in full compliance
with Environmental Laws) disposed or arranged for the disposal of Hazardous
Substances, (B) there are no underground storage tanks located on the Mortgaged
Property, (C) there is no asbestos contained in or forming a part of any
Improvement on the Mortgaged Property, and (D) no polychlorinated biphenyls
(PCBs) are used or stored on the Mortgaged Property.
(b) Each Mortgagor covenants and agrees with Mortgagee that it shall comply
and shall cause all tenants or other occupants of the Mortgaged Property to
comply, in all respects with all Environmental Laws, and will not permit any
tenant or other occupant of the Mortgaged Property to generate, store, handle,
process, dispose of or otherwise use, Hazardous Materials at, in, on, or about
the Mortgaged Property, in a manner that could lead or potentially lead to the
imposition on Mortgagors, Mortgagee or the Mortgaged Property of any liability
or lien of any nature whatsoever under any Environmental Law; provided that
Tenants may use, handle and store such materials as is customary in the
operation of a first-class office building in Manhattan in accordance with their
Leases and all Environmental Laws. Mortgagors shall notify Mortgagee promptly in
the event of any spill or other release of any Hazardous Substance at, in, on,
under or about the Mortgaged Property which is required to be reported to a
Governmental Authority under any Environmental Law, will promptly forward to the
Mortgagee copies of any notices received by Mortgagors relating to alleged
violations of any Environmental Law or any potential liability under any
Environmental Law and will, subject to Section 7(c) hereof, promptly pay when
due any fine or assessment against Mortgagee, Mortgagors or the Mortgaged
Property relating to any Environmental Law. If at any time it is it is
determined that the operation or use of the Mortgaged Property is in violation
of any applicable Environmental Law or that there are Hazardous Substances
located at, in, on, under or about the Mortgaged Property which, under any
Environmental Law, require special handling in collection, storage, treatment or
disposal, or any form of cleanup or corrective action, Mortgagors shall, within
thirty (30) days after receipt of notice thereof from any Governmental Authority
or from Mortgagee, take, at Mortgagors'
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sole cost and expense, such actions as may be necessary to fully comply in all
respects with all Environmental Laws, provided, however, that if such compliance
cannot reasonably be completed within such thirty (30) day period, Mortgagors
shall commence such necessary action within such thirty (30) day period and
shall thereafter diligently and expeditiously proceed to fully comply in all
respects and in a timely fashion with all Environmental Laws.
(c) If Mortgagors fail to timely take, or to diligently and expeditiously
proceed to complete in a timely fashion, any such action described in clause (b)
above, Mortgagee may, in its sole and absolute discretion, make upon prior
notice to the Mortgagors advances or payments toward the performance or
satisfaction of the same, but shall in no event be under any obligation to do
so. All sums so advanced or paid by Mortgagee (including, without limitation,
reasonable counsel and consultant fees and expenses, investigation and
laboratory fees and expenses, and fines or other penalty payments) and all sums
advanced or paid in connection with any judicial or administrative investigation
or proceeding relating thereto, will immediately, upon demand, become due and
payable from Mortgagors and shall bear interest at the Default Rate from the
date any such sums are so advanced or paid by the Mortgagee until the date any
such sums are repaid by Mortgagors to the Mortgagee. Mortgagors will execute and
deliver, promptly upon request, such instruments as the Mortgagee may deem
useful or necessary to permit the Mortgagee to take any such action as the
Mortgagee may require to secure all sums so advanced or paid by the Mortgagee.
If a lien is filed against the Mortgaged Property by any Governmental Authority
resulting from the need to expend or the actual expending of monies arising from
an action or omission, whether intentional or unintentional, of Mortgagors or
for which either Mortgagor is responsible, resulting in the releasing, spilling,
leaking, leaching, pumping, emitting, pouring, emptying or dumping of any
Hazardous Substance into the waters or onto land located within or without the
State where the Mortgaged Property is located, then Mortgagors will, within
thirty (30) days from the date that Mortgagors are first given notice that such
lien has been placed against the Mortgaged Property (or within such shorter
period of time as may be specified by Mortgagee if such Governmental Authority
has commenced steps to cause the Mortgaged Property to be sold pursuant to
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such lien), either (a) pay the claim and remove the lien, or (b) furnish a cash
deposit, bond, or such other security with respect thereto as is satisfactory in
all respects to Mortgagee and is sufficient to effect a complete discharge of
such lien on the Mortgaged Property.
(d) Mortgagee may, at its option, at intervals of not less than one year,
or more frequently if Mortgagee reasonably believes that a Hazardous Substance
or other environmental condition violates or threatens to violate any
Environmental Law, cause an environmental audit of the Mortgaged Property or
portions thereof to be conducted to confirm Mortgagors' compliance with the
provisions of this paragraph, and Mortgagors shall cooperate in all reasonable
ways with Mortgagee in connection with any such audit. If such audit discloses
that a violation of or a liability under an Environmental Law exists or if such
audit was required or prescribed by law, regulation or governmental or
quasi-governmental authority, Mortgagors shall pay all reasonable costs and
expenses incurred in connection with such audit; otherwise, the costs and
expenses of such audit shall, notwithstanding anything to the contrary set forth
in this paragraph, be paid by the Mortgagee.
(e) If this Mortgage is foreclosed, or if the Mortgaged Property is sold
pursuant to the provisions of this Mortgage, or if Mortgagors tender a deed or
assignment in lieu of foreclosure or sale, Mortgagors shall deliver the
Mortgaged Property to the purchaser at foreclosure or sale or to the Mortgagee,
its nominee, or wholly-owned subsidiary, as the case may be, in a condition that
complies in all respects with all Environmental Requirements.
(f) Each Mortgagor will defend, indemnify, and hold harmless Mortgagee, its
co-lenders, participants, employees, agents, officers, and directors, from and
against any and all claims, demands, penalties, causes of action, fines,
liabilities, settlements, damages, costs, or expenses of whatever kind or
nature, known or unknown, foreseen or unforeseen, contingent or otherwise
(including, without limitation, reasonable counsel and consultant fees and
expenses, investigation and laboratory fees and expenses, court costs, and
litigation expenses) arising out of, or in any way related to, (i) any breach by
either Mortgagor of any of the provisions of this
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Section 18, (ii) the presence, disposal, spillage, discharge, emission, leakage,
release, or threatened release of any Hazardous Substance which is at, in, on,
under, from or affecting the Mortgaged Property, including, without limitation,
any damage or injury resulting from any such Hazardous Substance to or affecting
the Mortgaged Property or the soil, water, air, vegetation, buildings, personal
property, persons or animals located on the Mortgaged Property or on any other
property or otherwise, (iii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to any such
Hazardous Substance, (iv) any lawsuit brought or threatened, settlement reached,
or order or directive of or by any Governmental Authority relating to such
Hazardous Substance, or (v) any violation of any Environmental Law or any policy
or requirement of Mortgagee hereunder, in each case to the extent not resulting
from the willful misconduct or gross negligence of such indemnified parties.
(g) Notwithstanding anything to the con- trary provided in this Mortgage or
in any other Loan Document, the indemnification provided in Section 18(f) hereof
shall be fully recourse to Mortgagors, constitute the personal recourse
undertakings, obligations and liabilities of the Mortgagors, and shall be
independent of, and shall survive, the discharge of the Indebtedness, the
release of the Lien created under this Mortgage, and/or the conveyance of title
to the Mortgaged Property to Mortgagee or any purchaser or designee in
connection with a foreclosure of this Mortgage or conveyance in lieu of
foreclosure; provided, that in the case of any foreclosure or a deed or
assignment in lieu of such foreclosure such indemnity shall exclude Hazardous
Substances placed on the Mortgaged Property after the date of such foreclosure
or deed in lieu thereof. Notwithstanding the foregoing, in no event shall this
indemnity be assignable by Mortgagee to any such purchaser at or subsequent to a
foreclosure sale.
19. Remedies. Upon the occurrence and continuance of an Event of Default,
Mortgagee may take such actions against Mortgagors and/or against the Mortgaged
Property or any portion thereof as Mortgagee determines is necessary to protect
and enforce its rights hereunder, without notice or demand except as set forth
below. Any such actions taken by Mortgagee shall be cumulative and concurrent
and may be pursued independently, singly,
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successively, together or otherwise, at such time and in such order as Mortgagee
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of
Mortgagee permitted by law, equity or contract or as set forth herein or in the
other Loan Documents. Such actions may include the following:
(a) Acceleration. Subject to any appli- cable provisions of the Notes, the
Credit Agreement and the other Loan Documents, Mortgagee may declare all or any
portion of the unpaid principal balance under the Notes, together with all
accrued and unpaid interest thereon, and all other unpaid Indebtedness, to be
immediately due and payable.
(b) Entry. Mortgagee, personally, or by its agents or attorneys, may enter
into and upon all or any part of the Mortgaged Property, and may exclude
Mortgagors, their agents and servants (including the Manager) therefrom; and,
Mortgagee, having and holding the same, may use, operate, manage and control the
Mortgaged Property or any part thereof and conduct the business thereof, either
personally or by its superintendents, managers, agents, servants, attorneys or
receiver. Upon every such entry, Mortgagee may, at the expense of the Mortgaged
Property or Mortgagors, from time to time, either by purchase, repair or
construction, maintain and restore the Mortgaged Property or any part thereof,
and may insure and reinsure the same in such amount and in such manner as may
seem to them to be advisable. Similarly, from time to time, Mortgagee may, at
the expense of the Mortgaged Property or Mortgagors make all necessary or proper
repairs, renewals, replacements, alterations, additions, betterments and
improvements to and on the Mortgaged Property or any part thereof as it may seem
advisable. Mortgagee shall also have the right to manage and operate the
Mortgaged Property or any part thereof and to carry on the business thereof and
exercise all rights and powers of Mortgagors with respect thereto, either in the
name of Mortgagors or otherwise, as may seem to them to be advisable. In
confirmation of GRANTING CLAUSE IV, in the case of the occurrence and
continuation of an Event of Default, Mortgagee shall be entitled to collect and
receive all Rents to be applied in the order of priorities and amounts as
Mortgagee shall elect in its sole discretion. In the event Mortgagee elects, in
its sole discretion, to apply the Rents to any matter
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provided herein or in the other Loan Documents, Mortgagee shall not have cause
to claim that the Rents so applied by Mortgagee were misappropriated by
Mortgagors. Mortgagee, shall be liable to account only for rents, issues and
profits and other proceeds actually received by Mortgagee.
(c) Foreclosure. (i) Mortgagee, with or without entry, personally or by its
agents or attorneys, insofar as applicable, may (i) sell to the extent permitted
by law and pursuant to the power of sale granted herein, all and singular the
Mortgaged Property, and all estate, right, title and interest, claim and demand
therein, and right of redemption thereof, at one or more sales, as an entirety
or in parcels, and at such times and places as required or permitted by law and
as are customary in any county or parish in which the Mortgaged Property is
located and upon such terms as Mortgagee may fix and specify in the notice of
sale to be given to Mortgagors (and on such other notice published or otherwise
given as provided by law), or as may be required by law; (ii) institute
proceedings for the complete or partial foreclosure of this Mortgage under the
provisions of the laws of the State of New York, or under any other applicable
provision of law; or (iii) take all steps to protect and enforce the rights of
Mortgagee, whether by action, suit or proceeding in equity or at law (for the
specific performance of any covenant, condition or agreement contained in this
Mortgage, or in aid of the execution of any power herein granted, or for any
foreclosure hereunder, or for the enforcement or any other appropriate legal or
equitable remedy), or otherwise, as Mortgagee, being advised by counsel and its
financial advisor, shall deem most advisable to protect and enforce any of their
rights or duties hereunder. Mortgagee may conduct any number of sales from time
to time. The power of sale shall not be exhausted by any one or more such sales
as to any part of the Mortgaged Property remaining unsold, but shall continue
unimpaired until the entire Mortgaged Property shall have been sold.
(d) Specific Performance. Mortgagee, in its sole and absolute discretion
may (but subject to the provisions of Section 9.14 of the Credit Agreement)
institute an action, suit or proceeding at law or in equity for the specific
performance of any covenant, condition or agreement contained herein or in the
Notes or any other Loan Document, or in aid of the execution of
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any power granted hereunder or for the enforcement of any
other appropriate legal or equitably remedy.
(e) Enforcement of Notes. Mortgagee may recover judgement on the Notes (or
any portion of the Indebtedness evidenced thereby), either before, during or
after any proceedings for the foreclosure (or partial foreclosure) or
enforcement of this Mortgage.
(f) Sale of Mortgaged Property; Applica- tion of Proceeds.
(i) Mortgagee may postpone any sale of all or any part of the
Mortgaged Property to be made under or by virtue of this Section 19 by
public announcement at the time and place of such sale, or by
publication, if required by law, and, from time to time, thereafter,
may further postpone such sale by public announcement made at the time
of sale fixed by the preceding postponement.
(ii) Upon the completion of any sale made by Mortgagee under or
by virtue of this Section 19, Mortgagee shall execute and deliver to
the accepted purchaser or purchasers a good and sufficient deed or
deeds or other appropriate instruments, conveying, assigning and
transferring all its estate, right, title and interest in and to the
property and rights so sold. Mortgagee is hereby appointed the true
and lawful irrevocable attorney-in-fact of Mortgagors in their name
and stead or in the name of Mortgagee to make all necessary
conveyances, assignments, transfers and deliveries of the property and
rights so sold, and, for that purpose, Mortgagee may execute all
necessary deeds and other instruments of assignment and transfer, and
may substitute one or more persons with like power, Mortgagors hereby
ratifying and confirming all that such attorney or attorneys or such
substitute or substitutes shall lawfully do by virtue hereof.
Mortgagors shall, nevertheless, if so requested in writing by
Mortgagee, ratify and confirm any such sale or sales by executing and
delivering to Mortgagee or to such purchaser or purchasers all such
instruments as may be advisable, in the judgment of Mortgagee, for
such purposes and as may be designated in such request. Any such sale
or sales made under or by virtue of this Section 19 shall operate
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to divest all the estate, right, title, interest, claim and demand,
whether at law or in equity, of Mortgagors in and to the property and
rights so sold, and shall be a perpetual bar, at law and in equity, of
Mortgagors in and to the property and rights so sold, and shall be a
perpetual bar, at law and in equity, against Mortgagors, its successors
and assigns and any Person claiming through or under Mortgagors and
their successors and assigns.
(iii) The receipt of Mortgagee for the purchase money paid as a
result of any such sale shall be a sufficient discharge therefor to
any purchaser of the property or rights, or any part thereof, so sold.
No such purchaser, after paying such purchase money and receiving such
receipt, shall be bound to see to the application of such purchase
money upon or for any trust or purpose of this Mortgage, or shall be
answerable, in any manner, for any loss, misapplication or
non-application of any such purchase money or any part thereof, nor
shall any such purchaser be bound to inquire as to the authorization,
necessity, expediency or regularity of such sale.
(iv) Upon any sale made under or by virtue of this Section 19,
Mortgagee may bid for and acquire the Mortgaged Property or any part
thereof and, in lieu of paying cash therefor, may make settlement for
the purchase price by crediting upon the Notes secured by this
Mortgage the net proceeds of sale, after deducting therefrom the
expense of the sale and the costs of the action and any other sums
which Mortgagee is authorized to deduct under this Mortgage. The
person making such sale shall accept such settlement without requiring
the production of the Notes or this Mortgage, and without such
production there shall be deemed credited to the Indebtedness and
Obligations under this Mortgage the net proceeds of such sale.
Mortgagee, upon acquiring the Mortgaged Property or any part thereof
shall be entitled to own, hold, lease, rent, operate, manage or sell
the same in any manner permitted by applicable laws.
(g) Voluntary Appearance; Receivers. After the happening, and during the
continuance of, any Event of Default, and immediately upon commencement of
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(i) any action, suit or other legal proceeding by Mortgagee to obtain judgment
for the principal and interest on the Notes and any other sums required to be
paid pursuant to this Mortgage, or (ii) any action, suit or other legal
proceeding by Mortgagee of any other nature in aid of the enforcement of the
Loan Documents or any of them, Mortgagors will (a) enter their voluntary
appearance in such action, suit or proceeding, and (b) if required by Mortgagee,
consent to the appointment of one or more receivers of the Mortgaged Property
and of the earnings, revenues, rents, issues, profits and income thereof. After
the happening and during the continuance of any Event of Default, or upon the
filing of a bill in equity to foreclose this Mortgage or to enforce the specific
performance hereof or in aid thereof, or upon the commencement of any other
judicial proceeding to enforce any right of Mortgagee, Mortgagee shall be
entitled, as a matter of right, if they shall so elect, without notice to any
other party and without regard to the adequacy of the security of the Mortgaged
Property, forthwith, either before or after declaring the principal and interest
on the Notes to be due and payable, to the appointment of such a receiver or
receivers. Any receiver or receivers so appointed shall have such powers as a
court or courts shall confer, which may include, without limitation, any or all
of the powers which Mortgagee is authorized to exercise by the provisions of
this Section 19, and shall have the right to incur such obligations and to issue
such certificates therefor as the court shall authorize.
(h) Retention of Possession. Notwith- standing the appointment of any
receiver, liquidator or trustee of Mortgagors, or any of their property, or of
the Mortgaged Property or any part thereof, Mortgagee, to the extent permitted
by law, shall be entitled to retain possession and control of all property now
or hereafter granted to or held by Mortgagee under this Mortgage.
(i) Suits by Mortgagee. All rights of action under this Mortgage may be
enforced by Mortgagee without the possession of the Notes and without the
production thereof or this Mortgage at any trial or other proceeding relative
thereto. Any such suit or proceeding instituted by Mortgagee shall be brought in
the name of Mortgagee and any recovery of judgment shall be subject to the
rights of Mortgagee.
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(j) Remedies Cumulative. No remedy herein conferred upon or reserved to
Mortgagee is intended to be exclusive of any other remedy, and each such remedy
shall be cumulative and in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity. No delay or omission of Mortgagee to
exercise any right or power accruing upon any Event of Default shall impair any
such right or power, or shall be construed to be a waiver of any such Event of
Default or an acquiescence therein. Every power and remedy given by this
Mortgage to Mortgagee may be exercised from time to time and as often as may
deemed expedient by Mortgagee. Nothing contained in this Mortgage shall affect
the obligations of Mortgagors to pay the principal of, and interest on, the
Notes in the manner and at the time and place expressed in the Notes.
(k) Waiver of Rights. Mortgagors agree that to the fullest extent permitted
by law Mortgagors will not, at any time, (a) insist upon, plead or claim or take
any benefit or advantage of any stay, extension or moratorium law, wherever
enacted, now or at any time hereafter in force, which may affect the covenants
and terms of performance of this Mortgage, (b) claim, take or insist upon any
benefit or advantage of any law, now or at any time hereafter in force,
providing for valuation or appraisal of the Mortgaged Property, or any part
thereof, prior to any sale or sales thereof which may be made pursuant to any
provision herein contained, or pursuant to the decree, judgment or order of any
court of competent jurisdiction, or (c) after any such sale or sales, claim or
exercise any right, under any statute heretofore or hereafter enacted by the
United States of America, any State thereof or otherwise, to redeem the property
and rights sold pursuant to such sale or sales or any part hereof. Mortgagors
hereby expressly waive all benefits and advantages of such laws, and covenants,
to the fullest extent permitted by law, not to hinder, delay or impede the
execution of any power herein granted or delegated to Mortgagee, but will suffer
and permit the execution of every power as though no such laws had been made or
enacted. Mortgagors for themselves, and all who may claim through or under them,
waive, to the extent that they lawfully may do so, any and all homestead rights,
any and all rights to reinstatement, any and all right to have the property
comprising the Mortgaged Property marshaled upon any foreclosure of the lien
hereof or to have the mortgaged property hereunder and the property
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covered by any other mortgage, deed to secure debt or
deed.
(l) If in connection with the exercise of any remedies hereunder, either
Mortgagor shall pay more than its proportionate share of the Obligations such
excess shall be deemed to be a loan from such Mortgagor to the other Mortgagor
in the amount of such excess, which loan or loans shall be subordinate to the
Lien of this Mortgage.
20. Application of Proceeds. The proceeds of any sale or foreclosure of the
Mortgaged Property shall be applied to the following in such priority as
Mortgagee shall elect in its sole discretion: (a) to the payment of the costs
and expenses of the foreclosure proceedings (including, without limitation,
reasonable counsel fees and disbursements actually incurred and advertising
costs and expenses), liabilities and advances made or incurred under this
Mortgage, and reasonable receivers' and trustees' fees and commissions together
with interest at the Default Rate, (b) to the payment of any other sums advanced
by Mortgagee in accordance with the terms hereof and not repaid to it by
Mortgagors, together with interest at the Default Rate from and after the date
incurred, (c) to the payment of all sums due under the Notes and the Breakage
Obligations, if any, pro rata, and in such order as Mortgagee may elect, (d) to
the payment of all sums due under any other Loan Document, in such order as
Mortgagee shall elect, and (e) to the payment of any surplus to Mortgagors or
other party legally entitled thereto.
21. Notice of Certain Occurrences. Mortgagors shall give notice to
Mortgagee promptly upon the occurrence of: (a) any Default or Event of Default;
(b) any litigation or proceeding affecting Mortgagors or the Mortgaged Property
which is reasonably likely, if adversely determined to have a material adverse
effect on the value of the Properties in the aggregate; and (c) a material
adverse change in the business, operations, property or financial condition of
Mortgagors.
22. WAIVER OF TRIAL BY JURY; WAIVER OF STATUTORY RIGHTS.
(a) EACH MORTGAGOR HEREBY WAIVES AND SHALL WAIVE, TO THE EXTENT PERMITTED
BY LAW, TRIAL BY JURY IN
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ANY ACTION OR PROCEEDING BROUGHT BY, OR COUNTERCLAIM ASSERTED BY MORTGAGEE WHICH
ACTION, PROCEEDING OR COUNTERCLAIM ARISES OUT OF OR IS CONNECTED WITH THIS
MORTGAGE, THE NOTES OR ANY OTHER LOAN DOCUMENTS.
(b) EACH MORTGAGOR SHALL NOT AND WILL NOT APPLY FOR OR AVAIL ITSELF OF ANY
APPRAISEMENT, VALUATION, STAY, EXTENSION OR EXEMPTION LAWS, OR ANY SO-CALLED
"MORATORIUM LAWS", NOW EXISTING OR HEREAFTER ENACTED, IN ORDER TO PREVENT OR
HINDER THE ENFORCEMENT OR FORECLOSURE OF THIS MORTGAGE, BUT HEREBY WAIVES THE
BENEFIT OF SUCH LAWS TO THE FULL EXTENT THAT SUCH MORTGAGOR MAY DO SO UNDER
APPLICABLE LAW. EACH MORTGAGOR FOR ITSELF AND ALL WHO MAY CLAIM THROUGH OR UNDER
IT WAIVES ANY AND ALL RIGHT TO HAVE THE PROPERTY AND ESTATES COMPRISING THE
MORTGAGED PROPERTY MARSHALLED UPON ANY FORECLOSURE OF THE LIEN OF THIS MORTGAGE
AND AGREES THAT ANY COURT HAVING JURISDICTION TO FORECLOSE SUCH LIEN MAY ORDER
THE MORTGAGED PROPERTY SOLD AS AN ENTIRETY. EACH MORTGAGOR HEREBY WAIVES FOR
ITSELF AND ALL WHO MAY CLAIM THROUGH OR UNDER IT, AND TO THE FULL EXTENT SUCH
MORTGAGOR MAY DO SO UNDER APPLICABLE LAW, ANY AND ALL RIGHTS OF REDEMPTION FROM
SALE UNDER ANY ORDER OR DECREE OF FORECLOSURE OF THIS MORTGAGE OR GRANTED UNDER
ANY STATUTE NOW EXISTING OR HEREAFTER ENACTED.
23. Trust Funds. All security deposits paid under the Leases shall be
treated as trust funds not to be commingled with any other funds of Mortgagors.
Within ten (10) days after request by Mortgagee, Mortgagors shall furnish
Mortgagee satisfactory evidence of compliance with this Section 23, together
with a statement of all security deposits by tenants under the Leases, which
statement shall be certified by Mortgagors.
24. Taxes. (a) In the event of the passage after the date hereof of any law
of the United States or of the State of New York either (i) deducting from the
value thereof, or changing in any way the laws for the taxation of mortgages or
debts secured thereby for federal, state or local purposes, or the manner of
collection of any such taxes, or (ii) imposing a tax, either directly or
indirectly, on mortgages or debts secured thereby, Mortgagors shall assume as an
obligation hereunder the payment of any tax so imposed until full payment of the
Notes provided such assumption shall be permitted by law within thirty (30) days
after written demand therefor from Mortgagee.
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(b) All payments by Mortgagors of princi- pal of, and interest on, the Loan
and all other amounts payable hereunder shall be made free and clear of and
without deduction for any Taxes. In the event that any withholding or deduction
from any payment to be made by Mortgagors hereunder is required in respect of
any Taxes pursuant to any applicable law, rule or regulation, then Mortgagors
will: (i) pay directly to the relevant authority the full amount required to be
so withheld or deducted; (ii) promptly forward to Mortgagee an official receipt
or other documentation satisfactory to Mortgagee evidencing such payment to such
authority; and (iii) pay to Mortgagee such additional amount or amounts as is
necessary to ensure that the net amount actually received by Mortgagee will
equal the full amount Mortgagee would have received had no such withholding or
deduction been required. Moreover, if any Taxes are directly asserted against
Mortgagee with respect to any payment received by Mortgagee under the Notes, or
hereunder, Mortgagee may pay such Taxes and Mortgagors will within five Domestic
Business Days pay such additional amounts (including any penalties, interest or
expenses) as are necessary in order that the net amount received by such person
after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such person would have received had no such Taxes been
asserted.
(c) If Mortgagors fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to Mortgagee the required receipts or other required
documentary evidence, Mortgagors shall indemnify Mortgagee for any incremental
Taxes, interest or penalties that may become payable by Mortgagee as a result of
any such failure.
(d) For purposes hereof, "Taxes" shall have the meaning set forth in
Section 8.4(a) of the Credit Agreement.
25. Notices. Any notice, election, request or demand which by any provision
of this Mortgage is re- quired or permitted to be given or served hereunder
shall be in writing and shall be given or served by hand deliv- ery against
receipt, by any nationally recognized over- night courier service providing
evidence of the date of delivery or by certified mail return receipt requested,
postage prepaid, addressed to Mortgagors at: c/o Victor Capital Group, L.P., 885
Third Avenue, New York, New York
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10022, Attention: John R. Klopp, with a copy to Tishman Speyer Properties, L.P.,
520 Madison Avenue, New York, New York 10022, Attention: Andrew Nathan, General
Counsel, and with a copy to Battle Fowler, LLP, 75 East 55th Street, New York,
New York 10022, Attention: Kenneth J. Friedman, Esq., and if to Mortgagee, to
The Chase Manhattan Bank, Chase Real Estate Finance Group, 380 Madison Avenue,
New York, New York 10017-2591, Attn: Mary Elisabeth Swerz, with a copy to The
Chase Manhattan Bank, Legal Department, 270 Park Avenue, 39th Floor, New York,
New York 10017, Attn: William C. Viets, Esq., and with a copy to Skadden, Arps,
Slate, Meagher & Flom, 919 Third Avenue, New York, New York 10022, Attention:
Wallace L. Schwartz, Esq., or at such other address as shall be designated from
time to time by Mortgagors or Mortgagee by notice given in accordance with the
provisions of this Section 25. Any such notice or demand given hereunder shall
be effective upon receipt or refusal (as indicated on the receipt) after mailing
as aforesaid.
26. No Oral Modification. This Mortgage may not be altered, amended,
modified, changed or terminated orally but only by a written agreement signed by
the party against which enforcement is sought.
27. Partial Invalidity. In the event any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, but each shall be construed as if
such invalid, illegal or unenforceable provision had never been included
hereunder.
28. Successors and Assigns. (a) All cove- nants of Mortgagors contained in
this Mortgage are im- posed solely and exclusively for the benefit of Mortgagee
and its successors and assigns, and no other Person shall have standing to
require compliance with such covenants or be deemed, under any circumstances, to
be Mortgagee of such covenants, any or all of which may be freely waived in
whole or in part by Mortgagee at any time if in its sole discretion it deems it
advisable to do so. All such covenants of Mortgagors shall run with the land and
bind Mortgagors, the successors and assigns of Mortgagors (and each of them) and
all subsequent owners, encumbrancer and Tenants of the Mortgaged Property, and
shall inure to the benefit of Mortgagee, its successors and assigns. The
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word "Mortgagee" shall be construed to mean Mortgagee
named herein.
(b) Any assignee of this Mortgage and the Notes which is not an Affiliate
of any Lender shall take the same free and clear of all offsets, counterclaims
or defenses of any nature whatsoever which Mortgagors may have against any
assignor of this Mortgage and the Note, and no such offset, counterclaim or
defense shall be interposed or asserted by Mortgagors in any action or
proceeding brought by any such assignee upon this Mortgage or the Notes and any
such right to interpose or assert any such offset, counterclaim or defense in
any such action or proceeding is hereby expressly waived by Mortgagors.
29. Governing Law. This Mortgage and the obligations arising hereunder
shall be governed by and construed in accordance with, the laws of the State of
New York. Whenever possible, each provision of this Mortgage shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Mortgage shall be prohibited by, or invalid under,
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remaining provisions of this
Mortgage. Nothing contained in this Mortgage or in any Loan Document shall
require either Mortgagors to pay or Mortgagee to accept any sum in any amount
which would, under applicable law, subject Mortgagee or any Mortgagee to penalty
or adversely affect the enforceability of this Mortgage. In the event that the
payment of any sum due hereunder or under any Loan Document would have such
result under applicable law, then, ipso facto, the obligation of Mortgagors to
make such payments shall be reduced to the highest sum then permitted under
applicable law and appropriate adjustment shall be made by Mortgagors and
Mortgagee.
30. Certain Representations, Warranties and Covenants.
(a) Recording Fees, Taxes, Etc. Mortgag- ors hereby agree to take all such
further reasonable actions, and to pay all taxes, recording fees, charges, costs
and other similar expenses including, without limitation, reasonable attorneys'
and reasonable professional fees and disbursements which are currently or in the
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future shall be imposed, and which may be required or necessary to establish,
preserve, protect or enforce the Lien of this Mortgage.
(b) No Offsets. Mortgagors warrant, covenant and represent to Mortgagee
that there exists no cause of action at law or in equity that would constitute
any offset, counterclaim or deduction against the Indebtedness or the
Obligations under this Mortgage.
(c) Tax Filings. Mortgagors have filed all Federal, state and local tax
returns required to be filed prior to the date hereof and have paid or made
adequate provision for the payment of all Federal, state and local taxes,
charges and assessments shown to be due from Mortgagors on such tax returns.
(d) No Litigation. To Mortgagors' knowl- edge, no litigation is pending or
threatened against Mortgagors which, if determined adversely to Mortgagors,
would have a material adverse effect on the Properties, the security created
hereby and Mortgagors have received no written notice from any Governmental
Authority that a Taking has been commenced or is threatened with respect to all
or any portion of the Mortgaged Property or for the relocation of roadways
providing access to the Mortgaged Property.
(e) Solvency. The fair saleable value of Mortgagors' assets exceed and
will, immediately following the making of the Loan and the consummation of the
other transactions contemplated to take place simultaneously therewith, exceed
Mortgagors' liabilities, including, without limitation, subordinated,
unliquidated, disputed and contingent liabilities. Mortgagors' assets do not
and, immediately following the making of the Loan and the consummation of the
other transactions contemplated to take place simultaneously therewith will not,
constitute unreasonably small capital to carry out its business as conducted or
as proposed to be conducted. Each Mortgagor does not intend to, and does not
believe that it will, incur debts and liabilities (including, without
limitation, contingent liabilities) beyond its ability to pay such debts as they
mature.
(f) Liens. No Lien (other than Permitted Liens), including, without
limitation, any tax lien, has been levied against any of the Mortgaged Property.
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(g) Trust Funds. Mortgagors shall re- ceive the advances secured hereby
subject to the trust fund provisions of Section 13 of the Lien Law of the State
of New York.
(h) Performance of Other Agreements. Mortgagors shall observe and perform
each and every term to be observed or performed by Mortgagors pursuant to the
terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property for which the failure to comply shall have a Material Adverse
Effect.
(i) Other Security for the Indebtedness. Mortgagors shall observe and
perform all of the terms, covenants and provisions contained in the Credit
Agreement and in all other mortgages and other instruments or documents
evidencing, securing or guaranteeing payment of the Indebtedness, in whole or in
part, or otherwise executed and delivered in connection with the Credit
Agreement, the Notes, this Mortgage or the Loan evidenced and secured thereby or
hereby.
31. No Waiver. No failure by Mortgagee to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof shall constitute a waiver of any such term or
right, power or remedy or of any such breach. No waiver of any breach shall
affect or alter this Mortgage, which shall continue in full force and effect, or
shall affect or alter the rights of Mortgagee with respect to any other then
existing or subsequent breach.
32. Recourse and Non-Recourse Obligations. The provisions of Section 9.14
of the Credit Agreement shall be deemed to be incorporated herein by reference.
33. Further Assurances.
(a) Mortgagors, at its own expense, will execute, acknowledge and deliver
all such reasonable further acts, documents or instruments including, without
limitation, security agreements on any personalty included or to be included in
the Mortgaged Property and a separate assignment of each Lease and take all such
actions as Mortgagee from time to time may reasonably request to better assure,
transfer and confirm unto Mortgagee the rights now or hereafter intended to be
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granted to Mortgagee under this Mortgage or the other
Loan Documents.
(b) Mortgagors covenant to give notice to Mortgagee no less than thirty
(30) days prior to a change of address.
34. Additional Security. Without notice to or consent of Mortgagors and
without impairment of the Lien and rights created by this Mortgage, Mortgagee
may accept (but Mortgagors shall not be obligated to furnish) from Mortgagors
additional security for the Notes. Neither the giving of this Mortgage nor the
acceptance of any such additional security shall prevent Mortgagee from
resorting, first, to such additional security, and, second, to the security
created by this Mortgage without affecting Mortgagee's Lien and rights under
this Mortgage.
35. Indemnification by Mortgagors. Subject to the provisions of Section 32
of this Mortgage, Each Mortgagor will protect, indemnify and save harmless each
Indemnitee from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including all reasonable
attorneys' fees and expenses actually incurred) imposed upon or incurred by or
asserted against any indemnitee or the Mortgaged Property or any part of its
interest therein, by reason of the occurrence or existence of any of the
following (to the extent the insurance Proceeds payable on account of the
following shall be inadequate) prior to (i) the payment in full of the Notes and
the Breakage Obligations, if any, (ii) the acceptance by Mortgagee of a
deed-in-lieu of foreclosure with respect to the applicable Property, or (iii)
Mortgagee's taking possession or control of the Mortgaged Property, unless
caused by the willful misconduct or gross negligence of Mortgagee (other than
such willful misconduct or gross negligence imputed to Mortgagee because of its
interest in the Mortgaged Property): (a) ownership of Mortgagors' interest in
the Mortgaged Property, or any interest therein, or receipt of any Rents or
other sum therefrom, (b) any accident, injury to or death of any persons or loss
of or damage to property occurring on or about the Mortgaged Property or any
appurtenances thereto, (c) any design, construction, operation, repair,
maintenance, use, non-use or condition of the Mortgaged Property or
appurtenances thereto, including claims or penalties arising
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from violation of any Legal Requirement or Insurance Requirement, as well as any
claim based on any patent or latent defect, whether or not discoverable by
Mortgagee, any claim the insurance as to which is inadequate, and any
Environmental Claim, (d) any failure on the part of Mortgagors to perform or
comply with any of the material terms of any Lease within the applicable notice
or grace periods, (e) any performance of any labor or services or the furnishing
of any materials or other property in respect of the Mortgaged Property or any
part thereof as provided for herein, (f) any negligence or tortious act or
omission on the part of Mortgagors or any of its agents, contractors, servants,
employees, sublessees, licenses or invitees, (g) any contest referred to in
Section 7 hereof, or (h) any obligation or undertaking relating to the
performance or discharge of any of the terms, covenants and conditions of the
landlord contained in the Leases. Any amounts payable to the any Indemnitee
under this Section 35 which are not paid within ten (10) Domestic Business Days
after written demand therefor by Mortgagee; setting forth in reasonable detail
the amount of such demand and the basis therefor, shall bear interest from the
date of demand at the Default Rate, and shall be part of the Indebtedness and
secured by this Mortgage. In case any action, suit or proceeding is brought
against any indemnitee by reason of any such occurrence, each Mortgagor shall at
Mortgagors expense resist and defend such action, suit or proceeding or will
cause the same to be resisted and defended by counsel for the insurer of the
liability or by counsel designated by Mortgagors (unless reasonably disapproved
by Mortgagee promptly after Mortgagee has been notified of such counsel);
provided, however, that nothing herein shall compromise the right of Mortgagee
to appoint its own counsel for its defense with respect to any action which in
its reasonable opinion presents a conflict or potential conflict between
Mortgagee and Mortgagors that would make such separate representation advisable.
So long as Mortgagors are resisting and defending such action, suit or
proceeding as provided above in a prudent and commercially reasonable manner,
such indemnitee shall not be entitled to settle such action, suit or proceeding
and claim the benefit of this Section 35 with respect to such action, suit or
proceeding and such indemnitee agrees that it will not settle any such action,
suit or proceeding without the consent of Mortgagors unless failure to settle
would subject Mortgagee to criminal penalties or result in the forfeiture of any
Property or Mortgagee's
63
<PAGE>
interest therein; provided, however, that if Mortgagors are not diligently
defending such action, suit or proceeding in a prudent and commercially
reasonable manner as provided above, such indemnitee may settle such action,
suit or proceeding subject only to the consent of Mortgagors, which consent
shall not be unreasonably withheld or delayed, and claim the benefit of this
Section 35 with respect to settlement of such action, suit or proceeding.
Mortgagee will give Mortgagors prompt notice after it obtains actual knowledge
of any potential claim by it for indemnification hereunder however the failure
of Mortgagee to give such notice to Mortgagors shall not affect Mortgagors'
obligations hereunder.
36. Sole Discretion of Mortgagee. Except as may otherwise be expressly
provided to the contrary, wherever pursuant to the Notes, this Mortgage, the
Credit Agreement or any other Loan Document, Mortgagee exercises any right given
to it to consent or not consent, or to approve or disapprove, or any arrangement
or term is to be satisfactory to Mortgagee, the decision of Mortgagee to consent
or not consent, or to approve or disapprove, or to decide that arrangements or
terms are satisfactory or not satisfactory, shall be in the sole and absolute
discretion of Mortgagee and shall be final and conclusive.
37. Right of Entry. Mortgagee and its agents shall have the right to enter
and inspect the Mortgaged Property at all reasonable times.
38. Waiver of Notice. Mortgagors shall not be entitled to any notices of
any nature whatsoever from Mortgagee except with respect to matters for which
this Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagors, and each Mortgagor hereby expressly waives the right to
receive any notice from Mortgagee with respect to any matter for which this
Mortgage does not specifically and expressly provide for the giving of notice by
Mortgagee to Mortgagors.
39. Estoppel Certificates. Each Mortgagor, within ten (10) days after
request by Mortgagee and at Mortgagors' expense, will furnish Mortgagee with a
state- ment, duly acknowledged and certified, setting forth the amount of the
Indebtedness and the offsets or defenses thereto, if any.
64
<PAGE>
40. Brokerage. Each Mortgagor covenants and agrees that no brokerage
commission or other fee, commis- sion or compensation is to be paid by Mortgagee
and each Mortgagor agrees to indemnify Mortgagee against any claims for any of
the same.
41. Relationship. The relationship of Mortgagee to each Mortgagor hereunder
is strictly and solely that of lender and borrower and mortgagor and mortgagee
and swap counterparties and nothing contained in the Note, this Mortgage, the
Credit Agreement or any other Loan Document is intended to create, or shall in
any event or under any circumstance be construed as creating, a partnership,
joint venture, tenancy-in-common, joint tenancy or other relationship of any
nature whatsoever between Mortgagee and each Mortgagor other than as lender and
borrower and mortgagor and mortgagee and swap counterparties.
42. Liability. The obligations and liabili- ties of each Mortgagor
hereunder shall be joint and several.
43. Certain Definitions. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Mortgage shall be used interchangeably in singular or plural form and the word
"Mortgagors" shall mean each Mortgagor and any subsequent owner or owners of the
Mortgaged Property or any part thereof or interest therein; the word "Mortgagee"
shall mean Mortgagee or any subsequent Agent for the holder of the Notes; the
word "Notes" shall mean the Notes, any amendment, extension, modification,
restatement or replacement thereof or any other evidence of indebtedness secured
by this Mortgage; the words "Mortgaged Property" shall include any portion of
the Mortgaged Property or interest therein; and the word "Indebtedness" shall
mean all sums secured by this Mortgage. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
44. Headings, etc. The headings and captions of various paragraphs of this
Mortgage are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.
65
<PAGE>
45. Duplicate Originals. This Mortgage may be executed in any number of
duplicate originals, and each such duplicate original shall be deemed to
constitute but one and the same instrument.
46. Non-Residential Property. This Mortgage does not cover real property
principally improved by one or more structures containing in the aggregate six
(6) or less residential dwelling units having their own separate cooking
facilities.
47. Reasonableness. If at any time Mortgagors believe that Mortgagee has
not acted reasonably in granting or withholding any approval or consent under
the this Mortgage, the Credit Agreement or any other Loan Document, as to which
approval or consent either Mortgagee has expressly agreed to act reasonably, or
absent such agreement, a court of law having jurisdiction over the subject
matter would require Mortgagee to act reasonably, then Mortgagors' sole remedy
shall be to seek injunctive relief or specific performance and no action for
monetary damages or punitive damages shall in any event or under any
circumstance be maintained by Mortgagors against Mortgagee.
48. Swap Agreement. The parties hereto agree that all sums that may or
shall become due and payable by Mortgagors to Mortgagee in accordance with the
Swap Agreement shall be deemed to constitute additional interest on the
indebtedness represented by, and shall be evidenced by, the Notes, shall be
secured by this Mortgage and shall constitute part of the Indebtedness. The lien
of this Mortgage insofar as it secures payment of sums that may or shall become
due and payable by Mortgagors to Mortgagee in accordance with the Swap Agreement
is and shall continue to be equal in lien to the lien of this Mortgage insofar
as it secures the payment of the balance of the Indebtedness. The parties hereto
agree that, if the Notes shall be declared to be immediately due and payable as
the result of an occurrence of an Event of Default or if the Notes are not paid
in full at maturity, then all sums that become available to Mortgagee pursuant
to this Mortgage shall be applied to sums due under the Swap Agreement and to
the balance of the Indebtedness in the same proportion that such sums bear to
such balance. The terms, covenants and conditions of the Swap Agreement are
incorporated herein by this reference
66
<PAGE>
with the same effect as if the same were fully set forth
in this Mortgage.
49. Release. (a) Mortgagors may obtain the release (in whole, but not in
part) of one of the Proper- ties (as selected by Mortgagors in their sole
discretion) from the Lien of this Mortgage upon satisfaction of all of the
conditions of Section 2.9(d) of the Credit Agree- ment.
(b) If Mortgagors shall pay or cause to be paid the principal of and
interest on the Notes in full at maturity or earlier as permitted in accordance
with the terms thereof and all other Indebtedness payable to Mortgagee hereunder
by Mortgagors or secured hereby or by the other Loan Documents and all of the
Obligations shall have been performed, then this Mortgage and all the other Loan
Documents shall be discharged and satisfied or assigned to Mortgagors or to any
other Person at Mortgagors' direction and without recourse or warranty to
Mortgagee at the expense of Mortgagors upon their written request. Concurrently
with such release and satisfaction or assignment of this Mortgage and all the
other Loan Documents, Mortgagee will return to Mortgagors the Notes and all
insurance policies relating to the Mortgaged Property which may be held by
Mortgagee and, on the written request and at the expense of Mortgagors, will
execute and deliver such proper instruments of release (including appropriate
UCC-3 termination statements) as may reasonably be requested by Mortgagors to
evidence such release and satisfaction or assignment, and any such instrument,
when duly executed by Mortgagee and duly recorded in the places where this
Mortgage and each other Loan Document is recorded, shall conclusively evidence
the release and satisfaction or assignment of this Mortgage and the other Loan
Documents.
67
<PAGE>
IN WITNESS WHEREOF, this Mortgage has been duly executed by Mortgagors on
the date first hereinabove written.
MORTGAGORS:
1290 PARTNERS, L.P.
By: 1290 GP Corp.,
General Partner
By:_____________________
Name:
Title:
237 PARK PARTNERS, L.P.
By: 237 GP Corp.,
General Partner
By:_____________________
Name:
Title:
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On this 9th day of October, 1996, before me personally came Lee S. Neibart,
to me known, who, being by me duly sworn, did depose and say that he resides at
14 Crestview Drive, Pleasantville, NY 10570, and that he is a President of 1290
GP Corp., a Delaware corporation, the general partner of 1290 PARTNERS, L.P.,
the partnership that executed the foregoing instrument; and that this instrument
has been executed as the act and deed of 1290 PARTNERS, L.P.; and that said
partnership executed the same.
Notary Public
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On this 9th day of October, 1996, before me personally came Lee S. Neibart,
to me known, who, being by me duly sworn, did depose and say that he resides at
14 Crestview Drive, and that he is a President of 237 GP Corp., a Delaware
corporation, the general partner of 237 PARK PARTNERS, L.P., the partnership
that executed the foregoing instrument; and that this instrument has been
executed as the act and deed of 237 PARK PARTNERS, L.P.; and that said
partnership executed the same.
Notary Public
69
<PAGE>
EXHIBIT A-1
DESCRIPTION OF 1290 LAND
70
<PAGE>
EXHIBIT A-2
DESCRIPTION OF 237 PARK LAND
71
<PAGE>
EXHIBIT B
EXISTING NOTES
72
<PAGE>
EXHIBIT C
EXISTING MORTGAGES
73
<PAGE>
EXHIBIT D
COLLECTION ACTIONS
74
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Definitions. ...................................... 12
SECTION 2. Warranty............................................ 19
SECTION 3. Payment and Performance of Obligations Secured...... 21
SECTION 4. Negative Covenants.................................. 22
SECTION 5. Insurance........................................... 23
SECTION 6. Condemnation and Insurance Proceeds................. 26
SECTION 7. Impositions, Liens and Other Items.................. 31
SECTION 8. Funds for Taxes and Insurance....................... 33
SECTION 9 Transfers, Additional Indebtedness and
Subordinate Liens............................. 35
SECTION 10. Maintenance of Mortgaged Property; Alterations;
Inspection; Utilities......................... 36
SECTION 11. Legal Compliance; Compliance with Covenants and
Easements..................................... 37
SECTION 12. Books and Records, Financial Statements, Reports
and Other Information......................... 38
SECTION 13. Compliance with Leases and Agreements............... 38
SECTION 14. Mortgagee's Right to Perform........................ 40
SECTION 15. Mortgagors' Existence; Organization and
Authority..................................... 40
SECTION 16. Protection of Security; Costs and Expenses.......... 41
SECTION 17. Management of the Mortgaged Property................ 43
SECTION 18. Environmental Matters............................... 44
SECTION 19. Remedies............................................ 48
SECTION 20. Application of Proceeds............................. 55
SECTION 21. Notice of Certain Occurrences....................... 55
SECTION 22. WAIVER OF TRIAL BY JURY; WAIVER OF STATUTORY
RIGHTS........................................ 55
SECTION 23. Trust Funds......................................... 56
SECTION 24. Taxes............................................... 56
SECTION 25. Notices............................................. 57
SECTION 26. No Oral Modification................................ 58
SECTION 27. Partial Invalidity.................................. 58
SECTION 28. Successors and Assigns.............................. 58
SECTION 29. Governing Law....................................... 59
SECTION 30. Certain Representations, Warranties and
Covenants..................................... 59
SECTION 31. No Waiver........................................... 61
SECTION 32. Recourse and Non-Recourse Obligations............... 61
SECTION 33. Further Assurances.................................. 61
SECTION 34. Additional Security................................. 62
SECTION 35. Indemnification by Mortgagors....................... 62
SECTION 36. Sole Discretion of Mortgagee........................ 64
i
<PAGE>
Page
SECTION 37. Right of Entry..................................... 64
SECTION 38. Waiver of Notice................................... 64
SECTION 39. Estoppel Certificates.............................. 64
SECTION 40. Brokerage.......................................... 65
SECTION 41. Relationship....................................... 65
SECTION 42. Liability.......................................... 65
SECTION 43. Certain Definitions................................ 65
SECTION 44. Headings, etc...................................... 65
SECTION 45. Duplicate Originals................................ 66
SECTION 46. Non-Residential Property........................... 66
SECTION 47. Reasonableness..................................... 66
SECTION 48. Swap Agreement..................................... 66
SECTION 49. Release............................................ 67
ii
(Multicurrency--Cross Border)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of October 10, 1996
THE CHASE MANHATTAN BANK and 1290 PARTNERS, L.P. and 237 PARK PARTNERS, L.P., as
joint and several obligors, have entered and/or anticipate entering into one or
more transactions (each a "Transaction") that are or will be governed by this
Master Agreement, which includes the schedule (the "Schedule"), and the
documents and other confirming evidence (each a "Confirmation") exchanged
between the parties confirming those Transactions.
Accordingly, the parties agree as follows:--
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement between
the parties (collectively referred to as this "Agreement"), and the parties
would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
C/M 11764.0009 434103.1
<PAGE>
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than
by payment), such delivery will be made for receipt on the due date in
the manner customary for the relevant obligation unless otherwise
specified in the relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event
of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date
in respect of the relevant Transaction has occurred or been effectively
designated and (3) each other applicable condition precedent specified
in this Agreement.
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
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C/M 11764.0009 434103.1
<PAGE>
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as modified
by the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that party
("X") will:--
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y
under this Section 2(d) promptly upon the earlier of determining
that such deduction or withholding is required or receiving notice
that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or certified copy),
or other documentation reasonably acceptable to Y, evidencing such
payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this Agreement,
such additional amount as is necessary to ensure that the net
amount actually received by Y (free and clear of Indemnifiable
Taxes, whether assessed against X or Y) will equal the full amount
Y would have received had no such deduction or withholding been
required. However, X will not be required to pay any additional
amount to Y to the extent that it would not be required to be paid
but for:--
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(ii) or 4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure
would not have occurred but for (I) any action taken by a
taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is
entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (II) a
Change in Tax Law.
(ii) Liability. If:--
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to
make any deduction or withholding in respect of which X
would not be required to pay an additional amount to Y under
Section 2(d)(i)(4);
-3-
C/M 11764.0009 434103.1
<PAGE>
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed
directly against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the
amount of such liability (including any related liability for
interest, but including any related liability for penalties only
if Y has failed to comply with or perform any agreement contained
in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of any Early Termination Date in respect of the relevant
Transaction, a party that defaults in the performance of any payment obligation
will, to the extent permitted by law and subject to Section 6(c), be required to
pay interest (before as well as after judgement) on the overdue amount to the
other party on demand in the same currency as such overdue amount, for the
period from (and including) the original due date for payment to (but excluding)
the date of actual payment, at the Default Rate. Such interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. If, prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party defaults in the
performance of any obligation required to be settled by delivery, it will
compensate the other party on demand if and to the extent provided for in the
relevant Confirmation or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:--
(a) Basic Representations.
(i) Status. It is duly organized and validly existing under the laws of
the jurisdiction of its organization or incorporation and, if relevant
under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it has
under any Credit Support Document to which it is a party and has taken
all necessary action to authorize such execution, delivery and
performance;
(iii) No Violation or Conflict. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision
of its constitutional documents,
-4-
C/M 11764.0009 434103.1
<PAGE>
any order or judgment of any court or other agency of government
applicable to it or any of its assets or any contractual restriction
binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in
full force and effect and all conditions of any such consents have been
complied with; and
(v) Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of Default
or, to its knowledge, Termination Event with respect to it has occurred and is
continuing and no such event or circumstance would occur as a result of its
entering into or performing its obligations under this Agreement or any Credit
Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge, threatened
against it or any of its Affiliates any action, suit or proceeding at law or in
equity or before any court, tribunal, governmental body, agency or official or
any arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or any Credit Support Document to which it is a
party or its ability to perform its obligations under this Agreement or such
Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.
(f) Payee Tax Representations. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(f) is accurate and true.
4. Agreements
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party: -
-5-
C/M 11764.0009 434103.1
<PAGE>
(a) Furnish Specified Information. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs: -
(i) any forms, documents or certificates relating to taxation specified
in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to
allow such other party or its Credit Support Provider to make a payment
under this Agreement or any applicable Credit Support Document without
any deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of
such demand), with any such form or document to be accurate and
completed in a manner reasonable satisfactory to such other party and to
be executed and to be delivered with any reasonably required
certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) Maintain Authorizations. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of such
failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated, organized, managed and
controlled, or considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is located ("Stamp
Tax Jurisdiction") and will indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in respect of the other party's
execution or performance of this Agreement by any such Stamp Tax Jurisdiction
which is not also a Stamp Tax Jurisdiction with respect to the other party.
-6-
C/M 11764.0009 434103.1
<PAGE>
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following events constitutes an event of default (an
"Event of Default") with respect to such party: -
(i) Failure to Pay or Deliver. Failure by the party to make, when due,
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) Breach of Agreement. Failure by the party to comply with or perform
any agreement or obligation (other than an obligation to make any
payment under this Agreement or delivery under Section 2(a)(i) or 2(e)
or to give notice of a Termination Event or any agreement or obligation
under Section 4(a)(i), 4(a)(iii) or 4(d) to be complied with or
performed by the party in accordance with this Agreement if such failure
is not remedied on or before the thirtieth day after notice of such
failure is given to the party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any
applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support Document
or the failing or ceasing of such Credit Support Document to be in
full force and effect for the purpose of this Agreement (in either
case other than in accordance with its terms) prior to the
satisfaction of all obligations of such party under each
Transaction to which such Credit Support Document relates without
the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) Misrepresentation. A representation (other than a representation
under Section 3(e) or (f) made or repeated or deemed to have been made
or repeated by the party or any Credit Support Provider of such party in
this Agreement or any Credit Support Document proves to have been
incorrect or misleading in any material respect when made or repeated or
deemed to have been made or repeated;
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(v) Default Under Specified Transaction. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to
any applicable notice requirement or grace period, there occurs a
liquidation of, an acceleration of obligations under, or an early
termination of, that Specified Transaction, (2) defaults, after giving
effect to any applicable notice requirement or grace period, in making
any payment or delivery due on the last payment, delivery or exchange
date of, or any payment on early termination of, a Specified Transaction
(or such default continues for at least three Local Business Days if
there is no applicable notice requirement or grace period) or (3)
disaffirms, disclaims, repudiates or rejects, in whole or in part, a
Specified Transaction (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however described)
in respect of such party, any Credit Support Provider of such party or
any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of
them (individually or collectively) in an aggregate amount of not less
than the applicable Threshold Amount (as specified in the Schedule)
which has resulted in such Specified Indebtedness becoming, or becoming
capable at such time of being declared, due and payable under such
agreements or instruments, before it would otherwise have been due and
payable or (2) a default by such party, such Credit Support Provider or
such Specified Entity (individually or collectively) in making one or
more payments on the due date thereof in an aggregate amount of not less
than the applicable Threshold Amount under such agreements or
instruments (after giving effect to any applicable notice requirement or
grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such party
or any applicable Specified Entity of such party: -
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to
pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its
creditors; (4) institutes or has instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or any
other relief under any bankruptcy or insolvency law or other
similar law affecting creditors' rights, or a petition is
presented for its winding-up or liquidation, and, in the case of
such proceeding or petition instituted or presented against it,
such proceeding or petition (A) results in a judgment of
insolvency or bankruptcy or entry of an order for relief or the
making of an order for its winding-up or liquidation or (B) is not
dismissed, discharged, stayed or restrained in each case within 30
days of the institution or presentation thereof; (5) has a
resolution passed for its winding-up, official management or
liquidation (other than pursuant to a consolidation, amalgamation
or merger);
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(6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all or
substantially all its assets; (7) has a secured party take
possession of all or substantially all its assets or has a
distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within 30 days thereafter; (8)
causes or is subject to any event with respect to it which , under
the applicable laws of any jurisdiction, has an analogous effect
to any of the events specified in clauses (1) to (7) (inclusive);
or (9) takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the foregoing
acts; or
(viii) Merger Without Assumption. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer: -
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it or
its predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by
such resulting, surviving or transferee entity of its obligations
under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event specified below constitutes an illegality if the
event is specified in (i) below, a Tax Event if the event is specified in (ii)
below or a Tax Event Upon Merger if the event is specified in (iii) below, and,
if specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to (iv) below or an Additional Termination Event if the event
is specified pursuant to (v) below: -
(i) Illegality. Due to the adoption of, or any change in, any applicable
law after the date on which a transaction is entered into, or due to the
promulgation of, or any change in, the interpretation by any court,
tribunal or regulatory authority with competent jurisdiction of any
applicable law after such date, it becomes unlawful (other than as a
result of a breach by the party of Section 4(b) for such party (which
will be the Affected Party): -
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(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party
to perform, any contingent or other obligation which the party (or
such Credit Support Provider) has under any Credit Support
Document relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a party to this Agreement or (y) a
Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next succeeding
Scheduled Payment Date (1) be required to pay to the other party an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii)
or 6(e) or (2) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in respect of
interest under Sections 2(e), 6(d)(ii) or 6(e)) and no additional amount
is required to be paid in respect of such Tax under Section 2(d)(i)(4)
(other than by reason of Section 2(d)(i)(4)(A) or (B));
(iii) Tax Event Upon Merger. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date with either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been
deducted or withheld for or on account of any Indemnifiable Tax in
respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(a) or (B), in either
case as a result of a party consolidating or amalgamating with, or
merging with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of X
consolidates or amalgamates with, or merges with or into, or transfers
all or substantially all its assets to, another entity and such action
does not constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate,
will be the Affected Party); or
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(v) Additional Termination Event. If any "Additional Termination Event"
is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.
6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section (5)(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) Transfer to Avoid Termination Event. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event upon Merger occurs and the Burdened Party is
the Affected Party, the Affected Party will, as a condition to its right
to designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days
after it gives notice under Section 6(b)(i) all its rights and
obligations under this Agreement in respect of the Affected Transactions
to another of its Offices or Affiliates so that such Termination Event
ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
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Any such transfer by a party under this Section 6(b)(ii) will be subject
to and conditional upon the prior written consent of the other party,
which consent will not be withheld if such other party's policies in
effect at such time would permit it to enter into transactions with the
transferee on the terms proposed.
(iii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) or
a Tax Event occurs and there are two Affected Parties, each party will
use all reasonable efforts to reach agreement within 30 days after
notice thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iv) Right to Terminate. If: -
(1) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected with
respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected
Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a Tax
Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the case
of a Credit Event Upon Merger or an Additional Termination Event if
there is only one Affected Party may, by not more than 20 days notice to
the other party and provided that the relevant Termination Event is then
continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) of 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
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(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving details
of the relevant account to which any amount payable to it is to be paid.
In the absence of written confirmation from the source of a quotation
obtained in determining a Market Quotation, the records of the party
obtaining such quotation will be conclusive evidence of the existence
and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day
that notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result an Event of
Default) and on the day which is two Local Business Days after the day
on which notice of the amount payable is effective (in the case of an
Early Termination Date which is designated as a result of a Termination
Event). Such amount will be paid together with (to the extent permitted
under applicable law) interest thereon (before as well as after
judgment) in the Termination Currency, from (and including) the relevant
Early Termination Date to (but excluding) the date such amount is paid,
at the Applicable Rate. Such interest will be calculated on the basis of
daily compounding and the actual number of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) Events of Default. If the Early Termination Date results from an
Event of Default: -
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party over (B) the Termination Currency Equivalent
of the Unpaid Amounts owing to the Defaulting Party.
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(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party less (B) the Termination Currency Equivalent
of the Unpaid Amounts owing to the Defaulting Party. If that
amount is a positive number, the Defaulting Party will pay it to
the Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that amount to
the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply,
an amount will be payable equal to the Non-defaulting Party's Loss
in respect of this Agreement. If that amount is a positive number,
the Defaulting Party will pay it to the Non-defaulting party; if
it is a negative number, the Non-defaulting Partner will pay the
absolute value of that amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event: -
(1) One Affected Party. If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3),
if Market Quotation applies, or Section 6(e)(i)(4), if Loss
applies, except that, in either case, references to the Defaulting
Party and to the Non-defaulting Party will be deemed to be
references to the Affected Party and the party which is not the
Affected Party, respectively, and, if Loss applies and fewer than
all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties: -
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (I) the sum of (a)
one-half of the difference between the Settlement Amount of
the party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency Equivalent of
the Unpaid Amounts owing to X less (II) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in
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respect of all Terminated Transactions) and an amount will
be payable equal to one-half of the difference between the
Loss of the party with the higher Loss ("X") and the Loss of
the party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if
it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will
be subject to such adjustments as are appropriate and permitted by law
to reflect any payments or deliveries made by one party to the other
under this Agreement (and retained by such other party) during the
period from the relevant Early Termination Date to the date for payment
determined under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies an
amount recoverable under this Section 6(e) is a reasonable pre-estimate
of loss and not a penalty. Such amount is payable for the loss of
bargain and the loss of protection against future risks and except as
otherwise provided in this Agreement neither party will be entitled to
recover any additional damages as a consequence of such losses.
7. Transfer
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that: -
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. Contractual Currency
(a) Payment in the Contractual Currency. Each payment under this Agreement will
be made in the relevant currency specified in this Agreement for that payment
(the "Contractual Currency"). To the extent permitted by applicable law, any
obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good
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faith in converting the currency so tendered into the Contractual Currency, of
the full amount in the Contractual Currency of all amounts payable in respect of
this Agreement. If for any reason the amount in the Contractual Currency so
received falls short of the amount in the Contractual Currency payable in
respect of this Agreement, the party required to make the payment will, to the
extent permitted by applicable law, immediately pay such additional amount in
the Contractual Currency as may be necessary to compensate for the shortfall. If
for any reason the amount in the Contractual Currency so received exceeds the
amount in the Contractual Currency payable in respect of this Agreement, the
party receiving the payment will refund promptly the amount of such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purpose of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient
for a party to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
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(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable
and may be executed and delivered in counterparts (including by
facsimile transmission) or be created by an exchange of telexes or by an
exchange of electronic messages on an electronic messaging system, which
in each case will be sufficient for all purposes to evidence a binding
supplement to this Agreement. The parties will specify therein or
through another effective means that any such counterpart, telex or
electronic message constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or organization of such party, the obligations
of such party are the same as if it had entered into the Transaction
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through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated: -
(i) if in writing and delivered in person or by courier, on the date it
is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the
sender and will not be met by a transmission report generated by the
sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, or overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that the
electronic message is received,
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unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably: -
(i) submits to the jurisdiction of the English courts, if this Agreement
is expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in New York
City, if this Agreement is expressed to be governed by the laws of the
State of New York; and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings,
that such court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any reason any party's
Process Agent is unable to act as such, such party will promptly notify the
other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given in
the manner provided for notices in Section 12. Nothing in this Agreement will
affect the right of either party to serve process in any other manner permitted
by law.
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(d) Waiver of Immunities. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. Definitions
As used in this Agreement: -
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"Applicable Rate" means: -
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"Burdened Party" has the meaning specified in Section 5(b).
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<PAGE>
"Change in Tax Law" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organized, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.
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<PAGE>
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant
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<PAGE>
Early Termination Date, have been required (assuming satisfaction of each
applicable condition precedent) after that Early Termination Date is to be
included. The Replacement Transaction would be subject to such documentation as
such party and the Reference Market-maker may, in good faith, agree. The party
making the determination (or its agent) will request each Reference Market-maker
to provide its quotation to the extent reasonably practicable as of the same day
and time (without regard to different time zones) on or as soon as reasonably
practicable after the relevant Early Termination Date. The day and time as of
which those quotations are to be obtained will be selected in good faith by the
party obliged to make a determination under Section 6(e), and, if each party is
so obliged, after consultation with the other. If more than three quotations are
provided, the Market Quotation will be the arithmetic mean of the quotations,
without regard to the quotations having the highest and lowest values. If
exactly three such quotations are provided, the Market Quotation will be the
quotation remaining after disregarding the highest and lowest quotations. For
this purpose, if more than one quotation has the same highest value or lowest
value, then one of such quotations shall be disregarded. If fewer than three
quotations are provided, it will be deemed that the Market Quotation in respect
of such Terminated Transaction or group of Terminated Transactions cannot be
determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's head or
home office.
"Potential Event of Default" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organized, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or
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<PAGE>
subject (whether arising under this Agreement, another contract, applicable law
or otherwise) that is exercised by, or imposed on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:_____________
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to any
Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
"Tax" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
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<PAGE>
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market value of that which was (or would have been) required to be
delivered as of the originally scheduled date for delivery, in each case
together with (to the extent permitted under applicable law) interest, in the
currency of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or performed to
(but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation
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<PAGE>
referred to in clause (b) above shall be reasonably determined by the party
obliged to make the determination under Section 6(e) or, if each party is so
obligated, it shall be the average of the Termination Currency Equivalents of
the fair market values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
THE CHASE MANHATTAN BANK, AS AGENT
By:
Name:
Title:
1290 PARTNERS, L.P.
By: 1290 GP Corp., General Partner
By:
Name:
Title:
237 PARK PARTNERS, L.P.
By: 237 GP Corp., General Partner
By:
Name:
Title:
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SCHEDULE to the MASTER AGREEMENT dated as of
October 10, 1996 between THE CHASE MANHATTAN BANK
("Party A")
and
1290 PARTNERS, L.P. and 237 PARK PARTNERS, L.P., as joint and several obligors
("Party B")
PART 1: Termination Provisions and Certain Other Matters
(a) "Specified Entity" means, in relation to Party A, for the
purpose of:
Section 5(a)(v), none;
Section 5(a)(vi), none;
Section 5(a)(vii), none; and
Section 5(b)(iv), none;
and, in relation to Party B, for the purpose of:
Section 5(a)(v), 1290 Corp. and 237 Corp.;
Section 5(a)(vi), 1290 Corp. and 237 Corp.;
Section 5(a)(vii), 1290 Corp. and 237 Corp.; and
Section 5(b)(iv), 1290 Corp. and 237 Corp.
(b) "Specified Transaction" will have the meaning specified in
Section 14.
(c) The "Cross-Default" provisions of Section 5(a)(vi) will apply to
Party A and Party B. In connection therewith, "Specified Indebtedness" will have
the meaning specified in Section 14, except that such term shall not include
obligations in respect of deposits received in the ordinary course of such
party's banking business, and "Threshold Amount" means (i) in respect of Party
A, an amount equal to three percent of such party's shareholders' equity,
determined in accordance with generally accepted accounting principles in the
United States, consistently applied, as at the end of such party's most recently
completed fiscal year, and (ii) in respect of Party B, USD1.00 or the equivalent
thereof in any other currencies. For purposes of this definition, any Specified
Indebtedness denominated in a currency other than the currency in which the
financial statements of such party are denominated shall be converted into the
currency in which such financial statements are denominated at the exchange rate
therefor reasonably chosen by the other party.
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(d) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will
not apply to Party A. The "Credit Event Upon Merger" provisions of Section
5(b)(iv) will apply to Party B.
(e) The "Automatic Early Termination" provision of Section 6(a) will not
apply to Party A or Party B.
(f) Payments on Early Termination. For the purpose of Section 6(e):
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "Termination Currency" means United States Dollars.
PART 2: Tax Representations
Not applicable.
PART 3: Agreement to Deliver Documents
For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents:
(a) Tax forms, documents or certificates to be delivered are: none.
(b) Other documents to be delivered are:
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<PAGE>
<TABLE>
<CAPTION>
Party
required Covered by
to deliver Form/Document/ Date by which Section 3(d)
document Certificate to be delivered Representation
<S> <C> <C> <C>
Party B Annual report of each entity As soon as available and Yes
comprising Party B containing in any event within 90
consolidated financial days after the end of
statements certified by each fiscal year of each
independent certified public entity comprising
accountants and prepared in Party B, unless
accordance with accounting otherwise provided to
principles that are generally Party A pursuant to the
accepted in the country in Credit Agreement (as
which each entity comprising hereinafter defined)
Party B is organized
Party B Unaudited consolidated As soon as available and Yes
financial statements of each in any event within 60
entity comprising Party B for days after the end of
a fiscal quarter prepared in each fiscal quarter of
accordance with accounting each entity comprising
principles that are generally Party B, unless
accepted in the country in otherwise provided to
which each entity comprising Party A pursuant to the
Party B is organized and on a Credit Agreement (as
basis consistent with that of hereinafter defined)
the respective annual financial
statements of each entity
comprising Party B.
Party B Opinion of counsel satisfactory Upon execution and No
to Party A substantially in the delivery of this
form of Exhibit I hereto Agreement
Party A Certified copies of all Upon execution and Yes
and corporate authorizations and delivery of this
Party B any other documents with Agreement and thereafter
respect to the execution, upon the request of the
delivery and performance of other party
this Agreement.
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<PAGE>
Party A Certificate of authority and Upon execution and Yes
and specimen signatures of delivery of this
Party B individuals executing this Agreement and thereafter
Agreement and Confirmations upon request of the other
party
</TABLE>
PART 4: Miscellaneous
(a) Address for Notices. For the purpose of Section 12(a) of this
Agreement:
Address for notice or communications to Party A:
Any notice relating to a particular Transaction shall be delivered to the
address or facsimile or telex number specified in the Confirmation of such
Transaction. Any notice delivered for purposes of Sections 5 and 6 of this
Agreement shall be delivered to the following address:
The Chase Manhattan Bank
Attention: Legal Department-Capital Markets Group
270 Park Avenue, 40th Floor
New York, New York 10017-2070
Telex No.: 232337; Answerback: CBC UR
Facsimile No.: (212) 270-7468
Address for notice or communications to Party B:
1290 Partners, L.P. and 237 Park Partners, L.P.
c/o Victor Capital Group, L.P.
885 Third Avenue
New York, New York 10022
Attention: John Klopp
Facsimile No.: 212-593-0316
with a copy to:
Tishman Speyer Properties, L.P.
520 Madison Avenue
New York, New York 10022
Attention: Region Manager
Facsimile No.: 212-319-1745
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(b) Process Agent. For the purpose of Section 13(c):
Party A appoints as its Process Agent: Not applicable.
Party B appoints as its Process Agent: Not applicable.
(c) Offices. The provisions of Section 10(a) will not apply to this
Agreement.
(d) Multibranch Party. For the purpose of Section 10 of this
Agreement:
Party A is not a Multibranch Party. Party B is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is Party A, unless
otherwise specified in a Confirmation in relation to the relevant Transaction.
(f) Credit Support Document. Details of any Credit Support Document: In
respect of Party B, the following shall be Credit Support Documents: (i) Credit
Agreement, dated as of the date hereof, among 1290 Partners, L.P., 237 Park
Partners, L.P., The Chase Manhattan Bank, as Agent for certain Lenders listed
therein (the "Lenders"), and the Lenders, (ii) Mortgage Consolidation,
Modification, Restatement, Security Agreement and Assignment of Leases and
Rents, dated as of the date hereof, among 1290 Partners, L.P., 237 Park
Partners, L.P., and The Chase Manhattan Bank, as Agent for certain Lenders,
(iii) Note Pledge and Security Agreement, dated as of the date hereof, among
1290 Partners, L.P., 237 Park Partners, L.P., and The Chase Manhattan Bank, as
Agent for certain Lenders, (iv) Cash Collateral Account Security, Pledge and
Assignment Agreement, dated as of the date hereof, among 1290 Partners, L.P.,
237 Park Partners, L.P., and The Chase Manhattan Bank, as Agent for certain
Lenders, (v) Joint and Several Hazardous Material Guaranty and Indemnification
Agreement, dated as of the date hereof, by 1290 Partners, L.P., and 237 Park
Partners, L.P., in favor of The Chase Manhattan Bank, as Agent for certain
Lenders, (vi) Assignment of Leases, Rents and Security Deposits, dated as of the
date hereof, by 1290 Partners, L.P., and 237 Park Partners, L.P., in favor of
The Chase Manhattan Bank, as Agent for certain Lenders, and (vii) Interest Rate
Agreement Pledge and Security Agreement, dated as of the date hereof, among 1290
Partners, L.P., 237 Park Partners, L.P., and The Chase Manhattan Bank, as Agent
for certain Lenders.
(g) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (without reference to choice
of law doctrine).
(h) Netting of Payments. Subparagraph (ii) of Section 2(c) will not
apply to any Transaction unless specified in the relevant Confirmation.
(i) "Affiliate" will have the meaning specified in Section 14 of this
Agreement.
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PART 5: Other Provisions
(a) Set-off. Any amount (the "Early Termination Amount") payable to one
party (the "Payee") by the other party (the "Payer") under Section 6(e), in
circumstances where there is a Defaulting Party or one Affected Party in the
case where a Termination Event under Section 5(b)(iv) has occurred, will, at the
option of the party ('X') other than the Defaulting Party or the Affected Party
(and without prior notice to the Defaulting Party or the Affected Party), be
reduced by its set-off against any amount(s) (the 'Other Agreement Amount')
payable (whether at such time or in the future or upon the occurrence of a
contingency) by the Payee to the Payer (irrespective of the currency, place of
payment or booking office of the obligation) under any other agreement(s)
between the Payee and the Payer or instrument(s) or undertaking(s) issued or
executed by one party to, or in favor of, the other party (and the Other
Agreement Amount will be discharged promptly and in all respects to the extent
it is so set-off). X will give notice to the other party of any set-off effected
under this Part 5(a).
For this purpose, either the Early Termination Amount or the Other Agreement
Amount (or the relevant portion of such amounts) may be converted by X into the
currency in which the other is denominated at the rate of exchange at which such
party would be able, acting in a reasonable manner and in good faith, to
purchase the relevant amount of such currency.
If an obligation is unascertained, X may in good faith estimate that obligation
and set off in respect of the estimate, provided that (A) if the amount of the
obligation owing by Y, when ultimately ascertained, is greater than the
estimated amount of such obligation, X shall be entitled to exercise a right of
set-off to the extent of such excess, (B) if the amount of the obligation owing
by Y, when ultimately ascertained, is less than the estimated amount of such
obligation, any obligation of X set off against such excess shall be reinstated,
(C) if the amount of the obligation owing by X, when ultimately ascertained, is
greater than the estimated amount of such obligation, X shall be entitled to
exercise a right of set-off to the extent of such excess and (D) if the amount
of the obligation owing by X, when ultimately ascertained, is less than the
estimated amount of such obligation, any obligation of Y set off against such
excess shall be reinstated.
Nothing in this Part 5(a) shall be effective to create a charge or other
security interest. This Part 5(a) shall be without prejudice and in addition to
any right of set-off, combination of accounts, lien or other right to which any
party is at any time otherwise entitled (whether by operation of law, contract
or otherwise).
(b) Exchange of Confirmations. For each Transaction entered into
hereunder, Party A shall promptly send to Party B a Confirmation, via telex or
facsimile transmission. Party B agrees to respond to such Confirmation within 10
Business Days (for this purpose, Business Days refers to Business Days in the
location of the recipient), either confirming agreement thereto or requesting a
correction of any error(s) contained therein. Failure by Party B to respond
within such period shall not affect the validity or enforceability of such
-6-
C/M 11764.0009 434098.1
<PAGE>
Transaction and shall be deemed to be an affirmation of the terms contained in
such Confirmation, absent manifest error. The parties agree that any such
exchange of telexes or facsimile transmissions shall constitute a Confirmation
for all purposes hereunder.
(c) Waiver of Right to Trial by Jury. Each party hereby irrevocably
waives any and all rights to trial by jury with respect to any legal proceeding
arising out of or relating to this Agreement or any Transaction contemplated
hereby.
(d) Telephonic Recording. Each party (i) consents to the recording of
the telephone conversations of trading, marketing, and operations personnel of
the parties and their Affiliates in connection with this Agreement or any
potential Transaction and (ii) agrees to obtain any necessary consent of, and
give notice of such recording to, such personnel of it and its Affiliates.
(e) Further Representations. (i) Party B represents to Party A (which
representations will be deemed to be repeated by Party B on each date on which a
Transaction is entered into) that:
(1) Generally Accepted Accounting Principles. The financial
information delivered pursuant to paragraph (b) of Part 3 of this
Schedule, including the related schedules and notes thereto, has been
prepared in accordance with accounting principles that are generally
accepted in the country in which Party B is organized, applied
consistently throughout the periods involved (except as disclosed
therein).
(2) No Material Contingent Obligation(s). Neither Party B nor any
of its subsidiaries has any material contingent obligation, contingent
liability or liability for taxes, long-term lease or unusual forward or
long-term commitment, which is not reflected in the financial statements
delivered to Party A pursuant to this Schedule or in the notes thereto.
(ii) Each entity comprising Party B represents to Party A, and
Party A represents to Party B, which representation will be deemed to be
repeated on each date on which a Transaction is entered into, that it is an
"eligible swap participant" as such term is defined in Part 35 of Chapter I of
Title 17 of the Code of Federal Regulations, promulgated by the Commodity
Futures Trading Commission, entitled "Exemption of Swap Agreements.
(f) Relationship Between Parties. The following representation shall be
inserted as a new Section 3(g) of this Agreement:
(g) Relationship Between Parties. Absent a written agreement to the
contrary:
(i) It is not relying on any advice (whether written or oral) of the
other party regarding any Transaction, other than the representations expressly
made by that other party in this Agreement and in the Confirmation in respect of
that Transaction; and
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C/M 11764.0009 434098.1
<PAGE>
(ii) In respect of each Transaction under this Agreement:
(1) It has the capacity to evaluate (internally or
through independent professional advice) that Transaction
and has made its own decision to enter into that
Transaction;
(2) It understands the terms, conditions and risks of
that Transaction and is willing to accept those terms and
conditions and to assume (financially and otherwise)
those risks; and
(3) The other party (a) is not acting as a fiduciary or
financial, investment or commodity trading advisor for
it; (b) has not given to it (directly or indirectly
through any other person) any assurance, guaranty or
representation whatsoever as to the merits (either legal,
regulatory, tax, financial, accounting or otherwise) of
that Transaction or any documentation related thereto;
and (c) has not committed to unwind that Transaction."
(h) Absence of Litigation. Section 3(c) of this Agreement is amended by
deleting the words "or, to its knowledge, threatened" in the first line thereof.
(i) "Credit Agreement" means the Credit Agreement dated as of the date
hereof among 1290 Partners, L.P. and 237 Park Partners, L.P., as Borrowers, the
Lenders listed therein, and The Chase Manhattan Bank, as Agent, as amended,
supplemented or otherwise modified from time to time; provided that if the
obligations under the Credit Agreement are paid in full or the Credit Agreement
is otherwise terminated, Credit Agreement means the Credit Agreement as it
existed immediately prior to such event.
(j) Further Agreements of Party B. Each of the entities comprising Party
B agrees with Party A that, so long as it has or may have any obligation under
this Agreement, it will comply with each of the covenants set forth in Article V
of the Credit Agreement.
(k) Additional Events of Default. With respect to Party B, it shall
constitute an Event of Default under this Agreement if there shall occur any
Event of Default as defined in the Credit Agreement.
(l) Further Representation of Party B. Each of the entities comprising
Party B represents and warrants to Party A (which representation will be deemed
to be repeated by each of the entities comprising Party B on each date on which
a Transaction is entered into) that each of the representations and warranties
made by it in Article IV of the Credit Agreement would be true and correct if
made as of the date hereof, and, on the date hereof, no Event of Default as
defined in the Credit Agreement has occurred and is continuing.
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C/M 11764.0009 434098.1
<PAGE>
(m) Joint and Several.
This Agreement is the joint and several agreement of each of the
entities comprising Party B, and the obligations and liabilities arising under
this Agreement are the joint and several obligations and liabilities of each of
the entities comprising Party B. Not in limitation of the immediately preceding
sentence, (i) each of the entities comprising Party B makes the representations
set forth in Section 3 of this Agreement to Party A, (ii) each of the entities
comprising Party B makes the agreements set forth in Section 4 of this Agreement
and undertakes joint and several liability with the other entity comprising
Party B for the performance of such agreements, (iii) an Event of Default or
Termination Event shall be deemed to occur with respect to Party B if it occurs
with respect to either of the entities comprising Party B and (iv) the
submission set forth in Section 13(a) of this Agreement, the waivers set forth
in Section 13(b) and (d) of this Agreement and the consent set forth in Section
13(c) of this Agreement are applicable to each of the entities comprising Party
B.
Each of the entities comprising Party B executes this Agreement
as a primary obligor, not as surety. Party A shall not be bound to exhaust its
recourse or to take any action against any one of such entities before being
entitled to performance under this Agreement from the other entity, but rather
Party A may make such demands and take such actions as it deems advisable and
may apply money received from any such entity upon such part of the obligations
arising under this Agreement as Party A may think best.
Each of the entities comprising Party B hereby waives notice of
failure by the other of such entities to pay when due any amount payable by the
other of such entities under this Agreement. Each of the entities comprising
Party B consents to and waives notice of (a) extension or renewal of any
obligation arising under this Agreement, (b) amendment or termination or waiver
of any provision of this Agreement as between Party A and the other of the
entities comprising Party B, and (c) release of the other entities comprising
Party B or cancellation of its obligations under the Agreement.
Until full and final payment to Party A of all amounts due to it
under this Agreement, each of the entities comprising Party B (a) agrees not to
exercise any right it may acquire against the other entity comprising Party B
(whether by subrogation, reimbursement, contribution, or otherwise) as a result
of payments made to Party A under this Agreement with respect to its rights
against such other entity arising hereunder, (b) assigns to Party A all such
rights such entity may have in any bankruptcy, receivership or insolvency
proceedings commenced by or against the other entity comprising Party B or its
property with respect to its rights against such other entity arising hereunder,
and (c) appoints Party A attorney-in-fact for it to appear in any such
proceeding, file claims, receive
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C/M 11764.0009 434098.1
<PAGE>
payments, and to do any other act which it could do personally in connection
with such rights.
THE CHASE MANHATTAN BANK
By:
Title: Vice President
1290 PARTNERS, L.P.
By: 1290 GP Corp., General Partner
By
Title: President
237 PARK PARTNERS, L.P.
By: 237 GP Corp. General Partner
By:
Title: President
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C/M 11764.0009 434098.1
<PAGE>
EXHIBIT I
FORM OF OPINION OF COUNSEL TO PARTY B
Date:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
We are counsel to 1290 Partners, L.P. and 237 Park Partners, L.P., each
of which is a _______________ limited partnership (collectively, the
"Counterparty"), and we are delivering this opinion in connection with the
Master Agreement, dated as of October [], 1996 (as supplemented by the
Confirmations relating to the Transactions entered into pursuant thereto, the
"Agreement"), between the Counterparty and The Chase Manhattan Bank ("Chase").
Terms defined in the Agreement are used herein as therein defined.
In that connection, we have examined the originals, or copies certified
to our satisfaction, of the Agreement and such corporate records of the
Counterparty, certificates of public officials and of officers of the
Counterparty, and agreements, instruments, and documents, as we have deemed
necessary as a basis for the opinions hereinafter expressed. As to questions of
fact material to such opinions, we have, when relevant facts were not
independently established by us, relied upon certificates of the Counterparty,
or its officers or of public officials. We have assumed the due execution and
delivery of the Agreement by Chase.
Based upon the foregoing, we are of the following opinion:
1. Each of the parties comprising the Counterparty is a limited
partnership duly organized, validly existing and in good standing under the laws
of _____________.
2. Each of the parties comprising the Counterparty has the power to
execute and deliver the Agreement and to perform its obligations under the
Agreement and has taken all necessary action to authorize such execution and
delivery and performance of such obligations.
3. The execution and delivery of the Agreement by the Counterparty and
the Counterparty's performance of its obligations under the Agreement do not
violate or conflict with any law, rule or regulation applicable to it, any
provision of its charter or by-laws (or
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C/M 11764.0009 434098.1
<PAGE>
comparable constitutional documents), any order or judgment of any court or
other agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting the Counterparty or any of its
assets.
4. All authorizations of and exemptions, actions or approvals by, and
all notices to or filings with, any governmental or other authority that are
required to have been obtained or made by the Counterparty with respect to the
Agreement have been obtained or made and are in full force and effect and all
conditions of any such authorizations, exemptions, actions or approvals have
been complied with.
5. The Agreement constitutes the Counterparty's legal, valid and binding
obligation enforceable against the Counterparty in accordance with its terms
(subject to applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at law)).
6. To the best of our knowledge, after due inquiry, there is not pending
or threatened against the Counterparty or any of its Affiliates any action, suit
or proceeding at law or in equity or before any court, tribunal, government
body, agency or official or any arbitrator that is likely to affect the
legality, validity or enforceability against the Counterparty of the Agreement
or its ability to perform its obligations thereunder.
We are qualified to practice law in the State of
___________________________ and do not purport to be expert on, or to express
any opinion herein concerning, any law other than the laws of the State of
__________________________ and the federal laws of the United States of America.
Very truly yours,
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C/M 11764.0009 434098.1
INTEREST RATE AGREEMENT
PLEDGE AND SECURITY AGREEMENT
between
1290 PARTNERS, L.P.
and
237 PARK PARTNERS, L.P.
collectively, as Pledgor
and
THE CHASE MANHATTAN BANK,
as Agent for the Lenders,
as Pledgee
Dated as of October 10, 1996
0147311.05-01S4a
<PAGE>
INTEREST RATE AGREEMENT
PLEDGE AND SECURITY AGREEMENT
INTEREST RATE AGREEMENT PLEDGE AND SECURITY AGREEMENT, dated as of
October 10, 1996 (this "Pledge Agreement"), by and between 1290 PARTNERS, L.P.,
a Delaware limited partnership, and 237 PARK PARTNERS, L.P., a Delaware limited
partnership (collectively, the "Pledgor"), each having its chief executive
office at c/o Victor Capital Group, L.L.P., 885 Third Avenue, New York, New York
10022, and THE CHASE MANHATTAN BANK, as agent ("Pledgee") for the lenders (the
"Lenders") listed on the signature pages of the Credit Agreement (the "Credit
Agreement"), dated as of the date hereof, among Pledgor, the Lenders and
Pledgee, having an office at 380 Madison Avenue, New York, New York 10017.
W I T N E S S E T H:
WHEREAS, Pledgor and The Chase Manhattan Bank (the "Counterparty")
have entered into an Interest Rate Exchange Agreement, dated as of the date
hereof (the "Swap Agreement") and certain Swap Transactions thereunder (the
"Swap Transactions") (a copy of the Swap Agreement, including the Confirmation
(as defined therein) for the Swap Transactions thereunder, is attached hereto as
Exhibit A);
WHEREAS, Pledgee has agreed to make a loan to Pledgor in the
principal amount of Four Hundred Twenty Million Dollars ($420,000,000)(the
"Loan");
WHEREAS, the Loan will be evidenced by certain promissory notes (the
"Notes") of Pledgor made to each of the Lenders in accordance with the terms of
the Credit Agreement;
WHEREAS, Pledgor is about to execute and deliver to Pledgee a
Mortgage Modification, Restatement and Security Agreement, dated as of the date
hereof (the "Mortgage"), covering certain real property owned by Pledgor as more
particularly described therein, to secure the Notes; and
0147311.05-01S4a
2
<PAGE>
WHEREAS, as a condition to closing the transactions contemplated by
the Credit Agreement, Pledgee requires that Pledgor pledge to Pledgee and grant
a security interest in the Collateral (hereinafter defined) to further secure
Pledgor's obligations under the Notes.
NOW, THEREFORE, in consideration of the foregoing and the Loan to
Pledgor represented by the Notes, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, Pledgor does hereby agree with
Pledgee, as follows:
1. Definitions. Unless the context otherwise requires, capitalized
terms used but not otherwise de- fined herein shall have the respective meanings
provided therefor in the Credit Agreement, and the following terms shall have
the following meanings:
"Code" shall mean the Uniform Commercial Code, as enacted in the
State of New York, as amended.
"Collateral" shall have the meaning assigned
thereto in Section 2 hereof.
"Event of Default" shall have the meaning assigned thereto in
Section 10 hereof.
2. Grant of Security Interest, Etc. As security for the full and
punctual payment and performance of the Obligations when due (whether upon
stated maturity, by acceleration, early termination or otherwise), Pledgor
hereby pledges, assigns, hypothecates, transfers and delivers to Pledgee and
hereby grants to Pledgee a continuing first priority lien on and security
interest in, to and under all of the following (the "Collateral") whether now
owned or hereafter acquired and whether now existing or hereafter arising: all
of Pledgor's right, title and interest in and to (i) the Swap Agreement and the
Swap Transactions; (ii) all payments due or to become due to Pledgor in respect
of the Swap Transactions thereunder or arising out of the Swap Agreement,
whether as contractual obligations, damages or otherwise; and (iii) all of
Pledgor's claims, rights, powers, privileges, authority, options, security
interests, liens and remedies, if any, under or arising out of the Swap
Agreement and the Swap Transactions, in each case including all accessions and
additions to, substitu-
0147311.05-01S4a
3
<PAGE>
tions for and replacements, products and proceeds of any
of the foregoing.
3. Powers of Pledgor Prior to an Event of Default. Prior to the
occurrence and the continuance of an Event of Default, but subject to the terms
of the Cash Collateral Agreement, Pledgor shall be entitled to receive and
retain all payments belonging to Pledgor pursuant to the terms of the Swap
Agreement and to exercise all rights, powers and privileges of Pledgor under,
and to control the prosecution of all claims with respect to, the Swap
Transactions, the Swap Agreement and the other Collateral.
4. Representations, Warranties and Covenants. Pledgor hereby
covenants with, and represents and war- rants to, Pledgee as follows:
(a) The Swap Agreement is the legal, valid and binding
obligation of Pledgor, enforceable against Pledgor in accordance with its terms.
(b) Pledgor will defend Pledgee's right, title and interest in
and to the Collateral pledged by it pursuant hereto or in which it has granted a
security interest pursuant hereto against the claims and demands of all other
Persons.
(c) The Collateral is free and clear of all liens, claims or
security interests of every nature whatsoever, except such as are created
pursuant to this Pledge Agreement and the other Loan Documents, and Pledgor has
the right to pledge and grant a security interest in the same as herein provided
without the consent of any other Person other than any such consent that has
been obtained.
(d) The Collateral has been duly and validly pledged
hereunder. All consents and approvals required for the consummation of the
transactions contemplated by this Pledge Agreement have been obtained.
(e) Pledgor will not sell, assign, or otherwise dispose of, or
mortgage, pledge or grant a security interest in, any of the Collateral or any
interest therein, and any sale, assignment, mortgage, pledge or security
interest whatsoever made in violation of this
0147311.05-01S4a
4
<PAGE>
covenant shall be a nullity and of no force and effect, and upon demand of
Pledgee, shall forthwith be cancelled or satisfied by an appropriate instrument
in writing. Notwithstanding the foregoing, Pledgor shall have the right to sell,
assign, or otherwise dispose of any portion of the Swap Agreement in accordance
with the terms thereof in connection with any prepayment in full or in part of
the Notes and the cancellation of the Commitments, with the prior written
consent of Agent.
(f) Pledgor covenants and agrees that except with respect to
the prepayment of the Loan in whole or in part in accordance with the terms of
the Credit Agreement, (i) it will not, without the prior written consent of
Pledgee, modify, amend or supplement the terms of any Swap Transactions or the
Swap Agreement, (ii) it will not, without the prior written consent of Pledgee,
except in accordance with the terms of the Swap Agreement, cause the termination
of (a) any Swap Transaction prior to its stated maturity date or (b) the Swap
Agreement prior to the stated maturity date of the Swap Transactions governed
thereby, (iii) it will not, without the prior written consent of Pledgee, except
as aforesaid, waive or release any obligation of the Counterparty (or any
successor or substitute party to the Swap Agreement or the Swap Transactions)
under the Swap Transactions or the Swap Agreement, (iv) it will not, without the
prior written consent of Pledgee, consent or agree to any act or omission to act
on the part of the Counterparty (or any successor or substitute party to the
Swap Agreement or the Swap Transactions), which, without such consent or
agreement, would constitute a default under the Swap Agreement to the extent the
value of the Collateral would be materially and adversely affected thereby, (v)
it will not fail to exercise promptly and diligently each and every right which
it may have under the Swap Agreement and the Swap Transactions to the extent the
value of the Collateral would be materially and adversely affected thereby, (vi)
it will not take or omit to take any action or suffer or permit any action to be
omitted or taken, the taking or omission of which would result in any right of
offset against sums payable under the Swap Transactions and the Swap Agreement,
or any defense by the Counterparty (or any successor or substitute party to the
Swap Agreement or the Swap Transactions) to payment, and (vii) it will give
prompt notice to Pledgee of any notice of default given by or to Pled-
0147311.05-01S4a
5
<PAGE>
gor under or with respect to the Swap Agreement or the Swap Transactions,
together with a complete copy of such notice.
(g) The chief executive office of the Pledgor is c/o Victor
Capital Group, L.P., 885 Third Avenue, New York, New York 10022. Pledgor will
not change such chief executive office unless Pledgor shall provide Pledgee with
written notice thereof within thirty (30) days after such change (but in any
event, within the period required pursuant to the Code) and there shall have
been taken such action, reasonably satisfactory to Pledgee, as may be necessary
to maintain the security interest of Pledgee hereunder at all times fully
perfected and in full force and effect. Pledgor shall not change its name unless
Pledgor shall have given Pledgee written notice thereof within thirty (30) days
after such change (but in any event, within the period required pursuant to the
Code) and shall have taken such action, reasonably satisfactory to Pledgee, as
may be necessary to maintain the security interest of Pledgee in the Collateral
granted hereunder at all times fully perfected and in full force and effect.
(h) Giving effect to the aforesaid grant and assignment to
Pledgee, Pledgee has, as of the date of this Pledge Agreement, and as to
Collateral acquired from time to time after such date, shall have, a valid, and
upon proper filing, perfected and continuing first priority lien upon and
security interest in the Collateral; provided that no representation or warranty
is made with respect to the perfected status of the security interest of the
Pledgee in the proceeds of Collateral consisting of "cash proceeds" or "non-cash
proceeds" as defined in the Code except if, and to the extent, the provisions of
Section 9-306 of the Code shall be complied with.
(i) Except for financing statements filed or to be filed in
favor of Pledgee as secured party, there are no financing statements under the
Code covering any or all of the Collateral and Pledgor will not, without the
prior written consent of Pledgee, until payment in full of all of the
Obligations, execute and file in any public office, any enforceable financing
statement or statements covering any or all of the Collateral, except financing
statements filed or to be filed in favor of Pledgee as secured party.
0147311.05-01S4a
6
<PAGE>
5. Payments After Event of Default.
Upon the occurrence and during the continuance of an Event of Default, if
Pledgor at any time shall be entitled to receive any payments with respect to
the Swap Transactions or the Swap Agreement, such amount shall, immediately upon
receipt by Pledgor, be remitted to Pledgee for application to the Obligations,
and until so remitted shall be received and held by Pledgor in trust for
Pledgee. Pledgor shall be deemed to have complied with the foregoing obligations
to the extent any such payment is made directly by the Counterparty to the Cash
Collateral Account (as defined in the Cash Collateral Agreement) pursuant to the
terms of the Cash Collateral Agreement.
6. Remedies. (i) Subject to the provisions of the Swap Agreement, if
an Event of Default shall occur and then be continuing:
(a) Pledgee, without obligation to resort to any other
security, right or remedy granted under any other agreement or instrument, shall
have the right to, in addition to all rights, powers and remedies of a secured
party pursuant to the Code, at any time and from time to time, sell, resell,
assign and deliver, in its sole discretion, any or all of the Collateral (in one
or more parcels and at the same or different times) and all right, title and
interest, claim and demand therein and right of redemption thereof, at public or
private sale, for cash, upon credit or for future delivery, and in connection
therewith Pledgee may grant options and may impose reasonable conditions such as
requiring any purchaser to represent that any "securities" constituting any part
of the Collateral are being purchased for investment only, Pledgor hereby
waiving and releasing any and all equity or right of redemption to the fullest
extent permitted by the UCC or applicable law. If all or any of the Collateral
is sold by Pledgee upon credit or for future delivery, Pledgee shall not be
liable for the failure of the purchaser to purchase or pay for the same and, in
the event of any such failure, Pledgee may resell such Collateral. It is
expressly agreed that Pledgee may exercise its rights with respect to less than
all of the Collateral, leaving unexercised its rights with respect to the
remainder of the Collateral, provided, however, that such partial exercise shall
in no way restrict or
0147311.05-01S4a
7
<PAGE>
jeopardize Pledgee's right to exercise its rights with respect to all or any
other portion of the Collateral at a later time or times.
(b) Pledgee may exercise, either by itself or by its nominee
or designee, in the name of the Pledgor, all of Pledgee's rights, powers and
remedies in respect of the Collateral, hereunder and under law.
(c) Pledgor hereby irrevocably, in the name of Pledgor or
otherwise, authorizes and empowers Pledgee and assigns and transfers unto
Pledgee, and constitutes and appoints Pledgee its true and lawful
attorney-in-fact, and as its agent, irrevocably, with full power of substitution
for it and in its name, (i) to exercise and enforce every right, power, remedy,
authority, option and privilege of Pledgor under the Swap Agreement and the Swap
Transactions, including any power to subordinate, terminate, cancel or modify
the Swap Agreement or the Swap Transactions or to give any notices, or to take
any action resulting in such subordination, termination, cancellation or
modification and (ii) in order to more fully vest in Pledgee the rights and
remedies provided for herein, to exercise all of the rights, remedies and powers
granted to Pledgee in this Pledge Agreement, and Pledgor further authorizes and
empowers Pledgee, as its attorney-in-fact, and as its agent, irrevocably, with
full power of substitution for it and in its name, to give any authorization, to
furnish any information, to make any demands, to execute any instruments and to
take any and all other action on behalf of and in the name of Pledgor which in
the opinion of Pledgee may be necessary or appropriate to be given, furnished,
made, exercised or taken under the Swap Agreement, including the Swap
Transactions, in order to comply therewith, to perform the conditions thereof or
to prevent or remedy any default by Pledgor thereunder or to enforce any of
Pledgor's rights thereunder, provided, however, that the power provided for in
this sentence may not be exercised by Pledgee prior to the occurrence of an
Event of Default and then only for so long as an Event of Default continues; and
provided, further, that Pledgee shall not be permitted to take any action
pursuant to said power-of-attorney that would conflict with any limitation on
Pledgee's rights with respect to the Collateral. This power-of-attorney is
irrevocable and coupled with an interest, and any similar or dissimilar
0147311.05-01S4a
8
<PAGE>
powers heretofore given by Pledgor in respect of the Collateral to any other
Person are hereby revoked. Without limiting the generality of the foregoing,
Pledgee, after the occurrence and during the continuance of an Event of Default,
shall have the right and power to receive, endorse and collect all checks and
other orders for the payment of money made payable to Pledgor representing: (i)
any payment of obligations owed pursuant to the Swap Transactions and the Swap
Agreement, (ii) interest accruing on any of the Collateral or (iii) any other
payment or distribution payable in respect of the Collateral or any part
thereof, and for and in the name, place and stead of Pledgor, to execute
endorsements, assignments or other instruments of conveyance or transfer in
respect of any property which is or may become a part of the Collateral
hereunder.
(d) Pledgee may, without notice to, or assent by, Pledgor or
any other Person (to the extent permitted by law), but without affecting any of
the Obligations, in the name of Pledgor or in the name of Pledgee, notify the
Counterparty, or if applicable, any other party to the Swap Agreement or the
Swap Transactions, to make payment and performance directly to Pledgee; extend
the time of payment and performance of, compromise or settle for cash, credit or
otherwise, and upon any terms and conditions, any obligations owing to Pledgor,
or claims of Pledgor, under the Swap Agreement or the Swap Transactions; file
any claims, commence, maintain or discontinue any actions, suits or other
proceedings deemed by Pledgee necessary or advisable for the purpose of
collecting upon or enforcing the Swap Transactions pursuant to the terms of the
Swap Agreement; and execute any instrument and do all other things deemed
necessary and proper by Pledgee to protect and preserve and realize upon the
Collateral and the other rights contemplated hereby.
(e) Pledgee may exercise all of the rights and remedies of a
secured party under the Code.
(f) Without limiting any other provision of this Pledge
Agreement, and without waiving or releasing Pledgor from any obligation or
default hereunder, Pledgee shall have the right, but not the obligation, to
perform any act or take any appropriate action, as it, in its reasonable
judgment, may deem necessary to cure such
0147311.05-01S4a
9
<PAGE>
Event of Default under Sections 10(a) or 10(b) hereof or cause any term,
covenant, condition or obligation required under this Pledge Agreement, the Swap
Agreement or the Swap Transactions to be performed or observed by Pledgor to be
promptly performed or observed on behalf of Pledgor or to protect the security
of this Pledge Agreement. All amounts advanced by, or on behalf of, Pledgee in
exercising its rights under this Section 6 (including, but not limited to,
reasonable legal expenses and disbursements incurred in connection therewith),
together with interest thereon at the rate of interest payable on overdue
principal under the Notes and the Credit Agreement from the date of each such
advance, shall be payable by Pledgor to Pledgee upon demand and shall be secured
by this Pledge Agreement.
7. Sales of Collateral. No demand, advertisement or notice, all of
which are hereby expressly waived by Pledgor, shall be required in connection
with any sale or other disposition of all or any part of the Collateral, except
that Pledgee shall give Pledgor at least ten (10) days' prior written notice of
the time and place of any public sale or of the time and the place where any
private sale or other disposition is to be made, which notice Pledgor hereby
agrees is reasonable, all other demands, advertisements and notices being hereby
waived. To the extent permitted by law, Pledgee shall not be obligated to make
any sale of the Collateral if it shall determine not to do so, regardless of the
fact that notice of sale may have been given, and Pledgee may without notice or
publication adjourn any public or private sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. Upon each private sale of the Collateral of a type customarily sold
in a recognized market and upon each public sale, unless prohibited by any
applicable statute which cannot be waived, Pledgee (or its nominee or designee)
may purchase any or all of the Collateral being sold, free and discharged from
any trusts, claims, equity or right of redemption of Pledgor, all of which are
hereby waived and released to the extent permitted by law, and may make payment
therefor by credit against any of the Obligations in lieu of cash or any other
obligations. In the case of all sales of the Collateral, public or private,
Pledgor will pay all reasonable costs and expenses of every kind for sale or
delivery, including brokers' and reasonable attorneys' fees and disburse-
0147311.05-01S4a
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<PAGE>
ments and any tax imposed thereon. However, the proceeds of sale of Collateral
shall be available to cover such costs and expenses, and, after deducting such
costs and expenses from the proceeds of sale, Pledgee shall apply any residue to
the payment of the Obligations in the order of priority as set forth in the
Mortgage and the Credit Agreement.
8. Public Sales Not Possible. Pledgor acknowledges that the terms of
the Swap Agreement may prohibit public sales, that the Collateral may not be of
the type appropriately sold at public sales, and that such sales may be
prohibited by law. In light of these considerations, Pledgor agrees that private
sales of the Collateral shall not be deemed to have been made in a commercially
unreasonably manner by mere virtue of having been made privately.
9. Receipt of Sale Proceeds. Upon any sale of the Collateral by
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt by Pledgee or the
officer making the sale or the proceeds of such sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold, and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to Pledgee or such officer or be answerable
in any way for the misapplication or non-application thereof.
10. Events of Default. An "Event of Default" shall exist if any of
the following shall have occurred:
(a) Pledgor's failure to comply with any of the covenants or
agreements of Sections 4(e) or clauses (i) or (ii) of Section 4(f) of this
Pledge Agreement immediately upon the occurrence thereof; or
(b) Pledgor's failure to comply with any of the covenants or
agreements of clauses (iii) or (iv) of Section 4(f) or of any other covenants,
agreements or provisions of this Pledge Agreement, which failure is not cured
within five (5) Domestic Business Days after written notice to Pledgor from
Pledgee; or
0147311.05-01S4a
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<PAGE>
(c) An Event of Default shall occur under the Mortgage, the
Notes, the Credit Agreement or any other Loan Document.
11. Waivers; Modifications. No delay on the part of Pledgee in
exercising any of its options, powers or rights, or partial or single exercise
thereof, shall constitute a waiver thereof. None of the terms and conditions of
this Pledge Agreement may be discharged, changed, waived, modified or varied in
any manner unless in a writing duly signed by the parties hereto.
12. Remedies Cumulative. All rights and remedies afforded to Pledgee
by reason of this Pledge Agreement are separate and cumulative remedies, and
shall be in addition to all other rights and remedies in favor of Pledgee
existing at law or in equity or otherwise. No one of such remedies, whether or
not exercised by Pledgee, shall be deemed to exclude, limit or prejudice the
exercise of any other legal or equitable remedy or remedies available to
Pledgee.
13. Notices. Any notice, election, request or demand which by any
provision of this Pledge Agreement is required or permitted to be given or
served hereunder shall be in writing and shall be given or served by hand
delivery against receipt, by any nationally recognized overnight courier service
providing evidence of the date of delivery or by certified mail return receipt
requested, postage prepaid, addressed to Pledgor at: c/o Victor Capital Group,
L.P., 885 Third Avenue, New York, New York 10022, Attn: John R. Klopp, with
copies to (i) Tishman Speyer Properties, L.P., 520 Madison Avenue, New York, New
York 10022, Attn: General Counsel, and (ii) Battle Fowler LLP, 75 East 55th
Street, New York, New York 10022, Attn: Kenneth J. Friedman, Esq., and addressed
to Pledgee at: The Chase Manhattan Bank, Chase Real Estate Finance Group, 380
Madison Avenue, New York, New York 10017-2591, Attn: Mary Elisabeth Swerz, with
copies to (i) The Chase Manhattan Bank, Legal Department, 270 Park Avenue, 39th
Floor, New York, New York 10017, Attn: William C. Viets, Esq., and (ii) Skadden,
Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York 10022,
Attention: Wallace L. Schwartz, Esq., or at such other address as shall be
designated from time to time by Pledgee or Pledgor by notice given in accordance
with the provisions of this Section 13. Any such notice or demand
0147311.05-01S4a
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<PAGE>
given hereunder shall be effective upon receipt or refusal (as indicated on the
receipt) after mailing as aforesaid. All notices, elections, requests and
demands required or permitted under this Pledge Agreement shall be in the
English language.
14. Jurisdiction, Etc. Any legal action or proceeding with respect
to this Pledge Agreement and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Pledge Agreement, Pledgor hereby accepts for
itself and in respect of its property, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts and appellate courts from any
thereof. Pledgor irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to Pledgor at
its address set forth herein. Pledgor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Pledge Agreement brought in the courts referred to above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of Pledgee to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against Pledgor in any other jurisdiction.
15. Successors and Assigns. This Pledge Agreement, and all
representations, warranties and covenants of Pledgor made herein, shall be
binding upon and inure to the benefit of Pledgor and its successors and assigns,
provided that nothing in this Section shall be deemed to constitute the consent
of Pledgee to any transactions in this Pledge Agreement elsewhere not permitted.
This Pledge Agreement shall be binding upon and shall inure to the benefit of
Pledgee and its successors and assigns.
16. Pledgee Not Bound.
0147311.05-01S4a
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<PAGE>
(a) This Pledge Agreement shall not be construed as creating a
partnership or joint venture agreement between Pledgee and Pledgor.
(b) Pledgee shall not be obligated to perform or discharge any
obligation of Pledgor as a result of the collateral assignment hereby effected.
(c) The acceptance by Pledgee of this Pledge Agreement, with
all the rights, powers, privileges and authority so created, shall not at any
time or in any event obligate Pledgee to appear in or defend any action or
proceeding relating to the Collateral to which it is not a party, or to take any
action hereunder or thereunder, or to expend any money or incur any expenses or
perform or discharge any obligation, duty or liability under the Collateral.
17. Acts of the Pledgee. All Collateral at any time delivered to
Pledgee pursuant hereto shall be held by Pledgee subject to the terms, covenants
and conditions herein set forth. Neither Pledgee nor any of its respective
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by such party or parties relative to any of the Collateral,
except for such party's or parties' own gross negligence or willful misconduct
or breach of this Pledge Agreement. Pledgee shall be entitled to rely in good
faith upon any writing or other document reasonably believed by it to be genuine
and correct and to have been signed, sent or made by the proper person or
persons, and, with respect to any legal matter, Pledgee may rely in acting or in
refraining from acting upon the advice of counsel selected by it concerning all
matters hereunder. Pledgor hereby agrees to indemnify and hold harmless Pledgee
and any of its directors, officers, agents or employees (collectively, the
"Indemnified Parties") from and against any and all claims, demands, losses,
judgments and liabilities (including, without limitation, liabilities for
penalties and all damages, liabilities, losses, costs and expenses which Pledgee
may incur or suffer if it becomes, or is alleged to have become, a partner of
Pledgor by reason of the operation of this Pledge Agreement or Pledgee's
exercise of the rights, remedies or powers under or in accordance with the terms
hereof or otherwise, but excluding those losses, judgments and liabilities of
Pledgee resulting from its gross
0147311.05-01S4a
14
<PAGE>
negligence or willful misconduct or breach of this Pledge Agreement) of
whatsoever kind or nature without limitation, and to reimburse, within ten (10)
days after demand therefor, Pledgee for all costs and expenses, including
reasonable attorneys' fees (other than those costs and expenses of Pledgee
resulting from its gross negligence or willful misconduct or breach of this
Pledge Agreement), arising out of or resulting from this Pledge Agreement or the
exercise by Pledgee of any right or remedy granted to it hereunder, such as
operating, selling or disposing of Pledgor's property, including, without
limitation, the Collateral, together with interest on such sums at the Default
Rate, from the date such expenses were paid by Pledgee to the date of payment to
Pledgee of such sums. Notwithstanding anything contained herein to the contrary,
Pledgor is not indemnifying and shall not be required to indemnify the
Indemnified Parties hereunder for any claim, demand, loss, judgment or liability
arising out of or resulting from the Collateral, provided the event or events
giving rise to such claim, demand, loss, judgment or liability occur after the
consummation of a foreclosure sale or other disposition of the Collateral as a
consequence of an Event of Default hereunder. In any action to enforce this
Pledge Agreement, the provisions of this Section 17 shall, to the extent
permitted by law, prevail notwithstanding any provision of applicable law
respecting the recovery of costs, disbursements and allowances to the contrary.
18. Custody of Collateral; Notice of Exercise of Remedies. Pledgee
shall not have any duty as to the collection or protection of the Collateral or
any income thereon or payments with respect thereto, or as to the preservation
of any rights pertaining thereto beyond exercising reasonable care with respect
to the custody of any thereof actually in its possession. Pledgor hereby waives
notice of acceptance hereof, and except as otherwise specifically provided
herein or required by provision of law which may not be waived, hereby waives
any and all notices or demands with respect to any exercise by Pledgee of any
rights or powers which it may have or to which it may be entitled with respect
to the Collateral.
19. Severability. In case any one or more of the provisions
contained in this Pledge Agreement shall be found to be invalid, illegal or
unenforceable in any
0147311.05-01S4a
15
<PAGE>
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby, and this
Pledge Agreement shall continue in full force and effect in accordance with its
remaining terms.
20. Further Assurances. Pledgor agrees to do such further acts and
things and to execute and deliver to Pledgee such additional conveyances,
assignments, agreements and instruments as Pledgee from time to time may
reasonably require to carry into effect this Pledge Agreement or to further
assure and confirm unto Pledgee its rights, powers and remedies hereunder.
Pledgor hereby agrees to sign and deliver to Pledgee such financing statements,
in form reasonably acceptable to Pledgee, as Pledgee may from time to time
reasonably request or as are necessary in the reasonable opinion of Pledgee to
establish and maintain a valid and perfected security interest in the Collateral
and to pay any filing fees relative thereto. Pledgor also authorizes Pledgee, to
the extent permitted by law, to file such financing statements without the
signature of Pledgor and further authorizes Pledgee, to the extent permitted by
law, to file a photographic or other reproduction of this Pledge Agreement or of
a financing statement in lieu of a financing statement.
21. Release. The security interest in the Collateral granted to
Pledgee hereunder shall be released upon satisfaction of all of the following
conditions precedent:
(a) That the principal amount of and interest on the Notes and
any costs or fees relative thereto and the other Obligations, shall have been
fully paid and satisfied, and any accrued interest thereon as provided in the
Loan Documents shall have been fully paid; and
(b) That all costs, fees, expenses and other sums paid or
incurred by or on behalf of Pledgee in exercising any of its rights, powers,
options, privileges and remedies hereunder or, with respect to the Obligations,
under any of the Loan Documents, including, without limitation, reasonable
attorneys' fees and disbursements, plus any accrued interest thereon as provided
in the Loan Documents shall have been fully paid.
0147311.05-01S4a
16
<PAGE>
In connection with any release of Collateral pursuant to this
Section 21, Pledgee shall execute such documents as may be reasonably requested
by Pledgor to acknowledge such release. Any documents delivered to confirm such
release shall be prepared by counsel for Pledgee at Pledgor's reasonable expense
and shall expressly provide that such confirmation is without recourse and
without any representation or warranty, express or implied (except that Pledgee
shall represent that such document has been and is duly authorized, that all
necessary consents to the execution and delivery thereof have been obtained and
that it has not assigned or encumbered the Collateral). If the Collateral is
released in its entirety, Pledgee, at the request and sole cost and expense of
Pledgor made at the time of any such release, will execute and deliver to
Pledgor a proper instrument or instruments acknowledging the satisfaction and
termination of this Pledge Agreement, and will duly assign and transfer, without
recourse and without any representation or warranty, express or implied (except
that Pledgee shall represent that such termination and such assignment and
transfer has been and is duly authorized, that all necessary consents to the
execution and delivery thereof have been obtained and that it has not assigned
or encumbered the Collateral), the Collateral (and deliver so much thereof as
shall be in its possession and as has not theretofore been sold or otherwise
applied or released pursuant to this Pledge Agreement, together with any moneys
at the time held by Pledgee hereunder and not applied to the payment of the
Obligations to Pledgor).
22. Governing Law. This Pledge Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to contracts entered into and to be performed entirely within such
State and without regard to the conflicts or choice of laws rules of such State.
This Pledge Agreement sets forth the entire understanding of the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements
and understandings, whether oral or written, relating thereto.
23. Miscellaneous.
(a) In enforcing any rights hereunder Pledgee shall not be
required to resort to any particular
0147311.05-01S4a
17
<PAGE>
security, right or remedy through foreclosure or otherwise or to proceed in any
particular order of priority, or otherwise act or refrain from acting, and, to
the extent permitted by law, Pledgor hereby waives and releases any right to a
marshaling of assets or a sale in inverse order of alienation.
(b) Pledgee agrees at any time and from time to time upon not
less than ten (10) days' prior notice by Pledgor to execute, acknowledge and
deliver to Pledgor or any other party specified by Pledgor a statement in
writing certifying that this Pledge Agreement is unmodified and in full force
and effect (or if there have been modifications, that the same, as modified, is
in full force and effect and stating the modifications), and stating whether or
not to the best knowledge of Pledgee there is a continuing Default or Event of
Default, and, if so, specifying each such Default or Event of Default.
(c) Pledgor agrees at any time and from time to time upon not
less than ten (10) days' prior notice by Pledgee to execute, acknowledge and
deliver to Pledgee or any other party specified by Pledgee, a statement in
writing certifying that this Pledge Agreement is unmodified and in full force
and effect (or if there have been modifications, that the same, as modified, is
in full force and effect and stating the modifications) and stating whether or
not to the best knowledge of Pledgor there is a continuing Default or Event of
Default, and, if so, specifying each such Default or Event of Default.
(d) The provisions of Section 9.14 of the Credit Agreement
shall be deemed to be incorporated herein by reference.
(e) This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
(f) PLEDGOR HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
24. Counterparty. Counterparty hereby con- sents to the above
assignment and agrees that it will
0147311.05-01S4a
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<PAGE>
make any payments to become payable under or pursuant to the Swap Agreement
directly into the Cash Collateral Account.
0147311.05-01S4a
19
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Pledge Agreement in the City of New York as of the day and year first above
written.
PLEDGOR:
1290 PARTNERS, L.P.
By: 1290 GP Corp.,
General Partner
By:_______________________
Name:
Title:
237 PARK PARTNERS, L.P.
By: 237 GP Corp.,
General Partner
By:
Name:
Title:
PLEDGEE:
THE CHASE MANHATTAN BANK,
as Agent for the Lenders
By:____________________________
Name:
Title:
0147311.05-01S4a
<PAGE>
Consented and agreed to this 10th day of October, 1996:
COUNTERPARTY:
THE CHASE MANHATTAN BANK
By:____________________________
Name:
Title:
0147311.05-01S4a
21
ASSIGNMENT OF LEASES, RENTS AND SECURITY DEPOSITS
THIS ASSIGNMENT OF LEASES, RENTS AND SECURITY DEPOSITS (this
"Assignment"), made as of the 10th day of October, 1996, by 1290 PARTNERS, L.P.,
a Delaware limited partnership, and 237 PARK PARTNERS, L.P., a Delaware limited
partnership, each having an address at c/o Victor Capital Group, L.P., 885 Third
Avenue, New York, New York 10022 (collectively, "Assignor") to THE CHASE
MANHATTAN BANK, having an office at 380 Madison Avenue, New York, New York
10017, as Agent ("Assignee").
W I T N E S S E T H :
WHEREAS, 1290 Partners, L.P. is the owner of the fee simple interest
in the land described in Exhibit A-1 attached hereto and made a part hereof (the
"1290 Land") and the improvements (the "1290 Improvements") located thereon and
237 Park Partners, L.P. is the owner of the fee simple interest in the land
described in Exhibit A-2 attached hereto and made a part hereof (the "237 Park
Land") and the improvements located thereon (the "237 Improvements", and
together with the 1290 Improvements, collectively, the "Improvements"). The 1290
Land and the 237 Park Land shall be collectively referred to herein as the
"Land" and the Land and the Improvements are collectively referred to
hereinafter as the "Property";
WHEREAS, Assignee has agreed to make a loan (the "Loan") to Assignor
pursuant to the Credit Agreement, dated of even date herewith, between Assignor
and Assignee (the "Credit Agreement"), and the Loan will be evidenced by certain
promissory notes (collectively, the "Notes"), made by Assignor, as maker, in
favor of Assignee and the other Lenders (as defined in the Credit Agreement), as
payee, in the aggregate principal amount of Four Hundred Twenty Million Dollars
($420,000,000);
WHEREAS, Assignor is about to execute and deliver to Assignee a
Mortgage Modification, Restatement and Security Agreement, dated as of the date
hereof (the "Mortgage"), covering the Property, to secure the Notes; and
0147318.04-01S4a
<PAGE>
WHEREAS, Assignee is unwilling to accept the Mortgage unless
Assignor makes, executes and delivers this Assignment.
NOW, THEREFORE, in consideration of the Loan to Assignor and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and to better secure the timely payment of all principal,
interest and other sums and amounts which may be due and payable and the
performance and discharge of all of the obligations, covenants and agreements of
Assignor under the Notes, the Mortgage and the other Loan Documents (as defined
in the Mortgage), Assignor hereby agrees as follows:
1. Capitalized terms used but not otherwise defined herein shall
have the respective meanings given thereto in the Mortgage.
2. Assignor hereby presently and irrevocably grants, transfers,
bargains, sells, assigns, conveys, and sets over unto Assignee, its successors
and assigns, from and after the date hereof (including any period allowed by law
for redemption after any foreclosure or other sale), all right, title and
interest of Assignor in and to (i) all present and future leases, subleases,
licenses, concession agreements, underlettings, contracts and other present and
future agreements which now or may hereafter affect the Property or any part or
parts thereof and all guarantees, modifications, renewals and extensions thereof
(collectively, the "Leases"), and (ii) all documents and instruments made or
hereafter made in respect of the Leases, together with all of the rents, income,
revenue, issues and profits, due and to become due or to which Assignor is now
or may hereafter become entitled, arising out of the Leases or the Property or
any part or parts thereof, and all security deposits delivered or hereafter
delivered to Assignor by Lessees (as hereinafter defined)(subject to the rights
of such Lessees in and to such security deposits)(collectively, the "Profits").
3. Upon the occurrence and during the continuance of an Event of
Default under the Mortgage, without regard to the adequacy of the security for
the Indebtedness, Assignee shall have the power and authority to:
(i) enter upon and take possession of the Property and
manage the same;
0147318.04-01S4a
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<PAGE>
(ii)(A) demand, collect, sue for, attach, levy, recover,
receive, compromise, and (B) adjust and make, execute, and deliver
receipts and releases for Profits which may be or hereafter become due,
owing or payable from any present or future lessees, sublessees,
licensees, concessionaires or other occupants of the Property or any part
thereof (collectively, the "Lessees");
(iii) receive, endorse and deposit for collection in the
name of Assignor or Assignee any checks, promissory notes or other
evidences of indebtedness, whether made payable to Assignor or Assignee,
which are given in payment or on account of rent for the Property or any
part or parts thereof, or by way of compromise or settlement of any
indebtedness for such rents, provided, however, that any Profits received
by Assignee shall be applied in accordance with Section 4 hereof;
(iv) institute, prosecute, settle or compromise any
summary or other proceedings for the recovery of the Profits or for
removing any and all Lessees in accordance with applicable law (and
subject to the terms of any nondisturbance agreements which may be entered
into by Assignee);
(v) institute, prosecute, settle or compromise any
proceedings for the protection of the Property, for the recovery of any
damage done to the Property or for the abatement of any nuisance thereon
or thereabouts;
(vi) defend, settle or compromise any legal proceedings
brought, or claims made against, Assignee or its agents, employees or
servants which may affect the Property, and, at the option of Assignee,
defend, settle or compromise any claims made or legal proceedings brought
against Assignor which may affect the Property or any part thereof;
(vii) lease or rent the Property or any part thereof for
such time and at such rentals as Assignee, in its sole discretion, may
deem advisable;
(viii) make any changes or improve- ments, structural or
otherwise, on, in or to the Prop-
0147318.04-01S4a
3
<PAGE>
erty or any part thereof which Assignee, in its reasonable discretion, may
deem necessary or expedient for the leasing, renting or preservation
thereof;
(ix) keep and maintain the Property in tenantable and
rentable condition and in a good state of repair;
(x) purchase such equipment and sup- plies as may be
necessary or desirable in the opinion of Assignee for use in connection
with the operation of the Property;
(xi) pay, from and out of the Profits collected by
Assignee hereunder, all Impositions, and any and all other charges, costs
and expenses which Assignee may deem necessary or advisable, in its
reasonable judgement, to pay in connection with the management and
operation of the Property (including, without limitation, brokers' fees
and any interest, principal and other payments due on any and all loans
secured by mortgages on the Property), it being understood that the excess
Profits, if any, remaining after all such payments shall have been made
shall be applied by Assignee in accordance with Section 4 hereof;
(xii) contract for and purchase such insurance as
Assignee may deem advisable or necessary for the protection of Assignee
and the Property, including, without limitation, insurance of the types
required under the Mortgage to the extent not being maintained by
Assignor;
(xiii) execute and comply with all Legal Requirements
and remove any and all violations of Legal Requirements which may be filed
against the Property;
(xiv) enforce, enjoin or restrain the violation of any
of the terms, provisions and condi- tions of the Leases; and
(xv) in all respects act in the place and stead of
Assignor with respect to the operation of the Property, whether herein
expressly authorized or not.
0147318.04-01S4a
4
<PAGE>
All of the foregoing powers and rights may be executed by Assignee or by its
agents, servants or attorneys, in the name of Assignee or in the name of
Assignor, and in such manner as Assignee, its agents, servants or attorneys
consider to be reasonably necessary, desirable, expedient, or appropriate;
provided, however, that under no circumstances shall Assignee be under any
obligation to exercise any of the foregoing powers or rights or be in any manner
liable to Assignor or any other party for failure to exercise such powers and
rights.
4. Assignee, subject to the terms of this Assignment, upon the
occurrence and during the continuance of an Event of Default, shall have the
right to use and apply the Profits (excluding security deposits) collected and
received by it under this Assignment (a) for the payment of any and all
reasonable costs and expenses incurred in accordance with the terms of the
Credit Agreement, the Mortgage and the other Loan Documents in connection with
(i) enforcing the terms of this Assignment, the Mortgage, the Credit Agreement
or other Loan Documents, (ii) upholding and defending the rights of Assignee
hereunder or under the Mortgage, the Credit Agreement or the other Loan
Documents, and (iii) collecting rents due under the Leases; (b) for the payment
of any or all operating expenses or other expenses relating to the operation and
maintenance of the Property that are due and payable and the payment of all
reasonable costs and expenses in connection therewith; (c) for the payment of
all costs and expenses including, without limitation, reasonable attorneys' fees
and disbursements paid or incurred in accordance with the terms of the Credit
Agreement, the Mortgage and the other Loan Documents by or on behalf of Assignee
in the protection and maintenance of the lien of the Mortgage or granted hereby
in connection with any litigation or proceeding affecting this Assignment, the
Credit Agreement, the Mortgage or the other Loan Documents or the Property and
(d) for the reduction of the indebtedness evidenced by the Notes and secured by
the Mortgage and the other Loan Documents.
5. Assignor hereby irrevocably constitutes and appoints Assignee its
true and lawful attorney, upon the occurrence and during the continuance of an
Event of Default, to undertake and execute any or all of the powers described
herein with the same force and effect as if undertaken or executed by Assignor.
0147318.04-01S4a
5
<PAGE>
6. Assignee shall not in any way be liable to Assignor for any act
done or anything omitted to be done by it in good faith in connection with the
management of the Property, except for the consequences of its own gross
negligence or willful misconduct, nor shall Assignee be liable for any act or
omission of its agents, servants or employees provided that due care is used by
Assignee in the selection of such agents, servants and employees. Except as
aforesaid, Assignee shall be accountable to Assignor only for monies actually
received by it pursuant to this Assignment.
7. It is understood and agreed that nothing contained in this
Assignment shall prejudice or be construed to prejudice the right of Assignee
under any of the other Loan Documents without notice (except as otherwise
provided therein), to institute, prosecute and compromise any action which it
would deem advisable to protect its interest in the Property, including an
action to foreclose the Mortgage, and in such action, to move for the
appointment of a receiver of the Profits, or prejudice any rights which Assignee
shall have upon the occurrence of an Event of Default under the Notes or the
Mortgage. This Assignment shall survive, however, the commencement of any such
action and shall continue in full force and effect in the event of any
foreclosure action until the earlier to occur of (i) (a) all sums due and
payable under the Notes, the Mortgage and the Credit Agreement shall have been
fully paid and satisfied, together with any and all other sums which may become
due and owing under this Assignment, and (b) all other monetary obligations of
Assignor under the Notes, the Mortgage, this Assignment and the other Loan
Documents are satisfied and (ii) a sale of the Property shall be had thereunder.
8. Assignor agrees to indemnify and hold Assignee and its agents
harmless from and against any and all liability, loss, damage, cost and expense,
including reasonable attorneys' fees and disbursements, which it may or shall
incur under any of the Leases, or by reason of this Assignment, or by reason of
any action taken in good faith by Assignee hereunder, and from and against any
and all claims and demands whatsoever which may be asserted against Assignee by
reason of any alleged obligation or undertaking on its part to perform or
discharge any of the terms, covenants and conditions contained in any of the
Leases, in each case to the extent not attributable to the gross negligence or
wilful misconduct of Assignee. Should Assignee suffer or
0147318.04-01S4a
6
<PAGE>
incur any such liability, loss, damage, cost or expense, the amount thereof,
together with interest thereon from the date such amount was suffered or
incurred by Assignee until the same is repaid by Assignor to Assignee, at a rate
equal to the annual interest rate payable under the Credit Agreement in the case
of an Event of Default thereunder with respect to the then outstanding principal
amount of the Loan and any overdue interest thereon (to the extent permitted by
law) (the "Default Rate"), shall be payable by Assignor to Assignee immediately
upon demand, or at the option of Assignee, Assignee may reimburse itself
therefor out of any Profits (excluding all security deposits) collected by
Assignee. Nothing contained herein shall operate or be construed to obligate
Assignee to perform any of the terms, covenants or conditions contained in the
Leases or otherwise to impose any obligation upon Assignee with respect to any
of the Leases.
9. Upon request of Assignee, Assignor shall execute and deliver to
Assignee, such further instruments as Assignee may deem reasonably necessary to
effect this Assignment and the covenants of Assignor contained herein. Assignor,
at its sole cost and expense, shall cause such further instruments to be
recorded in such manner and in such places as may be required by Assignee,
provided that no such filing shall be required to be made by Assignor or at its
expense if any material tax or expense would be incurred as a result thereof.
10. Assignor shall pay all recording and filing fees in respect of
this Assignment as well as any and all taxes which may be due and payable on the
recording of this Assignment and any taxes hereafter imposed on this Assignment.
Should Assignor fail to pay the same, all such recording and filing fees and
taxes may be paid by Assignee on behalf of Assignor and the amount thereof,
together with interest at the Default Rate, shall be payable by Assignor to
Assignee immediately upon demand, or, if an Event of Default shall exist and be
continuing, at the option of Assignee, Assignee may reimburse itself therefor
out of the Profits collected by Assignee.
11. Failure of Assignee to avail itself of any of the terms,
covenants and conditions of this Assignment shall not be construed or deemed to
be a waiver of any of its rights hereunder. The rights and remedies of the
Assignee under this Assignment are cumulative and are not in lieu of
0147318.04-01S4a
7
<PAGE>
but are in addition to, and shall not be affected by the exercise of, any other
rights and remedies which Assignee shall have under or by virtue of law or
equity, the Notes, the Mortgage or the other Loan Documents (collectively, the
"Other Rights"). The rights and remedies of Assignee hereunder may be exercised
concurrently with any of the Other Rights.
12. Assignee hereby gives Assignor a license to exercise all of its
rights as landlord and otherwise with respect to the Leases and to collect,
retain, use and enjoy all Profits; provided, however, that Assignee may
terminate such license without notice to Assignor upon the occurrence and during
the continuance of an Event of Default. This Assignment shall continue in full
force and effect until the earlier to occur of (i) (a) all sums due and payable
under the Notes, the Mortgage and the Credit Agreement shall have been fully
paid and satisfied, together with any and all other sums which may become due
and owing under this Assignment, and (b) all other monetary obligations of
Assignor under the Notes, the Mortgage, this Assignment and the other Loan
Documents are satisfied, and (ii) a sale of the Property at foreclosure. Upon
payment of all such sums and satisfaction of all such obligations this
Assignment and the authority and powers herein granted by Assignor to Assignee
shall cease and terminate, and, in that event, Assignee shall (i) execute and
deliver to Assignor such instrument or instruments effective to evidence the
termination of this Assignment and the reassignment to Assignor of the rights,
powers and authorities granted herein as may be reasonably requested by
Assignor, and (ii) deliver to Assignor any monies held by Assignee for the
benefit of Assignor. Assignor agrees that upon termination of this Assignment it
shall assume payment of all unmatured or unpaid charges, expenses or obligations
incurred or undertaken by Assignee in connection with the management of the
Property in accordance with the terms hereof.
13. All of the covenants, agreements and provisions in this
Assignment by or for the benefit of Assignor or Assignee shall bind and inure to
the benefit of their respective successors and assigns, except that Assignor may
not assign or otherwise transfer this Assignment without Assignee's prior
written consent, which consent may be withheld in Assignee's sole discretion.
0147318.04-01S4a
8
<PAGE>
14. Nothing in this Assignment shall be construed to give to any
person other than Assignee and its successors and assigns any legal or equitable
right, remedy or claim under this Assignment and this Assignment shall be held
to be for the sole and exclusive benefit of Assignee and its successors and
assigns.
15. All notices, demands or requests made pursuant to this
Assignment shall be given in the manner set forth in Section 9.1 of the Credit
Agreement.
16. This Assignment may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.
17. If Assignor shall be entitled to a release of the 1290 Land or
the 237 Park Land upon satisfaction of all of the conditions of Section 2.9(d)
of the Credit Agreement, Assignee shall execute and deliver to Assignor a
release, in recordable form, of the 1290 Land or the 237 Park Land, as
applicable, together with the Leases and Profits related thereto, from this
Assignment.
18. This Assignment shall be governed by, construed and enforced in
accordance with the laws of the State of New York.
19. The provisions of Section 9.14 of the Credit
Agreement shall be deemed to be incorporated herein by
reference.
20. This Assignment may be executed in any number of duplicate
originals, and each such duplicate original shall be deemed to constitute but
one and the same instrument.
21. ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS ASSIGNMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
0147318.04-01S4a
9
<PAGE>
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the
day and year first above written.
ASSIGNOR:
1290 PARTNERS, L.P.
By: 1290 GP Corp., General Partner
By:___________________________
Name:
Title:
237 PARK PARTNERS, L.P.
By: 237 GP Corp., General Partner
By:___________________________
Name:
Title:
0147318.04-01S4a
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On this 9th day of October, 1996, before me personally came Lee S.
Neibart, to me known, who, being by me duly sworn, did depose and say that he
resides at 14 Crestview Drive, Pleasantville, NY 10570, and that he is a
President of 1290 GP Corp., a Delaware corporation, the general partner of 1290
Partners, L.P., the partnership that executed the foregoing instrument; and that
this instrument has been executed as the act and deed of 1290 Partners, L.P. and
that said partnership executed the same.
Notary Public
0147318.04-01S4a
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On this 9th day of October, 1996, before me personally came Lee S.
Neibart, to me known, who, being by me duly sworn, did depose and say that he
resides at 14 Crestview Drive, Pleasantville, NY 10570, and that he is a
President of 237 GP Corp., a Delaware corporation, the general partner of 237
Park Partners, L.P., the partnership that executed the foregoing instrument; and
that this instrument has been executed as the act and deed of 237 Park Partners,
L.P.; and that said partnership executed the same.
Notary Public
0147318.04-01S4a
<PAGE>
EXHIBIT A-1
1290 LAND
0147318.04-01S4a
<PAGE>
EXHIBIT A-2
237 LAND
0147318.04-01S4a
NOTE PLEDGE AND SECURITY AGREEMENT
among
1290 PARTNERS, L.P.
and
237 PARK PARTNERS, L.P.
collectively, as Pledgors
and
THE CHASE MANHATTAN BANK
as Agent for the Lenders,
as Pledgee
Dated as of October 10, 1996
0148845.05-01S4a
<PAGE>
NOTE PLEDGE AND SECURITY AGREEMENT
NOTE PLEDGE AND SECURITY AGREEMENT, dated as of October 10, 1996
(this "Agreement"), by and among 1290 PARTNERS, L.P., a Delaware limited
partnership ("1290 Partners"), and 237 PARK PARTNERS, L.P., a Delaware limited
partnership ("237 Park Partners"; 1290 Partners and 237 Park Partners each, a
"Pledgor" and collectively, the "Pledgors"), and THE CHASE MANHATTAN BANK, a
banking corporation, as Agent for the Lenders (the "Pledgee").
W I T N E S S E T H:
WHEREAS, E.M. Warburg, Pincus & Co., Inc., a Delaware corporation
("Warburg"), holds a leasehold interest in that certain property located at 237
Park Avenue, New York, New York, pursuant to that certain Agreement of Lease,
dated as of December 15, 1983, between 237 Park Partners (successor-in-interest
to O&Y Equity Corp, Olympia & York Holdings Corp. and Fame Associates, as
tenants-in-common), as landlord, and Warburg, as tenant;
WHEREAS, Robinson Silverman Pearce Aronsohn & Berman, a New York
general partnership ("Robinson"), holds a leasehold interest in that certain
property located at 1290 Avenue of the Americas, New York, New York, pursuant to
that certain Agreement of Lease, dated as of March 1, 1989, between 1290
Partners (successor-in-interest to 1290 Associates), as landlord, and Robinson,
as tenant;
WHEREAS, 237 Park Partners is the holder of a certain promissory
note made by Warburg, as more fully described on Schedule 1 attached hereto and
made a part hereof (the "Warburg Note");
WHEREAS, 1290 Partners is the holder of a certain promissory note
made by Robinson, as more fully described on Schedule 2 attached hereto and made
a part hereof (the "Robinson Note");
WHEREAS, pursuant to the Credit Agreement, dated as of the date
hereof (as the same may be amended
0148845.05-01S4a
<PAGE>
or otherwise modified from time to time, the "Credit Agreement"), by and among
Pledgors, the Lenders and Pledgee, the Lenders propose to make a certain loan
(the "Loan") to Pledgors as evidenced by certain promissory notes, dated as of
the date hereof, of Pledgors in the maximum aggregate principal amount of
$420,000,000 (collectively, the "Notes");
WHEREAS, as a condition to making the Loan to Pledgors, the
Lenders require that Pledgors pledge to the Lenders and grant a security
interest in the Collateral (hereinafter defined) to secure Pledgors' obligations
under the Notes; and
NOW, THEREFORE, in consideration of the foregoing, and in order
to induce the Lenders to make the Loan to Pledgors, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, Pledgors do
hereby agree with Pledgee, as follows:
1. Definitions. Unless the context otherwise requires,
capitalized terms used herein without definition that are defined in the Credit
Agreement, shall have the respective meanings provided therefor in the Credit
Agreement, and the following terms shall have the following meanings:
"Agent" shall mean The Chase Manhattan Bank, in its capacity as
agent for the Lenders and any successor agent appointed in accordance with
Section 7.8 of the Credit Agreement.
"Code" shall mean the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Collateral" shall have the meaning assigned thereto in Section 2
hereof.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Disclosure Statement" shall mean the Disclo- sure Statement for
the Second Amended Joint Plan of Reorganization of 237 Park Avenue Associates,
L.L.C. and 1290 Associates, L.L.C., dated August 9, 1996.
0148845.05-01S4a
2
<PAGE>
"Event of Default" shall have the meaning assigned thereto in
Section 10 hereof.
"Lenders" shall have the meaning assigned thereto in the Credit
Agreement.
"Loan Documents" shall have the meaning assigned thereto in the
Credit Agreement.
"Obligations" shall have the meaning assigned thereto in the
Credit Agreement.
2. Grant of Security Interest, Etc. Pledgors hereby pledge,
assign, hypothecate, transfer and deliver to Pledgee and hereby grant Pledgee a
first lien on and security interest in all of its right, title and interest in,
to and under the following, whether now owned or hereafter acquired, now
existing or hereafter arising and wherever located (the "Collateral"): all of
Pledgors' ---------- right, title and interest in, and to (i) the Warburg Note
and (ii) the Robinson Note, including, with respect to each such Note, all
income and profits therefrom, all distributions thereon, and all rights and
privileges pertaining thereto, and all proceeds thereof, as security for the
full and punctual payment and performance of the Obligations when due (whether
upon stated maturity, by acceleration or otherwise).
3. Provisions Regarding the Warburg Note and Robinson Note. In
furtherance of the pledge, assignment and security interest granted by Section 2
hereof, Pledgors shall, simultaneously with the delivery of this Agreement,
deliver to Pledgee the Warburg Note and the Robinson Note.
4. Powers of Pledgors Prior to an Event of Default. Prior to the
occurrence and continuance of an Event of Default and subject to the terms of
the Cash Collateral Agreement, Pledgors shall be entitled to receive and retain
all payments belonging to Pledgors under the Warburg Note and the Robinson Note,
provided, however, that no action shall be taken or fail to be taken which (i)
could be reasonably likely to materially adversely affect Pledgee's rights to
the Collateral, or the value of the Collateral provided that Pledgors may
continue to accept payments under the Robinson Note on the same basis as O&Y
Financial Company ("O&Y") accepted such
0148845.05-01S4a
3
<PAGE>
payments as set forth in Section IIIB.3 (Assignment of Tenant Notes) of the
Disclosure Statement) or (ii) would violate any provision of this Agreement or
any of the Loan Documents.
5. Representations, Warranties and Covenants. Pledgors hereby
represent, as of the date hereof, cove- nant with and warrant to, Pledgee as
follows:
(a) To the best knowledge of Pledgors, (i) the Warburg Note is
the legal, valid and binding obligation of Warburg, which is the maker thereof,
enforceable against Warburg in accordance with its terms, (ii) the Robinson Note
is the legal, valid and binding obligation of Robinson, which is the maker
thereof, enforceable against Robinson in accordance with its terms, and (iii)
the obligations of Warburg under the Warburg Note and Robinson under the
Robinson Note are not subject to any defense, set-off or counterclaim. Pledgee
acknowledges that the Robinson Note may be subject to certain disputes as
discussed in Section IIIB.3 (Assignment of Tenant Notes) of the Disclosure
Statement.
(b) Pledgors will defend Pledgee's right, title and interest in
and to the Collateral pledged by it pursuant hereto or in which it has granted a
security interest pursuant hereto against the claims and demands of all other
Persons.
(c) To the best knowledge of Pledgors, Pledgors are the legal and
beneficial owner of and have good title to the Collateral in which they have
granted a security interest pursuant hereto, free and clear of all claims or
security interests of every nature whatsoever, except such as are created
pursuant to this Agreement, and have the unqualified right to pledge and grant a
security interest in the same as herein provided without the consent of any
other Person. Notwithstanding the foregoing, Pledgee acknowledges that the
transferor of the Warburg Note to 237 Park Partners has advised 237 Park
Partners that the Warburg Note may be subject to claims of other parties.
(d) The Collateral has been validly ac- quired by Pledgors,
subject to the possible claims of other parties with respect to the Warburg Note
as described above, and is duly and validly pledged hereunder.
0148845.05-01S4a
4
<PAGE>
All consents and approvals required for the consummation of the transactions
contemplated by this Agreement have been obtained.
(e) Pledgors will not sell, assign or otherwise dispose of, or
mortgage, pledge or grant a security interest in, any of the Collateral or any
interest therein, or suffer any of the same to exist, and any sale, assignment,
mortgage, pledge or security interest whatsoever made in violation of this
covenant shall be a nullity and of no force and effect, and upon demand of
Pledgee, shall forthwith be cancelled or satisfied by an appropriate instrument
in writing.
(f) Pledgors covenant and agree that (i) neither Pledgor will
consent to prepayment of the Warburg Note or the Robinson Note except if
expressly permitted by the terms thereof, nor will they take any action, the
taking of which might result in an alteration or impairment of the Warburg Note
or the Robinson Note, provided that Pledgors may continue to accept payments
under the Robinson Note on the same basis as O&Y as described in Section IIIB.3
(Assignment of Tenant Notes) in the Disclosure Statement, (ii) neither Pledgor
will, without the prior written consent of Pledgee, enter into any agreement
amending, modifying or supplementing the Warburg Note or the Robinson Note,
provided that Pledgors' acceptance of the continued payments under the Robinson
Note on the same basis as O&Y as described in Section III B.3 (Assignment of
Tenant Notes) in the Disclosure Statement will not be deemed to be an amendment,
modification or supplement of or a waiver of any obligation under (pursuant to
clause (iii) below) the Robinson Note, (iii) neither Pledgor will, without the
prior written consent of Pledgee, waive or release any obligation of Warburg or
Robinson under the Warburg Note or the Robinson Note, respectively, (iv) neither
Pledgor will, without the prior written consent of Pledgee, consent or agree to
any act or omission to act on the part of Warburg or Robinson, which, without
such consent or agreement, would constitute a default thereunder, (v) they will
exercise promptly and diligently each and every right which they may have under
the Warburg Note or the Robinson Note (except the right to reconvey, release or
cancel or foreclose on any collateral or exercise any other remedies with
respect to collateral under the Warburg Note or the Robinson Note unless Pledgee
otherwise consents in writ-
0148845.05-01S4a
5
<PAGE>
ing), (vi) they will not take or omit to take any action or suffer or permit any
action to be omitted or taken, the taking or omission of which might result in
any right of offset against sums payable under the Warburg Note or the Robinson
Note or any defense by Warburg or Robinson to payment, or any counterclaim by
Warburg or Robinson and (vii) Pledgors will give prompt notice to Pledgee of any
notice of default given by or to either or both Pledgors under or with respect
to the Warburg Note or the Robinson Note together with a complete copy of such
notice.
(g) The principal place of business and chief executive office of
each Pledgor is c/o Victor Capital Group, L.P., 885 Third Avenue, New York, New
York 10022, and the principal place where each Pledgor's records concerning the
Collateral are kept is c/o Tishman Speyer Properties, L.P., 520 Madison Avenue,
New York, New York 10022. Neither Pledgor will change such principal place of
business or chief executive office or remove such records unless Pledgors shall
provide Pledgee with written notice thereof within thirty (30) days after such
change (but in any event, within the period required pursuant to the Code) and
there shall have been taken such action, satisfactory to Pledgee, as may be
necessary to maintain the security interest of Pledgee hereunder at all times
fully perfected and in full force and effect. Neither Pledgor shall change its
name unless such Pledgor shall have given Pledgee written notice thereof within
thirty (30) days after such change (but in any event, within the period required
pursuant to the Code) and shall have taken such action, satisfactory to Pledgee,
as may be necessary to maintain the security interest of Pledgee in the
Collateral granted hereunder at all times fully perfected and in full force and
effect.
(h) Giving effect to the aforesaid grant and assignment to
Pledgee, and with respect to the Warburg Note, assuming that no third party has
any interest therein as described above, Pledgee has, as of the date of this
Agreement, and as to Collateral acquired from time to time after such date,
shall have, a valid, perfected and continuing first priority lien upon and
security interest in the Collateral; provided that no representation or warranty
is made with respect to the proceeds of Collateral consisting of "cash proceeds"
or "non-cash proceeds" as defined in the Code except if, and
0148845.05-01S4a
6
<PAGE>
to the extent, the provisions of Section 9-306 of the
Code shall be complied with.
(i) Except for financing statements filed, to be filed or filed
and assigned in favor of Pledgee as secured party, there are no financing
statements under the Code covering any or all of the Collateral and neither
Pledgor will, without the prior written consent of Pledgee, execute and, until
payment in full of all of the Obligations, there will not ever be on file in any
public office, any enforceable financing statement or statements covering any or
all of Pledgors' interest in the Collateral.
(j) None of the Collateral is, as of the date of this Agreement,
and as to Collateral which arises from time to time after such date will be,
evidenced by any instrument, note or chattel paper except such as have been or
will be endorsed, assigned or pledged and delivered to Pledgee by Pledgors
simultaneously with the creation thereof.
6. Application of Collateral. Subject to the terms of the Cash
Collateral Agreement, all proceeds of any Collateral now or at any time
hereafter received or retained by Pledgee pursuant to the provisions of this
Agreement may, at Pledgee's discretion, after the occurrence and during the
continuance of an Event of Default, be applied by Pledgee to the Obligations
pursuant to the terms of the Credit Agreement.
7. Remedies. If an Event of Default shall occur and then be
continuing:
(a) Pledgee, without obligation to resort to any other security,
right or remedy granted under any other agreement or instrument, shall have the
right to, in addition to all rights, powers and remedies of a secured party
pursuant to the Code, at any time and from time to time, sell, resell, assign
and deliver, in its sole discretion, any or all of the Collateral or any other
collateral security for the Obligations (in one or more parcels and at the same
of different times), except that Pledgee shall give Pledgor at least ten (10)
days' prior written notice of the time and place of any public sale or of the
time and the place where any private sale or other disposition is to be made,
which notice Pledgor
0148845.05-01S4a
7
<PAGE>
hereby agrees is reasonable, and all right, title and interest, claim and demand
therein and right of redemption thereof, at public or private sale, for cash,
upon credit or for future delivery, and in connection therewith Pledgee may
grant options and may impose reasonable conditions such as requiring any
purchaser to represent that any "securities" constituting any part of the
Collateral are being purchased for investment only, Pledgors hereby waiving and
releasing any and all equity or right of redemption. If all or any of the
Collateral is sold by Pledgee upon credit or for future delivery, Pledgee shall
not be liable for the failure of the purchaser to purchase or pay for the same
and, in the event of any such failure, Pledgee may resell such Collateral. It is
expressly agreed that Pledgee may exercise its rights with respect to less than
all of the Collateral, leaving unexercised its rights with respect to the
remainder of the Collateral, provided, however, that such partial exercise shall
in no way restrict or jeopardize Pledgee's right to exercise its rights with
respect to all or any other portion of the Collateral at a later time or times.
(b) Pledgee may exercise and enforce, either by itself or by its
nominee or designee, all of Pledgee's rights, powers and remedies hereunder and
under law.
(c) Pursuant to the power-of-attorney provided for in Section 23
hereof, Pledgee may take any action and exercise and execute any instrument
which it may deem necessary or advisable to accomplish the purposes hereof.
Without limiting the generality of the foregoing, Pledgee, after the occurrence
and during the continuance of an Event of Default, shall have all the rights and
powers granted to Pledgors under this Agreement and the Credit Agreement, and
shall have the right and power to receive, endorse and collect all checks and
other orders for the payment of money made payable to Pledgors representing any
interest, payment of principal or other distribution payable in respect of the
Collateral or any part thereof, and for and in the name, place and stead of
Pledgors, to execute endorsements, assignments or other instruments of
conveyance or transfer in respect of the Warburg Note or the Robinson Note or
any other property which is or may become a part of the Collateral hereunder.
0148845.05-01S4a
8
<PAGE>
(d) Pledgee may exercise all of the rights and remedies of a
secured party under the Code.
(e) Without limiting any other provision of this Agreement, and
without waiving or releasing Pledgors from any obligation or default hereunder,
Pledgee shall have the right, but not the obligation, to perform any act or take
any appropriate action, as it, in its reasonable judgment, may deem necessary to
cure an Event of Default under Section 10(a) hereof or cause any term, covenant,
condition or obligation required under this Agreement to be performed or
observed by Pledgors to be promptly performed or observed, on behalf of Pledgors
or to protect the security of this Agreement. All amounts advanced by, or on
behalf of, Pledgee in exercising its rights under this Section 7 (including, but
not limited to, reasonable legal expenses and disbursements incurred in
connection therewith), together with interest thereon at the rate of interest
payable on overdue principal under the Credit Agreement from the date of each
such advance, shall be payable by Pledgors to Pledgee upon demand and shall be
secured by this Agreement.
8. Sales of Collateral. No demand, advertisement or notice, all
of which are hereby expressly waived by Pledgors, shall be required in
connection with any sale or other disposition of all or any part of the
Collateral, except that Pledgee shall give Pledgors at least ten (10) days'
prior written notice of the time and place of any public sale or of the time and
the place where any private sale or other disposition is to be made, which
notice Pledgors hereby agree is reasonable, all other means, advertisements and
notices being hereby waived. To the extent permitted by law, Pledgee shall not
be obligated to make any sale of the Collateral if it shall determine not to do
so, regardless of the fact that notice of sale may have been given, and Pledgee
may without notice or publication adjourn any public or private sale, and such
sale may, without further notice, be made at the time and place to which the
same was so adjourned. Upon each private sale of the Collateral of a type
customarily sold in a recognized market and upon each public sale, unless
prohibited by any applicable statute which cannot be waived, Pledgee (or its
nominee or designee) may purchase any or all of the Collateral being sold, free
and discharged from any trusts, claims, equity or right of redemption of
Pledgors, all of which
0148845.05-01S4a
9
<PAGE>
are hereby waived and released to the extent permitted by law, and may make
payment therefor by credit against any of the Obligations in lieu of cash or any
other obligations. In the case of all sales of the Collateral, public or
private, Pledgors will pay all costs and expenses of every kind for sale or
delivery, including brokers' and reasonable attorneys' fees and disbursements
and any tax imposed thereon. However, the proceeds of sale of Collateral shall
be available to cover such costs and expenses, and, after deducting such costs
and expenses from the proceeds of sale, Pledgee shall apply any residue to the
payment of the Obligations in the order of priority as set forth in the Credit
Agreement.
9. Receipt of Sale Proceeds. Upon any sale of the Collateral by
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
10. Events of Default. An "Event of Default" shall exist if any
of the following shall have occurred:
(a) Either or both Pledgors' failure to comply with any of the
covenants or agreements made by it in this Agreement, or if any representation
or warranty made by either or both Pledgors contained in this Agreement was
false or misleading in any material respect on the date when made (i) as
provided for in Section 5(c), 5(d), 5(e) or 5(h), immediately upon the
occurrence thereof; or (ii) as provided for in Section 5 (other than those
subsections referred to above), or any other representation, warranty, term,
covenant or agreement contained in this Agreement, if such failure or breach, as
the case may be, shall continue for thirty (30) days after notice shall have
been given by Pledgee specifying such failure or breach, as the case may be, and
requiring such failure or breach, as the case may be, to be remedied; provided,
however if the nature of the failure or breach, as the case may be, referred to
in clause (ii) is such that it is curable by Pledgors but cannot be cured
0148845.05-01S4a
10
<PAGE>
within thirty (30) days then an Event of Default shall not be deemed to have
occurred hereunder if Pledgors, reasonably promptly after such notice, commence
to cure such failure or breach, as the case may be, and proceed with reasonable
diligence to cure the same, and such failure or breach, as the case may be,
shall not be deemed an Event of Default hereunder so long as Pledgors are
reasonably diligently pursuing the cure of such failure or breach, as the case
may be and, in the event such failure or breach, as the case may be, continues
for one hundred twenty (120) days after such notice, Pledgors inform Pledgee on
a monthly basis of all actions being taken by Pledgors to effect such cure; or
(b) An "Event of Default" shall occur under the Credit Agreement.
11. Waivers; Modifications. No delay on the part of Pledgee in
exercising any of its options, powers or rights, or partial or single exercise
thereof, shall constitute a waiver thereof. None of the terms and conditions of
this Agreement may be discharged, changed, waived, modified or varied in any
manner unless in a writing duly signed by the parties hereto.
12. Remedies Cumulative. All rights and remedies afforded to
Pledgee by reason of this Agreement are separate and cumulative remedies, and
shall be in addition to all other rights and remedies in favor of Pledgee
existing at law or in equity or otherwise. No one of such remedies, whether or
not exercised by Pledgee, shall be deemed to exclude, limit or prejudice the
exercises of any other legal or equitable remedy or remedies available to
Pledgee.
13. Notices. The provisions of Section 9.1 of the Credit
Agreement shall be deemed to be incorporated by reference herein.
14. Jurisdiction, Etc. Any legal action or proceeding with
respect to this Agreement and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, Pledgors hereby accept for themselves
and in respect of their property, generally and unconditionally, the non-
0148845.05-01S4a
11
<PAGE>
exclusive jurisdiction of the aforesaid courts and appellate courts from any
thereof. Pledgors irrevocably consent to the service of process out of any of
the afore-mentioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to Pledgors at
the addresses set forth herein. Pledgors hereby irrevocably waive any objection
which they may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement brought in the courts referred to above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such action
or proceeding brought in any such court has been brought in an inconvenient
forum. Nothing herein shall affect the right of Pledgee to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against either or both Pledgors in any other jurisdiction.
15. Successors and Assigns. This Agreement, and all
representations, warranties and covenants of Pledgors made herein, shall be
binding upon and inure to the benefit of Pledgors and their successors and
assigns, provided that nothing in this Section shall be deemed to constitute the
consent of Pledgee to any transaction in this Agreement elsewhere not permitted.
This Agreement shall be binding upon and shall inure to the benefit of Pledgee
and its successors and assigns.
16. Pledgee Not Bound.
(a) This Agreement shall not be construed as creating a
partnership or joint venture between Pledg- ee and Pledgors.
(b) Pledgee shall not be obligated to perform or discharge any
obligation of Pledgors as a result of the collateral assignment hereby effected.
(c) The acceptance by Pledgee of this Agreement, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate Pledgee to appear in or defend any action or proceeding
relating to the Collateral to which it is not a party, or to take any action
hereunder or thereunder, or to expend any money or incur any expenses or
0148845.05-01S4a
12
<PAGE>
perform or discharge any obligation, duty or liability
under the Collateral.
17. Acts of Pledgee. All Collateral at any time delivered to
Pledgee pursuant hereto shall be held by Pledgee subject to the terms, covenants
and conditions herein set forth. None of Pledgee, the Lenders nor any of their
respective directors, officers, agents, employees or counsel shall be liable for
any action taken or omitted to be taken by such party or parties relative to any
of the Collateral, except for such party's or parties' own gross negligence or
willful misconduct or breach of this Agreement. Pledgee shall be entitled to
rely in good faith upon any writing or other document, reasonably believed by it
to be genuine and correct and to have been signed, sent or by the proper person
or persons, and, with respect to any legal matter, Pledgee may rely in acting or
in refraining from acting upon the advice of counsel selected by it concerning
all matters hereunder. Pledgors hereby agree to indemnify and hold harmless
Pledgee, the Lenders and any of their respective directors, officers, agents,
employees or counsel (collectively, the "Indemnified Parties") from and against
any and all claim, demands, losses, judgments and liabilities (including,
without limitation, liabilities for penalties and all damages, liabilities,
losses, costs and expenses which Pledgee may incur or suffer by reason of the
operation of this Agreement or Pledgee's exercise of the rights, remedies or
powers under or in accordance with the terms hereof or otherwise, but excluding
those losses, judgments and liabilities of Pledgee resulting from its gross
negligence or willful misconduct or breach of this Agreement) of whatsoever kind
or nature without limitation, and to reimburse, within ten (10) days after
demand therefor, Pledgee for all costs and expenses, including reasonable
attorneys' fees (other than those costs and expenses of Pledgee resulting from
its or any Lender's gross negligence or willful misconduct or breach of this
Agreement), arising out of or resulting from this Agreement or the exercise by
Pledgee of any right or remedy granted to it hereunder, together with interest
on such sums at the prime rate, from the date such expenses were paid by Pledgee
to the date of payment to Pledgee of such sums. Notwithstanding anything
contained herein to the contrary, Pledgors are not indemnifying and shall not be
required to indemnify the Indemnified Parties hereunder for any claim, demand,
loss, judgment or liability
0148845.05-01S4a
13
<PAGE>
arising out of or resulting from the Collateral, provided the event or events
giving rise to such claim, demand, loss, judgment or liability occur after the
consummation of a foreclosure sale or other disposition of the Collateral as a
consequence of an Event of Default hereunder. In any action to enforce this
Agreement, the provisions of this Section shall, to the extent permitted by law,
prevail notwithstanding any provision of applicable law respecting the recovery
of costs, disbursements and allowances to the contrary.
18. Custody of Collateral; Notice of Exercise of Remedies.
Pledgee shall not have any duty as to the collection or protection of the
Collateral or any income thereon or payments with respect thereto, or as to the
preservation of any rights pertaining thereto beyond exercising reasonable care
with respect to the custody of the Warburg Note, the Robinson Note and any other
Collateral in its possession. Pledgors hereby waive notice of acceptance hereof,
and except as otherwise specifically provided herein or required by provision of
law which may not be waived, hereby waive any and all notices or demands with
respect to, any exercise by Pledgee of any rights or powers which it may have or
to which it may be entitled with respect to the Collateral.
19. Severability. In case any one or more of the provisions
contained in this Agreement shall be found to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby, and this Agreement shall continue in full force and effect in
accordance with its remaining terms.
20. Further Assurances. Pledgors agree to do such further acts
and things and to execute and deliver to Pledgee such additional conveyances,
assignments, agreements and instruments as Pledgee from time to time may
reasonably require or deem advisable to carry into effect this Agreement or to
further assure and confirm unto Pledgee its rights, powers and remedies
hereunder. Pledgors hereby agree to sign and deliver to Pledgee financing
statements, in form acceptable to Pledgee, as Pledgee may from time to time
reasonably request or as are necessary in the opinion of Pledgee to establish
and maintain a valid and perfected security interest in the
0148845.05-01S4a
14
<PAGE>
Collateral and to pay any filing fees relative thereto. Pledgors also authorize
Pledgee, to the extent permitted by law, to file such financing statements
without the signature of Pledgors and further authorize Pledgee, to the extent
permitted by law, to file a photographic or other reproduction of this Agreement
or of a financing statement in lieu of a financing statement.
21. Release. Pledgee agrees to release its security interest in
the Collateral upon satisfaction of all of the following conditions precedent:
(a) That the documents to effect such release be prepared by the
counsel for Pledgee at the reasonable expense of Pledgors;
(b) That (i) either (x) the principal amount of the Notes
evidencing the Loan and the other Obligations, shall have been fully paid and
satisfied and Pledgee shall have no further obligation to make the Loan pursuant
to the Credit Agreement, or (y) the Borrowers shall have complied with the
release provisions set forth in the Credit Agreement permitting the release of
the Lien on the Collateral, and (ii) accrued interest on the Notes evidencing
the Loan and any costs, commitment and other fees, expenses and other sums owing
to Pledgee or the Lenders as provided in the Loan Documents, in each case
together with accrued interest thereon as provided in the Loan Documents, shall
have been fully paid (to the extent then due in the case of clause (i)(y),
above);
(c) That (i) all costs, fees, expenses and other sums paid or
incurred by or on behalf of Pledgee or the Lenders (in accordance with the terms
of the Credit Agreement) in exercising any of its rights, powers, options,
privileges and remedies hereunder or under any of the Loan Documents, including,
without limitation, reasonable attorneys' fees and disbursements, plus accrued
interest thereon as provided in the Loan Documents, and (ii) any and all other
matured indebtedness, obligations and liabilities of Pledgors to Pledgee or the
Lenders arising out of or in connection with or otherwise related to the Loan
Documents, shall have been fully paid; and
(d) That (i) if the 1290 Property shall be released pursuant to
the terms of the Credit Agreement
0148845.05-01S4a
15
<PAGE>
and the Mortgage (as defined in the Credit Agreement), then the Robinson Note
shall be released, and (ii) if the 237 Park Property shall be released pursuant
to the terms of the Credit Agreement and the Mortgage, then the Warburg Note
shall be released.
Any such release and any documents deliv- ered to confirm the
same shall expressly provide that such release is made without recourse and
without any representation or warranty, express or implied (except that Pledgee
shall represent that such release has been and is duly authorized, that all
necessary consents to the execution and delivery thereof have been obtained and
that it has not assigned or encumbered the Collateral). If the Collateral is so
released, Pledgee, at the request and sole cost and expense of Pledgors made at
the time of any such release, will execute and deliver to Pledgors a proper
instrument or instruments acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver, without recourse and
without any representation or warranty, express or implied (except that Pledgee
shall represent that such release has been and is duly authorized, that all
necessary consents to the execution and delivery thereof have been obtained and
that it has not assigned or encumbered the Collateral), to Pledgors such of the
Collateral as may be in the possession of Pledgee and as has not theretofore
been sold or otherwise applied or released pursuant to this Agreement, together
with any monies at the time held by Pledgee hereunder and not applied to the
payment of the Obligations.
22. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to contracts entered into and to be performed entirely within such
State and without regard to the conflicts or choice of law rules of such State.
This Agreement, together with the other Loan Documents, sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, whether oral or written,
relating thereto.
23. Miscellaneous.
0148845.05-01S4a
16
<PAGE>
(a) Pledgors hereby irrevocably consti- tute and appoint Pledgee
as the true and lawful attorney-in-fact of Pledgors, which appointment is
coupled with an interest, with full power of substitution, to proceed from time
to time in each Pledgor's name in any statutory or non-statutory proceeding
affecting each Pledgor, or any Collateral, and Pledgee or its nominee may (i)
execute and file proof of claim for the full amount of any Collateral and vote
such claims for the full amount thereof (x) for or against proposal or
resolution, (y) for a trustee or trustees or for a receiver or receivers or for
a committee of creditors and/or (z) for the acceptance or rejection of any
proposed arrangement, plan or reorganization, composition or extension, and
Pledgee or its nominee may receive any payment or distribution and give
acquittance therefor and may exchange or release Collateral; (ii) endorse any
draft or other instrument for the payment of money, execute releases and
negotiate settlements and (iii) execute all such other documents or instruments
as may be necessary or expedient to be executed by Pledgors for any of the
purposes of this Agreement; provided, however, that the power provided for in
this sentence may not be exercised by Pledgee prior to the occurrence of an
Event of Default and then only for so long as an Event of Default continues.
Pledgee shall have no duty to exercise any of the aforesaid rights, privileges
or options and shall not be responsible for any failure to do so or delay in so
doing.
(b) In enforcing any rights hereunder or under any of the other
Loan Documents, Pledgee shall not be required to resort to any particular
security, right or remedy through foreclosure or otherwise or to proceed in any
particular order of priority, or otherwise act or refrain from acting, and, to
the extent permitted by law, Pledgors hereby waive and release any right to a
marshalling of assets or a sale in inverse order of alienation.
(c) Whenever any payment or performance of any obligation shall
be due on a day which is not a business day, such payment or performance shall
be made on the next succeeding business day.
(d) Pledgors hereby waive any claim for monetary damages against
the Lenders which they may have based on any assertion that Pledgee has
unreasonably
0148845.05-01S4a
17
<PAGE>
withheld or unreasonably delayed any determination, consent or approval, and
Pledgors agree that their sole remedy shall be an action or proceeding to
enforce any such provision or for specific performance, injunction or
declaratory judgment with respect thereto. In the event of such a determination
in favor of Pledgors in an action or proceeding seeking only the relief
permitted hereunder, the requested determination, consent or approval shall be
deemed to have been granted. However, Pledgee shall have no liability to
Pledgors for its refusal or failure to give such determination, consent or
approval.
(e) Whenever consent of Pledgee is re- quired hereunder, Pledgee
shall respond to Pledgors' request for consent within fifteen (15) business days
of receipt of a written request therefor, and if Pledgee fails to respond within
such fifteen (15) business day period, such consent shall be deemed granted by
Pledgee, provided Pledgors notify Pledgee on or before three (3) days, but no
earlier than five (5) days, prior to the expiration of such fifteen (15)
business day period that Pledgors have failed to receive Pledgee's response to
any such request for consent.
(f) Pledgee agrees at any time and from time to time upon not
less than ten (10) days' prior notice by Pledgors to execute, acknowledge and
deliver to Pledgors or any other party specified by Pledgors a statement in
writing certifying that this Agreement is unmodified and in full force and
effect (or if there have been modifications, that the same, as modified, is in
full force and effect and stating the modifications), and stating whether or not
to the best knowledge of Pledgee there is a continuing Default or Event of
Default, and, if so, specifying each such Default or Event of Default.
(g) Pledgors agree at any time and from time to time upon not
less than ten (10) days' prior notice by Pledgee or a Lender to execute,
acknowledge and deliver to Pledgee, the Lender or any other party specified by
Pledgee or such Lender, a statement in writing certifying that this Agreement is
unmodified and in full force and effect (or if there have been modifications,
that the same, as modified, is in full force and affect and stating the
modifications) and stating whether or not to the best knowledge of Pledgors
there is a continuing
0148845.05-01S4a
18
<PAGE>
Default or Event of Default, and, if so, specifying each such Default or Event
of Default.
(h) The provisions of Section 9.14 of the Credit Agreement shall
be deemed to be incorporated by reference herein.
(i) EACH OF THE PLEDGORS HEREBY IRRE- VOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
0148845.05-01S4a
19
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Agreement in the City of New York as of the day and year first above
written.
PLEDGORS:
1290 PARTNERS, L.P.
By: 1290 GP Corp.,
General Partner
By:
Name:
Title:
237 PARK PARTNERS, L.P.
By: 237 GP Corp.,
General Partner
By:
Name:
Title:
PLEDGEE:
THE CHASE MANHATTAN BANK,
as Agent for the Lenders
By:
Name:
Title:
0148845.05-01S4a
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of October, 1996 before me personally came
______________ to me known, who, being by me duly sworn, did depose and say that
he resides at _________________; that he is the _________________ of 1290 GP
Corp., the general partner of 1290 PARTNERS, L.P., the limited partnership
described in and which executed the foregoing instrument, and that he signed his
name thereto by the authority of the limited partnership.
Notary Public
0148845.05-01S4a
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of October, 1996 before me personally came
______________ to me known, who, being by me duly sworn, did depose and say that
he resides at _________________; that he is the _________________ of 237 GP
Corp., the general partner of 237 PARK PARTNERS, L.P., the limited partnership
described in and which executed the foregoing instrument, and that he signed his
name thereto by the authority of the limited partnership.
Notary Public
0148845.05-01S4a
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of October, 1996 before me personally came
______________ to me known, who, being by me duly sworn, did depose and say that
he resides at _________________; that he is the _________________ of The Chase
Manhattan Bank, the banking corporation described in and which executed the
foregoing instrument, and that he signed his name thereto by order of the board
of directors of said banking corporation.
Notary Public
0148845.05-01S4a
<PAGE>
SCHEDULE 1
WARBURG NOTE
Promissory Note in favor of O&Y Equity Corp., Olympia & York
Holdings Corp. and Fame Associates, as tenants in common, made by Warburg, dated
August 20, 1985, in the original principal of $4,354,758.09, as assigned to
Baden Real Estate Corporation and as endorsed to 237 Park Partners, L.P.
0148845.05-01S4a
<PAGE>
SCHEDULE 2
ROBINSON NOTE
Promissory Note made by Robinson to the order of O&Y, dated as of
April 1, 1989, in the original principal amount of $6,500,000, made in
connection with that certain letter agreement, dated as of March 1, 1989 (the
"Letter Agreement"), between O&Y and Robinson whereby O&Y agreed to advance the
amount of $6,500,000 to Robinson in no more than three separate advances, as
supplemented by letter, dated as of March 1, 1989, from Robinson to O&Y and as
endorsed to 1290 Partners, L.P. The Note was modified or supplemented by the
following documents:
(a) letter, dated May 12, 1989, from Robinson whereby
Robinson acknowledged receipt of an advance of $1,500,000
("First Advance") from O&Y pursuant to the Letter Agreement;
(b) letter, dated May 17, 1989, from O&Y relating to the
First Advance;
(c) letter, dated August 21, 1989, from Robinson whereby
Robinson acknowledged receipt of an advance of $2,500,000
("Second Advance") from O&Y pursuant to the Letter
Agreement;
(d) letter, dated August 25, 1989, from O&Y relating to the
Second Advance;
(e) unexecuted letter, dated March __, 1990, from Robinson
whereby Robinson acknowledged receipt of $2,500,000 ("Third
Advance") from O&Y pursuant to the Letter Agreement;
(f) letter, dated March 27, 1990, from Olympia & York
Companies relating to the Third Advance;
(g) letter agreement, dated as of July 23, 1991, from
Robinson to O&Y;* and
(h) letter, dated August 6, 1992, from Robinson to Olympia &
York Companies.**
--------
* No representation or warranty as to the effective- ness of such letter is
made by Pledgor.
** No representation or warranty as to the effective- ness of such letter is
made by Pledgor.
0148845.05-01S4a
CONSENT AND SUBORDINATION
OF PROPERTY MANAGEMENT AGREEMENT
THIS CONSENT AND SUBORDINATION OF PROPERTY MANAGEMENT AGREEMENT
(this "Agreement"), dated as of October 10, 1996, is executed by TISHMAN SPEYER
PROPERTIES, L.P., a New York limited partnership ("Manager"), in connection with
the Credit Agreement (the "Credit Agreement"), dated as of the date hereof, by
and among 1290 Partners, L.P. (the "1290 Borrower") and 237 Park Partners, L.P.
((the "237 Park Borrower"; the 1290 Borrower and the 237 Park Borrower each, a
"Borrower" and collectively, the "Borrowers"), The Chase Manhattan Bank, as
agent (the "Agent") and the lenders (each, a "Lender" and collectively, the
"Lenders") listed on the signature pages thereof, pursuant to which the Lenders
have agreed to make a loan to the Borrowers in the principal amount of Four
Hundred Twenty Million Dollars ($420,000,000) (the "Loan"). The Loan will be
evidenced by certain promissory notes (the "Notes") of the Borrowers made to
each of the Lenders in accordance with the terms of the Credit Agreement. The
Notes will be secured in part by that certain Mortgage Modification, Restatement
and Security Agreement, dated as of the date hereof (as same may hereafter be
amended, modified or supplemented, the "Mortgage"), covering the (i) real
property (the "1290 Property") commonly known as 1290 Avenue of the Americas,
New York, New York, and (ii) real property (the "237 Park Property") commonly
known as 237 Park Avenue, New York, New York (the 1290 Property and the 237 Park
Property, each, a "Property" and collectively, the "Properties").
1. Definitions. All capitalized terms not
defined herein shall have the meanings ascribed thereto
in the Credit Agreement, or if not in the Credit Agree-
ment, in the Mortgage.
2. Manager's Representations. Manager war-
rants and represents to the Agent, as of the date hereof,
that the following are true and correct:
(a) That Manager has agreed to act as manager and leasing
agent of the Properties, pursuant to a Management and Leasing Agreement, dated
as of October 10, 1996 (the "1290 Management Agreement"), between the 1290
Borrower and Manager and a Management and Leasing
0088151.06-01S7a
<PAGE>
Agreement, dated as of October 10, 1996 (the "237 Park Management Agreement"),
between the 237 Park Borrower and Manager (the 1290 Management Agreement and 237
Park Management Agreement collectively, the "Management Agreements");
(b) That the entire agreement between Manager and the
Borrowers for the management and leasing of the Properties is evidenced by the
Management Agreements.
(c) That the Management Agreements constitute the valid and
binding agreement of Manager, enforceable in accordance with its terms, and
Manager has full authority under all state or local laws and regulations, to
perform all of its obligations under said Management Agreements, except such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium, equity of redemption or other similar laws now or hereafter in
effect relating to creditors' rights and to the equitable discretion of a court
in enforcing the rights and remedies of creditors generally (regardless of
whether enforcement is sought in equity or at law).
(d) To Manager's actual knowledge, that neither the Borrowers
nor Manager is in default in the performance of any of its obligations under the
Management Agreements.
(e) That Manager has received and re- viewed a copy of the
Credit Agreement.
3. Manager's Agreements. Manager hereby
consents to and agrees to each and every one of the
following covenants and agreements for the benefit of the
Agent and as a requirement of the Lenders to make the
Loan to the Borrowers pursuant to the terms of the Credit
Agreement:
(a) No Termination of Management Agreements. Manager shall not
terminate the Management Agreements without first obtaining the Agent's written
consent; provided that the Agent shall cure any default by the Borrowers which
is the basis for such termination (other than non-monetary defaults which are
not susceptible to cure by a party other than the Borrowers) within thirty (30)
days after written notice thereof has been
0088151.06-01S7a
2
<PAGE>
given to the Agent by the Manager; provided, however, that if such default is
susceptible of cure but cannot reasonably be cured within such thirty (30) day
period and provided further that the Agent shall have commenced to cure such
default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for such time as is reasonably necessary for the Agent in the exercise
of due diligence to cure such default (but in no event longer than one hundred
twenty (120) days). Manager further agrees that, notwithstanding the foregoing,
nothing herein shall impose upon the Agent any obligation for payment or
performance in favor of Manager.
(b) Subordination of Management Agreements to Lien of the
Mortgage. Any and all liens, rights and interests (whether choate or inchoate
and including, without limitation, all mechanic's and materialman's liens under
applicable law) owned, claimed or held, or to be owned, claimed or held, by
Manager in and to the Properties, are and shall be, and are hereby made, in all
respects subordinate and inferior to the liens and security interests created or
to be created for the benefit of the Agent, its successors and assigns, and
securing the repayment of the Notes and all other obligations of the Borrowers
under the Credit Agreement and including, without limitation, those created
under and by virtue of the Mortgage.
(c) The Agent's Right to Terminate. Upon the occurrence and
during the continuance of an Event of Default under the Credit Agreement or any
of the other Loan Documents (each, an "Operative Event"), subject to Section
3(a) hereof, Manager shall, at the request of the Agent, its successors or
assigns, continue performance, on behalf of the Agent, or its successors or
assigns, of all of Manager's obligations under the terms of the Management
Agreements to the extent that the Agent requests Manager to so continue to
perform, provided that the Agent (or any Borrower) performs or causes to be
performed the obligations of the Borrowers to Manager under the Management
Agreements accruing or arising from and after, and with respect to the period
commencing upon, the date of such request. Notwithstanding anything contained in
the Management Agreements to the contrary, the Agent, or the Borrowers at the
Agent's direction, shall have the right to terminate the Management Agreements
(i) upon, or at any time after, an Operative Event, provided
0088151.06-01S7a
3
<PAGE>
that Lenders shall have appointed a receiver for the Properties, foreclosed upon
the Properties, accepted a deed in lieu of foreclosure, or have otherwise
elected to become a mortgagee in possession or taken control of the operation of
the Properties, (ii) upon, or at any time after, a default by Manager under the
Management Agreements beyond any applicable notice and cure period thereunder,
and provided that such default shall cause a Material Adverse Effect (as defined
in the Credit Agreement) or at any time for Manager's willful misconduct or
fraud, by giving Manager five (5) days prior written notice of such termination,
in which event Manager shall resign as manager of the Properties effective upon
the expiration of such five (5) day period. Manager agrees not to look to the
Agent for payment of any accrued but unpaid fees relating to the Properties
accruing from and after the effective date of such termination.
(d) No Amendments to Management Agreements. Manager will not
materially amend or modify any material term of or renew (other than pursuant to
the terms thereof) the Management Agreements without the prior written consent
of the Agent (which consent shall not be unreasonably withheld, delayed or
conditioned) if such modification or renewal shall cause a Material Adverse
Effect. In the event Manager fails to secure such approval, the Management
Agreements shall, for the purposes of Manager's obligations to the Agent
pursuant to this Agreement, including Manager's obligation aforesaid to continue
performance thereunder for the Agent's benefit pursuant to the terms of this
Agreement, be deemed not to have been modified by such amendment.
(e) Further Assurances. Manager further agrees, without cost
to Manager, to (i) execute such affidavits and certificates as the Agent shall
reasonably require to further evidence the agreements herein contained, (ii) on
request from the Agent, furnish the Agent with copies of such information as the
Borrowers are entitled to receive under the Management Agreements, and (iii)
upon reasonable advance notice, cooperate with the Agent's representative in any
inspection of all or any portion of the Properties.
(f) Assignment of Leases and Rents. Manager acknowledges that,
in connection with the Loan, the Borrowers have executed and delivered to the
Agent an Assignment of Leases and Rents, dated as of the date hereof, assigning
to the Agent, among other things, all
0088151.06-01S7a
4
<PAGE>
of the Borrowers' right, title and interest in and to all of the leases now or
hereafter affecting the Properties. Manager hereby agrees that upon receipt of
written notice from the Agent that an Event of Default has occurred under the
Credit Agreement or the other Loan Documents, Manager shall, upon the Agent's
request therefor, thenceforth, for as long as such Event of Default shall
continue, deliver to the Agent (subject to the provisions of the Cash Collateral
Agreement), for application in accordance with the terms and conditions of the
Credit Agreement, the Mortgage and the Notes, all Property Income (as defined in
the Credit Agreement) then being held by Manager or received from and after the
date thereof.
(g) No Joint Venture. The Agent has no obligation to Manager
with respect to the Loan and Manager shall not be a third party beneficiary with
respect to any of the Agent's obligations to the Borrowers set forth in the Loan
Documents. The relationship of the Agent to the Borrowers is one of a creditor
to a debtor, and the Agent is not a joint venturer or partner of the Borrowers.
(h) The Agent Not Obligated Under Management Agreements.
Manager further agrees that, except as herein set forth, nothing herein shall
impose upon the Agent any obligation for payment or performance in favor of
Manager. Subject to Section 3(a) hereof, in the event that the Agent notifies
Manager in writing that the Agent has elected to assert the Borrowers' rights
under the Management Agreements, the Agent shall pay to Manager the sums due
Manager under the terms of the Management Agreements for the period commencing
on the effective date of the Agent's notice to Manager and ending on the
expiration date or earlier termination of the Management Agreements.
(i) The Agent's Reliance on Representations. Manager has
executed this Agreement with full knowledge that the Lenders shall rely upon the
representations, warranties and agreements herein contained when making advances
to the Borrowers, and that but for this instrument and the representations,
warranties and agreements herein contained, the Lenders would not take such
actions.
(j) Governed by Loan Documents. Manager agrees that until such
time as the Loan made pursuant to the Credit Agreement has been repaid in full,
as between
0088151.06-01S7a
5
<PAGE>
Manager and Agent the terms and provisions of this Agreement shall be superior
to the terms and provisions of the Management Agreements with respect to the
matters set forth herein, and to the extent there are any inconsistencies
between the Management Agreements and this Agreement with respect to such terms
and provisions, the terms, provisions and conditions in this Agreement shall
govern in all respects.
4. Borrowers Consent. The Borrowers have joined herein to evidence
their consent to all the agree- ments of Manager contained in this Agreement.
5. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
6. Counterparts. This Agreement may be exe- cuted in several
counterparts, each of which shall be an original and all of which shall
collectively constitute but one and the same instrument.
7. Assignment. The Agent shall have the right to transfer, sell and
assign its interest in this Agreement to any Person acting as Agent for the
Lenders or acquiring the Properties from the Lenders. All references to the
"Agent" hereunder shall be deemed to include the successors and assigns of the
Agent.
8. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of each party hereto and their respective successors
and permitted assigns.
9. Notices. Unless expressly provided other- wise in this Agreement,
all notices, consents, approvals and requests required or permitted hereunder
shall be given in accordance with the terms of the Mortgage, and, in the case of
notices to Manager, shall be addressed to Manager at: 520 Madison Avenue, New
York, New York 10022, Attention: General Counsel, with a copy to Borrow- ers at
the address provided in the Credit Agreeement.
0088151.06-01S7a
6
<PAGE>
10. Governing Law. Section 9.8 of the Credit Agreement is
incorporated herein by reference, except that the term "Agreement" shall be
construed to mean this Consent and Subordination of Property Management Agree-
ment.
0088151.06-01S7a
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first hereinabove written.
MANAGER:
TISHMAN SPEYER PROPERTIES, L.P.
By: Tishman Speyer Properties, Inc.,
General Partner
By:____________________________
Name:
Title:
AGENT:
THE CHASE MANHATTAN BANK
By:____________________________
Name:
Title:
BORROWERS:
1290 PARTNERS, L.P.
By: 1290 GP Corp., General Partner
By:____________________________
Name:
Title:
237 PARK PARTNERS, L.P.
By: 237 GP Corp., General Partner
By:____________________________
Name:
Title:
0088151.06-01S7a
CASH COLLATERAL ACCOUNT
SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT
among
1290 PARTNERS, L.P.
and
237 PARK PARTNERS L.P.,
as Borrowers
and
THE CHASE MANHATTAN BANK,
as Agent for certain Lenders
DATED: as of October 10, 1996
0148055.08-01S4a
<PAGE>
CASH COLLATERAL ACCOUNT
SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT
CASH COLLATERAL ACCOUNT SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT
(this "Agreement"), dated as of October 10, 1996, by and among 1290 PARTNERS,
L.P., a Delaware limited partnership, and 237 PARK PARTNERS, L.P., a Delaware
limited partnership (each, a Borrower and collectively, the "Borrowers"), and
THE CHASE MANHATTAN BANK, as agent ("Agent") for certain lenders (the
"Lenders").
W I T N E S S E T H:
WHEREAS, pursuant to a certain Credit Agreement, dated as of the
date hereof (the "Credit Agreement"), among Borrowers, as borrowers, the Lenders
listed on the signature page thereof (the "Lenders") and Agent, as agent for the
Lenders, Agent and Lenders have committed to make a loan (the "Loan") to
Borrowers in the aggregate amount of $420,000,000, evidenced by certain
promissory notes, dated as of the date hereof (the "Notes") and secured by that
certain Mortgage Modification, Restatement and Security Agreement, dated as of
the date hereof (the "Mortgage"), between Borrowers, as mortgagor, and Agent, as
mortgagee, and the other Loan Documents (as hereinafter defined); and
WHEREAS, pursuant to the Credit Agreement, Borrowers have agreed
to establish the Collection Accounts, the Cash Collateral Account and the
Sub-Accounts therein (as such terms are hereinafter defined) and to grant to
Agent, a first perfected security interest therein, upon the terms and subject
to the conditions hereof.
NOW, THEREFORE, in consideration of the agreements and covenants
hereinafter contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. Unless the context otherwise requires,
capitalized terms used but not otherwise de- fined herein shall have the
respective meanings provided therefor in the Credit Agreement, and the following
terms shall have the following meanings:
0148055.08-01S4a
<PAGE>
"Annual Budget" has the meaning provided in the Credit Agreement.
"Basic Sub-Accounts" means the Sub-Accounts of the Cash
Collateral Account established and maintained pursuant to Section 3(b) hereof
relating to the payment of Basic Carrying Costs (as defined in Section 3(a)).
"Cash Collateral Account" has the meaning provided in Section 3.
"Cash Flow Commencement Date" has the meaning provided in Section
3(g).
"Collection Accounts" has the meaning provided in Section 3.
"Current Month" has the meaning provided in Section 3(e).
"Debt Service Payment Sub-Account" means the Sub-Account of the
Cash Collateral Account, entitled "237 & 1290 Debt Service Payment CMB Escrow
Account", Account Number: 230-110886, established and maintained pursuant to
Section 3(b) hereof relating to the Required Debt Service Payment.
"Domestic Business Day" has the meaning provid- ed in the Credit
Agreement.
"Equitable Lease" means that certain Lease, dated July 1, 1995,
by and between 1290 Partners, L.P. (successor in interest to 1290 Associates),
as landlord, and Equitable Life Assurance Society of the United States, as
tenant.
"Escrow Sub-Account" means the Sub-Account of the Cash Collateral
Account, entitled "237 & 1290 T.I. CMB Escrow Account", Account Number:
230-110894, estab- lished and maintained pursuant to Section 3(b) hereof
relating to the Warner Work Allowance and the 1290 Lobby Improvements.
"Event of Default" means any material breach of this Agreement
which, unless otherwise specified herein, continues for more than, with respect
to monetary matters, three (3) Domestic Business Days, and with respect
0148055.08-01S4a
2
<PAGE>
to non-monetary matters, ten (10) Domestic Business Days, after written notice
thereof has been given by Agent to Borrowers or any Event of Default as defined
in the Credit Agreement or the Mortgage.
"Expiring Lease Costs" has the meaning provided in the Credit
Agreement.
"Expiring Lease Costs Reserve Sub-Account" means the Sub-Account
of the Cash Collateral Account to be established and maintained pursuant to
Section 3(b) hereof relating to the payment of Expiring Lease Costs.
"Expiring Lease Costs Monthly Amount" means an amount equal to
50% of Net Cash Flow for each Monthly Collection Period, which amount shall be
deposited by Borrowers into the Expiring Lease Costs Reserve Sub-Ac-count for
each month commencing in the Fourth Loan Year, until such time as $15,000,000 is
on deposit in the Expiring Lease Costs Reserve Sub-Account, as such amount may
be reduced (i) pursuant to the terms of Section 2.9 of the Credit Agreement and
(ii) by the sum of Expiring Lease Costs actually incurred by Borrowers from and
after the date hereof, whether directly by Borrowers or in accordance with the
provisions of Section 3(i)(iv) hereof, as certified by Borrowers to Agent in an
Officer's Certificate and verified by such other documentation as Agent may
reasonably require.
"Imposition Sub-Account" means the Sub-Account of the Cash
Collateral Account, entitled "237 & 1290 Imposition CMB Escrow Account", Account
Number: 230- 110851, established and maintained pursuant to Section 3(b) hereof
relating to the payment of all Impositions hereunder.
"Initial Basic Carrying Costs Deposit" means $8,936,424.
"Insurance Sub-Account" means the Sub-Account of the Cash
Collateral Account, entitled "237 & 1290 Insurance CMB Escrow Account", Account
Number: 230- 110878, established and maintained pursuant to Section 3(b) hereof
relating to the payment of all insurance premiums required hereunder.
0148055.08-01S4a
3
<PAGE>
"Loan" has the meaning provided in the recitals hereof.
"Manager" has the meaning provided in the Credit Agreement.
"Monthly Amount" has the meaning provided in the Credit
Agreement.
"Monthly Collection Period" means the period commencing on the
first day of each calendar month and ending on the last day of such calendar
month.
"Net Cash Flow" has the meaning provided in the Credit Agreement.
"Officer's Certificate" has the meaning provid- ed in the Credit
Agreement.
"Payment Date" means the date or dates upon which any Required
Debt Service Payment is due.
"Pledged Notes" has the meaning provided in the Credit Agreement.
"Properties" has the meaning provided in the Mortgage.
"Property Expenses" has the meaning provided in the Credit
Agreement.
"Property Income" has the meaning provided in the Credit
Agreement.
"Required Debt Service Payment" with respect to any month, shall
mean the sum of any interest on the Loan, the Monthly Amount which is required
to be paid pursuant to the terms of the Credit Agreement during such month and
any payments or costs payable pursuant to any Termination Event (as defined in
the Swap Agreement) required to be paid under the Swap Agreement.
"Sub-Accounts" means any Sub-Accounts, however designated, of the
Cash Collateral Account, including the Basic Sub-Accounts, the Expiring Lease
Costs Reserve Sub-Account, and the Escrow Sub-Account to be established pursuant
to Section 3 hereof.
0148055.08-01S4a
4
<PAGE>
"Swap Agreement" has the meaning provided in the Credit
Agreement.
"Taking" has the meaning provided in the Mort- gage.
"Term" has the meaning provided in the Credit Agreement.
"1290 Lobby Improvements" means the work to be performed by
Landlord in the lobby of the 1290 Property pursuant to the terms of Section 8.21
of the Equitable Lease.
"Warner Lease" means that certain Lease, dated February 1, 1996,
by and between 1290 Partners, L.P. (successor in interest to 1290 Associates,
L.L.C.), as landlord, and Warner Communications, Inc., as tenant.
"Warner Work Allowance" means the Tenant Work Allowance payable
to Warner Communications, Inc. pursuant to Section 4.01(d) of the Warner Lease,
excluding any allowance applicable to Block F (as defined in the Warner Lease).
2. Security for Obligations. To secure the full and punctual
payment and performance of the Obligations, Borrowers hereby sell, assign,
convey, pledge, grant and transfer to Agent, a first and continuing perfected
security interest in and Lien on and to all of Borrowers' right, title and
interest in and to the following property of Borrowers, whether now owned or
existing or hereafter acquired or arising and regardless of where located (all
of the same, collectively, the "Collateral"):
(i) the Collection Accounts, the Cash Collateral Account and the
Sub-Accounts therein and all cash, checks, drafts, certificates and
instruments, if any, from time to time deposited or held in the
Collection Accounts, the Cash Collateral Account and the Sub-Accounts
therein from time to time including, without limitation, all deposits
or wire transfers made to the Collection Accounts, the Cash Collateral
Account and the Sub-Accounts therein pursuant to this Agreement;
0148055.08-01S4a
5
<PAGE>
(ii) any and all Permitted Investments (as hereinafter defined)
purchased with funds deposited in the Collection Accounts, the Cash
Collateral Account and the Sub-Accounts therein;
(iii) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise payable
in respect of, or in exchange for, any or all of the foregoing; and
(iv) to the extent not covered by clauses (i), (ii) and (iii)
above, all proceeds (as defined under the Uniform Commercial Code as
in effect in the State of New York (the "UCC")) of any or all of the
foregoing.
Agent shall have with respect to the Collateral, in addition to the rights and
remedies herein set forth, all of the rights and remedies available to a secured
party under the UCC, as if such rights and remedies were fully set forth herein,
as well as all other rights and remedies available at law or equity.
3. Cash Flow and Establishment of Accounts.
(a) Cash Flow. Borrowers hereby acknowledge and agree that all
Property Income derived from the Properties shall be deposited into the
Collection Accounts. Borrowers hereby acknowledge and agree that Agent shall
transfer, on a daily basis, all funds received in the Collection Accounts into
the Cash Collateral Account and the Sub-Accounts therein and such funds shall be
utilized as follows: (i) to fund the Imposition Sub-Account, to the extent
required pursuant to Section 3(e)(i) hereof, (ii) to fund the Insurance
Sub-Account, to the extent required pursuant to Section 3(e)(ii) hereof, (iii)
to fund the Debt Service Payment Sub-Account to the extent required pursuant to
Section 3(e)(iii) hereof and (iv) to replenish any of the Sub-Accounts described
in clauses (i)-(iii) above, to the extent funds in such Sub-Accounts were
previously drawn upon to fund other Sub-Accounts hereunder as provided in
Section 3 hereof (the amounts required to be paid out of the accounts described
in clauses (i) through (iv) above are collectively, the "Basic Carrying Costs").
In addition to the
0148055.08-01S4a
6
<PAGE>
foregoing, on the date hereof, Borrowers shall fund the Escrow Sub-Account in an
amount equal to $5,508,000. Each Borrower hereby represents and warrants that a
notice has been sent to each Tenant and any other Persons required to make any
payments to Borrowers, including, without limitation, the obligors under the
Pledged Notes and the Counterparty, instructing each Tenant and such other
Persons to send all rents, additional rents and other payments due and owing to
Borrowers under the Leases, the Pledged Notes, the Swap Agreement or otherwise,
directly to a Collection Account or the Cash Collateral Account. All leases
hereafter executed with respect to the Mortgaged Property shall include a
provision requiring such Person to send all rents, additional rents and other
payments due to Borrowers directly to a Collection Account or the Cash
Collateral Account or shall be accompanied by a notice evidencing such
requirement. Each Borrower agrees that it shall promptly deliver notice to any
future tenant and other Persons hereafter owing any Property Income to Borrowers
(except as otherwise provided in the Mortgage) requiring such Person to send all
rents, additional rents and other payments due to Borrowers directly to a
Collection Account or the Cash Collateral Account. Each Borrower covenants that
it shall not revoke any such notice sent to any Tenant or other Person in
accordance with the terms hereof. Each Borrower shall take all other reasonable
and necessary actions to ensure that each Tenant and such other Persons pay
Property Income due and owing to Borrowers into a Collection Account or the Cash
Collateral Account. If the Manager or either Borrower shall collect any Property
Income from any Tenant or any other Person, the Manager or such Borrower, as
applicable, shall send such funds, within three (3) Domestic Business Days after
receipt thereof, to a Collection Account or the Cash Collateral Account, and, to
the extent additional payments of Property Income are to be received from such
party, within three (3) Domestic Business Days thereof shall send such Tenant or
Person a notice directing that all Property Income be sent directly to a
Collection Account or the Cash Collateral Account, and shall send Agent a
duplicate copy of such notice, and if Borrowers fail to do so, Agent is hereby
appointed Borrowers' attorney-in-fact for purposes of sending such notice and
collecting such Property Income. Borrowers hereby grant Agent a security
interest in Borrowers' right, title and interest, if any, in all amounts
deposited into the Collection Accounts and
0148055.08-01S4a
7
<PAGE>
the Cash Collateral Account. Until so deposited, any such amounts held by
Borrowers shall be deemed to be Collateral and shall be held in trust by them
for the benefit and as the property of Lender (as secured party) and shall not
be commingled with any other funds or property of Borrowers. Each Borrower shall
be liable to Agent for any sums received by either Borrower or by any agent of
either Borrower which are not deposited in a Collection Account or the Cash
Collateral Account in accordance with this Agreement.
Each Borrower agrees that all Property Income from the Mortgaged
Property, including, without limitation, Proceeds received in accordance with
the Mortgage (except as otherwise provided in the Mortgage) and all amounts
payable to Borrowers under the Swap Agreement, will be deposited directly into a
Collection Account or the Cash Collateral Account, there are no other accounts
maintained by Borrowers or the Manager for the collection of Property Income
with respect to the ownership and operation of the Mortgaged Property, and so
long as the Notes shall be outstanding, neither Borrowers nor the Manager shall
open any accounts for the collection of Property Income with respect to the
Mortgaged Property other than such accounts as may be established to hold any
amounts disbursed by Agent to Borrowers from the Cash Collateral Account after
funding of the Basic Sub-Accounts in accordance with Section 3(e) hereof.
Notwithstanding the foregoing, Agent shall in its reasonable discretion
determine whether to deposit any checks received by Agent with any restrictive
endorsement (e.g. "accord and satisfaction"). Prior to the occurrence of an
Event of Default, Agent shall not deposit any check for which Borrowers have
notified Agent prior to receipt thereof as to any dispute concerning the maker
of such check.
(b) Establishment of Collection Accounts, Cash Collateral Account
and Sub-Accounts. (i) On or before the date hereof, there have been established
in the name of Agent, on behalf of the Lenders, as secured parties, a collateral
account (the "1290 Collection Account"), a collateral account (the "237 Park
Collection Account"; each, a "Collection Account" and collectively, the
"Collection Accounts") and a collateral account (the "Cash Collateral Account",
the Collection Accounts and the Cash Collateral Account collectively, the
"Accounts") with
0148055.08-01S4a
8
<PAGE>
Agent. On the date hereof, Borrowers shall deposit in the Collection Accounts or
the Cash Collateral Account, an amount sufficient to fund the Initial Basic
Carrying Costs Deposit and the Escrow Sub-Account.
(ii) The Collateral shall be held in the Accounts and the
Sub-Accounts in accordance with the terms of this Agreement. The 1290 Collection
Account will be entitled "1290 Partners, LP CMB Clearing Account", Account
Number: 230-110789. The 237 Park Collection Account will be entitled "237 Park
Partners, LP CMB Clearing Account", Account Number: 230-110797. The Cash
Collateral Account will be entitled "237 & 1290 CMB Cash Collateral Account",
Account Number: 230-110800. The Accounts shall at all times be maintained with a
commercial bank in New York City. Until the Indebtedness (as defined in the
Mortgage) secured under the Mortgage is repaid in full, the Accounts and the
Sub-Accounts shall be under the sole dominion and control of Agent, subject to
the terms of this Agreement. Borrowers hereby irrevocably direct and authorize
Agent to deposit into and withdraw funds from the Accounts and the Sub-Accounts
and transfer funds between Accounts and Sub-Accounts, all in accordance with the
terms and conditions hereof. Until the Indebtedness secured under the Mortgage
is repaid in full, Borrowers shall have no right of withdrawal in respect of the
Accounts or the Sub-Accounts. Each transfer of funds from the Accounts and the
SubAccounts shall be made only to the extent that funds are on deposit in such
Account or Sub-Account, as applicable, and Agent shall have no responsibility to
make additional funds available in the event that funds on deposit are
insufficient. The Imposition Sub-Account, Insurance Sub-Account, the Debt
Service Payment Sub-Account (collectively, the "Basic Sub-Accounts"), the
Expiring Lease Costs Reserve Sub-Account and the Escrow Sub-Account are
Sub-Accounts of the Cash Collateral Account to which certain funds shall be
allocated and from which disbursements shall be made pursuant to the terms of
this Agreement. Agent shall deliver to Borrowers on each Domestic Business Day
during which activity occurs, a daily report of all activity in the Cash
Collateral Account for such day and a facsimile of debits and credits as well as
copies of all checks deposited weekly.
(c) Permitted Investments. Upon the written request of Borrowers,
Agent shall direct the Bank to
0148055.08-01S4a
9
<PAGE>
invest and reinvest any balance in the Cash Collateral Account from time to
time, but not more frequently than weekly, in permitted investments as set forth
on Schedule A attached hereto (the "Permitted Investments") as directed by
Borrowers, provided that (i) if Borrowers fail to so instruct Agent, or during
an Event of Default, Agent may invest and reinvest such balance in Permitted
Investments in its discretion, (ii) the maturities of the Permitted Investments
on deposit in the Cash Collateral Account, and allocated to any of the
Sub-Accounts, shall be selected and coordinated to become due not later than the
day before any disbursements from the applicable Sub- Accounts must be made. If
Borrowers make such a request and Agent invests such monies as requested,
disbursements to Borrowers, if any, from such accounts shall be made prior to
the maturity of such Permitted Investments (x) only if Agent receives a written
request from Borrowers to take such a step and (y) only if Agent is able to
liquidate such Permitted Investments prior to maturity. All such Permitted
Investments shall be held in the name and be under the sole dominion and control
of Agent, and no Permitted Investment shall be made unless Agent shall perfect
its first priority Lien in such Permitted Investment securing the Indebtedness
and Agent shall have sole possession and control over each such Permitted
Investment and the income thereon, and any certificate or other instrument or
document evidencing any such investment shall be delivered directly to Agent,
together with any document of transfer necessary to transfer title to such
investment to Agent. It is the intention of the parties hereto that the entire
amount deposited in the Cash Collateral Account (or as much thereof as Agent may
reasonably arrange to invest) shall at all times be invested in Permitted
Investments. All funds in the Cash Collateral Account that are invested in any
Permitted Investment are deemed to be held in the Cash Collateral Account for
all purposes of the Mortgage and the other Loan Documents. Agent shall not have
any liability for any loss in investments of funds in the Cash Collateral
Account that are invested in Permitted Investments whether Borrowers or Agent
selected such Permitted Investment in accordance herewith, including (without
limitation) any loss incurred for any early liquidation of any Permitted
Investment, and no such loss shall affect Borrowers' obligation to fund, or
liability for funding, the Cash Collateral Account and each Basic Sub-Account or
such other Sub-Account established hereunder, as the case
0148055.08-01S4a
10
<PAGE>
may be. Borrowers agree that Borrowers shall include all such earnings on the
Cash Collateral Account as income of Borrowers (and, if either Borrower is a
partnership or other pass-through entity, the partners, members or beneficiaries
of such Borrower, as the case may be), shall include all such losses on the Cash
Collateral Account as losses of Borrowers (and, if either Borrower is a
partnership or other pass-through entity, the partners, members or beneficiaries
of such Borrower, as the case may be) and shall be the owner of such accounts
for federal and applicable state and local tax purposes.
(d) Interest on Accounts. All interest paid or other earnings on
the Permitted Investments of funds deposited into the Cash Collateral Account
made hereunder shall be deposited into the Cash Collateral Account and shall be
allocated to the Basic Sub-Account or such other Sub-Account established
hereunder which would, but for such Permitted Investments, have contained the
funds with respect to which such interest was paid or other earnings earned. All
such interest and earnings, once so allocated, shall be treated as Property
Income allocated to such Basic Sub-Account or such other Sub-Account established
hereunder.
(e) Monthly Funding of Basic Sub-Accounts. On the date hereof all
applicable Basic Sub-Accounts hereunder shall be funded with the Initial Basic
Carrying Costs Deposit. For all months thereafter, commencing with the calendar
month after the calendar month in which the Closing Date occurs (each, the
"Current Month"), all ------------- monies collected in the Cash Collateral
Account during such Current Month's Monthly Collection Period shall be allocated
as set forth in this Section 3(e). In each Current Month, during the Current
Month's Monthly Collection Period, Agent shall allocate all funds transferred or
deposited into the Cash Collateral Account among the Sub-Accounts as follows and
in the following priority:
(i) first, to the Imposition Sub-Account, until an amount has
been allocated to the Imposition Sub-Account equal to the monthly proportionate
sum of (w) all Impositions against the Mortgaged Property attributable to the
Current Month (with any such sums due less frequently than monthly allocated
equally to each Current Month) (i.e., if a certain Imposition is payable on a
semi-annual basis, then one-sixth (1/6) of such semi-
0148055.08-01S4a
11
<PAGE>
annual Imposition shall be due during each Current Month), plus (x) an amount
equal to such payments for any prior month(s), to the extent not previously
allocated to such Sub-Account, plus (y) an amount equal to the amount, if any,
deducted therefrom in any preceding month to pay any amounts due from any other
Basic Sub-Accounts because of a shortfall in such other Basic Sub-Accounts;
(ii) second, to the Insurance Sub-Ac- count, until an amount has
been allocated to the Insurance Sub-Account equal to the monthly proportionate
sum of (w) all insurance premiums attributable to the Current Month (with any
such sums due less frequently than monthly allocated equally to each Current
Month), for all insurance policies required to be maintained pursuant to the
terms of the Mortgage (i.e., if a certain insurance premium is payable on a
semi-annual basis, then one sixth (1/6) of such semi-annual premium shall be
deposited during each Current Month), plus (x) an amount equal to such payments
for any prior month(s), to the extent not previously allocated to such
Sub-Account, plus (y) an amount equal to the amount, if any, deducted therefrom
in any preceding month to pay any amounts due from any other Basic Sub-Accounts
because of a shortfall in such other Basic Sub-Accounts; and
(iii) third, to the Debt Service Payment Sub-Account, until an
amount equal to the Required Debt Service Payment for any Payment Date occurring
in such Current Month, has been allocated to the Debt Service Payment
Sub-Account plus (x) an amount equal to such payments for any prior month(s), to
the extent not previously allocated to such Sub-Account, plus (y) an amount
equal to the amount, if any, deducted therefrom in any preceding month to pay
any amounts due from any other Basic Sub-Accounts because of a shortfall in such
other Basic Sub-Accounts.
(f) Funding of Expiring Lease Costs Reserve Sub-Account.
Commencing in the Fourth Loan Year, Borrowers shall, subject to the provisions
of Section 2.15(b) of the Credit Agreement, deposit into the Expiring Lease
Costs Reserve Sub-Account an amount equal to the Expiring Lease Costs Monthly
Amount for the first month thereof and for each month thereafter during the
remainder of the Term not later than the fifteenth (15th) day of the next
succeeding month; provided that if the fifteenth day of
0148055.08-01S4a
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any month is not a Domestic Business Day, such deposit shall be made on the next
succeeding Domestic Business Day of such month.
(g) Cash Flow Commencement Date. During each Current Month Agent
shall notify Borrowers as soon as reasonably practicable after the amounts set
forth in clauses (i) through (iii) of Section 3(e) above have been transferred
or deposited into the Cash Collateral Account during such Monthly Collection
Period and allocated as aforesaid. The date such Sub-Accounts have been fully
funded in a given Monthly Collection Period is hereinafter referred to as the
"Cash Flow Commencement Date". Provided that no Event of Default has occurred
and is continuing, from and after the Cash Flow Commencement Date, Agent shall
disburse to Borrowers or at the direction of Borrowers, to the Manager, on a
daily basis, free of any lien hereunder, any amounts remaining in the Cash
Collateral Account for such Monthly Collection Period after the Basic
Sub-Accounts set forth in clauses (i) through (iii) of Section 3(e) have been
fully funded, less any amounts then due and payable but not yet paid to Agent in
accordance with Section (f) hereof for any prior month. The balance of the funds
distributed to Borrowers after payment of all amounts allocated to the
Sub-Accounts may be retained by Borrowers and may be used by Borrowers to pay
operating costs of the Properties, make distributions or for any purpose they
determine in their sole discretion.
(h) Funding of Deficiencies. Not later than two (2) Domestic
Business Days before each Payment Date during the term of the Loan, Agent shall
deliver (by facsimile or otherwise) to Borrowers a certificate in the form
annexed hereto and made a part hereof as Exhibit A, stating whether sufficient
funds have theretofore been deposited into the Cash Collateral Account to fund
each of the Basic Sub-Accounts. If any such certificate states that the funds
then allocated to any Basic Sub-Accounts are less than the amount of funds which
are required to be deposited therein for such Payment Date, Borrowers shall be
obligated to deposit immediately available United States funds (in addition to
Property Income) into the Cash Collateral Account, prior to such Payment Date,
in the amount of such deficiency, and failure to make such deposit within three
(3) Domestic Business Days after such Payment Date (to the extent such
0148055.08-01S4a
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<PAGE>
shortfall has not been remedied by collection of Property Income during such
period) shall be an Event of Default hereunder. The failure of Agent to deliver
such certificate to Borrowers shall not relieve any Event of Default hereunder.
If, on any Payment Date, the aggregate balance in the Debt Service Payment
Sub-Account is insufficient to make the Required Debt Service Payment required
to be made pursuant to clause (iii) of Section 3(i) below, then if Borrowers
shall fail to deposit such funds within three (3) Domestic Business Days after
same is due, an Event of Default shall exist hereunder. In the event that Agent
applies the proceeds of any Sub-Account other than the one allocated therefor to
make such payment, to make payments under any insurance policy or to pay any
Impositions, Borrowers shall, upon demand, repay to Agent, in order to replenish
such Sub-Account up to the amount contained therein immediately prior to such
application (including interest earned on the balance prior to withdrawal), the
amount of the funds so applied, and if Borrowers shall fail to repay such
amounts within five (5) Domestic Business Days after such demand (to the extent
such Sub-Account has not been replenished by Property Income during such
period), an Event of Default shall exist hereunder, which Event of Default shall
not be cured unless and until Borrowers repay such amount or all Sub-Accounts
have otherwise been fully funded. Agent may, at its sole option, replenish such
Sub-Account(s) out of available Property Income in subsequent months which
Borrowers would have otherwise been entitled to receive. Borrowers shall deliver
to Agent, an unaudited financial statement in respect of the Fourth Loan Year,
within thirty (30) days after the end of such year, which shall include a
reconciliation (reasonably satisfactory to Agent) and adjustment of the sum of
the Expiring Lease Costs Monthly Amounts so as to be equal to 50% of the actual
Net Cash Flow for such Fourth Loan Year. Agent shall notify Borrowers of any
deficiency in such amounts and Borrowers shall deposit such amount into the
Expiring Lease Costs Reserve Sub-Account within five (5) Domestic Business Days
after notice thereof. If Borrowers shall fail to pay such amounts within five
(5) Domestic Business Days after such demand, an Event of Default shall exist
hereunder, which Event of Default shall not be cured unless and until Borrowers
pay such amount or the Expiring Lease Costs Reserve Sub-Account has otherwise
been fully funded from Property Income for such year. In addition, the annual
financial statements of Borrowers to
0148055.08-01S4a
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<PAGE>
be delivered to Agent in accordance with the Credit Agreement in respect of the
Fourth Loan Year, shall include a reconciliation (reasonably satisfactory to
Agent) and adjustment of the sum of the Expiring Lease Costs Monthly Amounts so
as to be equal to 50% of the actual Net Cash Flow for such Fourth Loan Year.
Agent shall notify Borrowers of any deficiency in such amounts and Borrowers
shall deposit such amount into the Expiring Lease Costs Reserve Sub-Account
within five (5) Domestic Business Days after notice thereof. If Borrowers shall
fail to pay such amounts within five (5) Domestic Business Days after such
demand, an Event of Default shall exist hereunder, which Event of Default shall
not be cured unless and until Borrowers pay such amount or the Expiring Lease
Costs Reserve Sub-Account has otherwise been fully funded from Property Income
for such year. Any excess amounts in the Expiring Lease Costs Reserve
Sub-Account at the end of the Fourth Loan Year shall be credited against amounts
next due to be deposited therein in the Fifth Loan Year. Borrowers shall pay
operating costs, reserve for working capital, accrue expenses and otherwise
maintain their books and records and accounting practices as of the end of the
Third Loan Year in a manner consistent with the practices employed during the
first three (3) years of the Loan.
(i) Transfers of Funds out of Sub-Accounts. Transfers and
payments made out of the Sub-Accounts shall be made in accordance with the
following provisions to the extent the same are applicable and shall be payable
in the following order:
(i) Payments of Impositions. Borrowers shall deliver to Agent
bills received by Borrowers, if any, for all Impositions due in the following
month. Agent shall pay from the Imposition Sub-Account, all Impositions against
the Mortgaged Property when such payments become due.
(ii) Payments Under Insurance Policies. Borrowers shall deliver
to Agent copies of bills received by Borrowers, if any, for all insurance
premiums due the following month. Agent shall disburse to Borrowers, or at the
direction of Borrowers, to Manager from the Insurance Sub-Account all insurance
premiums on all insurance polices required to be maintained pursuant to the
terms of the Mortgage, as and when such payments become due.
0148055.08-01S4a
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<PAGE>
Borrowers, or if applicable Manager, as directed by Borrowers, shall use
proceeds disbursed from the Cash Collateral Account pursuant to this Section
solely for the payment of insurance premiums. Borrowers shall deliver to Agent
within ten (10) Domestic Business Days after any such disbursement is made
evidence reasonably satisfactory to Agent that such insurance premiums have been
paid.
(iii) Payment of Debt Service. On each Payment Date during the
term of the Loan, Agent shall disburse from the Debt Service Payment
Sub-Account, an amount equal to the sum of (x) the Required Debt Service Payment
for such Payment Date, including any payments required to be made to the
Counterparty for any costs incurred in connection with any Termination Event and
(y) any amounts deposited into the Cash Collateral Account that are (1) Loss
Proceeds that Agent has elected to apply to reduce the Indebtedness in
accordance with the terms of the Mortgage and the Credit Agreement and the other
Loan Documents, (2) excess Loss Proceeds remaining after the completion of any
restoration required hereunder following a Taking and (3) prepayments made
pursuant to the Credit Agreement, if any.
(iv) Funds in the Expiring Lease Costs Re- serve Sub-Account. Not
more than once each month, Borrowers' may deliver to Agent an Officer's
Certificate and any other documentation reasonably required by Agent evidencing
and requesting a release of funds on deposit in the Expiring Lease Costs Reserve
Sub-Account for any Expiring Lease Costs (collectively, the "Expiring Lease
Costs Package"). Provided that no Event of Default shall have occurred and such
Expiring Lease Costs have been approved by Agent in its reasonable discretion
(which approval shall be deemed granted if the Lease under which such Expiring
Lease Costs are to be paid has been previously approved by Agent) and there are
sufficient funds available in the Expiring Lease Costs Reserve Sub-Account,
Agent shall disburse to Borrowers an amount equal to such Expiring Lease Costs
within five (5) Domestic Business Days after Agent shall have received an
Expiring Lease Costs Package from Borrowers. Notwithstanding anything to the
contrary set forth herein, Borrowers may deliver to Agent an Officer's
Certificate and any other documentation reasonably requested by Agent evidencing
and requesting a release of funds in the Expiring Lease Costs Reserve
Sub-Account for the purpose of funding 50%
0148055.08-01S4a
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<PAGE>
of the amount (the "Shortfall") by which Property Expenses exceed Property
Income for such Monthly Collection Period. Provided that no Event of Default
shall have occurred, Agent shall disburse to Borrowers an amount equal to the
lesser of (x) the amount requested by Borrowers pursuant to such Officer's
Certificate (which in no event shall be more than 50% of the Shortfall), (y) the
amount which Borrowers shall, to Agent's reasonable satisfaction, have paid, are
paying simultaneously and/or shall pay, from sums previously retained by
Borrowers as Net Cash Flow, in respect of the Shortfall, and (iii) the remaining
balance of the Expiring Lease Costs Reserve Sub-Account in respect of deposits
(net of withdrawals therefrom and exclusive of any amounts deposited pursuant to
Section 2.9 (e) of the Credit Agreement) made during the Loan Year in which such
Shortfall occurs.
(v) Funds in the Escrow Sub-Account. Not more than once each
month, Borrowers may deliver to Agent an Officer's Certificate and any other
documentation reasonably required by Agent evidencing and requesting a release
of funds on deposit in the Escrow Sub-Account for any 1290 Lobby Improvements or
the Warner Work Allowance. Agent shall disburse to Borrowers such amount
provided that with respect to the Warner Work Allowance, such disbursement is in
accordance with the terms of Section 4.01 of the Warner Lease, and with respect
to the 1290 Lobby Improvements, the construction contracts therefor.
(j) Payment of Basic Carrying Costs. Except to the extent that
Agent is obligated to pay Basic Carrying Costs on behalf of Borrowers from the
Basic Sub-Accounts pursuant to Section 3(i) hereof, Borrowers hereby agree to
pay all Basic Carrying Costs. Borrowers' obligation to pay (or cause Agent to
pay on its behalf from the Basic Sub-Accounts) Basic Carrying Costs pursuant to
the Mortgage and the Cash Collateral Agreement shall include, to the extent
permitted by applicable law, Impositions resulting from future changes in law
which impose upon Agent an obligation to pay any property taxes or other
Impositions as provided in the Mortgage or the Credit Agreement. Borrowers shall
deliver to Agent, promptly following receipt by Borrowers, originals of all real
estate tax bills and other documents evidencing Impositions and copies of all
bills for insurance premiums.
0148055.08-01S4a
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<PAGE>
(k) Event of Default. All funds deposited into the Cash
Collateral Account shall be held by Agent pursuant to the provisions hereof and
shall be applied in payment of the applicable obligations provided herein when
and as payable, provided that no Event of Default shall have occurred and be
continuing or that Agent shall not have accelerated the Obligations due under
the Loan Documents. Should an Event of Default occur and be continuing or if
Agent shall have accelerated the Obligations due under the Loan Documents, the
proceeds on deposit in the Cash Collateral Account may be applied by Agent in
payment of any Basic Carrying Costs or Property Expenses for all or any portion
of the Mortgaged Property or may be applied to the payment of the Indebtedness
or any other charges affecting all or any portion of the Mortgaged Property as
Agent in its sole discretion may determine upon prior notice to Borrowers in
accordance with the Credit Agreement and the Mortgage; provided, however, that
no such application shall be deemed to have been made by operation of law or
otherwise until actually made by Agent as herein provided. Upon the occurrence
and during the continuance of an Event of Default hereunder or upon the
acceleration of the Obligations due under the Loan Documents, Agent may, at
Agent's sole discretion, either (i) upon receipt by Agent of copies of bills,
invoices and other reasonable substantiation of Property Expenses for any such
Property Expenses acceptable to Agent, pay the Property Expenses directly from
amounts on deposit in the Cash Collateral Account or (ii) not more than once
during each calendar month, on such date as shall be requested by Borrowers and
approved by Agent, disburse from the Cash Collateral Account, to Borrowers or at
Borrower's election, the Manager, an amount necessary to pay such Property
Expenses approved by Agent. All such disbursements from the Cash Collateral
Account to Borrowers or the Manager to pay Property Expenses hereunder shall be
made against receipt by Agent of (i) copies of bills, invoices and other
reasonable substantiation of Property Expenses for any such Property Expenses
acceptable to Agent and (ii) proof, including, without limitation, paid invoices
or other reasonable substantiation, including, without limitation, cancelled
checks, satisfactory to Agent that all disbursements from the Cash Collateral
Account for previous calendar months were applied to the payment of Property
Expenses. Borrowers or if applicable Manager, as directed by Borrowers, shall
use proceeds disbursed from the Cash Collater-
0148055.08-01S4a
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<PAGE>
al Account pursuant to this Section solely for the pay-
ment of Property Expenses.
(l) Loss Proceeds. In the event of a casualty to the Mortgaged
Property, unless Agent elects, or is deemed to have elected, pursuant to the
Mortgage to make the Proceeds received under the insurance policy required to be
maintained by Borrowers available to Borrowers for restoration, Agent and
Borrowers shall cause all such Proceeds, except as otherwise set forth in the
Mortgage, (less Borrowers's cost of recovering such Proceeds, including, without
limitation, reasonable attorneys' fees) to be paid by the insurer directly to
the Cash Collateral Account, whereupon Agent shall (after deducting out Agent's
reasonable expenses incurred in accordance with the terms of the Mortgage or the
Credit Agreement, to protect Agent's interest in the Mortgaged Property and
Agent's cost of recovering and paying out such Insurance Proceeds, including,
without limitation, reasonable attorneys' fees) apply the same to reduce the
Indebtedness in accordance with the terms of the Credit Agreement and the
Mortgage; provided, however, that if in accordance with the terms of the
Mortgage and the Credit Agreement the Proceeds shall be available for
restoration, all Proceeds in respect of business interruption coverage shall be
maintained in the Cash Collateral Account, to be applied by Agent in the same
manner as Property Income with respect to the operation of the Mortgaged
Property; provided, further, however, that in the event that the Proceeds of
such business interruption insurance policy are paid in a lump sum in advance,
Agent shall hold such Proceeds in a segregated interest-bearing escrow account,
shall estimate, in Agent's reasonable discretion, the number of months required
for Borrowers to restore the damage caused by the casualty, shall divide the
aggregate business interruption Proceeds by such number of months, and shall
disburse from such escrow account into the Cash Collateral Account each month
during the performance of such restoration such monthly installment of the
Proceeds. In the event that Proceeds are to be applied toward restoration, Agent
shall hold such funds in a segregated bank account, which shall be interest
bearing to the extent practicable, and shall disburse the same in accordance
with the provisions of the Mortgage. If in accordance with the terms of the
Mortgage and the Credit Agreement the Proceeds in respect of any taking are to
be made available to Borrowers for
0148055.08-01S4a
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<PAGE>
restoration, Agent and Borrowers shall cause such Proceeds (less Borrowers' cost
of recovering such Proceeds, including, without limitation, reasonable
attorneys' fees) to be paid to the Cash Collateral Account, whereupon Agent
shall (after deducting out Agent's reasonable expenses incurred to protect
Agent's interest in the Mortgaged Property and Agent's cost of recovering and
paying out such Proceeds, including, without limitation, reasonable attorneys'
fees) apply same to reduce the Indebtedness in accordance with the terms of the
Credit Agreement and the Mortgage; provided, however, that any Proceeds received
in connection with a temporary Taking shall be maintained in the Cash Collateral
Account, to be applied by Agent in the same manner as Property Income received
with respect to the operation of the Mortgaged Property; provided, further,
however, that in the event that the Proceeds of any such temporary taking are
paid in a lump sum in advance, Agent shall hold such Proceeds in a segregated
interest-bearing escrow account, shall estimate, in Agent's reasonable
discretion, the number of months that the Mortgaged Property shall be affected
by such temporary taking, shall divide the aggregate Proceeds in connection with
such temporary taking by such number of months, and shall disburse from such
escrow account into the Cash Collateral Account each month during the pendency
of such temporary taking such monthly installment of the Proceeds. In the event
that in accordance with the provisions of the Mortgage Proceeds are payable to
or to be held by Agent to be applied toward restoration, Agent shall hold such
funds in a segregated bank account, which shall be interest bearing to the
extent practicable, and shall disburse same in accordance with the provisions of
the Mortgage. If any Proceeds in excess of the Casualty Amount or Proceeds paid
due to a Taking (collectively, "Loss Proceeds") are received by Borrowers, such
Loss Proceeds (less Borrowers' reasonable cost of recovering such Loss Proceeds,
including, without limitation, reasonable attorneys' fees) shall be received in
trust for Agent, shall be segregated from other funds of Borrowers, and shall be
paid within five (5) Domestic Business Days after receipt into the Cash
Collateral Account, or paid to Agent to hold in a segregated account, which
shall be interest bearing to the extent practicable, in each case to be applied
or disbursed in accordance with the foregoing. Except during the continuance of
an Event of Default, any Loss Proceeds made available to Borrowers, in the event
of a casualty, for
0148055.08-01S4a
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<PAGE>
restoration in accordance herewith, to the extent not used by Borrowers in
connection with, or to the extent they exceed the cost of, such restoration,
shall be paid to Borrowers. Any Loss Proceeds made available to Borrowers, in
the event of a Taking, for restoration in accordance herewith, to the extent not
used by Borrowers in connection with, or to the extent they exceed the cost of,
such restoration, shall be paid to Agent, to reduce the Indebtedness.
4. Financing Statement; Further Assurances.
(a) Simultaneously herewith, Borrowers shall execute and deliver
to counsel for Agent for filing, a financing statement or statements in
connection with the Collateral in the form required to properly perfect Agent's
security interest in the Collateral that may be perfected by such filings.
Borrowers agree that, at any time and from time to time, including, without
limitation, in connection with any Permitted Investments under Section 3 hereof,
at the expense of Borrowers, Borrowers will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
reasonably necessary or desirable, or that Agent may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby (including, without limitation, any security interest in and to
any Permitted Investments), or to enable Agent, to exercise and enforce Agent's
rights and remedies hereunder with respect to, any Collateral in furtherance of
Borrowers' obligations under this Agreement and the Credit Agreement.
(b) The chief executive office of each Borrower is c/o Victor
Capital Group, L.P., 885 Third Avenue, New York, New York 10022. Each Borrower
will not change such chief executive office unless such Borrower shall provide
Agent with thirty (30) days' prior written notice thereof of such change (but in
any event, within the period required pursuant to the UCC) and there shall have
been taken such action, reasonably satisfactory to Agent, as may be necessary to
maintain the security interest of Agent in the Collateral, at all times fully
perfected and in full force and effect. Each Borrower shall not change its name
unless it shall have given Agent thirty (30) days' prior written notice thereof
of such change (but in any event, within the period required pursuant to the
0148055.08-01S4a
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<PAGE>
UCC) and shall take such action, reasonably satisfactory to Agent, as may be
necessary to maintain the security interest of Agent, in the Collateral granted
hereunder at all times fully perfected and in full force and effect.
5. Transfers and Other Liens. Each of the Borrowers and Agent
agrees that it will not (i) sell or otherwise dispose of any of the Collateral
other than pursuant to the terms hereof or pursuant to the terms of the Credit
Agreement or (ii) create or permit to exist any Lien upon or with respect to all
or any of the Collateral, except for the Lien granted to the Agent under this
Agreement or as otherwise permitted under the Credit Agreement or the Mortgage.
6. Agent's Right to Perform Borrowers' Obligations. If Borrowers
fail to perform any of the covenants or obligations contained herein, and such
failure shall continue for a period of three (3) Domestic Business Days with
respect to monetary obligations, or ten (10) Domestic Business Days with respect
to non-monetary obligations, after Borrowers' receipt of written notice thereof
from Agent, Agent may itself perform, or cause performance of, such covenants or
obligations, and the reasonable expenses of Agent incurred in connection
therewith shall be payable by Borrowers to Agent in accordance with Section 10
hereof.
7. Reasonable Care. Beyond the exercise of reasonable care in the
custody thereof, except as provided in Section 5 hereof, Agent shall not have
any duty as to any Collateral or any income thereon in its possession or control
or in the possession or control of any agents for, or of, Agent for the
preservation of rights against any Person or otherwise with respect thereto.
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which a reasonable person would exercise
under similar circumstances, it being understood that Agent shall not be liable
or responsible for any loss or damage to any of the Collateral, or for any
diminution in value thereof including, without limitation, any loss, damage or
diminution in value resulting from any Permitted Investment), by reason of the
act or omission of Agent or its agents, employees or bailees, except to the
0148055.08-01S4a
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<PAGE>
extent that such loss or damage results from Agent's gross negligence or willful
misconduct.
8. Remedies.
(a) Upon the occurrence and during the continuance of an Event of
Default, and subject to the terms and conditions of this Agreement and the
Credit Agreement, as applicable, Agent may:
(i) without notice to Borrowers except as required by law or any
of the Loan Documents and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Collateral against
the Obligations or any part thereof or any other expenses due in
accordance with the Credit Agreement;
(ii) in Agent's sole discre- tion, at any time and from time to
time, exercise any and all rights and remedies available to it under
this Agreement, and/or as a secured party under the UCC or otherwise
under applicable law; and
(iii) demand, collect, take possession of, receipt for, settle,
compromise, adjust, sue for, foreclose or realize upon the Collateral
(or any portion thereof) as Agent may determine in its sole
discretion.
Borrowers hereby expressly waive, to the fullest extent permitted by law,
presentment, demand, protest or any notice of any kind except as specifically
provided herein or in the other Loan Documents in connection with this Agreement
or the Collateral. Borrowers acknowledge and agree that ten (10) days' prior
written notice of the time and place of any public sale of the Collateral or any
other intended disposition thereof shall be commercially reasonable and
sufficient notice to Borrowers within the meaning of the UCC or otherwise under
applicable law.
9. No Waiver. The rights and remedies pro- vided in this
Agreement and the other Loan Documents are cumulative and may be exercised
independently or concur- rently, and are not exclusive of any other right or
0148055.08-01S4a
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<PAGE>
remedy provided at law or in equity. No failure to exercise or delay by Agent or
Borrowers in exercising any right or remedy hereunder or under the other Loan
Documents shall impair or prohibit the exercise of any such rights or remedies
in the future or be deemed to constitute a waiver or limitation of any such
right or remedy or acquiescence therein. Every right and remedy granted to Agent
under Section 8 hereof or by law may be exercised by Agent at any time and from
time to time, and as often as Agent may deem it expedient. Any and all of
Agent's rights with respect to the lien and security interest granted hereunder
shall continue unimpaired, and Borrowers shall be and remain obligated in
accordance with the terms hereof, notwithstanding (a) any proceeding of
Borrowers under the Federal Bankruptcy Code or any bankruptcy, insolvency or
reorganization laws or statutes of any state, (b) the release or substitution of
Collateral at any time, or of any rights or interests therein or (c) any delay,
extension of time, renewal, compromise or other indulgence granted by Agent in
the event of any default, with respect to the Collateral or otherwise hereunder.
No delay or extension of time by Agent in exercising any power of sale, option
or other right or remedy hereunder, and no notice or demand which may be given
to or made upon Borrowers by Agent, shall constitute a waiver thereof, or limit,
impair or prejudice Agent's right, without notice or demand, to take any action
against Borrowers or to exercise any other power of sale, option or any other
right or remedy.
10. Expenses. The Collateral shall secure, and Borrowers shall
pay to Agent and/or Agent's counsel upon thirty (30) days written notice from
Agent as applicable, from time to time, all reasonable costs and expenses
(including, but not limited to, reasonable attorneys' fees and disbursements,
and transfer, recording and filing fees, taxes and other charges) actually
incurred for, or incidental to, the creation or perfection of any lien or
security interest granted or intended to be granted hereby, the custody, care,
sale, transfer, administration, collection of or realization on the Collateral,
or in any way relating to the enforcement, protection or preservation of the
rights or remedies of Agent and the Lenders under this Agreement, the Credit
Agreement, the Mortgage or the other Loan Documents.
0148055.08-01S4a
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<PAGE>
11. Agent Appointed Attorney-In-Fact. Upon the occurrence and
during the continuance of an Event of Default, Borrowers hereby irrevocably
constitute and appoint Agent, as Borrowers' true and lawful attorney-in-fact,
with full power of substitution, to execute, acknowledge and deliver any
instruments and to exercise and enforce every right, power, remedy, option and
privilege of Borrowers with respect to the Collateral, and do in the name, place
and stead of Borrowers, all such acts, things and deeds for and on behalf of and
in the name of Borrowers, which Borrowers could or might do or which Agent may
deem necessary or desirable to more fully vest in Agent the rights and remedies
provided for herein and to accomplish the purposes of this Agreement. The
foregoing powers of attorney are irrevocable and coupled with an interest. If
Borrowers fail to perform any agreement herein contained, Agent may, subject to
Section 6 hereof, itself perform or cause performance of any such agreement, and
any reasonable expenses of Agent, and, at the direction of Agent, incurred in
connection therewith shall be paid by Borrowers as provided in Section 10
hereof.
12. Liability of Agent.
(a) Agent, in Agent's capacity as secured party hereunder, shall
be responsible for the performance only of such duties as are specifically set
forth in this Agreement, and no duty shall be implied from any provision hereof.
Agent shall not be required to take any discretionary actions hereunder. Agent
shall take action hereunder at the written direction of Borrowers (but only
where specifically permitted hereunder), it being understood and agreed that
Agent's duties hereunder shall be wholly ministerial in nature. In connection
with any action which Borrowers are permitted under this Agreement to direct
Agent to take, if Agent believes that the same is contrary to the provisions of
the Credit Agreement, Agent shall advise Borrowers thereof accordingly in
writing, and thereafter shall have no liability to Borrowers (or to any other
person) for not following any directions of Borrowers. Agent shall not be under
any obligation or duty (i) to perform any act which, in Agent's sole judgment,
could involve any liability or any expense for which it will not be reimbursed
or (ii) to institute or defend any suit in respect hereof, or to advance any of
its own monies; provided, however, that Agent shall
0148055.08-01S4a
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<PAGE>
advise Borrowers in writing in those cases where it intends to make such a
determination. Borrowers shall indemnify and hold Agent, and its agents,
employees and officers harmless from and against any loss, cost or damage
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred by Agent in connection with the transactions contemplated hereby,
excepting losses, costs, expenses and claims arising as a result of its own
gross negligence or willful misconduct.
(b) Agent shall be protected in acting upon any notice,
resolution, request, consent, order, certificate, representation, report,
opinion, bond or other paper, document or signature reasonably believed by Agent
to be genuine, and Agent may assume that any purported officer of Borrowers
purporting to give any of the foregoing in connection with the provisions hereof
has been duly authorized to do so. Agent may require such written certifications
or directions from Borrowers as it deems necessary or appropriate before taking
any action hereunder. Agent may consult with counsel, and the opinion of such
counsel shall be full and complete authorization and protection in respect of
any action taken or suffered by it hereunder and in good faith in accordance
therewith. Borrowers shall hold Agent harmless from and against any loss
incurred by Agent provided Agent was acting in accordance with this Agreement or
in reliance upon any instruction, direction or certification received by Agent
and provided Agent's action or omission was without gross negligence or willful
or reckless misconduct. Except as expressly set forth herein, Agent shall not be
responsible for monitoring Borrowers' compliance with Borrowers' obligations
under this Agreement or Borrowers' breach of any of its obligations under this
Agreement.
13. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall remain in full force
and effect until payment in full of the Obligations. Upon payment in full of the
Obligations, this Agreement shall terminate and Borrowers shall be entitled to
the return, upon their request and at their expense, of such of the Collateral
as shall not have been sold or otherwise applied pursuant to the terms hereof
and Agent shall execute such instruments and documents as may be reasonably
requested
0148055.08-01S4a
26
<PAGE>
by Borrowers to evidence such termination and the release
of the lien hereof.
14. Miscellaneous.
(a) This Agreement, the Mortgage together with the Credit
Agreement and the other Loan Documents, constitutes the entire and final
agreement among the parties with respect to the subject matter hereof and may
not be changed, terminated or otherwise varied, except by a writing duly
executed by the parties.
(b) No waiver of any term or condition of this Agreement, whether
by delay, omission or otherwise, shall be effective unless in writing and signed
by the party sought to be charged, and then such waiver shall be effective only
in the specific instance and for the purpose for which given.
(c) This Agreement shall be binding upon and inure to the benefit
of the parties hereto, their respective successors and permitted assigns.
(d) The provisions of Section 9.1 of the Credit Agreement with
respect to any notice to be delivered hereunder are incorporated herein by
reference.
(e) At the written request of Agent, Borrowers, at their sole
cost and expense, promptly shall take such action and execute and deliver such
financing statements and further instruments and documents as Agent may
reasonably request in order to more fully perfect, evidence or effectuate the
pledge and the security interest granted hereby or to enable Agent to exercise
and enforce its rights and remedies hereunder. Borrowers authorize Agent to file
one or more financing or continuation statements under the UCC relating to the
Collateral, naming Agent, as "secured party".
(f) All captions in this Agreement are included herein for
convenience of reference only and shall not constitute part of this Agreement
for any other purpose.
(g) This Agreement shall be governed by and construed and
enforced in all respects in accordance with the laws of the State of New York.
0148055.08-01S4a
27
<PAGE>
(h) Any legal action or proceeding with respect to this Agreement
and any action for enforcement of any judgment in respect thereof may be brought
in the courts of the State of New York in and for the City of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, Borrowers hereby accept for themselves
and in respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and appellate courts from any thereof.
Borrowers irrevocably consent to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to Borrowers at its
address set forth herein. Borrowers hereby irrevocably waive any objection which
they may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
brought in the courts referred to above and hereby further irrevocably waives
and agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
Nothing herein shall affect the right of Agent to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against Borrowers in any other jurisdiction.
(i) In the event any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, but each shall be construed as if
such invalid, illegal or unenforceable provision had never been included
hereunder.
15. Recourse. The provisions of Section 9.14 of the Credit
Agreement are incorporated herein by refer- ence.
16. WAIVER OF JURY TRIAL. EACH OF THE BOR- ROWERS AND AGENT
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
0148055.08-01S4a
28
<PAGE>
17. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
0148055.08-01S4a
29
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written:
Borrowers: 1290 PARTNERS, L.P.
By: 1290 GP Corp., General Partner
By:____________________
Name:
Title:
237 PARK PARTNERS, L.P.
By: 237 GP Corp., General Partner
By:____________________
Name:
Title:
Agent: THE CHASE MANHATTAN BANK, AS AGENT
By:___________________________
Name:
Title:
Manager: MANAGER EXECUTES THIS AGREEMENT SOLELY
TO EVIDENCE ITS CONSENT TO PERFORM ITS
OBLIGATIONS SET FORTH IN SECTION 3(a),
3(k) AND 3(i) HEREOF:
TISHMAN SPEYER PROPERTIES, L.P.
By:___________________________,
General Partner
By:____________________
Name:
Title:
0148055.08-01S4a
<PAGE>
SCHEDULE A
"Permitted Investments" shall mean (i) savings, money market or
other interest bearing accounts of Agent, (ii) direct obligations of the United
States Government, including, without limitation, treasury bills, notes and
bonds, (iii) interest bearing or discounted obligations of the Federal Home Loan
Mortgage Corporation, Government National Mortgage Association and the Federal
National Mortgage Association or (iv) commercial paper of domestic corporations,
which has received a rating of A1 or P-1 or its equivalent from either of
Moody's Investors Services, Inc. or Standard & Poor's Ratings Group
(collectively, the "Rating Agencies") and/or unconditionally guaranteed by an
entity which has received an equivalent credit rating by the Rating Agencies.
0148055.08-01S4a
MANAGEMENT AND LEASING AGREEMENT
THIS AGREEMENT is made as of October 10, 1996, between 237 PARK
PARTNERS, L.P., a Delaware limited partnership, having an office at c/o Victor
Capital Group, L.P., 885 Third Avenue, New York, New York 10022 ("Owner"), and
TISHMAN SPEYER PROPERTIES, L.P., a New York limited partnership, having an
office at 520 Madison Avenue, New York, New York 10022 ("Manager" or "Agent").
PRELIMINARY STATEMENT
Owner owns fee title to the improved real property commonly referred to
as 237 Park Avenue, New York, New York.
Owner desires to engage Agent to manage and lease space at the Property
(as defined below), and Agent desires to accept the engagement, in accordance
with the terms of this Agreement.
Therefore, in consideration of the mutual agreements contained in this
Agreement, Owner and Agent agree as follows:
ARTICLE 1
DEFINITIONS, INTERPRETATION
1. Definitions. The following terms have the following meanings
throughout this Agreement:
"Affiliate" means, with respect to a Person, any other Person
that, directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the first Person.
"Annual Budget" means an annual budget, prepared by Agent and
acceptable to Owner, containing on a month-by-month basis (a) the projected
capital improvements which will be made to the Property in a given Fiscal Year,
and (b) the projected operating income and operating expenses of the Property
for a given Fiscal Year, which budget has been approved pursuant to the
provisions of Section 3.1(b) of this Agreement.
"Claim" means any claim, damage, loss, liability, obligation,
demand, defense, judgment, suit, proceeding, disbursement or expense (including
reasonable attorneys' fees or expenses as incurred).
C/M: 11764.0009 434116.1
<PAGE>
"Emergency Expense" means any expense which, in Agent's
reasonable discretion, is necessary to (a) protect the health, safety or welfare
of any Person in the immediate vicinity of the Property, (b) prevent immediate
damage or loss to the Property, (c) avoid the suspension of any necessary
service in or to the Property, or (d) avoid criminal or civil liability on the
part of Owner or Agent.
"Fiscal Year" means the twelve-month period commencing on
January 1st and ending on December 31st.
"Fixed Rent" means the fixed annual rent payable by a tenant
under a Lease for the initial, renewal or extension Lease term (as appropriate)
excluding (a) all electrical and other utility charges, (b) any share of
increases in taxes or payments in lieu of taxes (whether or not Owner is
obligated to make payments of real estate taxes or is excused from making
payments pursuant to an exemption or an abatement in whole or in part), wage
rates, operating expenses or cost of living or other similar increases, whether
actual, estimated or otherwise, which the tenant is required to pay under the
Lease, (c) any amounts specifically identified as payable for cleaning, heat,
water, air conditioning or other services, (d) all other items of additional
rent, (e) any increases in the annual fixed rent not expressly provided for in
the Lease and agreed to after the execution of the Lease, and (f) any
consideration received by Owner from the tenant under the Lease for consenting
to an assignment or sublease, or for accepting a surrender or other termination
or cancellation, voluntary or otherwise; and less any amounts paid by Owner for
tenant improvements, tenant allowances, decorations or installations or other
tenant inducements costing, on a per rentable square foot basis, in excess of an
amount to be agreed upon in each Annual Budget, which excess amount shall be
amortized over the Lease term with interest at the Interest Rate. Any rent
abatements and so-called "free rent" and "take-over costs" will be amortized
over the Lease term and an equal portion deducted from Fixed Rent for each Lease
year. If the Lease provides for (i) increases in the fixed annual rent based
upon increases in the cost of living index, porters' wages, operating costs or
similar indices or formulas not capable of precise mathematical determination at
the time the Lease is executed, or (ii) adjustments based upon fair market
rental value, then such increase and adjustments will not be considered in
computing Fixed Rent; however, if the annual rent at the commencement of a
renewal or extension term, or pursuant to an option covering additional space,
is to be fixed based upon a fair market rental value determination, then the
fixed annual rent as so determined will constitute Fixed Rent for purposes of
computing any Leasing Commission payable in connection therewith and any payment
of the Leasing Commission due thereon will be postponed until such determination
is made.
"Governmental Authority" means the United States of America,
the State, the county or city of New York, the Borough of Manhattan or any
agency, department, commission, board or instrumentality of any of them.
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C/M: 11764.0009 434116.1
<PAGE>
"Gross Revenue" means all (a) rent, additional rent and other
charges and revenues collected under the Leases or in connection with the
Property, (b) amounts collected from all licensees, concessionaires, and similar
users of any portion of the Property (including all amounts collected from
vending machines and coin-operated telephones) at the Property, and (c) proceeds
of rental value insurance or business interruption insurance to the extent paid
to Owner in lieu of any amounts provided for in clauses (a)-(b) above. Gross
Revenue will not include any (i) charges to tenants for above-standard tenant
work, (ii) tenant security deposits (except to the extent applied toward the
payment of rent, additional rent or other charges due under the Leases), (iii)
interest on any funds received in connection with the operation of the Property,
(iv) insurance proceeds (except as provided for in clause (c) above) or
condemnation awards, (v) amounts received on account of any abatement, reduction
or refund of property taxes, (vi) discounts or dividends on insurance policies,
(vii) sums collected through litigation (other than for nonpayment of rent,
additional rent or other charges due under the Leases), (viii) proceeds from the
sale or refinancing of the Property or any portion thereof or interest therein,
(ix) capital contributions to Owner by, or loans to Owner by, partners of Owner
whether or not held by Agent, or (x) amounts received as payments under loans
made to tenants prior to the date hereof (clauses (i)-(x), collectively,
"Excluded Proceeds"); provided that amounts received as payments under loans
made to tenants after the date hereof shall be included in "Gross Revenue". The
proceeds from any buy-out of all or a portion of the remaining term of a Lease,
or from any damage claims against a tenant for lost rent shall be amortized over
the remaining term of the subject Lease and included in the "Gross Revenue" of
Owner in equal monthly installments until the earlier of (i) re-occupancy of the
subject tenant space or (ii) expiration of the term of the subject Lease.
"Insurance Requirements" orders of any Board of Fire
Underwriters or similar body, or any notice of non-compliance from Owner's
insurance carriers, which comes to Agent's attention.
"Interest Rate" means the annual fluctuating rate equal to two
percent (2%) above the rate of interest announced publicly by Citibank, N.A. in
New York, New York as its base rate (or the rate equivalent to its base rate).
"Lease" means any lease, sublease, license or other concession
or other occupancy agreement for space at the Property and any amendment or
supplement thereto.
"Leasing Commission" means a leasing commission calculated in
accordance with and paid at the times and in the manner specified in Article 8,
Section 11.5 and Exhibit "E".
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C/M: 11764.0009 434116.1
<PAGE>
"Leasing Guidelines" means leasing guidelines for the Property
for a given Fiscal Year, prepared by Agent and acceptable to Owner, containing
(a) proposed leasing activities for the Property for the ensuing Fiscal Year,
and (b) a schedule of acceptable economic terms with respect to Leases being
offered to prospective tenants of the Property and renewals or extensions of
existing Leases (including any rent abatements, so-called "free rent" and
"take-over costs", construction allowances and similar items).
"Legal Requirements" means any law, ordinance, order, rule or
regulation of a Governmental Authority which pertains to the Property, Owner or
Agent (as managing or leasing agent of the Property).
"Management Fee" means an amount equal to one and one half
percent (1.5%) of Gross Revenue, per year, which amount will be payable monthly
in accordance with Article 6.
"Marketing Plan" means a written plan, prepared by Agent and
acceptable to Owner, for the leasing and marketing of the Property, as provided
in Sections 3.15 and 7.2.
"Non-Discretionary Expense" means any expense which, in
Agent's reasonable discretion, is necessary to (a) comply with any Legal
Requirement relating to the Property, (b) comply with any of Owner's obligations
as landlord under any Lease, (c) comply with any of Owner's other contractual
obligations under agreements approved by Owner or entered into by Agent on
behalf of Owner pursuant to this Agreement, (d) fulfill Owner's real estate tax
obligations, (e) maintain insurance for the Property in accordance with the
terms of this Agreement or (f) pay utility bills for the Property.
"Nyprop, L.L.C." means Nyprop, L.L.C., a Delaware limited
liability company in which no less than 50% of the membership interests are
owned directly or indirectly by Agent and/or its Affiliates.
"Operating Account" means an account at a financial
institution selected by Owner entitled "Tishman Speyer Properties, L.P., as
Agent on behalf of 237 Park Partners, L.P.--Operating Account", which account
will bear interest.
"Outside Broker" means a real estate broker other than Agent
assisting with leasing efforts at the Property. The parties do not contemplate
any Outside Brokers being utilized except in connection with the representation
of prospective tenants.
"Outside Broker's Commission Agreement" means a commission
agreement between Owner and an Outside Broker.
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C/M: 11764.0009 434116.1
<PAGE>
"Person" means a natural person, corporation, partnership,
limited liability company, trust, joint venture, unincorporated association,
Governmental Authority or other entity.
"Property" means the improved real property commonly referred
to as 237 Park Avenue, located at 237 Park Avenue, New York, New York and
includes all easements, licenses, grants, permits, franchises, privileges,
appurtenances and other rights pertaining thereto.
"Security Deposit Account" means an account at a financial
institution selected by Owner entitled "Tishman Speyer Properties, L.P. Special
Account on behalf of Tenants at 237 Park Avenue, New York, New York which
account will bear interest for the benefit of the tenants if and to the extent
required by the Leases or by applicable Legal Requirements.
"State" means the State of New York.
2. Interpretation.
(a) The singular includes the plural and the plural includes
the singular.
(b) The word "or" is not exclusive and the word "including"
is not limiting.
(c) References to a law include any rule or regulation issued
under the law and any amendment to the law, rule or regulation.
(d) References to an Article, Section or Exhibit mean an
Article, Section or Exhibit contained in or attached to this Agreement.
(e) The caption headings in this Agreement are for convenience
and reference only and do not define, modify or describe the scope or intent of
any of the terms of this Agreement.
(f) This Agreement will be interpreted and enforced in
accordance with its provisions and without the aid of any custom or rule of law
requiring or suggesting construction against the party drafting or causing the
drafting of the provisions in question.
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C/M: 11764.0009 434116.1
<PAGE>
ARTICLE 2
APPOINTMENT, OTHER ACTIVITIES
1. Appointment. Owner hereby engages Manager to manage and operate the
Property and authorizes Manager to exercise, upon all the terms and conditions
hereof, such powers as may be necessary and appropriate for the management of
the Property. Manager hereby accepts such engagement and agrees to perform all
supervisory, management and leasing services and functions reasonably necessary
or incidental to the leasing, management and operation of the Property. Agent
has secured and will keep in effect during the term of this Agreement all
necessary licenses, permits and authorizations to enable Agent to perform all of
its obligations under this Agreement. As soon as practicable after the date
hereof, Owner will (a) notify the tenants and other occupants of space at the
Property and any Persons holding a mortgage on any portion of the Property and
other signatories to the instruments referred to in Section 3.6 of the
appointment of Agent as the exclusive managing and leasing agent of the Property
and (b) instruct the tenants, occupants and mortgagees and such other
signatories to direct all payments and notices under their respective agreements
with Owner to Agent.
2. No Liability for Past Acts or Omissions. Agent will not be liable
for any act or omission of any Person (including Owner and any previous property
manager or leasing agent) with respect to the Property for any period prior to
the date of this Agreement.
3. Other Activities. Owner understands that Agent and its Affiliates
engage in various development, management, leasing and other real estate
activities not related to the Property. Agent and its Affiliate have the right
to engage in these activities (whether or not competitive to the Property) and
to receive distributions and compensation with respect to these activities.
Agent will act in good faith and deal fairly with Owner when engaging in the
services described in this Agreement.
ARTICLE 3
MANAGEMENT RESPONSIBILITIES
1. Submission of Budgets.
(a) As soon as practicable but not later than forty-five (45)
days after the date of this Agreement, Agent will prepare and submit to Owner
for its consideration and approval the proposed Annual Budget for the remaining
portion
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C/M: 11764.0009 434116.1
<PAGE>
of the Fiscal Year in which this Agreement is executed and delivered. On or
before December 1st of each year thereafter, Agent will prepare and submit to
Owner for its consideration and approval the proposed Annual Budget for the
ensuing Fiscal Year. Prior to approval of the initial Annual Budget, Agent will
operate in accordance with the Interim Budget attached as Exhibit A.
(b) Agent will consult with Owner as to the assumptions used
in preparing the proposed Annual Budget and will make all necessary revisions
thereto. Owner will approve or disapprove the proposed Annual Budget (and
revisions thereto) within thirty (30) days after submission by Agent. If Owner
disapproves any portion of the proposed Annual Budget, then its disapproval will
be accompanied by a description, in reasonable detail, of the specific
objection(s). Agent will promptly revise the proposed Annual Budget in
accordance with Owner's objection and resubmit the proposed Annual Budget to
Owner. If Owner approves any portion of the proposed Annual Budget, then Owner
will promptly communicate such partial approval to Agent. Owner will not
unreasonably withhold or delay its approval to the proposed Annual Budget (or to
any revision thereto).
(c) Owner acknowledges that Agent has provided services prior
to the date hereof in connection with the transition of ownership and management
of the Property from Owner's and Agent's predecessor and has agreed to pay Agent
$50,000 per month (pro rated for any partial month) for such services for the
period commencing August 1, 1996 and ending on the date of execution of this
Agreement. Owner shall pay Agent such amount on the date of execution of this
Agreement.
2. Adherence to Budgets.
(a) Agent will use reasonable efforts to cause the actual
costs of operating and maintaining the Property not to exceed the Annual Budget
(either in total or in any line item). Agent will not, without Owner's prior
approval, incur any operating expenses or make any capital expenditures in
excess of (i) one hundred and ten percent (110%) of the amount set forth in any
line item in the Annual Budget or (ii) one hundred and five percent (105%) of
the total amount of the Annual Budget (each such excess, a "material variance"
for purposes of this Agreement). To the extent ascertainable in advance, Agent
shall notify Owner in advance of any projected material variance from the Annual
Budget (either in total or in any line item). Agent shall not transfer any
amounts from one expense line item to another (other than from any contingency
item to a specific line item) without Owner's prior written consent.
(b) If Owner fails to approve an Annual Budget (or any portion
thereof) for a given Fiscal Year, then Agent will continue to operate under the
most
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C/M: 11764.0009 434116.1
<PAGE>
recent Annual Budget (including any partial approval of the then proposed Annual
Budget), provided that Agent may incur non-budgeted Emergency Expenses and,
subject to paragraph 3 below, Non-Discretionary Expenses.
3. Emergency Expenses; Non-Discretionary Expenses. Agent may, at any
time, incur Emergency Expenses and, subject to the provisions of this paragraph,
Non-Discretionary Expenses without Owner's prior approval. Agent will give Owner
prompt notice of all Emergency Expenses incurred to the extent that the
Emergency Expenses exceed or are not contemplated under the Annual Budget. Agent
will give Owner reasonable notice of all Non-Discretionary Expenses to the
extent that the Non-Discretionary Expenses would constitute a material variance
prior to payments (in the case of items described in clauses (d), (e) and (f) of
the definition of Non-Discretionary Expenses) and prior to incurrence (in the
case of items described in clauses (a), (b) and (c) thereof). Agent will refrain
from paying any such Non-Discretionary Expenses upon receipt of written notice
from Owner.
4. Operation, Maintenance and Repairs; Payments. Subject to the
availability of funds therefor:
(a) Agent will operate and maintain the Property in a manner
commensurate with that of real properties of a size, character and quality
comparable to the Property.
(b) Agent will provide tenants with (i) the services expressly
set forth in the Leases in existence as of the date of this Agreement, (ii) the
services set forth in the Leases hereafter entered into by Owner, (iii)
additional services customarily provided to tenants for additional charges to
such tenants, and (iv) other services which Owner may approve from time to time.
(c) Agent will cause all ordinary repairs and alterations to
be made to the Property and its mechanical systems and equipment including, but
not limited to, interior and exterior cleaning, plumbing, electrical, HVAC,
carpentry and decorating, and such other normal maintenance and repair work as
may reasonably be deemed desirable or necessary by Owner or Agent, subject only
to the other limitations contained in this Agreement. Agent shall recommend to
Owner the purchase and installation of items of new or replacement equipment
when Agent believes such purchase to be necessary or desirable.
(d) Agent will pay for the account of Owner, to the extent
sufficient funds are available for such purpose from Gross Revenues or from
other funds made available by Owner, and subject to the limitations in this
Agreement, all costs incurred in operating, maintaining and repairing the
Property, when such costs become due and payable, including, but not limited to:
debt service under all mortgages and other payments due to Owner's mortgagees,
as directed by Owner;
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<PAGE>
water charges; sewer rents; assessments and all other charges and impositions
payable with respect to the Property; all utility costs; labor and payroll for
employees of the Property; and the cost of operations, maintenance, repairs and
improvements to the Property. Notwithstanding any provision to the contrary in
this Agreement, at no time shall it be the responsibility of Agent to advance
money for payments of any obligations of Owner when funds are not available, but
Agent agrees to advise Owner on a timely basis when funds are not available for
said payments, or when Agent believes anticipated expenses will exceed available
funds.
5. Enforcement of Leases. Agent will take necessary actions to enforce
the terms of the Leases and to collect all rent, additional rent and other
charges due and payable thereunder. Owner authorizes Agent to (i) request,
demand, collect and receive all rent, additional rent and other charges, and
(ii) subject to Owner's prior approval, settle or compromise the payment of such
amounts. For individual settlements or compromises where the disputed amount is
less than Fifty Thousand Dollars ($50,000), Agent need not obtain the prior
approval of Owner, but will give Owner notice of the settlements or compromises.
Agent will keep all tenants informed of all rules and regulations affecting the
Property. Agent shall use reasonably diligent efforts to secure full compliance
by the tenants with the terms and conditions of their respective Leases, and to
this end, use reasonably diligent efforts to see that all tenants are informed
with respect to such rules, regulations and notices as may be promulgated by
Owner. Agent shall not knowingly take any action which would violate any
tenant's Lease, and shall promptly deliver to Owner any notice of default
received from a tenant and use reasonable efforts and due diligence to cure such
default. Agent shall use reasonably diligent efforts to collect and shall
receive for the account of Owner all rents, receipts, accounts, revenues and all
other income from the Property including, with the prior written consent of
Owner and using counsel selected by Agent (from a list of reputable law firms
approved by Owner as provided in Section 5.3), instituting any and all legal
actions or proceedings (in the name of Owner, if necessary or advisable)
required for the collection of revenues from the Property or the ousting or
dispossession of tenants or other persons therefrom.
6. Compliance with Legal Requirements and Contracts. Agent will use its
reasonable efforts to comply with and cause the Property to comply with all
Legal Requirements and will obtain all necessary certificates of occupancy,
licenses or operating permits for the operation of the Property. In addition,
Agent will obtain, at Owner's sole cost and expense, any business license and/or
operating permit which may be required for the operation of the Property. Agent
shall, at its own expense, (i) maintain its corporate or partnership existence;
and (ii) qualify to do business and maintain (or cause one or more of its
employees to maintain) a real estate brokerage license in the State of New York.
Agent will also use its reasonable efforts to comply with and cause the Property
to comply with all terms
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C/M: 11764.0009 434116.1
<PAGE>
and provisions of (i) any mortgage, deed of trust, security agreement or other
agreement encumbering or affecting the Property or any personal property located
at the Property, a copy of which is provided to Agent, (ii) any casualty
insurance policy insuring Owner's interest in the Property or any personal
property located at the Property, and (iii) any other relevant conditions or
restrictions affecting the Property, in each case so long as Agent is aware of
such terms and provisions. If Owner elects to contest compliance with any of the
foregoing, Owner will notify Agent and Agent will participate in the contest to
the extent reasonably requested by Owner, Owner will bear all costs of such
compliance (or contest). Agent shall promptly furnish Owner with copies of all
material notices which are sent by any mortgagee, space lessee, or ground lessee
to Agent.
7. Books and Records.
(a) Agent will maintain in a manner consistent with good
accounting principals, practices and procedures, a system of books and records,
in detail reasonably acceptable to Owner, for the Property. All books and
records will be prepared on a Fiscal Year basis using the accrual method of
accounting (unless Owner requests that the books and records be prepared on a
cash basis). All books, records and supportive documentation will be maintained
in a prudent manner at the Property or at such other place as Agent and Owner
determine. All books, records and supportive documentation will be the sole
property of Owner, and Agent shall, upon request of Owner, deliver any and all
such documentation to Owner, but Agent may retain copies to the extent Owner has
not identified such material to Agent as constituting proprietary information.
(b) Owner and its representatives will have the right, upon
reasonable prior notice to Agent, to have access to (and audit) the books,
records and supportive documentation of the Property during normal business
hours during the term of this Agreement. Should the audit discover any error in
record keeping, Agent will immediately correct such error.
(c) Agent will use reasonable good faith efforts to keep all
financial information concerning the Property confidential at all times during
and after the term of this Agreement; and no such information shall be given to
any third party (other than professional firms retained in accordance with this
Agreement) without the prior written consent of Owner except as may be required
by law or by legal proceedings.
8. Reports and Statements. Agent will prepare and submit to Owner the
following reports and statements, each of which will be in form and substance
reasonably acceptable to Owner and Agent:
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(a) By the fifteenth (15th) business day of each calendar
month, a tenant report setting forth (i) the amount of leased space and vacant
space for the preceding calendar month, (ii) the amount of rent due and the
status of payments as of the end of the preceding calendar month, and (iii) such
other tenant related information as Owner reasonably requests.
(b) Within a reasonable period of time after Owner's request,
a tenant improvement budget setting forth in reasonable detail the estimated
cost of making the tenant improvements and such related information as Owner
reasonably requests.
(c) By the fifteenth (15th) business day of each calendar
month, an operating statement comparing the amount of actual expenses incurred
with the amount set forth in the Annual Budget for the preceding month. The
operating statement will be supported by the following documents:
(i) a rent roll;
(ii) a cash disbursement journal and receipts reflecting
the cut-off date used for the monthly statement;
(iii) a reconciliation of security deposit accounts, if any;
(iv) a computation of the management fee and the leasing
commissions; and
(v) copies of bank statements for the period corresponding
to the reconciliation.
(d) By the forty-fifth (45th) day following the end of each
calendar quarter (i) a summary variance report comparing actual results for the
quarter and year to date with the Annual Budget, together with detailed
explanation for material variances, and (ii) property level financial statements
(unaudited) for the quarter and year to date, together with projections through
the end of the Fiscal Year.
(e) Within a reasonable period of time after Owner's request,
a report setting forth in sufficient detail all information regarding the
ownership and operation of the Property reasonably necessary for Owner to
prepare its federal, state and local tax returns.
(f) Agent will provide such other information or documents
which Owner may reasonably request from time to time, within a reasonable period
of time after Owner's request, to the extent that such information or documents
are available without unreasonable effort or expense on behalf of Agent.
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(g) Agent shall furnish to Owner, on a timely basis following
receipt by Agent, any and all notices materially affecting the Property
including, without limitation, notices from any taxing or other governmental
authority and notices of violations of law or municipal ordinances or orders
issued by any governmental authority or by any Board of Fire Underwriters or
other similar body. Agent shall obtain bills for real estate and personal taxes,
improvement assessments and other like charges which are or may become liens
against the Property and recommend payment or appeal thereof. Agent shall
promptly forward such bills to Owner and shall ascertain and advise Owner of any
penalties for late payment or discounts for early payment.
(h) Agent shall promptly notify Owner of any known violation
of any Legal Requirements or any Insurance Requirements; advise Owner of any
areas known to Agent in which the Project does not fully comply with any such
Legal Requirements and/or Insurance Requirements; and, unless expressly advised
not to do so by Owner, do or cause to be done all such acts or things in or
about the Property as shall be reasonably necessary or desirable to comply with
any and all Legal or Insurance Requirements and to correct all violations
thereof, and promptly furnish to Owner evidence satisfactory to Owner of such
compliance and/or corrections.
9. Annual Audit; Tax Returns.
(a) Agent will use reasonable efforts to have a nationally
recognized certified public accounting firm (selected by Owner) audit the books
and records of the Property. Agent will cause the accounting firm to deliver to
Owner a copy of the accounting firm's opinion together with the related
financial statements as soon as reasonably practicable after the close of the
Fiscal Year, and Agent will require the accounting firm to deliver same not
later than April 1 of the following Fiscal Year. Owner will bear all costs of
the audit.
(b) Agent will require such accounting firm to prepare any tax
returns and statements which must be filed in connection with the ownership,
operation or maintenance of the Property. Agent will submit the returns and
statements to Owner for its approval prior to filing and, once approved, will
file the returns and statements in accordance with applicable Legal
Requirements. Agent will use reasonably diligent efforts to require the
Property's accountants to complete the Partnership tax returns for distribution
to Owner's constituent partners within 60 days following the end of each Fiscal
Year. Owner will bear all costs of preparing and filing the tax returns and
statements.
(c) Agent acknowledges that Metropolis Realty Trust, Inc., an
indirect partner in Owner, intends to become a public reporting company under
the Securities Exchange Act of 1934. Agent agrees to maintain the Property books
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and records in a manner and to use reasonably diligent efforts to require the
Property accountants to prepare financial statements and reports to enable
Metropolis Realty Trust, Inc. to file on a timely basis all documentation
required to be filed by a public reporting company, including without limitation
forms 10K, 10Q and 8K.
10. Employees.
(a) Agent will on Owner's behalf and for Owner's account
employ, train and supervise such employees as are necessary for the operation
and maintenance of the Property in accordance with this Agreement. All non-union
employees will be employed by Agent on behalf of Owner; however, (i) Owner shall
have the right to request Agent to replace any key on-site employees responsible
for management of the Property and leasing of the Property (whether on-site or
off-site), including, without limitation, all on-site property managers and all
leasing agents, and (ii) Owner will reimburse Agent for all employee
compensation paid to such employees identified on Exhibit A hereto in accordance
with Section 6.2. Agent agrees to hire for Owner's account (and at Owner's
expense) the building employees identified on Exhibit B hereto currently
employed by 237 Park Avenue Associates, L.L.C. from whom Owner is acquiring the
Property and, (i) subject to the provisions of the next sentence, to assume on
behalf of Owner (and at Owner's expense) such party's labor agreements relating
to union employees, and (ii) with respect to non-union employees, provide such
employees (at Owner's expense) the same wages and vacation and severance accrual
rules as are currently applicable to them (as provided in Exhibit C), such other
benefits as are customarily provided by Agent to its comparable employees, and
carry over such employees' accrued vacation and severance benefits. Owner shall
be responsible for any obligations to such currently existing employees of 237
Park Avenue Associates LLC (both union or non-union) for accrued vacation
through the date hereof and for any severance payments regardless of (i) when
such employee is terminated or (ii) whether or not Agent terminates such
employee, or the grounds for termination, unless such employee accepts
employment with Agent or an affiliate of Agent on another project. In the event
an employee is terminated at the Project for reasons unrelated to his job
performance or personal character, Agent will use its good faith efforts to
relocate such employee to another building under its management supervision.
Agent and each employee who is responsible for handling any of Owner's funds
will at all times be bonded by a fidelity bond (commercial blanket). Such bond
shall provide coverage of at least $1,000,000. Agent will promptly deliver
satisfactory evidence of such bond to Owner. Without limiting the generality of
the foregoing, Agent will:
(i) provide such personnel as it deems necessary
(subject to the approval of Owner) for the
proper operation and maintenance of the
Property so that the Building will be
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operated, maintained, and staffed on a
full-time basis in a manner which will
always at least equal the standard of care
and services rendered by leading management
companies performing the same type of
services rendered for first class buildings
in New York City. The number, duties and
cost of all personnel for which Owner will
compensate Agent pursuant to Section 6.2
shall be provided in the Annual Budget.
Subject to the provisions in this Section
3.10, the work performed by on-site
employees shall be exclusively for the
benefit of the Property unless otherwise
indicated in the Annual Budget or otherwise
agreed to by Owner in writing. Agent shall
be solely responsible for supervising and
coordinating, on behalf of Owner, all terms
and conditions of employment for the
employees, including obligations under any
collective bargaining agreement or federal
or state labor laws. In the event of any
labor dispute affecting Agent's duties
hereunder, Agent's obligation shall continue
in full force and effect and, without
reducing the said obligations of Agent,
Agent shall make reasonable efforts to use
supervisory personnel to continue Agent's
services hereunder with minimal disruption
under the circumstances. Agent agrees to
keep Owner reasonably informed on any
union-related negotiation or dispute.
(ii) provide a schedule of employees (in the
format of Exhibit D attached hereto and
hereby made a part hereof) to be employed
"on-site" in the direct management of the
Property. Exhibit D (which may be revised
annually or more frequently, by a writing
executed by the Owner and the Agent) shall
include the number of employees and their
title and salary range and shall also
indicate which employees are bonded or are
covered under the Agent's comprehensive
crime insurance policy. The parties hereto
agree that the services provided by any
employee position listed on Exhibit D may be
utilized for the Property as well
as any property owned by an affiliate of
Owner and managed by Agent. However, the
percentage of time dedicated by that
position shall not be less than the
percentage of that position's total annual
compensation that is allocated to the
Property in the then effective Annual
Budget. The Owner and Agent agree that each
Annual Budget shall specify, as to each
employee position on Exhibit D, the
percentage of that
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position's total annual compensation that is
to be allocated to the Property.
(b) Agent, on behalf of Owner, will be responsible for the
preparation of, and will timely file, all local, state and federal labor payroll
tax reports and other similar reports, and will timely make payments of all
withholding and other payroll taxes with respect to its employees in accordance
with applicable Legal Requirements. Without in any way limiting the foregoing,
Agent represents, warrants and agrees that it will pay and/or deduct from the
compensation of workers of the Property (whether union or non-union) all
contributions, taxes and other payments or charges required to be paid by an
employer with respect to the compensation paid, and to be paid, to its employees
under the provisions of all applicable state unemployment insurance, disability
benefits and withholding tax laws, the Federal Insurance Contributions Act, the
Federal Unemployment Tax Act and the Internal Revenue Code of 1986, as amended,
and will comply with all other local, state and federal laws, regulations and
requirements applicable to union workers at the Property or affecting their
compensation or conditions of employment or applicable to Agent for the
performance of the services hereunder, including, without limitation, the Fair
Labor Standards Act, the Occupational Safety and Health Act, the Equal
Employment Opportunity Act, the Fair Employment Practices Act, the Immigration
Reform and Control Act of 1986, the Employee Retirement Income Security Act of
1974 and any labor union contract in effect.
11. Tax Assessments and Condemnation. At Owner's request, Agent will
render advice and assistance to Owner in connection with negotiating and
prosecuting (a) any claims for the increase, abatement, reduction or refund of
property taxes affecting the Property or the property known as 2 Broadway, and
(b) any awards for any public taking of any portion of the Property. Owner will
reimburse Agent for Agent's out-of-pocket expenses incurred in connection with
rendering such advice or assistance. Agent will not agree to the terms of any
such real estate or condemnation settlement (relating to either the Property or
2 Broadway) without Owner's prior written approval.
12. Improvements. Agent will supervise and coordinate all customary and
ordinary capital improvements to the Property and will assist Owner in
determining which improvements should be made to the Property. Without limiting
the generality of the foregoing, Agent shall provide the associated supervision
and direction for the installation of such improvements and alterations to a
tenant's premises as may be required by the terms of any lease with such tenant
and, at the cost and expense of such tenant or of Owner (as set forth in the
lease or otherwise approved in writing by Owner in advance), provide the labor
and materials, through contractors approved in writing by Owner or Owner's
architect or consultant, to perform such alterations and installations to a
tenant's premises in the Property as are required by the terms of any lease with
such tenant. Owner will reimburse
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Agent for Agent's out-of-pocket expenses incurred in connection with rendering
such services.
13. Consent to Tenant Alterations to Property. At no additional expense
to Owner for the time dedicated to such work, Agent shall review tenant
alterations and installations and may (subject to the next sentence) consent to
and approve such alterations and installations provided for in the respective
Leases of tenants, subject to compliance by the tenants with the terms and
conditions of the applicable Leases and the conditions set forth below in this
Section. With respect to the alterations and installations not provided for by
such Leases (and tenant alterations and installations contemplated in a Lease
but for which the plans are not a part of such Lease), Agent is authorized to
consent to and approve such work provided: (i) such alterations and improvements
are made solely at tenant's expense (including any expenses incurred by Agent or
Owner in connection with such work) and in accordance with all Legal
Requirements and Insurance Requirements, (ii) such alterations and installations
do not affect the basic structure or systems of the Property or interfere with
other tenants and are not outside of the Tenant's demised premises (e.g., do not
include roof installation), and (iii) unless Owner otherwise agrees in writing,
tenant shall, at the expiration or termination of its Lease, be required to
remove any such alterations and installations which involve a cost of removal
greater than Twenty-Five Thousand Dollars ($25,000.00).
14. Tenant Complaints and Requests. Agent will handle promptly all
complaints and requests made by the tenants at the Property.
15. Advertising; Public Relations. Not later than the date on which the
initial Annual Budget is prepared, Agent will prepare for Owner's review and
approval a Marketing Plan for the remaining portion of the Fiscal Year in which
this Agreement is executed and delivered. Such Marketing Plan will include a
strategy for advertising and marketing the leasing of space at the Property,
including specific newspapers, trade journals, brochures, consultants and other
appropriate media which the Agent recommends utilizing, and an estimated amount
budgeted for each such use (which amount will also be included in the Annual
Budget). The Marketing Plan, when approved in writing by Owner, shall form the
basis on which the Property's leasing program will be marketed. Agent will
prepare for Owner's review and approval a Marketing Plan for each ensuing Fiscal
Year, together with and in the manner provided in Section 3.1 with respect to
the Annual Budget. Agent shall implement, or supervise the implementation of,
the leasing and marketing of the Property so long as it does so in accordance
with a Marketing Plan and Annual Budget that has been approved by Owner.
16. General Duties. In addition to the responsibilities set forth in
this Article 3, Agent will perform all other services or activities incidental
to the normal
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and professional operation by Agent of properties similar in type, character and
quality to the Property. Agent shall: (a) assist in the review and preparation
of leasing plans and programs and render assistance in presentations to
prospective tenants, financing groups, governmental officials, civic and
business groups and other persons and entities selected or designated by Owner,
(b) in the event of any refinancing of the Property, cooperate in all respects
and in good faith with Owner and any lender having a security interest in or
lien on the Property ("Lender"), including, without limitation, promptly upon
notice from Owner, executing and delivering any and all such agreements and
establishing and maintaining any and all such accounts as may be required by
Lender in connection with the Property (including, without limitation,
"lock-box" accounts, whether held by Agent or Lender), provided that they do not
materially modify Agent's rights, or materially expand Agent's obligations,
under this Agreement or otherwise, or subject Agent to any personal liability.
Agent shall comply with the requirements of any Lender brought to the attention
of Agent by Owner regarding matters as budget and lease approvals, requisition
procedures and other similar matters, and (c) use reasonable efforts to prevent
the release of any Hazardous Materials on, under or at the Property, to
immediately notify Owner when Agent is made aware of any such release, and to
cooperate in Owner's efforts to remove and/or remediate any such release and, at
Owner's request, to coordinate the removal of any Hazardous Materials discovered
at the Property. For purposes of this Agreement, "Hazardous Material" means and
includes any hazardous substance or any pollutant or contaminant defined as such
in (or for purposes of) the Comprehensive Environmental Response, Compensation
and Liability Act, any so-called "Superfund" or "Superlien" law, the Toxic
Substances Control Act, or any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning any hazardous, toxic or
dangerous waste, substance or material, as now or at any time hereafter in
effect (collectively, the "Environmental Statutes").
ARTICLE 4
BANK ACCOUNTS, DISBURSEMENTS
1. Operating Account. Agent will establish and maintain the Operating
Account. Agent will deposit all Gross Revenues and Excluded Proceeds (other than
tenant security deposits, unless some are applied toward the payment of rent,
additional rent or other charges due under the Leases) received by Agent with
respect to the Property into the Operating Account. Except as otherwise provided
herein, Agent will pay in a timely manner all expenses for the Property from the
Operating Account to the extent that the expenses are contemplated in the Annual
Budget, constitute Emergency Expenses or Non-Discretionary Expenses or are
otherwise approved by Owner.
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2. Security Deposit Account. Agent will establish and maintain the
Security Deposit Account in accordance with applicable Legal Requirements. Agent
will deposit all security deposits received by Agent from tenants of the
Property into the Security Deposit Account. Withdrawals from the Security
Deposit Account may only be made by an authorized and bonded employee of Agent
and may only be used to refund security deposits to tenants or cure defaults of
tenants in accordance with their respective Leases. Any security deposits which
are in the form of letters of credit, marketable instruments or other cash
equivalents shall be held by Agent in safekeeping in a responsible and
appropriate fashion.
3. Shortfalls; Advances.
(a) If, at any time, the funds in the Operating Account are
not sufficient to pay for any expenses of the Property (including the
obligations of Owner hereunder), then Agent will promptly notify Owner of such
anticipated shortfall.
(b) Owner will bear all expenses of owning, operating and
maintaining the Property, including Agent's expenses in connection with the
performance of its responsibilities under this Agreement, and Agent will not be
obligated to advance any of its own funds on behalf of Owner or otherwise incur
any personal obligation for the account of Owner.
4. Payments to Owner. Agent shall remit to Owner, within 15 days
following the end of each fiscal quarter, all rents, receipts, revenues and
other income from the Property remaining after payment of those items provided
for under this Agreement, if any, in a manner as directed by Owner, with Agent
retaining not less than $250,000 for working capital plus budgeted reserves.
ARTICLE 5
MANAGEMENT AUTHORITY, CONTRACTS
1. General Authority. (a) Agent will have the authority to enter into
contracts and incur expenses on behalf of Owner for all goods, services and
supplies necessary or advisable in connection with the operation and maintenance
of the Property in accordance with this Agreement to the extent such expenses
are contemplated in the Annual Budget, constitute Emergency Expenses or real
estate taxes, utility charges or (in the event an approved Budget is not in
effect and subject to the other limitations provided herein) other
Non-Discretionary Expenses or are otherwise reasonably approved by Owner.
Notwithstanding the foregoing, any such contract that requires annual payment(s)
which total in excess of $250,000, or which has a term of more than one year, or
which is with an affiliate
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of Agent, or which would cause any line item of the Annual Budget to be exceeded
by more than a material variance, shall require the prior written consent of
Owner. Together with Agent's request for consent to any such service contract,
Agent shall deliver to Owner a copy of the proposed contract, a statement of the
relationship, if any, between Agent (or the person or persons in control of
Agent) and the party which will supply such goods or services under the proposed
contract, and supporting analysis, if any.
(b) All service contracts shall, unless expressly approved by
Owner: (i) include a provision for cancellation thereof (without penalty) by
Owner upon not more than 60 days' written notice, (ii) require that all
contractors provide evidence of insurance specified in paragraph (d) below, and
(iii) if for work of a nature which would entitle the contractor to file a lien
against the Property, include, unless waived by Owner, a provision requiring the
contractor to provide lien waivers in accordance with the provisions of the New
York Lien Law, in connection with work to be performed under the terms of the
contract.
(c) Agent shall require that each contractor engaged to
perform any work at the Property deliver to Agent a Certificate of Insurance,
evidencing insurance coverage maintained, at such contractor's expense, in no
less than the following amounts: (i) Worker's Compensation -- statutory amount;
(ii) Employer's Liability -- statutory amount; (iii) Comprehensive General
Liability -- $1,000,000 combined single limit for personal injury and property
damage; and (iv) Automobile Liability -- $100,000/$300,000 single combined
limit.
2. Execution of Contracts. All contracts permitted under this Agreement
may be signed by Agent as agent for Owner. Agent will disclose Owner's existence
and identity to all third-party contractors. Agent will use reasonable efforts
to have each contract include an exculpatory clause (similar to the clause set
forth in Section 10.5(a)) limiting Owner's obligations under the contract to
Owner's interest in the Property.
3. Use of Counsel and Other Professionals. If Agent deems it necessary
or desirable to retain attorneys, architects, accountants, engineers or other
third-party professionals, then Agent may retain, on behalf of Owner and at
Owner's expense, professionals selected from a list of professionals
pre-approved by Owner or, if not on such list, with Owner's prior written
consent.
4. Limitation of Authority. Agent will not, without Owner's prior
approval (a) convey, transfer, pledge or encumber any property or other asset of
Owner, (b) institute or defend any lawsuits or other legal proceedings on behalf
of Owner, (c) execute, amend or terminate any Leases, (d) obligate Owner for the
payment of any fee or commission to any real estate agent or broker (other than
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Agent in accordance with this Agreement), or (e) borrow money in the name of
Owner.
5. Value of Goods, Services and Supplies. Agent will use reasonable
efforts to ensure that the consideration paid for any goods, services or
supplies obtained by Agent for the Property will not exceed the amount
ordinarily paid for such goods, services or supplies for properties
substantially similar to the Property. At Owner's request, Agent will procure
competitive bids for the goods, services or supplies obtained by Agent for the
Property. Owner understands, however, that with respect to procuring competitive
bids, accepting services from the lowest bidder may not necessarily be in the
best interest of Owner. Owner will be entitled to receive the benefit of all
rebates, discounts or commissions obtained with respect to all goods, services
and supplies of the Property.
6. Contracts with Affiliates. Agent may contract with any of its
Affiliates to provide goods, services or supplies under this Agreement so long
as (a) Agent discloses the relationship to Owner, (b) the economic and material
non- economic terms of the contract are reasonable and no more favorable than
terms generally available from third parties of comparable experience providing
a similar scope and quality of goods, services or supplies, (c) such contract
otherwise conforms to the requirements of this Article 5, and (d) Owner has
given its written approval of such contract.
ARTICLE 6
COMPENSATION FOR MANAGEMENT SERVICES
1. Management Fee. Owner will pay the Management Fee to Agent on or
before the fifth (5th) business day of each calendar month, for its services in
managing the Property for the immediately preceding calendar month. If this
Agreement commences on a date other than the first day of a calendar month or if
the term expires or is terminated on a day other than the last day of a calendar
month, then the Management Fee will be prorated for such partial month on the
basis of a thirty (30) day month.
2. Reimbursement. Owner will reimburse Agent, on or before the fifth
(5th) business day of each calendar month, for all reasonable out-of-pocket
expenses incurred by Agent directly related to the performance of its
responsibilities under this Agreement, to the extent set forth in the Annual
Budget. Owner understands that Agent's out-of-pocket expenses with respect to
the Property will include items such as (a) costs of preparing printed forms,
notices, checks, stationary, envelopes and similar items, (b) telephone,
telecopier and other communication expenses, (c) postage, delivery and
photocopying costs,
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(d) entertainment expenses (including meals) where appropriate and reasonable
(e.g., the cost of occasionally entertaining key building facility persons and
tenants), (e) costs of advertising and engaging in promotional activities
(including the preparation of brochures and other marketing materials) to the
extent permitted herein, and (f) costs of insurance required to be maintained by
Agent pursuant to Section 9.2 to the extent permitted therein. Owner will also
reimburse Agent for (i) all compensation paid to on-site employees of Agent
(such as base salaries, bonuses, medical benefits, retirement benefits, other
fringe benefits, payroll taxes and any severance payments), (ii) the fair and
equitable portion of such compensation paid to off-site employees of Agent
working on matters relating to the Property to the extent provided in an Annual
Budget approved by Owner, and (iii) all reasonable and customary placement fees
incurred in connection with the hiring of employees of Agent working on matters
relating to the Property (and subject to the prior approval of Owner). Agent
will maintain reasonably detailed records documenting all reimbursable expenses.
Owner shall have the right to audit such records, on reasonable prior notice to
Agent. Agent shall maintain such records, at the Property or at such other place
as Agent and Owner may determine, for a period of not less than 4 years from the
date of the incurrence of the respective fees to which they relate. The
provisions of Sections 6.1 and 6.2 will survive the expiration or earlier
termination of this Agreement.
3. Payment of Compensation. Agent may withdraw the Management Fee and
the reimbursable expenses from the Operating Account as and when the Management
Fee and the reimbursable expenses become due and payable in accordance with this
Agreement.
ARTICLE 7
LEASING RESPONSIBILITIES
1. Leasing Efforts. (a) Agent will use reasonable efforts to lease
space in the Property to desirable tenants upon terms and conditions reasonably
acceptable to Owner. Owner will refer to Agent all offers or inquiries which are
received by Owner with respect to leasing space in the Property.
(b) The services to be performed by Agent as
leasing agent shall include, but shall not be limited to, the following:
(i) Agent shall procure tenants for the Property
and shall be responsible for the leasing of space and the renewal,
extension and expansion of existing leases in the Property upon such
terms and conditions as are specified by Owner; the conduct of all
negotiations related thereto (subject to Owner's direction); and if
requested by Owner arranging for the
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preparation of leases and other documents in form satisfactory to Owner
and approved by Owner and its counsel (which shall be retained by and
at the expense of Owner), including tending to the execution of such
leases by tenants and delivery of such leases; provided, however, that
Agent shall not have any lease executed without securing the prior
written consent of Owner (which consent shall be in Owner's sole and
absolute discretion). Agent shall not have the right to cancel, amend
or accept the surrender of any lease or to consent to a sublease or
assignment of a lease, except with the written consent of Owner. Agent
shall use reasonable diligence to obtain and submit to Owner credit
reports and other financial statements pertaining to prospective
tenants to the extent available.
(ii) Agent shall acquire and maintain a thorough
knowledge of the leasing market for space similar to that contained in
the Property, prepare a leasing and marketing plan for the Property
(which will include, without limitation, analysis of the Property's
leasing activity, market absorption and projected leasing activities)
and recommend pricing and marketing strategies for Owner's
consideration.
(c) Agent represents that it is a licensed
real estate broker and all of its employees required to be licensed real estate
brokers are so licensed and will remain so during the term of this Agreement.
2. Advertisement. Agent will list and advertise the Property for rental
by means of periodicals, signs, plans, brochures or other appropriate means in
accordance with the Marketing Plan and Annual Budget. Agent shall not use
Owner's name in any advertising or promotional material without Owner's express
prior written approval in each instance unless provided for in an approved
Marketing Plan. Advertising and promotional materials shall be prepared in full
compliance with Federal, state and municipal laws, ordinances, regulations and
orders. Any reasonable costs of printing leasing brochures and other promotional
material shall be paid by Owner to the extent provided for in Marketing Plan and
Annual Budget and otherwise to the extent approved in writing by Owner as an
over-budget expense. Agent shall use reasonable efforts to ascertain advertising
and marketing programs being used by competing buildings, and shall utilize such
information in developing the Marketing Plan for the Property.
3. Outside Brokers. Owner acknowledges that Outside Brokers may be
involved in the leasing of space at the Property. Agent will advise owner of the
involvement of any Outside Brokers in any pending transaction. In the event any
Outside Broker is involved, Agent will use reasonable efforts to have each
Outside Broker execute and deliver to Owner an Outside Broker's Commission
Agreement, the form and substance of which shall be subject to Owner's approval.
Agent will
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deliver a fully executed counterpart of the Outside Broker's Commission
Agreement to Owner promptly upon the execution thereof.
4. Reporting. Agent will provide Owner with monthly leasing activity
reports in form and substance reasonably acceptable to Owner and Agent which
shall include a description of prospective tenants contacted during the prior
month.
5. Leasing Guidelines. Not later than the date on which the initial
Annual Budget is prepared, Agent will prepare for Owner's review and approval
Leasing Guidelines for the remaining portion of the Fiscal Year in which this
Agreement is executed and delivered. Such Leasing Guidelines will state proposed
lease rates (gross) and concessions (i.e., free rent, tenant fit-out allowance)
to ensure that the Property is competitive in the marketplace. The Leasing
Guidelines, when approved in writing by Owner, shall form the basis on which the
terms of proposed leases of space in the Property shall be negotiated. Agent
will prepare for Owner's review and approval Leasing Guidelines for the ensuing
Fiscal Year, together with and in the manner provided in Section 3.1 with
respect to the Annual Budget. If Owner and Agent fail to establish new Leasing
Guidelines for any given Fiscal Year, then the Leasing Guidelines established
for the immediately preceding Fiscal Year will continue in effect until Owner
and Agent establish the new Leasing Guidelines. Agent shall update the Leasing
Guidelines from time to time, upon Owner's request.
6. Authority. Agent will have the authority to negotiate with
prospective tenants on behalf of Owner so long as the terms thereof are
substantially in accordance with the Leasing Guidelines. Agent will have no
authority to enter into any Lease on behalf of Owner without Owner's prior
consent. All Leases permitted under this Agreement may be signed by Agent as
agent for Owner or, at Agent's request, by Owner.
7. Conflicts of Interest. The parties acknowledge that Agent and
certain of its Affiliates are the owners and/or managers of other properties
located in New York City, some of which properties may form part of the same
leasing market (the "Leasing Market") (taking into account use, geographical
location, rental rates and building facilities) as the Property. Accordingly,
Agent agrees that, in the event that any then-existing tenant of the Property
enters into negotiations for space (other than at the Property) within the
Leasing Market which is owned or managed by Agent or its Affiliates, or with a
prospective tenant which is considering both the Property and another property
owned or managed by Agent or its Affiliates (and provided that Agent's senior
leasing representative at the Property has actual knowledge that such event has
occurred), Agent shall give Owner notice of Agent's intent to enter into such
negotiations and Owner shall have the right to negotiate directly with such
existing or prospective tenant of the Property.
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ARTICLE 8
COMPENSATION FOR LEASING SERVICES
1. Leasing Commission. If and when a Lease is executed and delivered by
a tenant and Owner pursuant to this Agreement (including any Lease entered into
prior to the date of this Agreement where Agent materially participated in its
negotiation), Owner will pay a Leasing Commission to Agent calculated in
accordance with Exhibit E, subject to Section 8.5 below in the case where an
Outside Broker is involved.
2. Limitations.
(a) If a Lease provides that a tenant has the right to
terminate the Lease at any time prior to the commencement of the term thereof,
then no Leasing Commission will be payable to Agent unless and until the
commencement of the term of the Lease occurs. If a Lease involves a right of the
tenant to cancel or terminate after commencement of the term, the Leasing
Commission will be based on the Fixed Rent through the date of such right and if
the tenant fails to exercise such right the remainder of the Leasing Commission
shall then be due calculated as if the remaining term were part of the initial
Lease term.
(b) If, for any reason, a Lease is not entered into between
Owner and a prospective tenant of the Property, then no Leasing Commission will
be earned by Agent.
3. Renewals and Extensions. If a tenant exercises an option in the
Lease to renew or extend the initial term of the Lease, then Owner will pay a
Leasing Commission to Agent based on the Fixed Rent (determined in accordance
with Exhibit E) payable during the renewal or extension term. Such Leasing
Commission will be calculated at the rates set forth in Exhibit E at the
percentage levels that would have applied if the renewal or extension period
were part of the initial term of the Lease (e.g., if the initial term was 10
years and the renewal term is 5 years, the applicable rates would be for years
11-15). Notwithstanding the foregoing, if, in such event, a commission is
payable to an Outside Broker upon such renewal or extension, then Owner will pay
a leasing commission to such Outside Broker, and will pay to Agent a Leasing
Commission equal to thirty seven and one half percent (37.5%) of the Leasing
Commission amount otherwise payable to Agent (were Agent the sole leasing agent)
provided in accordance with the preceding sentence. If (i) an option or right is
negotiated or (ii) a Lease, option or right is renegotiated and (iii) a renewal
or extension is actually effectuated pursuant thereto, then Owner will pay a
Leasing Commission to Agent (or 37.5% thereof if an Outside Broker is involved)
based upon the new term of the Lease (as extended or renewed) calculated in
accordance with Exhibit E as if it were a new Lease, but net
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of rent, if any, remaining under the Lease previously in effect with respect to
the initial term in the case of an early renewal or extension amortized over the
new term as extended.
4. Additional Space. If, pursuant to or in connection with an option or
right in the Lease, a tenant leases additional space at the Property, then Owner
will pay a Leasing Commission to Agent (or 37.5% thereof if an Outside Broker is
involved) based on the Fixed Rent payable during the expansion space term. Such
Leasing Commission will be calculated at the rates set forth in Exhibit E at the
percentage levels that would have applied if the additional space were part of
the initial term of the Lease (e.g., if the initial term was 10 years and the
additional space were acquired at the end of year 10 for a term of 5 years, the
applicable rates would be for years 11-15). If an option or right to acquire
additional space is negotiated or renegotiated, and then exercised, then Owner
will pay a Leasing Commission to Agent (or 37.5% thereof if an Outside Broker is
involved) calculated in accordance with Exhibit E as if the additional space
were a new Lease.
5. Outside Brokers. If an Outside Broker is entitled to a leasing
commission in connection with the leasing of space at the Property, then Owner
will pay a leasing commission to the Outside Broker pursuant to the Outside
Broker's Commission Agreement and will pay to Agent a Leasing Commission equal
to thirty seven and one half percent (37.5%) of the Leasing Commission amount
otherwise payable to Agent (were Agent the sole leasing agent) set forth in
Exhibit E. Agent will advise Owner of the involvement of any Outside Broker.
6. Timing of Payments.
(a) Owner will pay all Leasing Commissions earned by Agent in
connection with the consummation of a new Lease in two (2) equal installments as
follows: (i) fifty percent (50%) upon execution and delivery of the Lease, and
(ii) fifty percent (50%) upon the earlier of delivery of the demised premises to
the tenant or the date tenant begins paying rent to Owner under the Lease.
(b) Owner will pay all Leasing Commissions earned in
connection with the renewal or extension of a Lease or the leasing of additional
space (in each case pursuant to an option or right in the Lease) in the manner
provided in paragraph (a) above.
(c) The provisions of this Section 8.6 will survive the
expiration or earlier termination of this Agreement.
(d) The provisions of this Section 8.6 are subject to the
provisions of Section 11.5(c).
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ARTICLE 9
INSURANCE
1. Owner's Insurance.
(a) Owner will maintain, or at Owner's written request, Agent,
on behalf of Owner, will maintain in full force and effect during the term of
this Agreement "All Risk" property coverage insuring the Property for its
replacement costs and including coverage for expediting expense and rental
insurance. The policy will (i) include a thirty (30) day notice of cancellation
to Agent in the event of non-renewal, non-payment of premium or material change
of terms, and (ii) be maintained with an insurance company licensed to do
business in the State and reasonably acceptable to Owner, Owner hereby agreeing
to accept a Standard & Poor's rating of at least A-8. If Owner shall request
Agent in writing to obtain such policy, Agent shall have 45 days to obtain such
policy or notify Owner that such policy cannot be obtained on terms more
favorable than the existing policy.
(b) Owner will maintain or, at Owner's written request, Agent,
on behalf of Owner, will maintain in full force and effect during the term of
this Agreement comprehensive general liability insurance (including broad form
contractual, property damage and personal injury coverage) with a maximum
deductible of Twenty-Five Thousand Dollars ($25,000) and a combined single limit
of not less than Fifty Million Dollars ($50,000,000) per occurrence for bodily
injury or death and third-party property damage. The policy will (i) name Agent
as an additional insured party, (ii) include a thirty (30) day notice of
cancellation to Agent in the event of non-renewal, non-payment of premium or
material change of terms, and (iii) be maintained with an insurance company
licensed to do business in the State and reasonably acceptable to Owner, Owner
hereby agreeing to accept a Standard & Poor's rating of at least A-8. Insurance
coverage may be carried under "blanket" policies, but in all events must be the
primary coverage for Owner and Agent for all Claims relating to the Property. If
Owner shall request Agent in writing to obtain such policy, Agent shall have 45
days to obtain such policy or to notify Owner that such policy cannot be
obtained on terms more favorable than the existing policy.
(c) Agent, on behalf of Owner, will provide Owner with
certificates of insurance or other satisfactory documentation evidencing its
compliance with the insurance requirements under this Agreement.
(d) Notwithstanding the foregoing provisions of this Article
9, all insurance in respect of the Property obtained by Agent on behalf of Owner
shall conform to the requirements of any mortgage encumbering the Property that
has been brought to Agent's attention by Owner, the terms and provisions of
which
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mortgage shall control in the event of any conflict between the insurance
requirements set forth therein and the foregoing provisions of this Agreement.
2. Agent's Insurance.
(a) Agent will maintain in full force and effect during the
term of this Agreement the following insurance coverage for Property employees:
(i) Comprehensive crime coverage in the minimum amount
of One Million Dollars ($1,000,000).
(ii) Worker's compensation insurance in such
form, and in such amounts, as may be
required by applicable Legal Requirements.
(iii) Non-Occupational disability insurance in such
form, and in such amounts, as may be required by
applicable Legal Requirements.
(b) Agent's insurance policies will (i) include a thirty (30)
day notice of cancellation to Owner in the event of non-renewal, non-payment of
premium or material change of terms, (ii) be maintained with an insurance
company licensed to do business in the State and reasonably acceptable to Owner,
(iii) shall provide for a maximum deductible not in excess of $25,000 and (iv)
otherwise be reasonably acceptable to Owner in all other respects. Agent's
insurance may be carried under "blanket" policies.
(c) Agent will provide Owner with certificates of insurance or
other satisfactory documentation evidencing Agent's compliance with its
insurance requirements under this Agreement.
(d) Owner shall not reimburse Agent for Agent's cost of such
insurance or for any coverages Agent obtains for its own account other than
workmen's compensation and non-occupational disability insurance for personnel
working on the Property.
3. Agent's Duties in Case of Loss.
(a) Agent will promptly notify Owner of any fire or other
damage suffered with respect to the Property.
(b) Agent will promptly notify Owner of any personal injury
suffered or claimed to have been suffered by any Person with respect to the
Property. Agent will also forward to Owner any summons, subpoenas or similar
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legal document served upon Agent with respect to any potential liability of
Owner or Agent in connection with the Property.
(c) Agent will promptly investigate and make a full written
report of all damages or accidents relating to the Property and will submit such
report to and otherwise cooperate with the insurance company representing Owner
or Owner's mortgagee in connection therewith. Agent shall deliver a copy of any
and all such reports to Owner.
(d) Agent may settle Claims on account of damage or injury to
the extent that the settlement is fully covered by insurance and does not expose
Owner to criminal or civil penalties, including the execution of proofs of loss,
the adjustment of losses, signing of receipts, and the collection of money,
without joinder of Owner if the aggregate amount of such claim or series of
claims equals or is less than One Hundred Thousand Dollars ($100,000). If the
amount involved exceeds One Hundred Thousand Dollars ($100,000), settlement of
such claim shall be made only with Owner's knowledge and consent. The foregoing
authority of Agent may be revoked by Owner to the extent inconsistent with any
mortgage encumbering the Property.
4. Waiver of Rights of Subrogation. All insurance policies required to
be maintained under this Agreement will include a clause or endorsement
providing that the insurer waives all rights of subrogation against Owner and
Agent with respect to losses payable thereunder if and to the extent such clause
or endorsement is available and can be obtained at a reasonable cost. Each of
Owner and Agent waives all Claims against the other (and their Affiliates and
respective partners, shareholders, directors, officers, employees and agents)
for any loss or damage to the other's property to the extent of insurance
coverage included in a standard "all-risk" form of property insurance. Agent
shall not intentionally take any action (such as admission of liability), except
as required by law, which reasonably would bar Owner from obtaining any
protection afforded by any policy Owner may hold or which reasonably would
prejudice Owner in its defense to a claim based on such loss, damage or injury.
ARTICLE 10
INDEMNIFICATION, EXCULPATION
1. Owner's Indemnity. OWNER WILL DEFEND, INDEMNIFY AND HOLD HARMLESS
AGENT, ITS AFFILIATES AND THEIR RESPECTIVE PARTNERS, SHAREHOLDERS, DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS FROM AND AGAINST ALL CLAIMS ARISING FROM OR IN
ANY WAY CONNECTED WITH (A) THE PERFORMANCE OF AGENT'S OBLIGATIONS UNDER AND IN
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ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, (B) ANY OTHER ACTS PERFORMED BY
AGENT AT THE DIRECTION OF OWNER, (C) THE BREACH OF THIS AGREEMENT BY OWNER, AND
(D) CLAIMS BROUGHT AGAINST AGENT FOR DISCRIMINATION ON THE GROUNDS OF RACE,
COLOR, CREED, RELIGION, SEX, NATIONAL ORIGIN OR ANY OTHER BASIS ("DISCRIMINATION
CLAIMS"), (E) OWNER'S FAILURE (OTHER THAN BY REASON OF AGENT'S DEFAULT UNDER
THIS AGREEMENT) OR REFUSAL TO COMPLY WITH OR ABIDE BY ANY LEGAL REQUIREMENTS.
IF, FOLLOWING A FINAL ADJUDICATION ON THE MERITS BY A COURT OF COMPETENT
JURISDICTION, IT IS DETERMINED ("FINAL DETERMINATION") THAT ACTS OF GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT WERE PERMITTED OR SUFFERED BY AGENT, ITS
PARTNERS, OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES OR AGENTS, OR (WITH
RESPECT TO ANY DISCRIMINATION CLAIM) AGENT IS THE LOSING PARTY, THEN AGENT WILL
BE RESPONSIBLE FOR THE AMOUNT OF THE CLAIM TO THE EXTENT THE CLAIM IS NOT
OTHERWISE COVERED BY INSURANCE REQUIRED TO BE MAINTAINED BY OWNER OR AGENT
("AGENT INDEMNIFIED ACTS"). AGENT FURTHER AGREES TO REIMBURSE OWNER FOR COURT
COSTS AND OTHER REASONABLE EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES,
INCURRED BY OWNER IN DEFENDING ANY ACTION BROUGHT AGAINST OWNER FOR INJURY OR
DAMAGE CLAIMED TO HAVE BEEN SUFFERED AS A RESULT OF AGENT'S WILLFUL MISCONDUCT
OR GROSS NEGLIGENCE OR THAT OF ITS EMPLOYEES OR AGENTS, BUT ONLY IF THERE IS A
FINAL DETERMINATION OF SUCH WILLFUL MISCONDUCT OR GROSS NEGLIGENCE, OR THERE IS
A FINAL DETERMINATION IN A DISCRIMINATION CLAIM WHERE AGENT IS THE LOSING PARTY.
2. Agent's Indemnity. AGENT WILL DEFEND, INDEMNIFY AND HOLD HARMLESS
OWNER, ITS AFFILIATES AND THEIR RESPECTIVE PARTNERS, SHAREHOLDERS, DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS FROM AND AGAINST ALL CLAIMS ARISING FROM OR IN
ANY WAY CONNECTED WITH (A) AGENT INDEMNIFIED ACTS, AND (B) THE BREACH BY AGENT
OF ITS OBLIGATION HEREIN TO COMPLY WITH THE LEGAL REQUIREMENTS APPLICABLE TO
PROPERTY EMPLOYEES.
3. Waiver of Claims; Environmental Indemnity. AGENT SHALL NOT BE LIABLE
OR ACCOUNTABLE, IN DAMAGES OR OTHERWISE, TO OWNER FOR ANY ACT PERFORMED OR
FAILURE TO ACT BY IT IN GOOD FAITH AND WHICH DOES NOT CONSTITUTE FRAUD, BAD
FAITH, GROSS NEGLIGENCE OR A BREACH OF THIS AGREEMENT BY AGENT. OWNER WILL ALSO
DEFEND, INDEMNIFY AND HOLD HARMLESS AGENT, ITS AFFILIATES AND EACH OF THEIR
RESPECTIVE PARTNERS, SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
FROM AND AGAINST ALL CLAIMS ARISING FROM OR IN ANY WAY CONNECTED WITH THE
PRESENCE, RELEASE OR DISCHARGE OF ANY HAZARDOUS MATERIALS, HAZARDOUS SUBSTANCES,
HAZARDOUS WASTES OR SIMILAR
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SUBSTANCES AFFECTING ALL OR ANY PORTION OF THE PROPERTY OR AFFECTING ANY LANDS,
SURFACE WATERS, GROUND WATERS OR AIR SPACE ADJACENT TO OR IN THE VICINITY OF THE
PROPERTY (WITHOUT REGARD TO THE SOURCE OR ORIGIN OF THE PRESENCE, RELEASE OR
DISCHARGE OR THE OWNERSHIP OF THE PROPERTY AT THE TIME OF THE PRESENCE, RELEASE
OR DISCHARGE), UNLESS (1) SUCH CLAIM ARISES FROM THE GROSS NEGLIGENCE, OR
WILLFUL MISCONDUCT OF AGENT, ITS AFFILIATES OR ANY OTHER RESPECTIVE PARTNERS,
SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES OR AGENT AND (2) THERE HAS BEEN A
FINAL DETERMINATION OF SUCH GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
4. Survival. The provisions of Section 10.1, Section 10.2 and Section
10.3 will survive the expiration or earlier termination of this Agreement.
5. Exculpation.
(a) No direct or indirect partner or shareholder in or of
Owner (and no officer, director, employee or agent of such partner or
shareholder) will be personally liable for the performance of Owner's
obligations under this Agreement. The liability of Owner for Owner's obligations
under this Agreement will be limited to Owner's interest in the Property and
other assets and the proceeds thereof. A negative capital account of any partner
will not be considered to be a partnership asset. Nothing in this Section
10.5(a) will affect the rights of Agent to seek appropriate relief against any
Person to the extent that such Person commits fraud against Agent.
(b) No direct or indirect partner or shareholder in or of
Agent (and no officer, director, employee or agent of such partner or
shareholder) will be personally liable for the performance of Agent's
obligations under this Agreement. The liability of Agent for Agent's obligations
under this Agreement will be limited to its partnership assets. A negative
capital account of any partner will not be considered to be a partnership asset.
Nothing in this Section 10.5(b) will affect the rights of Owner to seek
appropriate relief against any Person to the extent that such Person
misappropriates funds of Owner or commits fraud against Owner.
ARTICLE 11
TERM, EXPIRATION, TERMINATION
1. Term. This Agreement will be effective as of the date set forth in the
Preface of this Agreement and will continue in full force and effect until the
second (2nd) anniversary of such date. At least 90 days prior to the expiration
of the initial term of this Agreement, Owner and Agent shall discuss in good
faith the
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renewal of the term of this Agreement beyond the initial term, provided that
neither party shall be under any obligation to agree to any such renewal. If
upon the expiration of the term of this Agreement Agent is still serving as
managing and leasing agent for the Property and Owner has not notified Agent in
writing that Agent shall no longer serve as managing and leasing agent for the
Property (such notice to be provided at least 30 days prior to the expiration of
such term), then this Agreement will automatically renew for additional
consecutive 90 day terms on the same terms and conditions set forth in this
Agreement until such time as Owner shall notify Agent in writing that Agent
shall no longer serve as managing and leasing Agent for the Property (such
notice to be provided at least 30 days prior to the expiration of such term).
This Agreement may also be terminated by Owner on sixty (60) days notice if the
Property is either (a) sold by Owner or (b) refinanced by Owner pursuant to a
securitized financing of the Property, provided that termination of this
Agreement as a result of such financing shall only be effective if Agent is not
approved by the rating agency participating in such financing. This Agreement is
terminable only upon the conditions and in the manner provided for in this
Article 11.
2. Owner's Rights of Termination.
(a) If Agent breaches any of the payment obligations or other
material terms of this Agreement, Owner will give Agent notice of such breach.
If Agent fails to cure the breach within 10 business days, in the case of a
monetary default, or, in the case of a non-monetary default, 30 days, after
receiving such notice (provided that if any such non-monetary breach cannot by
the exercise of diligent effort be cured within such 30 day period, the same
shall be extended as long as reasonably necessary provided Agent is diligently
prosecuting a cure but in no event longer than 120 days), Owner may terminate
this Agreement upon notice to Agent.
(b) If Agent or any principal of Agent intentionally
misappropriates funds of Owner or commits fraud against Owner, then Owner may
terminate this Agreement immediately upon notice to Agent.
(c) If a petition in bankruptcy is filed by or against Agent
and is not dismissed within 60 days, or a trustee, receiver or other custodian
is appointed for a substantial part of Agent's assets and is not vacated within
60 days, or Agent makes an assignment for the benefit of its creditors, then
Owner may terminate this Agreement upon notice to Agent.
(d) If a controlling interest in Agent (i.e., any interest in
Agent which includes the exclusive right to direct policy and make managerial
decisions) shall be transferred, sold or otherwise conveyed to a party other
than an Affiliate of Agent, then Owner may terminate this Agreement upon 30
days' notice to Agent;
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provided, that Owner shall not be permitted to so terminate if, following such
transfer of a controlling interest in Agent, one or more of the current senior
management personnel of Agent shall continue to control the policy and
managerial decisions of Agent.
(e) If Nyprop, L.L.C. shall default on its agreement to
purchase shares in Metropolis Realty Trust, Inc. ("MRT") pursuant to the
Subscription Agreement between MRT and Nyprop, L.L.C., then Owner may terminate
this Agreement upon 30 days' notice to Agent.
Notwithstanding any such notice of termination by Owner (under this Section
11.2) or Agent (under Section 11.3), Agent shall be and remain liable for the
performance of its duties and other obligations hereunder through the date of
termination and shall maintain all records, documents, property and files until
the termination date.
3. Agent's Rights of Termination.
(a) If Owner materially breaches any of the payment
obligations or other material terms of this Agreement, Agent will give Owner
notice of such breach. If Owner fails to cure the material breach within 30 days
after receiving such notice (provided that if any such non-monetary breach
cannot by the exercise of diligent effort be cured within such 30 day period,
the same shall be extended as long as reasonably necessary provided Owner's is
diligently prosecuting a cure but in no event longer than 120 days), Agent may
terminate this Agreement upon notice to Owner.
(b) If Owner fails to provide sufficient funds on a consistent
basis to operate and maintain the Property in a first class manner in accordance
with this Agreement, then Agent may terminate this Agreement upon sixty (60)
days' notice to Owner.
(c) If a petition in bankruptcy is filed by or against Owner
and is not dismissed within 60 days, or a trustee, receiver or other custodian
is appointed for a substantial part of Owner's assets and is not vacated within
60 days, or Owner makes an assignment for the benefit of its creditors, then
Agent may terminate this Agreement upon notice to Owner.
4. Obligations Upon Expiration or Termination.
(a) Upon the expiration or earlier termination of this
Agreement, each party will promptly pay to the other party all amounts due and
payable to that party under this Agreement. Within forty-five (45) days after
any such termination, Agent shall deliver to Owner the financial statements
required by Section 3.8 for
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any periods not covered by such reports at the time of termination and a profit
and loss statement for the fiscal year or portion thereof ending on the date of
termination. Within thirty (30) days of the delivery of the final profit and
loss statement and balance sheet, Owner shall approve or dispute the contents
thereof and, provided that Agent has performed all of its obligations under this
Section 11.4, shall make final payment of any unpaid fees owed to Agent under
the terms of this Agreement, subject to offsets and defenses available to Owner
and to resolution of any dispute to the extent that the amount of such fees
would be affected thereby. Nothing contained herein is intended to nor shall it
excuse the timely payment of fees due Agent under the terms of this Agreement.
Owner and Agent agree to act in good faith and use reasonable efforts to resolve
any dispute promptly so a final payment of fees can be made. Upon receipt of
such payments neither party will have any further rights or obligations under
this Agreement, except for those rights and obligations which expressly survive
the expiration or earlier termination of this Agreement.
(b) Upon the expiration or earlier termination of this
Agreement, Agent will deliver to Owner (i) a final accounting reflecting the
balance of income and expenses for the Property as of the date of expiration or
termination, (ii) any balance of funds (including security deposits and advance
rent) belonging to Owner which are then being held by Agent with respect to the
Property, and (iii) all files, books, records, documents and other instruments
relating to the ownership, operation and maintenance of the Property to the
extent required to be maintained by Agent pursuant to this Agreement and not
previously delivered to Owner. In connection with the termination of this
Agreement, Agent shall assign to Owner, to the extent same are assignable, all
contracts and other agreements, if any, executed in the name of Agent, relating
to the operation and maintenance of the Property.
(c) Owner and Agent will use reasonable efforts to ensure an
orderly transition of the operation and management of the Property and will
perform their respective obligations under this Agreement until the expiration
or effective date of the termination of this Agreement.
5. Leasing Commissions. Upon the expiration or earlier termination of
this Agreement, Owner will pay a Leasing Commission to Agent in the following
instances:
(a) If (i) Agent negotiates and delivers a proposed Lease to
Owner for consideration prior to the expiration or termination of this
Agreement, and (ii) Owner and the tenant execute and deliver a Lease within six
months after such expiration or termination.
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(b) If (i) a Lease is not presented to Owner prior to the
expiration or termination of this Agreement, but Agent gives notice to Owner,
within 10 days after such expiration or termination, of negotiations with a
prospective tenant for specified premises within the ninety (90) day period
immediately preceding the expiration or termination of this Agreement, and (ii)
Owner and the prospective tenant execute a Lease for the specified premises
within one hundred and eighty (180) days after the expiration or earlier
termination of this Agreement.
(c) Any Leasing Commission, or portion thereof, that, pursuant
to Section 8.6 is otherwise due and payable upon the date tenant begins paying
rent to Owner under the Lease shall instead be due and payable upon the
expiration date or earlier termination of this Agreement.
ARTICLE 12
GENERAL PROVISIONS
1. Agent's Office. Owner will provide to, and maintain for, at no cost
to Agent, (a) sufficient Agent office space and other space at the Property
reasonably acceptable to Owner and Agent for the conduct of Agent's leasing and
management services hereunder, and (b) all office machines, furniture,
equipment, computers, cabling and supplies of all types and kinds which are
reasonably required by Agent in order properly to perform its duties hereunder.
Such space will be used solely by employees performing responsibilities under
this Agreement. Owner will bear all reasonable costs of operating the space
provided to Agent hereunder.
2. No Discrimination. Neither Owner nor Agent will discriminate against
any person on the grounds of race, color, creed, religion, sex, national origin
or any other basis prohibited by applicable Legal Requirements with respect to
any activity affecting the Property.
3. Availability of Funds. Any obligation of Agent hereunder with
respect to the Property requiring the expenditure of funds shall be subject to
the condition that sufficient funds are then available in the Operating Account
for the performance of such obligation.
4. ERISA. Owner represents and warrants to Agent that no portion of the
Property constitutes plan assets of any employee benefit plan under the Employee
Retirement Income Security Act of 1974 and does not constitute a tax favored
plan under the Internal Revenue Code. Owner will defend, indemnify and hold
harmless Agent, its Affiliates and their respective partners, shareholders,
directors, officers, employees and agents from and against all Claims arising
from
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or in any way connected with the breach of this representation or warranty by
Owner.
5. Notices. All notices, approvals, consents, elections or other
communications under this Agreement must be in writing and may be (a) delivered
personally, (b) delivered by a nationally recognized overnight courier, (c)
mailed by registered or certified mail, postage prepaid, with return receipt
requested, or (d) sent by telecopier (with written confirmation of the receipt
of the telecopy) with the original to follow in the manner specified in clauses
(a)-(c) above, and addressed to the party at its address set forth below:
if to Owner, to:
237 Park Partners, L.P.
c/o Victor Capital Group, L.P.
885 Third Avenue
New York, New York 10022
Attention: Mr. John R. Klopp
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Kenneth J. Friedman, Esq.
if to Agent, to:
Tishman Speyer Properties, L.P.
520 Madison Avenue
New York, New York 10022
Attention: Director of Property Management
with a copy to:
Tishman Speyer Properties, L.P.
520 Madison Avenue
New York, New York 10022
Attention: General Counsel
or at such other address, as from time to time, supplied by a party to the
others by like notice. Notices will be deemed to be received, if personally
delivered, upon delivery, if sent by overnight courier, on the first (1st)
business day after being sent, if sent by mail, on the date set forth on the
return receipt, if sent by
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<PAGE>
telecopier, on the date sent if confirmation of receipt shows delivery on or
before 5:00 P.M., or on the next business day if confirmation of receipt shows
delivery after 5:00 P.M. Each party shall be entitled to rely on all
communications which purport to be on behalf of the other party and purport to
be signed by an authorized party.
6. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the respective successors and permitted assigns of Owner
and Agent, but neither Owner nor Agent will have the right to assign its rights
or obligations under this Agreement without the prior written consent of the
other party and any attempted assignment, in the absence of such consent, will
be void and of no effect; however, either party may upon fifteen (15) days'
prior notice to the other party, assign this Agreement to an Affiliate so long
as the Affiliate executes and delivers to the other party an assumption
agreement in form and substance reasonably satisfactory to the other party and
provided that the assigning party shall not be released by or upon delivery of
such executed assumption agreement.
7. Attorneys' Fees. If any action or proceeding is instituted by one
party against the other party with respect to this Agreement, the prevailing
party in the action or proceeding will be entitled to receive from the
non-prevailing party the reasonable attorneys' fees and expenses incurred by the
prevailing party.
8. Amendment. No purported amendment to or waiver of any term of this
Agreement will be binding upon any party, or have any other force or effect in
any respect, unless the same is in writing and signed by the party to be
charged.
9. State Law. This Agreement will be interpreted and enforced in
accordance with the internal laws of the State without giving effect to the
principles of conflicts of laws.
10. Entire Agreement. All prior understandings and agreements between
the parties with respect to the subject matter of this Agreement are merged in
this Agreement. Neither party is relying upon any statement, covenant or
representation made by any other party which is not embodied in this Agreement.
11. No Waiver. No failure or delay of either party in the exercise of
any right under this Agreement will be deemed to be a waiver of such right. No
waiver by either party of any condition under this Agreement for its benefit or
any breach under this Agreement will constitute a waiver of any other or further
right or any other subsequent breach.
12. Further Assurances. Each party will, from time to time, execute,
acknowledge and deliver such further instruments, and perform such additional
-36-
C/M: 11764.0009 434116.1
<PAGE>
acts, and otherwise cooperate with the other party and be available to consult
with the other party as the other party may reasonably request in order to (a)
effectuate the intent of this Agreement and (b) facilitate Agent's expeditious
performance of its obligations hereunder. Without limiting the foregoing, as
promptly as practicable after execution hereof, Owner shall make available to
Agent (to the extent Owner is in possession) (a) plans and specifications for
the buildings and other structures and improvements at the Property so that
Agent may be advised with respect to, and have knowledge of, the layout,
construction, location, character, plan and operation of the elevators,
escalators, lighting, heating, air conditioning, plumbing, electrical and other
mechanical equipment at the Property; (b) copies of all guarantees given by
contractors or subcontractors in connection with the construction and alteration
of the Property; (c) copies of all Leases of space at the Property; (d) copies
of all mortgages and ground leases affecting the Property; and (e) copies of all
contracts relating to the maintenance and operation of the Property.
13. Effectiveness of Agreement. This Agreement will not become
effective unless and until it is executed and delivered by both Owner and Agent.
14. No Third-Party Beneficiaries. This Agreement is entered into solely
for the benefit of Owner and Agent. No other Person is intended to be a
third-party beneficiary of this Agreement.
15. Divisibility. If any article, section or exhibit of this Agreement
is deemed illegal or unlawful, the same will be struck from this Agreement and
all other articles, sections and exhibits will remain valid and in full force
and effect.
16. Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed to be an original and all of which will together
constitute one instrument.
17. Jury Trial Waiver. OWNER AND AGENT BOTH WAIVE THE RIGHT TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BOUGHT BY EITHER PARTY AGAINST
THE OTHER WITH RESPECT TO THIS AGREEMENT.
18. Brokers. Each party represents and warrants to the other party that
the party has not retained any broker, finder or other commission or fee agent,
and no such person has acted on its behalf in connection with the execution an
delivery of this Agreement.
19. Confidentiality; Publicity. The parties agree that no party hereto
shall issue any press release or otherwise publicize or disclose the terms of
this Agreement without the prior written approval of the other party, which
approval shall not be unreasonably withheld. The foregoing shall not apply to
disclosures
-37-
C/M: 11764.0009 434116.1
<PAGE>
made by a party in the course of normal reporting practices to its shareholders,
and partners, or to lenders, attorneys, accountants and other consultants or as
required by law. Agent will use reasonable efforts to hold confidential the
terms and conditions of the leases and other agreements relating to the
Property, together with all data obtained by Agent in connection with the
Property.
20. Remedies Cumulative. All rights or remedies in this Agreement
specified and all other rights or remedies that the parties may have at law, in
equity or otherwise upon breach of any term or condition in this Agreement
contained upon the part of the other party to be performed, shall be distinct,
separate and cumulative rights or remedies and no one of them, whether exercised
by the non-defaulting party or not, shall be deemed to be in exclusion of any
other right or remedy of such non-defaulting party. No term or condition of this
Agreement shall be deemed to have been waived by either party unless such waiver
be in writing and signed by such party.
21. Asset Manager. Wherever any consent or approval by Owner shall be
required by the terms and provisions of this Agreement, the same may be given by
any asset manager of the Property engaged by Owner and which has been
specifically identified in a written notice by Owner to Agent. Copies of any
required notices or other communications hereunder (including, without
limitation, copies of invoices, leases and financial statements and other
reports) shall be
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C/M: 11764.0009 434116.1
<PAGE>
delivered to such asset manager at the times and in the manner herein specified
for such notices and communications to be given to Owner.
THIS AGREEMENT has been executed and delivered by Owner and Agent as of
the date first set forth above.
OWNER:
237 PARK PARTNERS, L.P.
By: 237 GP Corp., general partner
By:
Name:
Title:
AGENT:
TISHMAN SPEYER PROPERTIES, L.P.
By: Tishman Speyer Properties, Inc.,
General Partner
By:
Name:
Title:
-39-
C/M: 11764.0009 434116.1
<PAGE>
EXHIBIT "A"
INTERIM BUDGET
C/M: 11764.0009 434116.1
<PAGE>
<TABLE>
237 PARK AVENUE
BUDGET
FOR THE PERIOD OCTOBER THROUGH DECEMBER 1996
(000's Omitted)
<CAPTION>
Oct-96 Nov-96 Dec-96 Total
<S> <C> <C> <C> <C>
REVENUE:
Base Rent 2,594 2,851 2,899 8,344
Electric 1 1 1 3
Escalations 1,033 1,032 1,033 3,098
Sales & Sundry 47 47 47 141
Parking 3 3 3 9
Contingency (52) (55) (55) (162)
------------- --------------- ------------------- ---------------
TOTAL REVENUE 3,626 3,879 3,928 11,433
------------- --------------- ------------------- ---------------
EXPENSES:
Payroll 122 122 122 365
Cleaning 109 109 109 327
Repairs and Maintenance 98 127 120 345
Rubbish/Waste 0 0 0 0
Steam 2 3 9 14
Electricity 59 51 55 165
Water 8 7 6 21
Miscellaneous 4 4 4 12
Professional Fees 7 7 8 22
Insurance (Premium Payment) (1) 181 0 0 181
Property Management Fee 54 58 59 171
Real Estate Taxes 0 0 0 0
------------- --------------- ------------------- ---------------
TOTAL EXPENSES 644 488 492 1,623
------------- --------------- ------------------- ---------------
NET OPERATING INCOME 2,982 3,391 3,436 9,810
------------- --------------- ------------------- ---------------
OTHER EXPENDITURES:
Commissions 0 0 0 0
Capital Projects (2) 55 85 85 225
Other (3) 100 0 0 100
------------- --------------- ------------------- ---------------
TOTAL OTHER EXPENDITURES 155 85 85 325
N.C.F. BEFORE DEBT SERVICE 2,827 3,306 3,351 9,485
============= =============== =================== ===============
NOTES:
(1) Insurance Premium Payments: See attached analysis.
- -----------------------------------------------------------------------------------------------------------------------------------
(2) Summary of Capital Projects:
Oct. Nov. Dec. Total
Warburg: Slab 35 0 0 35
Warburg: Elevator Reprogramming 20 0 0 20
Elevator Upgrade (for Full-Service Contract) 0 75 75 150
Facade Consulting 0 10 10 20
------------ ------------ ---------------- ----------------
55 85 85 225
============ ============ ================ ================
- -----------------------------------------------------------------------------------------------------------------------------------
(3) Other: Includes the one-time cost of the build-out of the management office.
</TABLE>
C/M: 11764.0009 434116.1
<PAGE>
EXHIBIT "B"
LIST OF CURRENT AND PROPOSED STAFFING
[Exhibit B has been provided in a separate written instrument delivered by
Agent to Owner]
C/M: 11764.0009 434116.1
<PAGE>
EXHIBIT "C"
TERMS OF EMPLOYMENT OF NON-UNION EMPLOYEES
C/M: 11764.0009 434116.1
<PAGE>
EXHIBIT C
[EMPLOYEES/LABOR AGREEMENTS]
Terms of Employment of Non-Union Employees
1. Vacation. An employee is entitled to ten days vacation each year, fifteen
days after five years and 20 days after 10 years.
2. Holidays. The office is closed for nine major holidays and each employee
is also entitled to three floating holidays.
3. Personal and Sick Days. Each employee is entitled to three personal days
and ten paid sick days.
4. Termination/Severance Pay. In case of a termination for reasons other
than malfeasance, an employee is to receive termination pay equal to
one week's salary per full six months of employment up to five years.
Above five years, severance pay is based on a scheduled number of weeks
which can be increased at the discretion of the employer.
The current accrued vacation and severance pay for non-union employees
of 237 Park and 1290 Avenue of the Americas is set forth on the
attached schedule.
The following information is as of the date of commencement of the
bankruptcy case for the Debtors and will be updated by Grantor at the
Effective Date:
C/M: 11764.0009 434116.1
<PAGE>
<TABLE>
237 PARK AVENUE
As of 10/4/96
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
NAME POSITION WKLY.RATE START DATE TOT.VAC. VAC.DUE VAC.AMT. SEV. TERMIN.
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MANAGEMENT NON UNION
- ----------------------------------------------------------------------------------------------------------------------------------
CALDERON, J. SECRETARY 511.81 7/11/88 15 15.25 1561.02 8188.96 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL 511.81 1561.02 8188.96 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
ELEVATOR R.A.B. CRAFT AGREEMENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
LICARI, S. MECHANIC 979.20 9/19/83 15 0 0.00 0.00 2937.80
- ----------------------------------------------------------------------------------------------------------------------------------
OLIVERI, P. MECHANIC 979.20 11/30/81 15 0 0.00 0.00 2937.80
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL 1958.40 0.00 0.00 5875.20
- ----------------------------------------------------------------------------------------------------------------------------------
ENGINEERS UNION LOCAL 32
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
MARKIC, Z. ENGINEER 645.48 9/76 20 10 1290.96 16782.48 5163.84
- ----------------------------------------------------------------------------------------------------------------------------------
URANOWSKI, G. ENGINEER 645.48 7/81 20 0 0.00 16782.48 3872.88
- ----------------------------------------------------------------------------------------------------------------------------------
RIVERA, P. ENGINEER 645.48 9/21/81 20 10 1290.96 16782.48 3872.88
- ----------------------------------------------------------------------------------------------------------------------------------
STANZIALE, M. CHIEF 920.00 11/88 15 10 1840.00 23920.00 920.00
- ----------------------------------------------------------------------------------------------------------------------------------
PETRULLO, R. ENGINEER 645.48 1/90 15 0 0.00 16782.48 645.48
- ----------------------------------------------------------------------------------------------------------------------------------
LUCKIC, M. ENGINEER 645.48 5/92 10 0 0.00 16782.48 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL 9,119.82 7,575.96 124,242.32 26,257.88
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
BLDG.TOT.
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
GRAND TOT.
- ----------------------------------------------------------------------------------------------------------------------------------
NOTE: Union employees weekly rate is based on their hourly rate times 40 hours.
</TABLE>
C/M: 11764.0009 434116.1
<PAGE>
EXHIBIT "D"
LIST OF ON-SITE DIRECT MANAGEMENT EMPLOYEES
[Other information in Exhibit D has been provided in a separate written
instrument delivered by Agent to Owner]
C/M: 11764.0009 434116.1
<PAGE>
Exhibit "D" As of 10/4/96
Tishman Speyer Properties
Management Assignments
Each position is 100% allocable to its respective building
237 Park Avenue
Name Position
Kevin T. Hoey Property Manager
TBA Asst. Property Manager
Jackie Calderon Office Manager
TBA Secretary
Total
Staffing subject to change
C/M: 11764.0009 434116.1
<PAGE>
EXHIBIT "E"
LEASING COMMISSIONS
Leasing Commissions will be computed by multiplying Fixed Rent by the following
percentages, as appropriate, and adding together the results:
1. For the 1st year of any Lease term 5%
2. For the 2nd year 4%
3. For the 3rd year through and including the 5th year 3 1/2%
4. For the 6th year through and including the 10th year 2 1/2%
5. For the 11th year through and including the 20th year 2%
6. For the 21st year and each succeeding year thereafter 1%
C/M: 11764.0009 434116.1
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS, INTERPRETATION............................... 1
1. Definitions............................................... 1
2. Interpretation............................................ 5
ARTICLE 2 APPOINTMENT, OTHER ACTIVITIES............................. 6
1. Appointment............................................... 6
2. No Liability for Past Acts or Omissions................... 6
3. Other Activities.......................................... 6
ARTICLE 3 MANAGEMENT RESPONSIBILITIES............................... 6
1. Submission of Budgets..................................... 6
2. Adherence to Budgets...................................... 7
3. Emergency Expenses; Non-Discretionary Expenses............ 8
4. Operation, Maintenance and Repairs; Payments.............. 8
5. Enforcement of Leases..................................... 9
6. Compliance with Legal Requirements and Contracts.......... 9
7. Books and Records......................................... 10
8. Reports and Statements.................................... 10
9. Annual Audit; Tax Returns................................. 12
10. Employees................................................. 13
11. Tax Assessments and Condemnation.......................... 15
12. Improvements.............................................. 15
13. Consent to Tenant Alterations to Property................. 16
14. Tenant Complaints and Requests............................ 16
15. Advertising; Public Relations............................. 16
16. General Duties............................................ 16
ARTICLE 4 BANK ACCOUNTS, DISBURSEMENTS.............................. 17
1. Operating Account......................................... 17
2. Security Deposit Account.................................. 18
3. Shortfalls; Advances...................................... 18
4. Payments to Owner......................................... 18
ARTICLE 5 MANAGEMENT AUTHORITY, CONTRACTS........................... 18
1. General Authority......................................... 18
2. Execution of Contracts.................................... 19
3. Use of Counsel and Other Professionals.................... 19
4. Limitation of Authority................................... 19
5. Value of Goods, Services and Supplies..................... 20
6. Contracts with Affiliates................................. 20
C/M: 11764.0009 434116.1
<PAGE>
Page
ARTICLE 6 COMPENSATION FOR MANAGEMENT SERVICES...................... 20
1. Management Fee............................................ 20
2. Reimbursement............................................. 20
3. Payment of Compensation................................... 21
ARTICLE 7 LEASING RESPONSIBILITIES.................................. 21
1. Leasing Efforts........................................... 21
2. Advertisement............................................. 22
3. Outside Brokers........................................... 22
4. Reporting................................................. 23
5. Leasing Guidelines........................................ 23
6. Authority................................................. 23
7. Conflicts of Interest..................................... 23
ARTICLE 8 COMPENSATION FOR LEASING SERVICES......................... 24
1. Leasing Commission........................................ 24
2. Limitations............................................... 24
3. Renewals and Extensions................................... 24
4. Additional Space.......................................... 25
5. Outside Brokers........................................... 25
6. Timing of Payments........................................ 25
ARTICLE 9 INSURANCE................................................. 26
1. Owner's Insurance......................................... 26
2. Agent's Insurance......................................... 27
3. Agent's Duties in Case of Loss............................ 27
4. Waiver of Rights of Subrogation........................... 28
ARTICLE 10 INDEMNIFICATION, EXCULPATION.................................... 28
1. Owner's Indemnity......................................... 28
2. Agent's Indemnity......................................... 29
3. Waiver of Claims; Environmental Indemnity................. 29
4. Survival.................................................. 30
5. Exculpation............................................... 30
ARTICLE 11 TERM, EXPIRATION, TERMINATION................................... 30
1. Term...................................................... 30
2. Owner's Rights of Termination............................. 31
3. Agent's Rights of Termination............................. 32
4. Obligations Upon Expiration or Termination................ 32
5. Leasing Commissions....................................... 33
-ii-
C/M: 11764.0009 434116.1
<PAGE>
Page
ARTICLE 12 GENERAL PROVISIONS.............................................. 34
1. Agent's Office............................................ 34
2. No Discrimination......................................... 34
3. Availability of Funds..................................... 34
4. ERISA..................................................... 34
5. Notices................................................... 35
6. Successors and Assigns.................................... 36
7. Attorneys' Fees........................................... 36
8. Amendment................................................. 36
9. State Law................................................. 36
10. Entire Agreement.......................................... 36
11. No Waiver................................................. 36
12. Further Assurances........................................ 36
13. Effectiveness of Agreement................................ 37
14. No Third-Party Beneficiaries.............................. 37
15. Divisibility.............................................. 37
16. Counterparts.............................................. 37
17. Jury Trial Waiver......................................... 37
18. Brokers................................................... 37
19. Confidentiality; Publicity................................ 37
20. Remedies Cumulative....................................... 38
21. Asset Manager............................................. 38
-iii-
C/M: 11764.0009 434116.1
<PAGE>
EXHIBITS
EXHIBIT "A" -- INTERIM BUDGET
EXHIBIT "B" -- LIST OF CURRENT EMPLOYEES THAT WILL BE
RETAINED BY AGENT
EXHIBIT "C" -- TERMS OF EMPLOYMENT OF NON-UNION
EMPLOYEES
EXHIBIT "D" -- ON-SITE DIRECT MANAGEMENT EMPLOYEES
EXHIBIT "E" -- LEASING COMMISSIONS
-iv-
C/M: 11764.0009 434116.1
<PAGE>
MANAGEMENT AND LEASING AGREEMENT
between
237 PARK PARTNERS, L.P.,
OWNER
and
TISHMAN SPEYER PROPERTIES, L.P.,
AGENT
PROPERTY:
237 Park Avenue, New York, New York
C/M: 11764.0009 434116.1
MANAGEMENT AND LEASING AGREEMENT
THIS AGREEMENT is made as of October 10, 1996, between 1290 PARTNERS,
L.P., a Delaware limited partnership, having an office at c/o Victor Capital
Group, L.P., 885 Third Avenue, New York, New York 10022 ("Owner"), and TISHMAN
SPEYER PROPERTIES, L.P., a New York limited partnership, having an office at 520
Madison Avenue, New York, New York 10022 ("Manager" or "Agent").
PRELIMINARY STATEMENT
Owner owns fee title to the improved real property commonly referred to as
237 Park Avenue, New York, New York.
Owner desires to engage Agent to manage and lease space at the Property
(as defined below), and Agent desires to accept the engagement, in accordance
with the terms of this Agreement.
Therefore, in consideration of the mutual agreements contained in this
Agreement, Owner and Agent agree as follows:
ARTICLE 1
DEFINITIONS, INTERPRETATION
1. Definitions. The following terms have the following meanings
throughout this Agreement:
"Affiliate" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the first Person.
"Annual Budget" means an annual budget, prepared by Agent and acceptable
to Owner, containing on a month-by-month basis (a) the projected capital
improvements which will be made to the Property in a given Fiscal Year, and (b)
the projected operating income and operating expenses of the Property for a
given Fiscal Year, which budget has been approved pursuant to the provisions of
Section 3.1 (b) of this Agreement.
"Claim" means any claim, damage, loss, liability, obligation, demand,
defense, judgment, suit, proceeding, disbursement or expense (including
reasonable attorneys' fees or expenses as incurred).
434110.1
<PAGE>
"Emergency Expense" means any expense which, in Agent's reasonable
discretion, is necessary to (a) protect the health, safety or welfare of any
Person in the immediate vicinity of the Property, (b) prevent immediate damage
or loss to the Property, (c) avoid the suspension of any necessary service in or
to the Property, or (d) avoid criminal or civil liability on the part of Owner
or Agent.
"Fiscal Year" means the twelve-month period commencing on January 1st and
ending on December 31st.
"Fixed Rent" means the fixed annual rent payable by a tenant under a Lease
for the initial, renewal or extension Lease term (as appropriate) excluding (a)
all electrical and other utility charges, (b) any share of increases in taxes or
payments in lieu of taxes (whether or not Owner is obligated to make payments of
real estate taxes or is excused from making payments pursuant to an exemption or
an abatement in whole or in part), wage rates, operating expenses or cost of
living or other similar increases, whether actual, estimated or otherwise, which
the tenant is required to pay under the Lease, (c) any amounts specifically
identified as payable for cleaning, heat, water, air conditioning or other
services, (d) all other items of additional rent, (e) any increases in the
annual fixed rent not expressly provided for in the Lease and agreed to after
the execution of the Lease, and (f) any consideration received by Owner from the
tenant under the Lease for consenting to an assignment or sublease, or for
accepting a surrender or other termination or cancellation, voluntary or
otherwise; and less any amounts paid by Owner for tenant improvements, tenant
allowances, decorations or installations or other tenant inducements costing, on
a per rentable square foot basis, in excess of an amount to be agreed upon in
each Annual Budget, which excess amount shall be amortized over the Lease term
with interest at the Interest Rate. Any rent abatements and so-called "free
rent" and "take-over costs" will be amortized over the Lease term and an equal
portion deducted from Fixed Rent for each Lease year. If the Lease provides for
(i) increases in the fixed annual rent based upon increases in the cost of
living index, porters' wages, operating costs or similar indices or formulas not
capable of precise mathematical determination at the time the Lease is executed,
or (ii) adjustments based upon fair market rental value, then such increase and
adjustments will not be considered in computing Fixed Rent; however, if the
annual rent at the commencement of a renewal or extension term, or pursuant to
an option covering additional space, is to be fixed based upon a fair market
rental value determination, then the fixed annual rent as so determined will
constitute Fixed Rent for purposes of computing any Leasing Commission payable
in connection therewith and any payment of the Leasing Commission due thereon
will be postponed until such determination is made.
"Governmental Authority" means the United States of America, the State,
the county or city of New York, the Borough of Manhattan or any agency,
department, commission, board or instrumentality of any of them.
-2-
434110.1
<PAGE>
"Gross Revenue" means all (a) rent, additional rent and other charges and
revenues collected under the Leases or in connection with the Property, (b)
amounts collected from all licensees, concessionaires, and similar users of any
portion of the Property (including all amounts collected from vending machines
and coin-operated telephones) at the Property, and (c) proceeds of rental value
insurance or business interruption insurance to the extent paid to Owner in lieu
of any amounts provided for in clauses (a)-(b) above. Gross Revenue will not
include any (i) charges to tenants for above-standard tenant work, (ii) tenant
security deposits (except to the extent applied toward the payment of rent,
additional rent or other charges due under the Leases), (iii) interest on any
funds received in connection with the operation of the Property, (iv) insurance
proceeds (except as provided for in clause (c) above) or condemnation awards,
(v) amounts received on account of any abatement, reduction or refund of
property taxes, (vi) discounts or dividends on insurance policies, (vii) sums
collected through litigation (other than for nonpayment of rent, additional rent
or other charges due under the Leases), (viii) proceeds from the sale or
refinancing of the Property or any portion thereof or interest therein, (ix)
capital contributions to Owner by, or loans to Owner by, partners of Owner
whether or not held by Agent, or (x) amounts received as payments under loans
made to tenants prior to the date hereof (clauses (i)-(x), collectively,
"Excluded Proceeds"); provided that amounts received as payments under loans
made to tenants after the date hereof shall be included in "Gross Revenue". The
proceeds from any buy-out of all or a portion of the remaining term of a Lease,
or from any damage claims against a tenant for lost rent shall be amortized over
the remaining term of the subject Lease and included in the "Gross Revenue" of
Owner in equal monthly installments until the earlier of (i) re-occupancy of the
subject tenant space or (ii) expiration of the term of the subject Lease.
"Insurance Requirements" means orders of any Board of Fire Underwriters or
similar body, or any notice of non-compliance from Owner's insurance carriers,
which comes to Agent's attention.
"Interest Rate" means the annual fluctuating rate equal to two percent
(2%) above the rate of interest announced publicly by Citibank, N.A. in New
York, New York as its base rate (or the rate equivalent to its base rate).
"Lease" means any lease, sublease, license or other concession or other
occupancy agreement for space at the Property and any amendment or supplement
thereto.
"Leasing Commission" means a leasing commission calculated in accordance
with and paid at the times and in the manner specified in Article 8, Section
11.5 and Exhibit "E".
"Leasing Guidelines" means leasing guidelines for the Property for a given
Fiscal Year, prepared by Agent and acceptable to Owner, containing (a) proposed
leasing
-3-
434110.1
<PAGE>
activities for the Property for the ensuing Fiscal Year, and (b) a schedule of
acceptable economic terms with respect to Leases being offered to prospective
tenants of the Property and renewals or extensions of existing Leases (including
any rent abatements, so-called "free rent" and "take-over costs", construction
allowances and similar items).
"Legal Requirements" means any law, ordinance, order, rule or regulation
of a Governmental Authority which pertains to the Property, Owner or Agent (as
managing or leasing agent of the Property).
"Management Fee" means an amount equal to one and one half percent (1.5%)
of Gross Revenue, per year, which amount will be payable monthly in accordance
with Article 6.
"Marketing Plan" means a written plan, prepared by Agent and acceptable to
Owner, for the leasing and marketing of the Property, as provided in Sections
3.15 and 7.2.
"Non-Discretionary Expense" means any expense which, in Agent's reasonable
discretion, is necessary to (a) comply with any Legal Requirement relating to
the Property, (b) comply with any of Owner's obligations as landlord under any
Lease, (c) comply with any of Owner's other contractual obligations under
agreements approved by Owner or entered into by Agent on behalf of Owner
pursuant to this Agreement, (d) fulfill Owner's real estate tax obligations, (e)
maintain insurance for the Property in accordance with the terms of this
Agreement or (f) pay utility bills for the Property.
"Nyprop, L.L.C." means Nyprop, L.L.C., a Delaware limited liability
company in which no less than 50% of the membership interests are owned directly
or indirectly by Agent and/or its Affiliates.
"Operating Account" means an account at a financial institution selected
by Owner entitled "Tishman Speyer Properties, L.P., as Agent on behalf of 237
Park Partners, L.P.--Operating Account", which account will bear interest.
"Outside Broker" means a real estate broker other than Agent assisting
with leasing efforts at the Property. The parties do not contemplate any Outside
Brokers being utilized except in connection with the representation of
prospective tenants.
"Outside Broker's Commission Agreement" means a commission agreement
between Owner and an Outside Broker.
-4-
434110.1
<PAGE>
"Person" means a natural person, corporation, partnership, limited
liability company, trust, joint venture, unincorporated association,
Governmental Authority or other entity.
"Property" means the improved real property commonly referred to as 237
Park Avenue, located at 237 Park Avenue, New York, New York and includes all
easements, licenses, grants, permits, franchises, privileges, appurtenances and
other rights pertaining thereto.
"Security Deposit Account" means an account at a financial institution
selected by Owner entitled "Tishman Speyer Properties, L.P. Special Account on
behalf of Tenants at 237 Park Avenue, New York, New York," which account will
bear interest for the benefit of the tenants if and to the extent required by
the Leases or by applicable Legal Requirements.
"State" means the State of New York.
2. Interpretation.
(a) The singular includes the plural and the plural includes the
singular.
(b) The word "or" is not exclusive and the word "including" is not
limiting.
(c) References to a law include any rule or regulation issued
under the law and any amendment to the law, rule or regulation.
(d) References to an Article, Section or Exhibit mean an Article,
Section or Exhibit contained in or attached to this Agreement.
(e) The caption headings in this Agreement are for convenience and
reference only and do not define, modify or describe the scope or intent of any
of the terms of this Agreement.
(f) This Agreement will be interpreted and enforced in accordance
with its provisions and without the aid of any custom or rule of law requiring
or suggesting construction against the party drafting or causing the drafting of
the provisions in question.
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ARTICLE 2
APPOINTMENT, OTHER ACTIVITIES
1. Appointment. Owner hereby engages Manager to manage and operate the
Property and authorizes Manager to exercise, upon all the terms and conditions
hereof, such powers as may be necessary and appropriate for the management of
the Property. Manager hereby accepts such engagement and agrees to perform all
supervisory, management and leasing services and functions reasonably necessary
or incidental to the leasing, management and operation of the Property. Agent
has secured and will keep in effect during the term of this Agreement all
necessary licenses, permits and authorizations to enable Agent to perform all of
its obligations under this Agreement. As soon as practicable after the date
hereof, Owner will (a) notify the tenants and other occupants of space at the
Property and any Persons holding a mortgage on any portion of the Property and
other signatories to the instruments referred to in Section 3.6 of the
appointment of Agent as the exclusive managing and leasing agent of the Property
and (b) instruct the tenants, occupants and mortgagees and such other
signatories to direct all payments and notices under their respective agreements
with Owner to Agent.
2. No Liability for Past Acts or Omissions. Agent will not be liable
for any act or omission of any Person (including Owner and any previous property
manager or leasing agent) with respect to the Property for any period prior to
the date of this Agreement.
3. Other Activities. Owner understands that Agent and its Affiliates
engage in various development, management, leasing and other real estate
activities not related to the Property. Agent and its Affiliate have the right
to engage in these activities (whether or not competitive to the Property) and
to receive distributions and compensation with respect to these activities.
Agent will act in good faith and deal fairly with Owner when engaging in the
services described in this Agreement.
ARTICLE 3
MANAGEMENT RESPONSIBILITIES
1. Submission of Budgets.
(a) As soon as practicable but not later than forty-five (45) days
after the date of this Agreement, Agent will prepare and submit to Owner for its
consideration and approval the proposed Annual Budget for the remaining portion
of the Fiscal Year in which this Agreement is executed and delivered. On or
before December 1st of each year thereafter, Agent will prepare and submit to
Owner for its
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consideration and approval the proposed Annual Budget for the ensuing Fiscal
Year. Prior to approval of the initial Annual Budget, Agent will operate in
accordance with the Interim Budget attached as Exhibit A.
(b) Agent will consult with Owner as to the assumptions used in
preparing the proposed Annual Budget and will make all necessary revisions
thereto. Owner will approve or disapprove the proposed Annual Budget (and
revisions thereto) within thirty (30) days after submission by Agent. If Owner
disapproves any portion of the proposed Annual Budget, then its disapproval will
be accompanied by a description, in reasonable detail, of the specific
objection(s). Agent will promptly revise the proposed Annual Budget in
accordance with Owner's objection and resubmit the proposed Annual Budget to
Owner. If Owner approves any portion of the proposed Annual Budget, then Owner
will promptly communicate such partial approval to Agent. Owner will not
unreasonably withhold or delay its approval to the proposed Annual Budget (or to
any revision thereto).
(c) Owner acknowledges that Agent has provided services prior to
the date hereof in connection with the transition of ownership and management of
the Property from Owner's and Agent's predecessor and has agreed to pay Agent
$50,000 per month (prorated for any partial month) for such services for the
period commencing August 1, 1996 and ending on the date of execution of this
Agreement. Owner shall pay Agent such amount on the date of execution of this
Agreement.
2. Adherence to Budgets.
(a) Agent will use reasonable efforts to cause the actual costs of
operating and maintaining the Property not to exceed the Annual Budget (either
in total or in any line item). Agent will not, without Owner's prior approval,
incur any operating expenses or make any capital expenditures in excess of (i)
one hundred and ten percent (110%) of the amount set forth in any line item in
the Annual Budget or (ii) one hundred and five percent (105%) of the total
amount of the Annual Budget (each such excess, a "material variance" for
purposes of this Agreement). To the extent ascertainable in advance, Agent shall
notify Owner in advance of any projected material variance from the Annual
Budget (either in total or in any line item). Agent shall not transfer any
amounts from one expense line item to another (other than from any contingency
item to a specific line item) without Owner's prior written consent.
(b) If Owner fails to approve an Annual Budget (or any portion
thereof) for a given Fiscal Year, then Agent will continue to operate under the
most recent Annual Budget (including any partial approval of the then proposed
Annual Budget), provided that Agent may incur non-budgeted Emergency Expenses
and, subject to paragraph 3 below, Non-Discretionary Expenses.
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3. Emergency Expenses; Non-Discretionary Expenses. Agent may, at any
time, incur Emergency Expenses and, subject to the provisions of this paragraph,
Non- Discretionary Expenses without Owner's prior approval. Agent will give
Owner prompt notice of all Emergency Expenses incurred to the extent that the
Emergency Expenses exceed or are not contemplated under the Annual Budget. Agent
will give Owner reasonable notice of all Non-Discretionary Expenses to the
extent that the Non- Discretionary Expenses would constitute a material variance
prior to payments (in the case of items described in clauses (d), (e) and (f) of
the definition of Non-Discretionary Expenses) and prior to incurrence (in the
case of items described in clauses (a), (b) and (c) thereof). Agent will refrain
from paying any such Non-Discretionary Expenses upon receipt of written notice
from Owner.
4. Operation, Maintenance and Repairs; Payments. Subject to the
availability of funds therefor:
(a) Agent will operate and maintain the Property in a manner
commensurate with that of real properties of a size, character and quality
comparable to the Property.
(b) Agent will provide tenants with (i) the services expressly set
forth in the Leases in existence as of the date of this Agreement, (ii) the
services set forth in the Leases hereafter entered into by Owner, (iii)
additional services customarily provided to tenants for additional charges to
such tenants, and (iv) other services which Owner may approve from time to time.
(c) Agent will cause all ordinary repairs and alterations to be
made to the Property and its mechanical systems and equipment including, but not
limited to, interior and exterior cleaning, plumbing, electrical, HVAC,
carpentry and decorating, and such other normal maintenance and repair work as
may reasonably be deemed desirable or necessary by Owner or Agent, subject only
to the other limitations contained in this Agreement. Agent shall recommend to
Owner the purchase and installation of items of new or replacement equipment
when Agent believes such purchase to be necessary or desirable.
(d) Agent will pay for the account of Owner, to the extent
sufficient funds are available for such purpose from Gross Revenues or from
other funds made available by Owner, and subject to the limitations in this
Agreement, all costs incurred in operating, maintaining and repairing the
Property, when such costs become due and payable, including, but not limited to:
debt service under all mortgages and other payments due to Owner's mortgagees,
as directed by Owner; water charges; sewer rents; assessments and all other
charges and impositions payable with respect to the Property; all utility costs;
labor and payroll for employees of the Property; and the cost of operations,
maintenance, repairs and improvements to the Property. Notwithstanding any
provision to the contrary in this Agreement, at no time shall it
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be the responsibility of Agent to advance money for payments of any obligations
of Owner when funds are not available, but Agent agrees to advise Owner on a
timely basis when funds are not available for said payments, or when Agent
believes anticipated expenses will exceed available funds.
5. Enforcement of Leases. Agent will take necessary actions to enforce
the terms of the Leases and to collect all rent, additional rent and other
charges due and payable thereunder. Owner authorizes Agent to (i) request,
demand, collect and receive all rent, additional rent and other charges, and
(ii) subject to Owner's prior approval, settle or compromise the payment of such
amounts. For individual settlements or compromises where the disputed amount is
less than Fifty Thousand Dollars ($50,000), Agent need not obtain the prior
approval of Owner, but will give Owner notice of the settlements or compromises.
Agent will keep all tenants informed of all rules and regulations affecting the
Property. Agent shall use reasonably diligent efforts to secure full compliance
by the tenants with the terms and conditions of their respective Leases, and to
this end, use reasonably diligent efforts to see that all tenants are informed
with respect to such rules, regulations and notices as may be promulgated by
Owner. Agent shall not knowingly take any action which would violate any
tenant's Lease, and shall promptly deliver to Owner any notice of default
received from a tenant and use reasonable efforts and due diligence to cure such
default. Agent shall use reasonably diligent efforts to collect and shall
receive for the account of Owner all rents, receipts, accounts, revenues and all
other income from the Property including, with the prior written consent of
Owner and using counsel selected by Agent (from a list of reputable law firms
approved by Owner as provided in Section 5.3), instituting any and all legal
actions or proceedings (in the name of Owner, if necessary or advisable)
required for the collection of revenues from the Property or the ousting or
dispossession of tenants or other persons therefrom.
6. Compliance with Legal Requirements and Contracts. Agent will use its
reasonable efforts to comply with and cause the Property to comply with all
Legal Requirements and will obtain all necessary certificates of occupancy,
licenses or operating permits for the operation of the Property. In addition,
Agent will obtain, at Owner's sole cost and expense, any business license and/or
operating permit which may be required for the operation of the Property. Agent
shall, at its own expense, (i) maintain its corporate or partnership existence;
and (ii) qualify to do business and maintain (or cause one or more of its
employees to maintain) a real estate brokerage license in the State of New York.
Agent will also use its reasonable efforts to comply with and cause the Property
to comply with all terms and provisions of (i) any mortgage, deed of trust,
security agreement or other agreement encumbering or affecting the Property or
any personal property located at the Property, a copy of which is provided to
Agent, (ii) any casualty insurance policy insuring Owner's interest in the
Property or any personal property located at the Property, and (iii) any other
relevant conditions or restrictions affecting the Property, in each case so long
as Agent is aware of such terms and provisions. If Owner elects to contest
compliance
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with any of the foregoing, Owner will notify Agent and Agent will participate in
the contest to the extent reasonably requested by Owner. Owner will bear all
costs of such compliance (or contest). Agent shall promptly furnish Owner with
copies of all material notices which are sent by any mortgagee, space lessee, or
ground lessee to Agent.
7. Books and Records.
(a) Agent will maintain in a manner consistent with good
accounting principals, practices and procedures, a system of books and records,
in detail reasonably acceptable to Owner, for the Property. All books and
records will be prepared on a Fiscal Year basis using the accrual method of
accounting (unless Owner requests that the books and records be prepared on a
cash basis). All books, records and supportive documentation will be maintained
in a prudent manner at the Property or at such other place as Agent and Owner
determine. All books, records and supportive documentation will be the sole
property of Owner, and Agent shall, upon request of Owner, deliver any and all
such documentation to Owner but Agent may retain copies to the extent Owner has
not identified such material to Agent as constituting proprietary information.
(b) Owner and its representatives will have the right, upon
reasonable prior notice to Agent, to have access to (and audit) the books,
records and supportive documentation of the Property during normal business
hours during the term of this Agreement. Should the audit discover any error in
record keeping, Agent will immediately correct such error.
(c) Agent will use reasonable good faith efforts to keep all
financial information concerning the Property confidential at all times during
and after the term of this Agreement; and no such information shall be given to
any third party (other than professional firms retained in accordance with this
Agreement) without the prior written consent of Owner except as may be required
by law or by legal proceedings.
8. Reports and Statements. Agent will prepare and submit to Owner the
following reports and statements, each of which will be in form and substance
reasonably acceptable to Owner and Agent:
(a) By the fifteenth (15th) business day of each calendar month, a
tenant report setting forth (i) the amount of leased space and vacant space for
the preceding calendar month, (ii) the amount of rent due and the status of
payments as of the end of the preceding calendar month, and (iii) such other
tenant related information as Owner reasonably requests.
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(b) Within a reasonable period of time after Owner's request, a
tenant improvement budget setting forth in reasonable detail the estimated cost
of making the tenant improvements and such related information as Owner
reasonably requests.
(c) By the fifteenth (15th) business day of each calendar month,
an operating statement comparing the amount of actual expenses incurred with the
amount set forth in the Annual Budget for the preceding month. The operating
statement will be supported by the following documents:
(i) a rent roll;
(ii) a cash disbursement journal and receipts reflecting the
cut- off date used for the monthly statement;
(iii) a reconciliation of security deposit accounts, if any;
(iv) a computation of the management fee and the leasing
commissions; and
(v) copies of bank statements for the period corresponding
to the reconciliation.
(d) By the forty-fifth (45th) day following the end of each
calendar quarter (i) a summary variance report comparing actual results for the
quarter and year to date with the Annual Budget, together with detailed
explanation for material variances, and (ii) property level financial statements
(unaudited) for the quarter and year to date, together with projections through
the end of the Fiscal Year.
(e) Within a reasonable period of time after Owner's request, a
report setting forth in sufficient detail all information regarding the
ownership and operation of the Property reasonably necessary for Owner to
prepare its federal, state and local tax returns.
(f) Agent will provide such other information or documents which
Owner may reasonably request from time to time, within a reasonable period of
time after Owner's request, to the extent that such information or documents are
available without unreasonable effort or expense on behalf of Agent.
(g) Agent shall furnish to Owner, on a timely basis following
receipt by Agent, any and all notices materially affecting the Property
including, without limitation, notices from any taxing or other governmental
authority and notices of violations of law or municipal ordinances or orders
issued by any governmental authority or by any Board of Fire Underwriters or
other similar body. Agent shall obtain bills for real estate and personal taxes,
improvement assessments and other like
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charges which are or may become liens against the Property and recommend payment
or appeal thereof. Agent shall promptly forward such bills to Owner and shall
ascertain and advise Owner of any penalties for late payment or discounts for
early payment.
(h) Agent shall promptly notify Owner of any known violation of
any Legal Requirements or any Insurance Requirements; advise Owner of any areas
known to Agent in which the Project does not fully comply with any such Legal
Requirements and/or Insurance Requirements; and, unless expressly advised not to
do so by Owner, do or cause to be done all such acts or things in or about the
Property as shall be reasonably necessary or desirable to comply with any and
all Legal or Insurance Requirements and to correct all violations thereof, and
promptly furnish to Owner evidence satisfactory to Owner of such compliance
and/or corrections.
9. Annual Audit; Tax Returns.
(a) Agent will use reasonable efforts to have a nationally
recognized certified public accounting firm (selected by Owner) audit the books
and records of the Property. Agent will cause the accounting firm to deliver to
Owner a copy of the accounting firm's opinion together with the related
financial statements as soon as reasonably practicable after the close of the
Fiscal Year, and Agent will require the accounting firm to deliver same not
later than April 1 of the following Fiscal Year. Owner will bear all costs of
the audit.
(b) Agent will require such accounting firm to prepare any tax
returns and statements which must be filed in connection with the ownership,
operation or maintenance of the Property. Agent will submit the returns and
statements to Owner for its approval prior to filing and, once approved, will
file the returns and statements in accordance with applicable Legal
Requirements. Agent will use reasonably diligent efforts to require the
Property's accountants to complete the Partnership tax returns for distribution
to Owner's constituent partners within 60 days following the end of each Fiscal
Year. Owner will bear all costs of preparing and filing the tax returns and
statements.
(c) Agent acknowledges that Metropolis Realty Trust, Inc., an
indirect partner in Owner, intends to become a public reporting company under
the Securities Exchange Act of 1934. Agent agrees to maintain the Property books
and records in a manner and to use reasonably diligent efforts to require the
Property accountants to prepare financial statements and reports to enable
Metropolis Realty Trust, Inc. to file on a timely basis all documentation
required to be filed by a public reporting company, including without limitation
forms 10K, 10Q and 8K.
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10. Employees.
(a) Agent will on Owner's behalf and for Owner's account employ,
train and supervise such employees as are necessary for the operation and
maintenance of the Property in accordance with this Agreement. All non-union
employees will be employed by Agent on behalf of Owner; however, (i) Owner shall
have the right to request Agent to replace any key on-site employees responsible
for management of the Property and leasing of the Property (whether on-site or
off-site), including, without limitation, all on-site property managers and all
leasing agents, and (ii) Owner will reimburse Agent for all employee
compensation paid to such employees identified on Exhibit A hereto in accordance
with Section 6.2. Agent agrees to hire for Owner's account (and at Owner's
expense) the building employees identified on Exhibit B hereto currently
employed by 237 Park Avenue Associates, L.L.C. from whom Owner is acquiring the
Property and, (i) subject to the provisions of the next sentence, to assume on
behalf of Owner (and at Owner's expense) such party's labor agreements relating
to union employees, and (ii) with respect to non-union employees, provide such
employees (at Owner's expense) the same wages and vacation and severance accrual
rules as are currently applicable to them (as provided in Exhibit C), such other
benefits as are customarily provided by Agent to its comparable employees, and
carry over such employees' accrued vacation and severance benefits. Owner shall
be responsible for any obligations to such currently existing employees of 237
Park Avenue Associates LLC (both union or non-union) for accrued vacation
through the date hereof and for any severance payments regardless of (i) when
such employee is terminated or (ii) whether or not Agent terminates such
employee, or the grounds for termination, unless such employee accepts
employment with Agent or an affiliate of Agent on another project. In the event
an employee is terminated at the Project for reasons unrelated to his job
performance or personal character, Agent will use its good faith efforts to
relocate such employee to another building under its management supervision.
Agent and each employee who is responsible for handling any of Owner's funds
will at all times be bonded by a fidelity bond (commercial blanket). Such bond
shall provide coverage of at least $1,000,000. Agent will promptly deliver
satisfactory evidence of such bond to Owner. Without limiting the generality of
the foregoing, Agent will:
(i) provide such personnel as it deems necessary (subject to
the approval of Owner) for the proper operation and
maintenance of the Property so that the Building will be
operated, maintained, and staffed on a full-time basis
in a manner which will always at least equal the
standard of care and services rendered by leading
management companies performing the same type of
services rendered for first class buildings in New York
City. The number, duties and cost of all personnel for
which Owner will compensate Agent pursuant to Section
6.2 shall be
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provided in the Annual Budget. Subject to the provisions
in this Section 3.10, the work performed by on-site
employees shall be exclusively for the benefit of the
Property unless otherwise indicated in the Annual Budget
or otherwise agreed to by Owner in writing. Agent shall
be solely responsible for supervising and coordinating,
on behalf of Owner, all terms and conditions of
employment for the employees, including obligations
under any collective bargaining agreement or federal or
state labor laws. In the event of any labor dispute
affecting Agent's duties hereunder, Agent's obligation
shall continue in full force and effect and, without
reducing the said obligations of Agent, Agent shall make
reasonable efforts to use supervisory personnel to
continue Agent's services hereunder with minimal
disruption under the circumstances. Agent agrees to keep
Owner reasonably informed on any union-related
negotiation or dispute.
(ii) provide a schedule of employees (in the format of
Exhibit D --------- attached hereto and hereby made a
part hereof) to be employed "on-site" in the direct
management of the Property. Exhibit D (which may be
revised annually or more --------- frequently, by a
writing executed by the Owner and the Agent) shall
include the number of employees and their title and
salary range and shall also indicate which employees are
bonded or are covered under the Agent's comprehensive
crime insurance policy. The parties hereto agree that
the services provided by any employee position listed on
Exhibit D may be utilized for the Property as well
--------- as any property owned by an affiliate of Owner
and managed by Agent. However, the percentage of time
dedicated by that position shall not be less than the
percentage of that position's total annual compensation
that is allocated to the Property in the then effective
Annual Budget. The Owner and Agent agree that each
Annual Budget shall specify, as to each employee
position on Exhibit D, the percentage of that position's
total annual --------- compensation that is to be
allocated to the Property.
(b) Agent, on behalf of Owner, will be responsible for the
preparation of, and will timely file, all local, state and federal labor payroll
tax reports and other similar reports, and will timely make payments of all
withholding and other payroll taxes with respect to its employees in accordance
with applicable Legal Requirements. Without in any way limiting the foregoing,
Agent represents, warrants and agrees that
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it will pay and/or deduct from the compensation of workers of the Property
(whether union or non-union) all contributions, taxes and other payments or
charges required to be paid by an employer with respect to the compensation
paid, and to be paid, to its employees under the provisions of all applicable
state unemployment insurance, disability benefits and withholding tax laws, the
Federal Insurance Contributions Act, the Federal Unemployment Tax Act and the
Internal Revenue Code of 1986, as amended, and will comply with all other local,
state and federal laws, regulations and requirements applicable to union workers
at the Property or affecting their compensation or conditions of employment or
applicable to Agent for the performance of the services hereunder, including,
without limitation, the Fair Labor Standards Act, the Occupational Safety and
Health Act, the Equal Employment Opportunity Act, the Fair Employment Practices
Act, the Immigration Reform and Control Act of 1986, the Employee Retirement
Income Security Act of 1974 and any labor union contract in effect.
11. Tax Assessments and Condemnation. At Owner's request, Agent will
render advice and assistance to Owner in connection with negotiating and
prosecuting (a) any claims for the increase, abatement, reduction or refund of
property taxes affecting the Property or the property known as 2 Broadway, and
(b) any awards for any public taking of any portion of the Property. Owner will
reimburse Agent for Agent's out-of-pocket expenses incurred in connection with
rendering such advice or assistance. Agent will not agree to the terms of any
such real estate or condemnation settlement (relating to either the Property or
2 Broadway) without Owner's prior written approval.
12. Improvements. Agent will supervise and coordinate all customary and
ordinary capital improvements to the Property and will assist Owner in
determining which improvements should be made to the Property. Without limiting
the generality of the foregoing, Agent shall provide the associated supervision
and direction for the installation of such improvements and alterations to a
tenant's premises as may be required by the terms of any lease with such tenant
and, at the cost and expense of such tenant or of Owner (as set forth in the
lease or otherwise approved in writing by Owner in advance), provide the labor
and materials, through contractors approved in writing by Owner or Owner's
architect or consultant to perform such alterations and installations to a
tenant's premises in the Property as are required by the terms of any lease with
such tenant. Owner will reimburse Agent for Agent's out-of-pocket expenses
incurred in connection with rendering such services.
13. Consent to Tenant Alterations to Property. At no additional expense
to Owner for the time dedicated to such work, Agent shall review tenant
alterations and installations and may (subject to the next sentence) consent to
and approve such alterations and installations provided for in the respective
Leases of tenants, subject to compliance by the tenants with the terms and
conditions of the applicable Leases and the conditions set forth below in this
Section. With respect to the alterations and
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installations not provided for by such Leases (and tenant alterations and
installations contemplated in a Lease but for which the plans are not a part of
such lease), Agent is authorized to consent to and approve such work provided:
(i) such alterations and improvements are made solely at tenant's expense
(including any expenses incurred by Agent or Owner in connection with such work)
and in accordance with all Legal Requirements and Insurance Requirements, (ii)
such alterations and installations do not affect the basic structure or systems
of the Property or interfere with other tenants and are not outside of the
Tenant's demised premises (e.g., do not include roof installation), and (iii)
unless Owner otherwise agrees in writing, tenant shall, at the expiration or
termination of its Lease, be required to remove any such alterations and
installations which involve a cost of removal greater than Twenty-Five Thousand
Dollars ($25,000.00).
14. Tenant Complaints and Requests. Agent will handle promptly all
complaints and requests made by the tenants at the Property.
15. Advertising; Public Relations. Not later than the date on which the
initial Annual Budget is prepared, Agent will prepare for Owner's review and
approval a Marketing Plan for the remaining portion of the Fiscal Year in which
this Agreement is executed and delivered. Such Marketing Plan will include a
strategy for advertising and marketing the leasing of space at the Property,
including specific newspapers, trade journals, brochures, consultants and other
appropriate media which the Agent recommends utilizing, and an estimated amount
budgeted for each such use (which amount will also be included in the Annual
Budget). The Marketing Plan, when approved in writing by Owner, shall form the
basis on which the Property's leasing program will be marketed. Agent will
prepare for Owner's review and approval a Marketing Plan for each ensuing Fiscal
Year, together with and in the manner provided in Section 3.1 with respect to
the Annual Budget. Agent shall implement, or supervise the implementation of,
the leasing and marketing of the Property so long as it does so in accordance
with a Marketing Plan and Annual Budget that has been approved by Owner.
16. General Duties. In addition to the responsibilities set forth in
this Article 3, Agent will perform all other services or activities incidental
to the normal and professional operation by Agent of properties similar in type,
character and quality to the Property. Agent shall: (a) assist in the review and
preparation of leasing plans and programs and render assistance in presentations
to prospective tenants, financing groups, governmental officials, civic and
business groups and other persons and entities selected or designated by Owner,
(b) in the event of any refinancing of the Property, cooperate in all respects
and in good faith with Owner and any lender having a security interest in or
lien on the Property ("Lender"), including, without limitation, promptly upon
notice from Owner, executing and delivering any and all such agreements and
establishing and maintaining any and all such accounts as may be required by
Lender in connection with the Property (including, without limitation,
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"lock-box" accounts, whether held by Agent or Lender), provided that they do not
materially modify Agent's rights, or materially expand Agent's obligations,
under this Agreement or otherwise, or subject Agent to any personal liability.
Agent shall comply with the requirements of any Lender brought to the attention
of Agent by Owner regarding matters as budget and lease approvals, requisition
procedures and other similar matters, and (c) use reasonable efforts to prevent
the release of any Hazardous Materials on, under or at the Property, to
immediately notify Owner when Agent is made aware of any such release, and to
cooperate in Owner's efforts to remove and/or remediate any such release and, at
Owner's request, to coordinate the removal of any Hazardous Materials discovered
at the Property. For purposes of this Agreement, "Hazardous Material" means and
includes any hazardous substance or any pollutant or contaminant defined as such
in (or for purposes of) the Comprehensive Environmental Response, Compensation
and Liability Act, any so-called "Superfund" or "Superlien" law, the Toxic
Substances Control Act, or any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning any hazardous, toxic or
dangerous waste, substance or material, as now or at any time hereafter in
effect (collectively, the "Environmental Statutes").
ARTICLE 4
BANK ACCOUNTS, DISBURSEMENTS
1. Operating Account. Agent will establish and maintain the Operating
Account. Agent will deposit all Gross Revenues and Excluded Proceeds (other than
tenant security deposits, unless some are applied toward the payment of rent,
additional rent or other charges due under the Leases) received by Agent with
respect to the Property into the Operating Account. Except as otherwise provided
herein, Agent will pay in a timely manner all expenses for the Property from the
Operating Account to the extent that the expenses are contemplated in the Annual
Budget, constitute Emergency Expenses or Non-Discretionary Expenses or are
otherwise approved by Owner.
2. Security Deposit Account. Agent will establish and maintain the
Security Deposit Account in accordance with applicable Legal Requirements. Agent
will deposit all security deposits received by Agent from tenants of the
Property into the Security Deposit Account. Withdrawals from the Security
Deposit Account may only be made by an authorized and bonded employee of Agent
and may only be used to refund security deposits to tenants or cure defaults of
tenants in accordance with their respective Leases. Any security deposits which
are in the form of letters of credit, marketable instruments or other cash
equivalents shall be held by Agent in safekeeping in a responsible and
appropriate fashion.
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3. Shortfalls; Advances.
(a) If, at any time, the funds in the Operating Account are not
sufficient to pay for any expenses of the Property (including the obligations of
Owner hereunder), then Agent will promptly notify Owner of such anticipated
shortfall.
(b) Owner will bear all expenses of owning, operating and
maintaining the Property, including Agent's expenses in connection with the
performance of its responsibilities under this Agreement, and Agent will not be
obligated to advance any of its own funds on behalf of Owner or otherwise incur
any personal obligation for the account of Owner.
4. Payments to Owner. Agent shall remit to Owner, within 15 days
following the end of each fiscal quarter, all rents, receipts, revenues and
other income from the Property remaining after payment of those items provided
for under this Agreement, if any, in a manner as directed by Owner, with Agent
retaining not less than $250,000 for working capital plus budgeted reserves.
ARTICLE 5
MANAGEMENT AUTHORITY, CONTRACTS
1. General Authority. (a) Agent will have the authority to enter into
contracts and incur expenses on behalf of Owner for all goods, services and
supplies necessary or advisable in connection with the operation and maintenance
of the Property in accordance with this Agreement to the extent such expenses
are contemplated in the Annual Budget, constitute Emergency Expenses or real
estate taxes, utility charges or (in the event an approved Budget is not in
effect and subject to the other limitations provided herein) other
Non-Discretionary Expenses or are otherwise reasonably approved by Owner.
Notwithstanding the foregoing, any such contract that requires annual payment(s)
which total in excess of $250,000, or which has a term of more than one year, or
which is with an affiliate of Agent, or which would cause any line item of the
Annual Budget to be exceeded by more than a material variance, shall require the
prior written consent of Owner. Together with Agent's request for consent to any
such service contract, Agent shall deliver to Owner a copy of the proposed
contract, a statement of the relationship, if any, between Agent (or the person
or persons in control of Agent) and the party which will supply such goods or
services under the proposed contract, and supporting analysis, if any.
(b) All service contracts shall, unless expressly approved by
Owner: (i) include a provision for cancellation thereof (without penalty) by
Owner upon not more than 60 days' written notice, (ii) require that all
contractors provide evidence of
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insurance specified in paragraph (d) below, and (iii) if for work of a nature
which would entitle the contractor to file a lien against the Property, include,
unless waived by Owner, a provision requiring the contractor to provide lien
waivers in accordance with the provisions of the New York Lien Law, in
connection with work to be performed under the terms of the contract.
(c) Agent shall require that each contractor engaged to perform
any work at the Property deliver to Agent a Certificate of Insurance, evidencing
insurance coverage maintained, at such contractor's expense, in no less than the
following amounts: (i) Worker's Compensation -- statutory amount; (ii)
Employer's Liability -- statutory amount; (iii) Comprehensive General Liability
- -- $1,000,000 combined single limit for personal injury and property damage; and
(iv) Automobile Liability -- $100,000/$300,000 single combined limit.
2. Execution of Contracts. All contracts permitted under this Agreement
may be signed by Agent as agent for Owner. Agent will disclose Owner's existence
and identity to all third-party contractors. Agent will use reasonable efforts
to have each contract include an exculpatory clause (similar to the clause set
forth in Section 10.5(a)) limiting Owner's obligations under the contract to
Owner's interest in the Property.
3. Use of Counsel and Other Professionals. If Agent deems it necessary
or desirable to retain attorneys, architects, accountants, engineers or other
third-party professionals, then Agent may retain, on behalf of Owner and at
Owner's expense, professionals selected from a list of professionals
pre-approved by Owner or, if not on such list, with Owner's prior written
consent.
4. Limitation of Authority. Agent will not, without Owner's prior
approval (a) convey, transfer, pledge or encumber any property or other asset of
Owner, (b) institute or defend any lawsuits or other legal proceedings on behalf
of Owner, (c) execute, amend or terminate any Leases, (d) obligate Owner for the
payment of any fee or commission to any real estate agent or broker (other than
Agent in accordance with this Agreement), or (e) borrow money in the name of
Owner.
5. Value of Goods, Services and Supplies. Agent will use reasonable
efforts to ensure that the consideration paid for any goods, services or
supplies obtained by Agent for the Property will not exceed the amount
ordinarily paid for such goods, services or supplies for properties
substantially similar to the Property. At Owner's request, Agent will procure
competitive bids for the goods, services or supplies obtained by Agent for the
Property. Owner understands, however, that with respect to procuring competitive
bids, accepting services from the lowest bidder may not necessarily be in the
best interest of Owner. Owner will be entitled to receive the benefit of all
rebates, discounts or commissions obtained with respect to all goods, services
and supplies of the Property.
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6. Contracts with Affiliates. Agent may contract with any of its
Affiliates to provide goods, services or supplies under this Agreement so long
as (a) Agent discloses the relationship to Owner, (b) the economic and material
non-economic terms of the contract are reasonable and no more favorable than
terms generally available from third parties of comparable experience providing
a similar scope and quality of goods, services or supplies, (c) such contract
otherwise conforms to the requirements of this Article 5, and (d) Owner has
given its written approval of such contract.
ARTICLE 6
COMPENSATION FOR MANAGEMENT SERVICES
1. Management Fee. Owner will pay the Management Fee to Agent on or
before the fifth (5th) business day of each calendar month, for its services in
managing the Property for the immediately preceding calendar month. If this
Agreement commences on a date other than the first day of a calendar month or if
the term expires or is terminated on a day other than the last day of a calendar
month, then the Management Fee will be prorated for such partial month on the
basis of a thirty (30) day month.
2. Reimbursement. Owner will reimburse Agent, on or before the fifth
(5th) business day of each calendar month, for all reasonable out-of-pocket
expenses incurred by Agent directly related to the performance of its
responsibilities under this Agreement, to the extent set forth in the Annual
Budget. Owner understands that Agent's out-of-pocket expenses with respect to
the Property will include items such as (a) costs of preparing printed forms,
notices, checks, stationary, envelopes and similar items, (b) telephone,
telecopier and other communication expenses, (c) postage, delivery and
photocopying costs, (d) entertainment expenses (including meals) where
appropriate and reasonable (e.g., the cost of occasionally entertaining key
building facility persons and tenants), (e) costs of advertising and engaging in
promotional activities (including the preparation of brochures and other
marketing materials) to the extent permitted herein, and (f) costs of insurance
required to be maintained by Agent pursuant to Section 9.2 to the extent
permitted therein. Owner will also reimburse Agent for (i) all compensation paid
to on-site employees of Agent (such as base salaries, bonuses, medical benefits,
retirement benefits, other fringe benefits, payroll taxes and any severance
payments), (ii) the fair and equitable portion of such compensation paid to
off-site employees of Agent working on matters relating to the Property to the
extent provided in an Annual Budget approved by Owner, and (iii) all reasonable
and customary placement fees incurred in connection with the hiring of employees
of Agent working on matters relating to the Property (and subject to the prior
approval of Owner). Agent will maintain reasonably detailed records documenting
all reimbursable expenses. Owner shall have the right to audit such
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records, on reasonable prior notice to Agent. Agent shall maintain such records,
at the Property or at such other place as Agent and Owner may determine, for a
period of not less than 4 years from the date of the incurrence of the
respective fees to which they relate. The provisions of Section 6.1 and 6.2 will
survive the expiration or earlier termination of this Agreement.
3. Payment of Compensation. Agent may withdraw the Management Fee
and the reimbursable expenses from the Operating Account as and when the
Management Fee and the reimbursable expenses become due and payable in
accordance with this Agreement.
ARTICLE 7
LEASING RESPONSIBILITIES
1. Leasing Efforts. (a) Agent will use reasonable efforts to lease
space in the Property to desirable tenants upon terms and conditions reasonably
acceptable to Owner. Owner will refer to Agent all offers or inquiries which are
received by Owner with respect to leasing space in the Property.
(b) The services to be performed by Agent as leasing agent shall
include, but shall not be limited to, the following:
(i) Agent shall procure tenants for the Property and shall
be responsible for the leasing of space and the renewal,
extension and expansion of existing leases in the Property
upon such terms and conditions as are specified by Owner; the
conduct of all negotiations related thereto (subject to
Owner's direction); and if requested by Owner arranging for
the preparation of leases and other documents in form
satisfactory to Owner and approved by Owner and its counsel
(which shall be retained by and at the expense of Owner),
including tending to the execution of such leases by tenants
and delivery of such leases; provided, however, that Agent
shall not have any lease executed without securing the prior
written consent of Owner (which consent shall be in Owner's
sole and absolute discretion). Agent shall not have the right
to cancel, amend or accept the surrender of any lease or to
consent to a sublease or assignment of a lease, except with
the written consent of Owner. Agent shall use reasonable
diligence to obtain and submit to Owner credit reports and
other financial statements pertaining to prospective tenants
to the extent available.
(ii) Agent shall acquire and maintain a thorough knowledge of
the leasing market for space similar to that contained in the
Property, prepare a leasing and marketing plan for the
Property (which will include,
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without limitation, analysis of the Property's leasing activity,
market absorption and projected leasing activities) and recommend
pricing and marketing strategies for Owner's consideration.
(c) Agent represents that it is a licensed real estate broker and
all of its employees required to be licensed real estate brokers are so licensed
and will remain so during the term of this Agreement.
2. Advertisement. Agent will list and advertise the Property for rental
by means of periodicals, signs, plans, brochures or other appropriate means in
accordance with the Marketing Plan and Annual Budget. Agent shall not use
Owner's name In any advertising or promotional material without Owner's express
prior written approval in each instance unless provided for in an approved
Marketing Plan. Advertising and promotional materials shall be prepared in full
compliance with Federal, state and municipal laws, ordinances, regulations and
orders. Any reasonable costs of printing leasing brochures and other promotional
material shall be paid by Owner to the extent provided for in the Marketing Plan
and Annual Budget and otherwise to the extent approved in writing by Owner as an
over-budget expense. Agent shall use reasonable efforts to ascertain advertising
and marketing programs being used by competing buildings, and shall utilize such
information in developing the Marketing Plan for the Property.
3. Outside Brokers. Owner acknowledges that Outside Brokers may be
involved in the leasing of space at the Property. Agent will advise Owner of the
involvement of any Outside Brokers in any pending transaction. In the event any
Outside Broker is involved, Agent will use reasonable efforts to have each
Outside Broker execute and deliver to Owner an Outside Broker's Commission
Agreement, the form and substance of which shall be subject to Owner's approval.
Agent will deliver a fully executed counterpart of the Outside Broker's
Commission Agreement to Owner promptly upon the execution thereof.
4. Reporting. Agent will provide Owner with monthly leasing activity
reports in form and substance reasonably acceptable to Owner and Agent which
shall include a description of prospective tenants contacted during the prior
month.
5. Leasing Guidelines. Not later than the date on which the initial
Annual Budget is prepared, Agent will prepare for Owner's review and approval
Leasing Guidelines for the remaining portion of the Fiscal Year in which this
Agreement is executed and delivered. Such Leasing Guidelines will state proposed
lease rates (gross) and concessions (i.e., free rent, tenant fit-out allowance)
to ensure that the Property is competitive in the marketplace. The Leasing
Guidelines, when approved in writing by Owner, shall form the basis on which the
terms of proposed leases of space in the Property shall be negotiated. Agent
will prepare for Owner's review and approval Leasing Guidelines for the ensuing
Fiscal Year, together with and in the
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manner provided in Section 3.1 with respect to the Annual Budget. If Owner and
Agent fall to establish new Leasing Guidelines for any given Fiscal Year, then
the Leasing Guidelines established for the immediately preceding Fiscal Year
will continue in effect until Owner and Agent establish the new Leasing
Guidelines. Agent shall update the Leasing Guidelines from time to time, upon
Owner's request.
6. Authority. Agent will have the authority to negotiate with
prospective tenants on behalf of Owner so long as the terms thereof are
substantially in accordance with the Leasing Guidelines. Agent will have no
authority to enter into any Lease on behalf of Owner without Owner's prior
consent. All Leases permitted under this Agreement may be signed by Agent as
agent for Owner or, at Agent's request, by Owner.
7. Conflicts of Interest. The parties acknowledge that Agent and
certain of its Affiliates are the owners and/or managers of other properties
located in New York City some of which properties may form part of the same
leasing market (the "Leasing Market") (taking into account use, geographical
location, rental rates and building facilities) as the Property. Accordingly,
Agent agrees that, in the event that any then-existing tenant of the Property
enters into negotiations for space (other than at the Property) within the
Leasing Market which is owned or managed by Agent or its Affiliates, or with a
prospective tenant which is considering both the Property and another property
owned or managed by Agent or its Affiliates (and provided that Agent's senior
leasing representative at the Property has actual knowledge that such event has
occurred), Agent shall give Owner notice of Agent's intent to enter into such
negotiations and Owner shall have the right to negotiate directly with such
existing or prospective tenant of the Property.
ARTICLE 8
COMPENSATION FOR LEASING SERVICES
1. Leasing Commission. If and when a Lease is executed and delivered by
a tenant and Owner pursuant to this Agreement (including any Lease entered into
prior to the date of this Agreement where Agent materially participated in its
negotiation), Owner will pay a Leasing Commission to Agent calculated in
accordance with Exhibit E, subject to Section 8.5 below in the case where an
Outside Broker is involved.
2. Limitations.
(a) If a Lease provides that a tenant has the right to terminate
the Lease at any time prior to the commencement of the term thereof, then, no
Leasing Commission will be payable to Agent unless and until the commencement of
the term of the Lease occurs. If a Lease involves a right of the tenant to
cancel or terminate
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after commencement of the term, the Leasing Commission will be based on the
Fixed Rent through the date of such right and if the tenant fails to exercise
such right the remainder of the Leasing Commission shall then be due calculated
as if the remaining term were part of the initial Lease term.
(b) If, for any reason, a Lease is not entered into between Owner
and a prospective tenant of the Property, then no Leasing Commission will be
earned by Agent.
3. Renewals and Extensions. If a tenant exercises an option in the
Lease to renew or extend the initial term of the Lease, then Owner will pay a
Leasing Commission to Agent based on the Fixed Rent (determined in accordance
with Exhibit E) payable during the renewal or extension term. Such Leasing
Commission will be calculated at the rates set forth in Exhibit E at the
percentage levels that would have applied if the renewal or extension period
were part of the initial term of the Lease (e.g., if the initial term was 10
years and the renewal term is 5 years, the applicable rates would be for years
11-15). Notwithstanding the foregoing, if, in such event, a commission is
payable to an Outside Broker upon such renewal or extension, then Owner will pay
a leasing commission to such Outside Broker, and will pay to Agent a Leasing
Commission equal to thirty-seven and one half percent (37.5%) of the Leasing
Commission amount otherwise payable to Agent (were Agent the sole leasing agent)
provided in accordance with the preceding sentence. If (i) an option or right is
negotiated or (ii) a Lease, option or right is renegotiated and (iii) a renewal
or extension is actually effectuated pursuant thereto, then Owner will pay a
Leasing Commission to Agent (or 37.5% thereof if an Outside Broker is involved)
based upon the new term of the Lease (as extended or renewed) calculated in
accordance with Exhibit E as if it were a new Lease, but net of rent, if any,
remaining under the Lease previously in effect with respect to the initial term
in the case of an early renewal or extension amortized over the new term as
extended.
4. Additional Space. If, pursuant to or in connection with an option or
right in the Lease, a tenant leases additional space at the Property, then Owner
will pay a Leasing Commission to Agent (or 37.5% thereof if an Outside Broker is
involved) based on the Fixed Rent payable during the expansion space term. Such
Leasing Commission will be calculated at the rates set forth in Exhibit E at the
percentage levels that would have applied if the additional space were part of
the initial term of the Lease (e.g., if the initial term was 10 years and the
additional space were acquired at the end of year 10 for a term of 5 years, the
applicable rates would be for years 11-15). If an option or right to acquire
additional space is negotiated or renegotiated, and then exercised, then Owner
will pay a Leasing Commission to Agent (or 37.5% thereof if an Outside Broker is
involved) calculated in accordance with Exhibit E as if the additional space
were a new Lease.
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5. Outside Brokers. If an Outside Broker is entitled to a leasing
commission in connection with the leasing of space at the Property, then Owner
will pay a leasing commission to the Outside Broker pursuant to the Outside
Broker's Commission Agreement and will pay to Agent a Leasing Commission equal
to thirty-seven and one half percent (37.5%) of the Leasing Commission amount
otherwise payable to Agent (were Agent the sole leasing agent) set forth in
Exhibit E. Agent will advise Owner of the involvement of any Outside Broker.
6. Timing of Payments.
(a) Owner will pay all Leasing Commissions earned by Agent in
connection with the consummation of a new Lease in two (2) equal installments as
follows: (i) fifty percent (50%) upon execution and delivery of the Lease, and
(ii) fifty percent (50%) upon the earlier of delivery of the demised premises to
the tenant or the date tenant begins paying rent to Owner under the Lease.
(b) Owner will pay all Leasing Commissions earned in connection
with the renewal or extension of a Lease or the leasing of additional space (in
each case pursuant to an option or right in the Lease) in the manner provided in
paragraph (a) above.
(c) The provisions of this Section 8.6 will survive the expiration
or earlier termination of this Agreement.
(d) The provisions of this Section 8.6 are subject to the
provisions of Section 11.5(c).
ARTICLE 9
INSURANCE
1. Owner's Insurance.
(a) Owner will maintain, or at Owner's written request, Agent, on
behalf of Owner, will maintain in full force and effect during the term of this
Agreement "All Risk" property coverage insuring the Property for its replacement
costs and including coverage for expediting expense and rental insurance. The
policy will (i) include a thirty (30) day notice of cancellation to Agent in the
event of non-renewal, non-payment of premium or material change of terms, and
(ii) be maintained with an insurance company licensed to do business in the
State and reasonably acceptable to Owner, Owner hereby agreeing to accept a
Standard & Poor's rating of at least A-8. If Owner shall request Agent in
writing to obtain such policy, Agent
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shall have 45 days to obtain such policy or notify Owner that such policy cannot
be obtained on terms more favorable than the existing policy.
(b) Owner will maintain or, at Owner's written request, Agent, on
behalf of Owner, will maintain in full force and effect during the term of this
Agreement comprehensive general liability insurance (including broad form
contractual, property damage and personal injury coverage) with a maximum
deductible of Twenty- Five Thousand Dollars ($25,000) and a combined single
limit of not less than Fifty Million Dollars ($50,000,000) per occurrence for
bodily injury or death and third-party property damage. The policy will (i) name
Agent as an additional insured party, (ii) include a thirty (30) day notice of
cancellation to Agent in the event of non-renewal, non-payment of premium or
material change of terms, and (iii) be maintained with an insurance company
licensed to do business in the State and reasonably acceptable to Owner, Owner
hereby agreeing to accept a Standard & Poor's rating of at least A-8. Insurance
coverage may be carried under "blanket" policies, but in all events must be the
primary coverage for Owner and Agent for all Claims relating to the Property. If
Owner shall request Agent in writing to obtain such policy, Agent shall have 45
days to obtain such policy or to notify Owner that such policy cannot be
obtained on terms more favorable than the existing policy.
(c) Agent, on behalf of Owner, will provide Owner with
certificates of insurance or other satisfactory documentation evidencing its
compliance with the insurance requirements under this Agreement.
(d) Notwithstanding the foregoing provisions of this Article 9,
all insurance in respect of the Property obtained by Agent on behalf of Owner
shall conform to the requirements of any mortgage encumbering the Property that
has been brought to Agent's attention by Owner, the terms and provisions of
which mortgage shall control in the event of any conflict between the insurance
requirements set forth therein and the foregoing provisions of this Agreement.
2. Agent's Insurance.
(a) Agent will maintain in full force and effect during the term
of this Agreement the following insurance coverage for Property employees:
(i) Comprehensive crime coverage in the minimum amount of
One Million Dollars ($1,000,000).
(ii) Worker's compensation insurance in such form, and in
such amounts, as may be required by applicable Legal
Requirements.
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(iii) Non-Occupational disability insurance in such form, and
in such amounts, as may be required by applicable Legal
Requirements.
(b) Agent's insurance policies will (i) include a thirty (30) day
notice of cancellation to Owner in the event of non-renewal, non-payment of
premium or material change of terms, (ii) be maintained with an insurance
company licensed to do business in the State and reasonably acceptable to Owner,
(iii) shall provide for a maximum deductible not In excess of $25,000 and (iv)
otherwise be reasonably acceptable to Owner in all other respects. Agent's
insurance may be carried under "blanket" policies.
(c) Agent will provide Owner with certificates of insurance or
other satisfactory documentation evidencing Agent's compliance with its
insurance requirements under this Agreement.
(d) Owner shall not reimburse Agent for Agent's cost of such
insurance or for any coverages Agent obtains for its own account other than
workmen's compensation and non-occupational disability insurance for personnel
working on the Property.
3. Agent's Duties in Case of Loss.
(a) Agent will promptly notify Owner of any fire or other damage
suffered with respect to the Property.
(b) Agent will promptly notify Owner of any personal injury
suffered or claimed to have been suffered by any Person with respect to the
Property. Agent will also forward to Owner any summons, subpoenas or similar
legal document served upon Agent with respect to any potential liability of
Owner or Agent in connection with the Property.
(c) Agent will promptly investigate and make a full written report
of all damages or accidents relating to the Property and will submit such report
to and otherwise cooperate with the insurance company representing Owner or
Owner's mortgagee in connection therewith. Agent shall deliver a copy of any and
all such reports to Owner.
(d) Agent may settle Claims on account of damage or injury to the
extent that the settlement is fully covered by insurance and does not expose
Owner to criminal or civil penalties, including the execution of proofs of loss,
the adjustment of losses, signing of receipts, and the collection of money,
without joinder of Owner if the aggregate amount of such claim or series of
claims equals or is less than One Hundred Thousand Dollars ($100,000). If the
amount involved exceeds One Hundred
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Thousand Dollars ($100,000), settlement of such claim shall be made only with
Owner's knowledge and consent. The foregoing authority of Agent may be revoked
by Owner to the extent inconsistent with any mortgage encumbering the Property.
4. Waiver of Rights of Subrogation. All insurance policies required to
be maintained under this Agreement will include a clause or endorsement
providing that the insurer waives all rights of subrogation against Owner and
Agent with respect to losses payable thereunder if and to the extent such clause
or endorsement is available and can be obtained at a reasonable cost. Each of
Owner and Agent waives all Claims against the other (and their Affiliates and
respective partners, shareholders, directors, officers, employees and agents)
for any loss or damage to the other's property to the extent of insurance
coverage included in a standard "all-risk" form of property insurance. Agent
shall not intentionally take any action (such as admission of liability), except
as required by law, which reasonably would bar Owner from obtaining any
protection afforded by any policy Owner may hold or which reasonably would
prejudice Owner in its defense to a claim based on such loss, damage or injury.
ARTICLE 10
INDEMNIFICATION, EXCULPATION
1. Owner's lndemnity. OWNER WILL DEFEND, INDEMNIFY AND HOLD HARMLESS
AGENT, ITS AFFILIATES AND THEIR RESPECTIVE PARTNERS, SHAREHOLDERS, DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS FROM AND AGAINST ALL CLAIMS ARISING FROM OR IN
ANY WAY CONNECTED WITH (A) THE PERFORMANCE OF AGENT'S OBLIGATIONS UNDER AND IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, (B) ANY OTHER ACTS PERFORMED BY
AGENT AT THE DIRECTION OF OWNER, (C) THE BREACH OF THIS AGREEMENT BY OWNER, AND
(D) CLAIMS BROUGHT AGAINST AGENT FOR DISCRIMINATION ON THE GROUNDS OF RACE,
COLOR, CREED, RELIGION, SEX, NATIONAL ORIGIN OR ANY OTHER BASIS ("DISCRIMINATION
CLAIMS"), (E) OWNER'S FAILURE (OTHER THAN BY REASON OF AGENT'S DEFAULT UNDER
THIS AGREEMENT) OR REFUSAL TO COMPLY WITH OR ABIDE BY ANY LEGAL REQUIREMENTS.
IF, FOLLOWING A FINAL ADJUDICATION ON THE MERITS BY A COURT OF COMPETENT
JURISDICTION, IT IS DETERMINED ("FINAL DETERMINATION") THAT ACTS OF GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT WERE PERMITTED OR SUFFERED BY AGENT, ITS
PARTNERS, OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES OR AGENTS, OR (WITH
RESPECT TO ANY DISCRIMINATION CLAIM) AGENT IS THE LOSING PARTY, THEN AGENT WILL
BE RESPONSIBLE FOR THE AMOUNT OF THE CLAIM TO THE EXTENT THE CLAIM IS NOT
OTHERWISE COVERED BY INSURANCE REQUIRED TO BE MAINTAINED BY OWNER OR AGENT
("AGENT INDEMNIFIED ACTS"). AGENT FURTHER AGREES TO REIMBURSE OWNER FOR COURT
COSTS AND OTHER REASONABLE EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES,
INCURRED
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BY OWNER IN DEFENDING ANY ACTION BROUGHT AGAINST OWNER FOR INJURY OR DAMAGE
CLAIMED TO HAVE BEEN SUFFERED AS A RESULT OF AGENT'S WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE OR THAT OF ITS EMPLOYEES OR AGENTS, BUT ONLY IF THERE IS A FINAL
DETERMINATION OF SUCH WILLFUL MISCONDUCT OR GROSS NEGLIGENCE, OR THERE IS A
FINAL DETERMINATION IN A DISCRIMINATION CLAIM WHERE AGENT IS THE LOSING PARTY.
2. Agent's Indemnity. AGENT WILL DEFEND, INDEMNIFY AND HOLD HARMLESS
OWNER, ITS AFFILIATES AND THEIR RESPECTIVE PARTNERS, SHAREHOLDERS, DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS FROM AND AGAINST ALL CLAIMS ARISING FROM OR IN
ANY WAY CONNECTED WITH (A) AGENT INDEMNIFIED ACTS, AND (B) THE BREACH BY AGENT
OF ITS OBLIGATION HEREIN TO COMPLY WITH THE LEGAL REQUIREMENTS APPLICABLE TO
PROPERTY EMPLOYEES.
3. Waiver of Claims; Environmental Indemnity. AGENT SHALL NOT BE LIABLE
OR ACCOUNTABLE, IN DAMAGES OR OTHERWISE, TO OWNER FOR ANY ACT PERFORMED OR
FAILURE TO ACT BY IT IN GOOD FAITH AND WHICH DOES NOT CONSTITUTE FRAUD, BAD
FAITH, GROSS NEGLIGENCE OR A BREACH OF THIS AGREEMENT BY AGENT. OWNER WILL ALSO
DEFEND, INDEMNIFY AND HOLD HARMLESS AGENT, ITS AFFILIATES AND EACH OF THEIR
RESPECTIVE PARTNERS, SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
FROM AND AGAINST ALL CLAIMS ARISING FROM OR IN ANY WAY CONNECTED WITH THE
PRESENCE, RELEASE OR DISCHARGE OF ANY HAZARDOUS MATERIALS, HAZARDOUS SUBSTANCES,
HAZARDOUS WASTES OR SIMILAR SUBSTANCES AFFECTING ALL OR ANY PORTION OF THE
PROPERTY OR AFFECTING ANY LANDS, SURFACE WATERS, GROUND WATERS OR AIR SPACE
ADJACENT TO OR IN THE VICINITY OF THE PROPERTY (WITHOUT REGARD TO THE SOURCE OR
ORIGIN OF THE PRESENCE, RELEASE OR DISCHARGE OR THE OWNERSHIP OF THE PROPERTY AT
THE TIME OF THE PRESENCE, RELEASE OR DISCHARGE), UNLESS (1) SUCH CLAIM ARISES
FROM THE GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT OF AGENT, ITS AFFILIATES OR ANY
OTHER RESPECTIVE PARTNERS, SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES OR AGENT
AND (2) THERE HAS BEEN A FINAL DETERMINATION OF SUCH GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
4. Survival. The provisions of Section 10.1, Section 10.2 and Section
10.3 will survive the expiration or earlier termination of this Agreement.
5. Exculpation.
(a) No direct or indirect partner or shareholder in or of Owner
(and no officer, director, employee or agent of such partner or shareholder)
will be personally liable for the performance of Owner's obligations under this
Agreement. The liability of Owner for Owner's obligations under this Agreement
will be limited to Owner's
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interest in the Property and other assets and the proceeds thereof. A negative
capital account of any partner will not be considered to be a partnership asset.
Nothing in this Section 10.5(a) will affect the rights of Agent to seek
appropriate relief against any Person to the extent that such Person
misappropriates funds of Owner or commits fraud against Agent.
(b) No direct or indirect partner or shareholder in or of Agent
(and no officer, director, employee or agent of such partner or shareholder)
will be personally liable for the performance of Agent's obligations under this
Agreement. The liability of Agent for Agent's obligations under this Agreement
will be limited to its partnership assets. A negative capital account of any
partner will not be considered to be a partnership asset. Nothing in this
Section 10.5(b) will affect the rights of Owner to seek appropriate relief
against any Person to the extent that such Person misappropriates funds of Owner
or commits fraud against Owner.
ARTICLE 11
TERM, EXPIRATION, TERMINATION
1. Term. This Agreement will be effective as of the date set forth in
the Preface of this Agreement and will continue in full force and effect until
the second (2nd) anniversary of such date. At least 90 days prior to the
expiration of the initial term of this Agreement, Owner and Agent shall discuss
in good faith the renewal of the term of this Agreement beyond the initial term,
provided that neither party shall be under any obligation to agree to any such
renewal. If upon the expiration of the term of this Agreement Agent is still
serving as managing and leasing agent for the Property and Owner has not
notified Agent in writing that Agent shall no longer serve as managing and
leasing agent for the Property (such notice to be provided at least 30 days
prior to the expiration of such term), then this Agreement will automatically
renew for additional consecutive 90 day terms on the same terms and conditions
set forth in this Agreement until such time as Owner shall notify Agent in
writing that Agent shall no longer serve as managing and leasing Agent for the
Property (such notice to be provided at least 30 days prior to the expiration of
such term). This Agreement may also be terminated by Owner on sixty (60) days'
notice if the Property is either (a) sold by Owner or (b) refinanced by Owner
pursuant to a securitized financing of the Property, provided that termination
of this Agreement as a result of such financing shall only be effective if Agent
is not approved by the rating agency participating in such financing. This
Agreement is terminable only upon the conditions and in the manner provided for
in this Article 11.
-30-
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<PAGE>
2. Owner's Rights of Termination.
(a) If Agent breaches any of the payment obligations or other
material terms of this Agreement, Owner will give Agent notice of such breach.
If Agent fails to cure the breach within 10 business days, in the case of a
monetary default, or, in the case of a non-monetary default, 30 days, after
receiving such notice (provided that if any such non-monetary breach cannot by
the exercise of diligent effort be cured within such 30 day period, the same
shall be extended as long as reasonably necessary provided Agent is diligently
prosecuting a cure but in no event longer than 120 days), Owner may terminate
this Agreement upon notice to Agent.
(b) If Agent or any principal of Agent intentionally
misappropriates funds of Owner or commits fraud against Owner, then Owner may
terminate this Agreement immediately upon notice to Agent.
(c) If a petition in bankruptcy is filed by or against Agent and
is not dismissed within 60 days, or a trustee, receiver or other custodian is
appointed for a substantial part of Agent's assets and is not vacated within 60
days, or Agent makes an assignment for the benefit of its creditors, then Owner
may terminate this Agreement upon notice to Agent.
(d) If a controlling interest in Agent (i.e., any interest in
Agent which includes the exclusive right to direct policy and make managerial
decisions) shall be transferred, sold or otherwise conveyed to a party other
than an Affiliate of Agent, then Owner may terminate this Agreement upon 30
days' notice to Agent; provided that Owner shall not be permitted to so
terminate if, following such transfer of a controlling interest in Agent, one or
more of the current senior management personnel of Agent shall continue to
control the policy and managerial decisions of Agent.
(e) If Nyprop, L.L.C. shall default on its agreement to purchase
shares in Metropolis Realty Trust, Inc. ("MRT") pursuant to the Subscription
Agreement between MRT and Nyprop, L.L.C., then Owner may terminate this
Agreement upon 30 days' notice to Agent.
Notwithstanding any such notice of termination by Owner (under this Section
11.2) or Agent (under Section 11.3), Agent shall be and remain liable for the
performance of its duties and other obligations hereunder through the date of
termination and shall maintain all records, documents, property and files until
the termination date.
3. Agent's Rights of Termination.
(a) If Owner materially breaches any of the payment obligations or
other material terms of this Agreement, Agent will give Owner notice of such
breach. If Owner fails to cure the material breach within 30 days after
receiving such notice
-31-
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<PAGE>
(provided that if any such non-monetary breach cannot by the exercise of
diligent effort be cured within such 30 day period, the same shall be extended
as long as reasonably necessary provided Owner's is diligently prosecuting a
cure but in no event longer than 120 days), Agent may terminate this Agreement
upon notice to Owner.
(b) If Owner fails to provide sufficient funds on a consistent
basis to operate and maintain the Property in a first class manner in accordance
with this Agreement, then Agent may terminate this Agreement upon sixty (60)
days' notice to Owner.
(c) If a petition in bankruptcy is filed by or against Owner and
is not dismissed within 60 days, or a trustee, receiver or other custodian Is
appointed for a substantial part of Owner's assets and is not vacated within 60
days, or Owner makes an assignment for the benefit of its creditors, then Agent
may terminate this Agreement upon notice to Owner.
4. Obligations Upon Expiration or Termination.
(a) Upon the expiration or earlier termination of this Agreement,
each party will promptly pay to the other party all amounts due and payable to
that party under this Agreement. Within forty-five (45) days after any such
termination, Agent shall deliver to Owner the financial statements required by
Section 3.8 for any periods not covered by such reports at the time of
termination and a profit and loss statement for the fiscal year or portion
thereof ending on the date of termination. Within thirty (30) days of the
delivery of the final profit and loss statement and balance sheet, Owner shall
approve or dispute the contents thereof and, provided that Agent has performed
all of its obligations under this Section 11.4, shall make final payment of any
unpaid fees owed to Agent under the terms of this Agreement, subject to offsets
and defenses available to Owner and to resolution of any dispute to the extent
that the amount of such fees would be affected thereby. Nothing contained herein
is intended to nor shall it excuse the timely payment of fees due Agent under
the terms of this Agreement. Owner and Agent agree to act in good faith and use
reasonable efforts to resolve any dispute promptly so a final payment of fees
can be made. Upon receipt of such payments neither party will have any further
rights or obligations under this Agreement, except for those rights and
obligations which expressly survive the expiration or earlier termination of
this Agreement.
(b) Upon the expiration or earlier termination of this Agreement,
Agent will deliver to Owner (i) a final accounting reflecting the balance of
income and expenses for the Property as of the date of expiration or
termination, (ii) any balance of funds (including security deposits and advance
rent) belonging to Owner which are then being held by Agent with respect to the
Property, and (iii) all files, books, records, documents and other instruments
relating to the ownership, operation and maintenance of the Property to the
extent required to be maintained by Agent
-32-
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<PAGE>
pursuant to this Agreement and not previously delivered to Owner. In connection
with the termination of this Agreement, Agent shall assign to Owner, to the
extent same are assignable, all contracts and other agreements, if any, executed
in the name of Agent, relating to the operation and maintenance of the Property.
(c) Owner and Agent will use reasonable efforts to ensure an
orderly transition of the operation and management of the Property and will
perform their respective obligations under this Agreement until the expiration
or effective date of the termination of this Agreement.
5. Leasing Commissions. Upon the expiration or earlier termination of
this Agreement, Owner will pay a Leasing Commission to Agent in the following
instances:
(a) If (i) Agent negotiates and delivers a proposed Lease to Owner
for consideration prior to the expiration or termination of this Agreement, and
(ii) Owner and the tenant execute and deliver a Lease within six months after
such expiration or termination.
(b) If (i) a Lease is not presented to Owner prior to the
expiration or termination of this Agreement, but Agent gives notice to Owner,
within 10 days after such expiration or termination, of negotiations with a
prospective tenant for specified premises within the ninety (90) day period
immediately preceding the expiration or termination of this Agreement, and (ii)
Owner and the prospective tenant execute a Lease for the specified premises
within one hundred and eighty (180) days after the expiration or earlier
termination of this Agreement.
(c) Any Leasing Commission, or portion thereof, that, pursuant to
Section 8.6, is otherwise due and payable upon the date tenant begins paying
rent to Owner under the Lease shall instead be due and payable upon the
expiration date or earlier termination of this Agreement.
ARTICLE 12
GENERAL PROVISIONS
1. Agent's Office. Owner will provide to, and maintain for, at no cost
to Agent, (a) sufficient Agent office space and other space at the Property
reasonably acceptable to Owner and Agent for the conduct of Agent's leasing and
management services hereunder, and (b) all office machines, furniture,
equipment, computers, cabling and supplies of all types and kinds which are
reasonably required by Agent in order properly to perform its duties hereunder.
Such space will be used solely by employees performing responsibilities under
this Agreement. Owner will bear all reasonable costs of operating the space
provided to Agent hereunder.
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<PAGE>
2. No Discrimination. Neither Owner nor Agent will discriminate against
any person on the grounds of race, color, creed, religion, sex, national origin
or any other basis prohibited by applicable Legal Requirements with respect to
any activity affecting the Property.
3. Availability of Funds. Any obligation of Agent hereunder with
respect to the Property requiring the expenditure of funds shall be subject to
the condition that sufficient funds are then available in the Operating Account
for the performance. of such obligation.
4. ERISA. Owner represents and warrants to Agent that no portion of the
Property constitutes plan assets of any employee benefit plan under the Employee
Retirement Income Security Act of 1974 and does not constitute a tax favored
plan under the Internal Revenue Code. Owner will defend, indemnify and hold
harmless Agent, its Affiliates and their respective partners, shareholders,
directors, officers, employees and agents from and against all Claims arising
from or in any way connected with the breach of this representation or warranty
by Owner.
5. Notices. All notices, approvals, consents, elections or other
communications under this Agreement must be in writing and may be (a) delivered
personally, (b) delivered by a nationally recognized overnight courier, (c)
mailed by registered or certified mail, postage prepaid, with return receipt
requested, or (d) sent by telecopier (with written confirmation of the receipt
of the telecopy) with the original to follow in the manner specified in clauses
(a)-(c) above, and addressed to the party at its address set forth below:
if to Owner, to:
1290 Partners, L.P.
c/o Victor Capital Group, L.P. 885 Third Avenue
New York, New York 10022
Attention: Mr. John R. Klopp
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Kenneth J. Friedman, Esq.
-34-
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<PAGE>
if to Agent, to:
Tishman Speyer Properties, L.P.
520 Madison Avenue
New York, New York 10022
Attention: Director of Property Management
with a copy to:
Tishman Speyer Properties, L.P.
520 Madison Avenue
New York, New York 10022
Attention: General Counsel
or at such other address, as from time to time, supplied by a party to the
others by like notice. Notices will be deemed to be received, if personally
delivered, upon delivery, if sent by overnight courier, on the first (1st)
business day after being sent, if sent by mail, on the date set forth on the
return receipt, if sent by telecopier, on the date sent if confirmation of
receipt shows delivery on or before 5:00 P.M., or on the next business day if
confirmation of receipt shows delivery after 5:00 P.M. Each party shall be
entitled to rely on all communications which purport to be on behalf of the
other party and purport to be signed by an authorized party.
6. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the respective successors and permitted assigns of Owner
and Agent, but neither Owner nor Agent will have the right to assign its rights
or obligations under this Agreement without the prior written consent of the
other party and any attempted assignment, in the absence of such consent, will
be void and of no effect; however, either party may, upon fifteen (15) days'
prior notice to the other party, assign this Agreement to an Affiliate so long
as the Affiliate executes and delivers to the other party an assumption
agreement in form and substance reasonably satisfactory to the other party and
provided that the assigning party shall not be released by or upon delivery of
such executed assumption agreement.
7. Attorneys' Fees. If any action or proceeding is instituted by one
party against the other party with respect to this Agreement, the prevailing
party in the action or proceeding will be entitled to receive from the
non-prevailing party the reasonable attorneys' fees and expenses incurred by the
prevailing party.
8. Amendment. No purported amendment to or waiver of any term of this
Agreement will be binding upon any party, or have any other force or effect in
any respect, unless the same is in writing and signed by the party to be
charged.
-35-
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<PAGE>
9. State Law. This Agreement will be interpreted and enforced in
accordance with the internal laws of the State without giving effect to the
principles of conflicts of laws.
10. Entire Agreement. All prior understandings and agreements between
the parties with respect to the subject matter of this Agreement are merged in
this Agreement. Neither party is relying upon any statement, covenant or
representation made by any other party which is not embodied in this Agreement.
11. No Waiver. No failure or delay of either party in the exercise of
any right under this Agreement will be deemed to be a waiver of such right. No
waiver by either party of any condition under this Agreement for its benefit or
any breach under this Agreement will constitute a waiver of any other or further
right or any other subsequent breach.
12. Further Assurances. Each party will, from time to time, execute,
acknowledge and deliver such further instruments, and perform such additional
acts, and otherwise cooperate with the other party and be available to consult
with the other party as the other party may reasonably request in order to (a)
effectuate the intent of this Agreement and (b) facilitate Agent's expeditious
performance of its obligations hereunder. Without limiting the foregoing, as
promptly as practicable after execution hereof, Owner shall make available to
Agent (to the extent Owner is in possession) (a) plans and specifications for
the buildings and other structures and improvements at the Property so that
Agent may be advised with respect to, and have knowledge of, the layout,
construction, location, character, plan and operation of the elevators,
escalators, lighting, heating, air conditioning, plumbing, electrical and other
mechanical equipment at the Property; (b) copies of all guarantees given by
contractors or subcontractors in connection with the construction and alteration
of the Property; (c) copies of all Leases of space at the Property; (d) copies
of all mortgages and ground leases affecting the Property; and (e) copies of all
contracts relating to the maintenance and operation of the Property.
13. Effectiveness of Agreement. This Agreement will not become effective
unless and until it is executed and delivered by both Owner and Agent.
14. No Third-Party Beneficiaries. This Agreement is entered into solely
for the benefit of Owner and Agent. No other Person is intended to be a
third-party beneficiary of this Agreement.
15. Divisibility. If any article, section or exhibit of this Agreement
is deemed illegal or unlawful, the same will be struck from this Agreement and
all other articles, sections and exhibits will remain valid and in full force
and effect.
-36-
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<PAGE>
16. Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed to be an original and all of which will together
constitute one instrument.
17. Jury Trial Waiver. OWNER AND AGENT BOTH WAIVE THE RIGHT TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BOUGHT BY EITHER PARTY AGAINST
THE OTHER WITH RESPECT TO THIS AGREEMENT.
18. Brokers. Each party represents and warrants to the other party that
the party has not retained any broker, finder or other commission or fee agent,
and no such person has acted on its behalf in connection with the execution and
delivery of this Agreement.
19. Confidentiality; Publicity. The parties agree that no party hereto
shall issue any press release or otherwise publicize or disclose the terms of
this Agreement without the prior written approval of the other party, which
approval shall not be unreasonably withheld. The foregoing shall not apply to
disclosures made by a party in the course of normal reporting practices to its
shareholders, and partners, or to lenders, attorneys, accountants and other
consultants or as required by law. Agent will use reasonable efforts to hold
confidential the terms and conditions of the leases and other agreements
relating to the Property, together with all data obtained by Agent in connection
with the Property.
20. Remedies Cumulative. All rights or remedies in this Agreement
specified and all other rights or remedies that the parties may have at law, in
equity or otherwise upon breach of any term or condition in this Agreement
contained upon the part of the other party to be performed, shall be distinct,
separate and cumulative rights or remedies and no one of them, whether exercised
by the non-defaulting party or not, shall be deemed to be in exclusion of any
other right or remedy of such non-defaulting party. No term or condition of this
Agreement shall be deemed to have been waived by either party unless such waiver
be in writing and signed by such party.
-37-
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<PAGE>
21. Asset Manager. Wherever any consent or approval by Owner shall be
required by the terms and provisions of this Agreement, the same may be given by
any asset manager of the Property engaged by Owner and which has been
specifically identified in a written notice by Owner to Agent. Copies of any
required notices or other communications hereunder (including, without
limitation, copies of invoices, leases and financial statements and other
reports) shall be delivered to such asset manager at the times and in the manner
herein specified for such notices and communications to be given to Owner.
THIS AGREEMENT has been executed and delivered by Owner and Agent as of
the date first set forth above.
OWNER:
1290 PARTNERS, L.P.
By: 1290 GP Corp., general partner
By:
Name: Lee S. Neibart
Title:President
AGENT:
TISHMAN SPEYER PROPERTIES, L.P.
By: Tishman Speyer Properties, Inc.,
General Partner
By:
Name:
Title:
21. Asset Manager. Wherever any consent or approval by Owner shall be
required by the terms and provisions of this Agreement, the same may be given by
any asset manager of the Property engaged by Owner and which has been
specifically identified in a written notice by Owner to Agent. Copies of any
required notices or other communications hereunder (including, without
limitation, copies of invoices, leases and financial statements and other
reports) shall be delivered to such asset manager at the times and in the manner
herein specified for such notices and communications to be given to Owner.
-38-
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<PAGE>
THIS AGREEMENT has been executed and delivered by Owner and Agent as of
the date first set forth above.
OWNER:
1290 PARTNERS, L.P.
By: 1290 GP Corp., general partner
By:
Name:
Title:
AGENT:
TISHMAN SPEYER PROPERTIES, L.P.
By: Tishman Speyer Properties, Inc.,
General Partner
By:
Name:
Title:
-39-
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<PAGE>
EXHIBIT "A"
INTERIM BUDGET
-40-
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<PAGE>
1290 AVENUE OF THE AMERICAS
BUDGET
FOR THE PERIOD OCTOBER THROUGH DECEMBER 1996
('000's Omitted)
<TABLE>
<CAPTION>
Oct-96 Nov-96 Dec-96 Total
------ ------ ------ -----
REVENUE:
<S> <C> <C> <C> <C>
Base Rent 3,940 3,962 3,962 11,864
Electric 284 284 284 852
Escalations 187 187 1,102 1,476
Sales & Sundry 60 60 60 180
Parking 3 3 3 9
Other Income 75 75 75 225
Contingency (44) (44) (53) (141)
-------------- -------------- -------------- --------------
TOTAL REVENUE 4,505 4,527 5,433 14,465
------------- ------------- ------------- -------------
EXPENSES:
Payroll 263 263 263 788
Cleaning 214 222 234 670
Repairs & Maintenance 184 213 212 609
Rubbish/Waste 23 23 23 69
Steam 43 67 107 217
Electricity 682 432 326 1,441
Water 18 17 10 45
Miscellaneous 20 20 21 61
Professional Fees 33 33 33 99
Insurance (Annual Premium Payment (1) 322 0 0 322
Property Management Fee 68 68 81 217
Real Estate Taxes 0 0 0 0
------------- ------------- ------------- -------------
TOTAL EXPENSES 1,870 1,358 1,311 4,538
------------- ------------- ------------- -------------
NET OPERATING INCOME 2,635 3,169 4,122 9,927
------------- ------------- ------------- -------------
OTHER EXPENDITURES:
Commissions 0 0 0 0
Capital Projects (2) 588 1,683 4,017 6,288
Other (3) 125 0 0 125
------------- ------------- ------------- -------------
TOTAL OTHER EXPENDITURES 713 1,683 4,017 6,413
N.C.F. BEFORE DEBT SERVICE 1,922 1,486 106 3,514
============= ============= ============= =============
NOTES:
(1) Insurance Estimates: See Summary Schedule for Details
- ---------------------------------------------------------------------------------------------------
(2) Summary of Capital Projects:
Oct. Nov. Dec. Total
---- ---- ---- -----
Equitable (Punchlist & Blinds) 160 20 40 220
Lobby 378 341 300 1,019
Warner (LL Wk - Window Blinds & Film) 0 15 75 90
Warner (Tenant Allowance) 0 1,122 3,367 4,489
Security Cameras 50 50 50 150
Bank of New York (Removal & reconnect A/C 0 0 50 50
Elevator Upgrade (To obtain full-service contract) 0 135 135 270
-------- ---------- ---------- --------
Total 588 1,683 4,017 6,288
======== ========== ========== ========
- ---------------------------------------------------------------------------------------------------
(3) Other. Includes the one-time cost of the build-out of the management office.
</TABLE>
-41-
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<PAGE>
EXHIBIT "B"
LIST OF CURRENT AND PROPOSED STAFFING
[Exhibit B has been provided in a separate written instrument delivered by Agent
to Owner]
-42-
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<PAGE>
EXHIBIT "C"
TERMS OF EMPLOYMENT OF NON-UNION EMPLOYEES
-43-
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<PAGE>
EXHIBIT C
[EMPLOYERS/LABOR AGREEMENTS]
Terms of Employment of Non- Union Employees
1. Vacation. An employee is entitled to ten days vacation each year, fifteen
days after five years and 20 days after 10 years.
2. Holidays. The office is closed for nine major holidays and each employee
is also entitled to three floating holidays.
3. Personal and Sick Days. Each employee is entitled to three personal days
and ten paid sick days.
4. Termination/Severance Pay. In case of a termination for reasons other than
malfeasance, an employee is to receive termination pay equal to one week's
salary per full six months of employment up to five years. Above five
years, severance pay is based on a scheduled number of weeks which can be
increased at the discretion of the employer.
The current accrued vacation and severance pay for non-union employees of
237 Park and 1290 Avenue of the Americas is set forth on the attached
schedule.
The following information is as of the date of commencement of the
bankruptcy case for the Debtors and will be updated by Grantor at the
Effective Date:
-44-
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<PAGE>
<TABLE>
<CAPTION>
1290 AVENUE OF THE AMERICAS
As of 10/4/96
- --------------------------------------------------------------------------------------------------------------------------------
NAME POSITION WKLY. RATE START DATE TOT. VAC. VAC. DUE VAC. AMT. SEV. TERMIN.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT NON UNION
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GRECO, J. ASST. MANAGER 1154.56 10/3/83 20 61 14065.63 26554.88 0.00
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 1154.56 14065.63 26554.88 0.00
- --------------------------------------------------------------------------------------------------------------------------------
ELEVATOR R.A.B. CRAFT AGREEMENT
- --------------------------------------------------------------------------------------------------------------------------------
MALONEY, J. MECHANIC 758.40 6/6/92 10 5 758.40 0.00 0.00
- --------------------------------------------------------------------------------------------------------------------------------
HOGAN, M. MECHANIC 758.40 11/5/90 15 0 0.00 0.00 758.40
- --------------------------------------------------------------------------------------------------------------------------------
ROCHE, J. MECHANIC 979.20 7/9/84 15 5 979.20 0.00 1958.40
- --------------------------------------------------------------------------------------------------------------------------------
DENNEHY, D. MECHANIC 758.40 11/17/82 15 10 1516.80 0.00 2275.20
- --------------------------------------------------------------------------------------------------------------------------------
LOONEY, M. MECHANIC 902.00 5/16/88 15 5 902.00 0.00 902.00
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4156.40 4156.40 0.00 5894.00
- --------------------------------------------------------------------------------------------------------------------------------
ENGINEERS UNION LOCAL 94
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
ALIPPI, R. ENGINEER 826.40 8/69 25 15 2479.20 10743.20 8264.00
- --------------------------------------------------------------------------------------------------------------------------------
BURGESS, W. ENGINEER 817.60 1/3078 20 0 0.00 10628.80 5723.20
- --------------------------------------------------------------------------------------------------------------------------------
CUMINALE, J. ENGINEER 768.06 5/18/78 20 8 1230.53 9998.04 5383.56
- --------------------------------------------------------------------------------------------------------------------------------
MCMORROW, W. CHIEF 1066.12 6/6/83 15 5 1058.12 13729.56 3168.36
- --------------------------------------------------------------------------------------------------------------------------------
KIERAN, K. ASST. CHIEF 936.48 6/4/84 15 0 0.00 12174.24 2809.44
- --------------------------------------------------------------------------------------------------------------------------------
RIORDAN, M. ENGINEER 817.60 6/17/85 15 7 1144.54 10628.80 1635.20
- --------------------------------------------------------------------------------------------------------------------------------
BILLINGS, J. ENGINEER 638.40 2/23/87 15 0 0.00 8273.20 636.40
- --------------------------------------------------------------------------------------------------------------------------------
COURT, C. ENGINEER 817.60 2/8/87 15 5 817.60 10628.80 817.60
- --------------------------------------------------------------------------------------------------------------------------------
KENNEDY, J. ENGINEER 817.60 7/14/88 15 10 1635.20 10628.80 817.60
- --------------------------------------------------------------------------------------------------------------------------------
O'BRIEN, J. ENGINEER 769.06 2/20/93 10 7 1076.71 9996.04 0.00
- --------------------------------------------------------------------------------------------------------------------------------
O'SULLIVAN, K. HELPER 636.40 6/1/93 10 5 636.40 8273.20 0.00
- --------------------------------------------------------------------------------------------------------------------------------
HUNT, S. HELPER 636.40 6/9/94 10 0 0.00 8273.20 0.00
- --------------------------------------------------------------------------------------------------------------------------------
HIRSCH, R. HELPER 636.40 7/15/94 10 0 0.00 8273.20 0.00
- --------------------------------------------------------------------------------------------------------------------------------
DIAZ, R. HELPER 516.40 10/2/95 3 0 0.00 8713.20 0.00
- --------------------------------------------------------------------------------------------------------------------------------
DUNN, N. HELPER 516.40 7/10/96 0 0 0.00 8713.20 0.00
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 11216.92 10078.10 130773.48 29255.36
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
BLDG. TOT. 16527.88 28300.13 157328.36 35149.36
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
GRAND TOT 237305.73
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
NOTE: Union employees weekly rate is based on their hourly rate times 40 hours.
* Ed ?? is a joint employee of several properties.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-45-
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<PAGE>
EXHIBIT "D"
LIST OF ON-SITE DIRECT MANAGEMENT EMPLOYEES
[Other information in Exhibit D has been provided in a separate written
instrument delivered by Agent to Owner]
-46-
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<PAGE>
Exhibit "D" As of 10/4/96
Tishman Speyer Properties
Management Assignments
Each position is 100% allocable to its respective building
1290 Avenue of the Americas
Name Position
- ----------------------------------------------------------------------------
Robert H. Linder Property Manager
Jim Greco Asst. Prop. Manager
Siobhan Stack Office Manager
TBA Secretary
Total
Staffing subject to change.
-47-
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<PAGE>
EXHIBIT "E"
LEASING COMMISSIONS
Leasing Commissions will be computed by multiplying Fixed Rent by the following
percentages, as appropriate, and adding together the results:
1. For the 1st year of any Lease term 5%
2. For the 2nd year 4%
3. For the 3rd year through and including the 5th year 3 1/2%
4. For the 6th year through and including the 10th year 2 1/2%
5. For the 21st year and each succeeding year thereafter 2%
6. For the 21st year and each succeeding year thereafter 1%
-48-
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<PAGE>
MANAGEMENT AND LEASING AGREEMENT
between
1290 PARTNERS, L.P.
OWNER
and
TISHMAN SPEYER PROPERTIES, L.P.,
AGENT
PROPERTY:
1290 Avenue of the Americas, New York, New York
-49-
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<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS, INTERPRETATION.................................. 1
1. Definitions.................................................. 1
2. Interpretation............................................... 5
ARTICLE 2 APPOINTMENT, OTHER ACTIVITIES................................ 6
1. Appointment.................................................. 6
2. No Liability for Past Acts or Omissions...................... 6
3. Other Activities............................................. 6
ARTICLE 3 MANAGEMENT RESPONSIBILITIES.................................. 6
1. Submission of Budgets........................................ 6
2. Adherence to Budgets......................................... 7
3. Emergency Expenses; Non-Discretionary Expenses............... 8
4. Operation, Maintenance and Repairs; Payments................. 8
5. Enforcement of Leases........................................ 9
6. Compliance with Legal Requirements and Contracts............. 9
7. Books and Records............................................ 10
9. Annual Audit; Tax Returns.................................... 12
10. Employees.................................................... 13
11. Tax Assessments and Condemnation............................. 15
12. Improvements................................................. 15
13. Consent to Tenant Alterations to Property.................... 15
14. Tenant Complaints and Requests............................... 16
15. Advertising; Public Relations................................ 16
16. General Duties............................................... 16
ARTICLE 4 BANK ACCOUNTS, DISBURSEMENTS................................. 17
1. Operating Account............................................ 17
3. Shortfalls; Advances......................................... 18
4. Payments to Owner............................................ 18
ARTICLE 5 MANAGEMENT AUTHORITY, CONTRACTS.............................. 18
1. General Authority............................................ 18
2. Execution of Contracts....................................... 19
3. Use of Counsel and Other Professionals....................... 19
4. Limitation of Authority...................................... 19
5. Value of Goods, Services and Supplies........................ 19
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<PAGE>
ARTICLE 6 COMPENSATION FOR MANAGEMENT SERVICES......................... 20
1. Management Fee............................................... 20
ARTICLE 7 LEASING RESPONSIBILITIES..................................... 21
1. Leasing Efforts.............................................. 21
2. Advertisement................................................ 22
3. Outside Brokers.............................................. 22
4. Reporting.................................................... 22
5. Leasing Guidelines........................................... 22
6. Authority.................................................... 23
7. Conflicts of Interest........................................ 23
ARTICLE 8 COMPENSATION FOR LEASING SERVICES............................ 23
1. Leasing Commission........................................... 23
2. Limitations.................................................. 23
3. Renewals and Extensions...................................... 24
4. Additional Space............................................. 24
5. Outside Brokers.............................................. 25
6. Timing of Payments........................................... 25
ARTICLE 9 INSURANCE.................................................... 25
1. Owner's Insurance............................................ 25
2. Agent's Insurance............................................ 26
3. Agent's Duties in Case of Loss............................... 27
4. Waiver of Rights of Subrogation.............................. 28
ARTICLE 10 INDEMNIFICATION, EXCULPATION............................. 28
1. Owner's lndemnity............................................ 28
2. Agent's Indemnity............................................ 29
3. Waiver of Claims; Environmental Indemnity.................... 29
4. Survival..................................................... 29
5. Exculpation.................................................. 29
ARTICLE 11 TERM, EXPIRATION, TERMINATION............................ 30
1. Term......................................................... 30
2. Owner's Rights of Termination................................ 31
3. Agent's Rights of Termination................................ 31
4. Obligations Upon Expiration or Termination................... 32
5. Leasing Commissions.......................................... 33
ARTICLE 12 GENERAL PROVISIONS....................................... 33
1. Agent's Office............................................... 33
2. No Discrimination............................................ 34
3. Availability of Funds........................................ 34
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4. ERISA........................................................ 34
5. Notices...................................................... 34
6. Successors and Assigns....................................... 35
7. Attorneys' Fees.............................................. 35
8. Amendment.................................................... 35
9. State Law.................................................... 36
10. Entire Agreement............................................. 36
12. Further Assurances........................................... 36
13. Effectiveness of Agreement................................... 36
14. No Third-Party Beneficiaries................................. 36
15. Divisibility................................................. 36
16. Counterparts................................................. 37
17. Jury Trial Waiver............................................ 37
18. Brokers...................................................... 37
19. Confidentiality; Publicity................................... 37
20. Remedies Cumulative.......................................... 37
21. Asset Manager................................................ 38
21. Asset Manager................................................ 38
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ASSET MANAGEMENT AGREEMENT
THIS ASSET MANAGEMENT AGREEMENT (this "Agreement") is made as
of the 10the day of October, 1996, by and between METROPOLIS REALTY TRUST, INC.,
a Maryland corporation having an office c/o Victor Capital Group, L.P., 885
Third Avenue, New York, New York 10022 ("Owner") and 970 MANAGEMENT, LLC, a New
York limited liability company, having an office c/o Victor Capital Group, L.P.,
885 Third Avenue, New York, New York 10022 ("Asset Manager").
R E C I T A L S
A. Owner is the direct or indirect owner of certain assets
consisting of real property located in the City, County, and State of New York
commonly known as 237 Park Avenue and 1290 Avenue of the Americas and related
assets (the "Projects") or interests in entities owning the Projects and such
related assets (the "Project Partnerships"), which interests in the Projects and
the Project Partnerships are referred to herein as the Existing Assets; and
B. Owner desires to engage the Asset Manager to perform the
services set forth in this Agreement; and
C. Asset Manager desires to accept such engagement and to
perform such services for Owner, all upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby mutually acknowledged, the parties hereto agree
as follows:
ARTICLE 1
Definitions
The following terms as used herein shall have the following
meanings:
"Affiliate" - shall mean, in the case of any Person, a Person
which directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such Person; and for the purposes
of the foregoing definition, "control" (including "controlled by" and "under
common control with") shall mean possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of the Person
in question, whether through the ownership of voting securities or partnership
interests, by contract or otherwise.
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<PAGE>
"Asset Management Fee" - shall have the meaning ascribed to
such term in Section 4.1.
"Budget" - the annual budget for the Projects to be prepared
by the Property Manager and approved by Owner, as the same may be updated. If
Owner and the Property Manager are unable to agree on an annual budget, the
provisions of the Property Management Agreement will govern what will constitute
the Budget until such agreement is reached.
"Business Day" - shall mean any day which is not a Saturday,
Sunday, or a day observed as a holiday by the State of New York or the federal
government.
"Leases" - shall mean leases, licenses and other agreements
regarding use of space at the Projects or any guaranty thereof.
"Leasing Agent" - shall mean the exclusive leasing agent
engaged by Owner from time to time to conduct leasing activities for each of the
Project(s) owned directly or indirectly (through an interest in a Project
Partnership) by Owner. The initial Leasing Agent shall be Tishman Speyer
Properties, L.P.
"Leasing Agreement" - shall mean the exclusive leasing
agreement, if any, in force at the time in question, entered into between the
applicable Project Partnership and the applicable Leasing Agent with respect to
any Project. The initial Leasing Agreement shall be those certain Management and
Leasing Agreements dated as of the date hereof between 1290 Partners, L.P. and
237 Park Partners, L.P., respectively, and Tishman Speyer Properties, L.P., as
same may hereafter be amended.
"Leasing Guidelines" - shall mean the leasing guidelines for
the Projects prepared by the Leasing Agent and approved by the Owner pursuant to
the Leasing Agreement, containing proposed leasing activities for the Projects
for the ensuing fiscal year, and a schedule of acceptable economic terms with
respect to leases being offered to prospective tenants of the Projects
(including rent abatements, free rent and take-over costs, construction
allowances and similar items).
"Person" - shall mean an individual, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, entity or government (including, without limitation, any
instrumentality, division, agency or department thereof).
"Property Manager" - shall mean the property manager engaged
by Owner from time to time to manage each of the Project(s) owned directly or
indirectly (through an interest in a Project Partnership) by Owner. The initial
Property Manager shall be Tishman Speyer Properties, L.P.
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C/M: 11764.0004 383702.4
<PAGE>
"Property Management Agreement" - shall mean the property
management agreement, if any, in force at the time in question, entered into
between the applicable Project Partnership and the applicable Property Manager
with respect to any Project. The initial Property Management Agreements shall be
those certain Management and Leasing Agreements dated as of the date hereof
between 1290 Partners, L.P. and 237 Park Partners, L.P., respectively, and
Tishman Speyer Properties, L.P., as same may hereafter be amended.
"Services" - shall have the meaning ascribed to such term in
Section 2.2.
ARTICLE 2
Services And Responsibilities
2.1 Nature of Relationship. Owner hereby retains Asset Manager
to act as Owner's advisor and consultant with respect to the management of the
Existing Assets. To the extent not specified herein, Owner and Asset Manager
shall consult with each other to determine from time to time the scope of Asset
Manager's authority and discretion to make decisions regarding the Projects
without Owner's consent. The parties shall consult for such purpose as
frequently as either party may reasonably request. Unless Owner delegates
decision-making authority in writing to Asset Manager, such authority shall be
retained by Owner. Asset Manager's services hereunder shall include the
following:
(a) Property Management Review: Asset Manager will
advise Owner regarding the employment of and will monitor the performance by the
Property Manager for each Project, who will have responsibility for the
day-to-day management, leasing, maintenance, and making of authorized capital
improvements and repairs to the applicable Project pursuant to the applicable
Property Management Agreement. Without limiting the foregoing, Asset Manager
will (i) review and make recommendations to Owner with respect to the Budgets
proposed by the Property Manager for Owner's approval, including all updates and
modifications thereof, and other actions to be taken pursuant to the Property
Management Agreement, (ii) monitor tenant disputes and arbitration proceedings
and litigation relating to the Projects, and (iii) if requested by Owner,
receive notices under leases, contracts and financing documentation. Asset
Manager will review the performance of the Property Manager on a day-to-day
basis and will make recommendations to Owner and advise Owner on actions to be
taken under the Property Management Agreement, including, without limitation,
the exercise of any cancellation/termination rights under such management
agreement. Asset Manager will advise Owner as to, and will, at Owner's request,
negotiate for Owner, any proposed modifications to the Property Management
Agreement. If the existing Property Manager is to be replaced, Asset Manager
will make recommendations to Owner and advise Owner as to potential replacement
managers, services to be performed in connection therewith and fees charged with
respect thereto. At Owner's
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C/M: 11764.0004 383702.4
<PAGE>
request, Asset Manager will, at Owner's request, negotiate on Owner's behalf any
such replacement Property Management Agreement.
(b) Leasing Review: Asset Manager will advise Owner
regarding the employment of and will monitor the performance by the Leasing
Agent for each Project, who will have responsibility for the leasing of the
applicable Project pursuant to the applicable Leasing Agreement. Without
limiting the foregoing, (i) Asset Manager will review the Leasing Guidelines,
marketing plans and leasing proposals made by the Leasing Agent under the
Leasing Agreement and make recommendations to the Owner with respect thereto,
and (ii) supervise the negotiation on Owner's behalf, of all third-party leasing
brokerage agreements with respect to the Projects. Asset Manager will advise
Owner on actions to be taken under the Leasing Agreement, including, without
limitation, the exercise of any cancellation/termination rights under the
Leasing Agreement. Asset Manager will advise Owner as to, and will, at Owner's
request, negotiate for Owner, any proposed modifications to the Leasing
Agreement. If the existing Leasing Agent is to be replaced, Asset Manager will
make recommendations to the Owner and advise Owner as to replacement leasing
agents and the use of leasing brokers and fees charged with respect thereto. At
Owner's request, Asset Manager will negotiate on Owner's behalf any such
replacement Leasing Agreement.
(c) Capital Projects: Asset Manager will review and
advise Owner with respect to any capital projects proposed by the Property
Manager, including making recommendations regarding budgets and contracts
proposed therefor and monitoring the performance of any such project for
consistency with the approved budget. Asset Manager will not perform the
services of a construction manager in connection with any capital project
described above but rather will be the Owner's representative and advisor with
respect thereto. As used herein, "capital projects" shall include major repairs,
replacements and restorations.
(d) Taxes and REIT Status: Asset Manager shall
coordinate with the Property Manager and Owner's lawyers and accountants any tax
planning (including bringing any tax certiorari claims) for the Projects and
Owner in respect of its interest in the Projects. Asset Manager shall advise
Owner and make recommendations with respect to any tax certiorari proceeding so
brought with respect to the Projects or with respect to the property known as 2
Broadway. Asset Manager shall, on Owner's and each Property Partnership's behalf
and at the expense of each, cooperate with and assist the accountants selected
by Owner (or the Project Partnerships) for the preparation and filing of United
States federal, state and local partnership tax returns and applications, if
any. Asset Manager shall cooperate with and assist Owner and its accountants in
developing cash management and dividend policies intended to satisfy applicable
requirements for the maintenance of Owner's status as a real estate investment
trust.
(e) Reports; Shareholders Meetings. Asset Manager
shall assist Owner in maintaining records and preparing reports required of
Owner as a reporting
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C/M: 11764.0004 383702.4
<PAGE>
company under the securities laws (e.g., preparing and filing 10Ks, 10Qs and
other required filings). Asset Manager shall assist Owner and the Property
Manager in preparing or otherwise arranging for (x) any statements and reports
to governmental authorities having jurisdiction over the Projects which are to
be prepared or filed by Owner or the Project Partnerships, (y) any statements,
reports or certificates required to be given under any leases and (z) any
statements, reports, appraisals, certificates or opinions that are to be
prepared by or otherwise delivered by Owner or the Project Partnerships under
any mortgage encumbering the Projects. Asset Manager will assist Owner in
preparing for and holding annual and special shareholders meetings, including if
requested by Owner preparing and making presentations at such meetings.
(f) Liaison with Lenders. Asset Manager shall be
Owner's liaison with the holder of any mortgage encumbering the Projects. Asset
Manager shall deliver to such lender all documentation required to be delivered
under the applicable loan documents or which may be requested in accordance
therewith, including documentation regarding the ownership of Owner. Asset
Manager shall monitor any loans to ensure that Owner is complying therewith and
shall advise Owner of the acts to be taken or not taken, as the case may be, to
remain in compliance therewith. Asset Manager shall advise Owner as to any
issues that may arise under the applicable loan documents and discuss and assist
in implementing appropriate responses thereto, including the curing of any
events of default.
(g) Professionals. Asset Manager shall make
recommendations to Owner concerning the hiring (by Owner or a Project
Partnership and at either of their expense) of professionals to perform services
with respect to the Assets, including, without limitation, architects,
accountants, attorneys, engineers, appraisers and tax consultants. Asset Manager
shall consult with and assist any such professionals.
(h) Records. Asset Manager shall maintain at an
office located in New York, New York or elsewhere in the New York metropolitan
area accurate, complete and proper records with respect to the performance of
its services under this Agreement, including copies of all financial statements,
reports and analyses which Asset Manager prepares under this Agreement, for at
least four (4) years from the end of the annual period to which such records
relate. Owner and its representatives and advisors shall have the right to
inspect such records, make photocopies and extracts thereof at all reasonable
times and upon reasonable notice. The obligations of Asset Manager under this
Section 2.1(1) shall survive the expiration or any termination of this
Agreement.
2.2 Standard of Care. Asset Manager shall perform the services
set forth in Section 2.1 (the "Services") under this Agreement in a manner
consistent with that in which a reasonable and prudent business person in the
Asset Manager's profession would conduct itself in transactions of a similar
nature, and shall at all times act in good faith and in the best interests of
Owner. Except as otherwise expressly set forth herein, Asset Manager shall not
be liable to Owner for any action taken or omitted or for any error in judgment
in connection with the services rendered to Owner under this Agreement.
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C/M: 11764.0004 383702.4
<PAGE>
ARTICLE 3
Term and Termination
3.1 Term. Unless earlier terminated pursuant to Section 3.2 or
3.3, this Agreement shall have an initial term of one year commencing on the
date hereof, and the term of this Agreement shall be automatically extended for
consecutive one-year periods thereafter unless Owner or Asset Manager shall
notify the other, at least thirty (30) days before the then current term would
otherwise terminate, of its election not to extend the term.
3.2 Termination for Cause, Sale or Bankruptcy.
(a) If Asset Manager shall default in any material
respect in the performance of any of the terms, covenants or conditions of this
Agreement on its part to be performed (including, without limitation, the
performance of the Services) and such default shall continue for a period of
thirty (30) days after written notice of such default is given by Owner to Asset
Manager (or, if such default is curable but is of such a nature that it cannot
reasonably be completely cured within such thirty (30) day period, then if Asset
Manager does not commence to cure such default within said thirty (30) day
period and thereafter proceed with reasonable diligence to complete the cure of
the same), Owner shall have the right to terminate this Agreement by notice
given to Asset Manager and this Agreement shall thereupon terminate on the date
set forth for such termination in such notice. Upon such effective date of
termination this Agreement shall terminate without any obligation on the part of
Owner to make any payments to Asset Manager hereunder, except for asset
management fees earned by Asset Manager and other amounts due to Asset Manager
hereunder which have accrued prior to such effective date of termination, and
without prejudice to any right to damages which may have accrued to Owner. Asset
Manager shall not be deemed to be in default hereunder if the alleged default
results from causes beyond Asset Manager's control.
(b) Owner may terminate this Agreement, immediately,
upon notice to Asset Manager, (i) if the Projects are sold by Owner, or (ii) if
there shall occur a change in control of Asset Manager.
(c) Asset Manager may terminate this Agreement if
Owner defaults in the payment of any amount due and payable to Asset Manager
from Owner pursuant to this Agreement and such failure continues for thirty (30)
days following Asset Manager's written notice to Owner of such failure.
(d) Either party hereto may terminate this Agreement
immediately upon giving notice to the other in the event that the other party
shall (i) make an assignment for the benefit of its creditors; (ii) admit in
writing its inability to pay its debts as they
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C/M: 11764.0004 383702.4
<PAGE>
become due; (iii) commence in any court, pursuant to any statute of the United
States or of any state, any voluntary case for any bankruptcy, reorganization,
composition, extension, arrangement or insolvency proceeding; (iv) have filed
against it in any court pursuant to any statute of the United States or of any
state, any bankruptcy, reorganization, composition, extension, arrangement or
insolvency proceeding, and such court shall enter an order for relief or if such
proceeding shall not be dismissed within sixty (60) days after the institution
thereof; or (v) have suffered or permitted a receiver, trustee, liquidator or
similar officer to be appointed to administer and/or liquidate all or any
portion of its assets and such appointment shall not be vacated or set aside
within sixty (60) days after the appointment of such receiver, trustee,
liquidator or similar officer.
3.3 Owner's Right to Perform Asset Manager's Obligations. It
is not intended that Asset Manager's rights to perform various services for
Owner hereunder or to act for Owner hereunder exclude Owner from performing such
services or taking such acts itself.
3.4 Transition After Termination. If this Agreement is
terminated pursuant to the provisions of this Article, or upon the expiration of
the term hereof, Asset Manager shall immediately deliver to Owner or whomsoever
Owner shall designate copies or originals of books, records, contracts and any
and all other records or documents, whether or not enumerated herein, pertaining
to the Projects and Asset Manager shall do all other things reasonably necessary
to cause an orderly transition of the asset management of the Projects without
detriment to the rights of Owner or to the continued asset management of the
Projects.
3.5 Non-Termination. This Agreement is not terminable except
as set forth in this Article 3.
ARTICLE 4
Compensation
4.1 Asset Management Fee.
Owner agrees to pay Asset Manager and Asset Manager agrees to
accept, as Asset Manager's sole compensation for the Services, a fee (the "Asset
Management Fee") in an amount equal to $25,000 per month. The Asset Management
Fee shall be paid in arrears, on the first day of each month during the term
hereof. In the event Owner shall sell or otherwise dispose of one but not both
of the Projects, Owner and Asset Manager shall review whether an adjustment to
the Asset Management Fee is equitable and appropriate. If Owner believes that
the Asset Management Fee should be reduced and Owner and Asset Manager are
unable in good faith to agree upon a reduced fee, this Agreement shall be
terminable by either party upon ninety (90) days notice to the other.
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C/M: 11764.0004 383702.4
<PAGE>
4.2 Reimbursement for Costs and Expenses.
(a) In addition to payment of the Asset Management
Fee, Owner shall reimburse Asset Manager for all amounts which may be payable by
Asset Manager to any contractors, consultants, accountants, lawyers, auditors or
other professionals engaged by Asset Manager pursuant to, or in order to perform
its obligations under, Article 2 of this Agreement or such other amounts as are
expended by Asset Manager at Owner's expense as provided herein.
(b) No amount described in paragraph (a) above shall
be payable by Owner hereunder unless the same shall have been provided for in
the approved Budget or is a permitted variance therefrom. In addition no amount
described in paragraph (a) above shall be payable to the extent the need for the
same arises out of the gross negligence or willful misconduct of Asset Manager,
as finally determined by a court of competent jurisdiction.
(c) Amounts described in paragraph (a) above shall
not include salaries and wages, payroll taxes, insurance, workers' compensation,
severance compensation and other benefits paid to or for the benefit of Asset
Manager's personnel or any general overhead expenses of Asset Manager.
(d) Notwithstanding anything to the contrary set
forth in this Agreement, Asset Manager shall not be required to spend any of its
own funds on behalf of Owner.
ARTICLE 5
Notices
Any notice, approval, consent, demand or request
(collectively, a "notice") which is or may be given or made by the parties
hereto, shall be in writing, and shall be given or made by any of the following
methods: (x) personal delivery, (y) mailing the same by registered mail or
certified mail, return receipt requested, postage prepaid, or (z) by Federal
Express or other reputable express courier service, in each case to the
following addresses:
If to Asset Manager: 970 Management, LLC
c/o Victor Capital Group, L.P.
885 Third Avenue
New York, New York 10022
Attention: John R. Klopp
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C/M: 11764.0004 383702.4
<PAGE>
If to Owner: Metropolis Realty Trust, Inc.
c/o Apollo Realty Advisors, L.P.
1301 Avenue of the Americas
38th floor
New York, New York 10019
Attention: Lee Neibart, President
or to such other addresses as Asset Manager or Owner shall have last designated
by notice to the other. Any notice given hereunder shall be deemed delivered
when received. The inability to deliver notices because of changed address of
which no notice was given, or rejection or refusal to accept any notice offered
for delivery shall be deemed to be receipt of such notice as of the date of such
inability to deliver or rejection or refusal to accept delivery.
ARTICLE 6
Indemnification
6.1 Performance. Owner agrees: (1) to hold and save Asset
Manager, its officers, directors, members, employees and Affiliates (including
Victor Capital Group, L.P.) (collectively, the "Indemnified Parties") free and
harmless from damages or injuries to person or property by reason of any cause
whatsoever either in and about the Project or elsewhere when Asset Manager is
carrying out the provisions of this Agreement or acting under the express or
implied directions of Owner; (2) to reimburse any Indemnified Party upon demand
for any monies which such Indemnified Party is required to pay out for any
reason whatsoever, either in connection with, or as an expense in defense of,
any claim, civil or criminal action, proceeding, charge or prosecution made,
instituted or maintained against such Indemnified Party or Owner and such
Indemnified Party jointly or severally, affecting or due to the condition or use
of the Project, or acts or omissions of Asset Manager or employees of Owner or
Asset Manager; and (3) to defend promptly and diligently, at Owner's sole
expense, any claim, action or proceeding brought against such Indemnified Party
or such Indemnified Party and Owner jointly or severally arising out of or
connected with any of the foregoing, and to hold harmless and fully indemnify
such Indemnified Party from any judgment, loss or settlement on account thereof.
It is expressly understood and agreed that the foregoing provisions of this
Article shall survive the termination of this Agreement, but this shall not be
construed to mean that Owner's liability does not survive as to other provisions
of this Agreement. Nothing contained in this Article shall relieve Asset Manager
from responsibility to Owner for, and Owner shall not be obligated to make any
payment or reimbursement to any Indemnified Party described above to the extent
arising out of, Asset Manager's gross negligence or willful misconduct, as
finally determined by a court of competent jurisdiction. If prior to a final
determination by a court of competent jurisdiction of such gross negligence or
willful misconduct of Asset Manager, Owner's funds
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<PAGE>
have been utilized to pay the same, Asset Manager, upon such a final
determination, shall be obligated to return the amounts so utilized.
6.2 Insurance Coverage. Owner agrees that it will designate
Asset Manager as a party or additional insured with Owner in any insurance
obtained by Owner or the Project Partnerships. Owner agrees that it will not
make any claim against or seek to recover from Asset Manager for any loss or
damage to property of any type which is covered by insurance, to the extent of
the insurance proceeds received by Owner in respect of such loss or damage.
ARTICLE 7
Miscellaneous
7.1 Complete Agreement; No Oral Modification. This Agreement
contains a complete statement of all of the arrangements between the parties
hereto with respect to the subject matter hereof, and this Agreement cannot be
modified or terminated orally, but only by a written agreement executed by Asset
Manager and Owner. There are no representations, agreements, arrangements or
understandings, oral or written, between or among the parties relating to the
subject matter of this Agreement which are not fully expressed in this
Agreement.
7.2 No Joint Venture; Liability to Third Parties.
In carrying out its obligations under this Agreement, Asset
Manager is acting solely as an independent contractor for Owner, and nothing in
this Agreement shall create or be construed to create an agency, partnership or
joint venture relationship between Owner, its successors and assigns, on the one
part, and Asset Manager, its successors and assigns, on the other part, or as
requiring Asset Manager to bear any portion of losses arising out of or in
connection with the ownership or operation of the Projects. Except as may
otherwise be expressly provided in this Agreement, all debts and liabilities to
third persons properly incurred by Asset Manager in the course of the
performance of its obligations hereunder shall be debts and liabilities of Owner
only, and Asset Manager shall not be liable therefor by reason of its management
activities pursuant to this Agreement.
7.3 Construction of Agreement. This Agreement shall be
construed without regard to any presumption or other rule requiring construction
against the party causing this Agreement to be drafted.
7.4 Governing Law. Irrespective of the place of execution or
performance, this Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York without giving effect to its
conflict of law principles or rules.
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<PAGE>
7.5 Binding Effect; Assignment. This Agreement shall be
binding on the parties hereto and their successors and permitted assigns. Asset
Manager may not assign this Agreement or its rights hereunder without Owner's
consent, except to an Affiliate. Asset Manager represents that it is an
Affiliate of Victor Capital Group, L.P. This Agreement shall run to the sole
benefit of the parties hereto and their successors and permitted assigns and
there shall be no third party beneficiaries hereof.
7.6 Competitive Business. Owner acknowledges that Asset
Manager and its Affiliates engage in other business ventures of every nature and
description, independently, or with others, including, but not limited to, the
real estate business in all its phases, such as the ownership, operation,
management, syndication and development of real property, and may continue to
engage in transactions and business opportunities that could have benefited
Owner; and neither Owner nor any partners, shareholders or other owners of a
legal or beneficial interest in the Owner shall have any rights in and to such
independent ventures or the income of profits derived therefrom. Without
limiting the foregoing, Owner acknowledges and understands that Asset Manager
and its Affiliates may in the future own properties that may be directly
competitive with the business and property of the Owner. To the extent that the
conduct by Asset Manager and its Affiliates of activities and businesses that
are competitive with the activities and business of Owner would otherwise
represent an actual or potential conflict of interest, Owner agrees that Asset
Manager shall not have breached any duty to Owner with respect to actions taken
in connection with such competition and conflicts.
7.7 Section Headings. Section headings are for convenience of
reference only and shall not be deemed part of this Agreement.
7.8 Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which taken together shall constitute
one and the same agreement.
7.9 Severability. If any term or provision of this Agreement
or the application thereof to any person or circumstance shall to any extent be
invalid or unenforceable, the remaining terms and provisions of this Agreement,
or the application of such terms or provisions to the person or circumstance
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Agreement shall be valid
and enforced to the fullest extent permitted by law.
ARTICLE 8
Exculpation
8.1 Liability of Owner and its Partners. The liability of
Owner hereunder is limited to its interest in the Projects, the Project
Partnerships and the proceeds thereof.
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<PAGE>
Asset Manager shall not look to (i) any property or assets of Owner except
Owner's interest in the Projects, the Project Partnerships and the proceeds
thereof, including any net proceeds received from the sale of the Projects, or
(ii) the property or assets of any officer, partner, director, shareholder,
employee or Affiliate of Owner, or of any partner in Owner, in seeking either to
enforce Owner's obligations or to satisfy a judgment for Owner's failure to
perform any obligations under this Agreement.
8.2 Liability of Parties Affiliated with Asset Manager. No
officer, partners, member, director, shareholder, employee or Affiliate of Asset
Manager, or of any partner or shareholder of Asset Manager, shall have any
liability to Owner or any other person or entity for the obligations of Asset
Manager hereunder or for any claim with respect hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
OWNER:
METROPOLIS REALTY TRUST, INC.
By:
ASSET MANAGER:
970 MANAGEMENT, LLC
By: /s/ John R. Klopp
John R. Klopp, Manager
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C/M: 11764.0004 383702.4
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ASSET MANAGEMENT AGREEMENT
between
METROPOLIS REALTY TRUST, INC.
and
970 MANAGEMENT, LLC
Dated
October 10, 1996
C/M: 11764.0004 383702.4
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TABLE OF CONTENTS
Page
ARTICLE 1 Definitions........................................... 1
ARTICLE 2 Services And Responsibilities......................... 3
2.1 Nature of Relationship................................ 3
2.2 Standard of Care...................................... 5
ARTICLE 3 Term and Termination.................................. 6
3.1 Term.................................................. 6
3.2 Termination for Cause, Sale or Bankruptcy............. 6
3.3 Owner's Right to Perform Asset Manager's Obligations.. 7
3.4 Transition After Termination.......................... 7
3.5 Non-Termination....................................... 7
ARTICLE 4 Compensation.......................................... 7
4.1 Asset Management Fee.................................. 7
4.2 Reimbursement for Costs and Expenses.................. 8
ARTICLE 5 Notices............................................... 8
ARTICLE 6 Indemnification....................................... 9
6.1 Performance........................................... 9
6.2 Insurance Coverage.................................... 10
ARTICLE 7 Miscellaneous......................................... 10
7.1 Complete Agreement; No Oral Modification.............. 10
7.2 No Joint Venture; Liability to Third Parties.......... 10
7.3 Construction of Agreement............................. 10
7.4 Governing Law......................................... 10
7.5 Binding Effect; Assignment............................ 11
7.6 Competitive Business.................................. 11
7.7 Section Headings...................................... 11
7.8 Counterparts.......................................... 11
7.9 Severability.......................................... 11
ARTICLE 8 Exculpation........................................... 11
8.1 Liability of Owner and its Partners................... 11
8.2 Liability of Parties Affiliated with Asset Manager.... 12
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C/M: 11764.0004 383702.4
