SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for use of the Commission Only (as permitted by
Rule 14c-5(d)(2)
[ X ] Definitive Information Statement
METROPOLIS REALTY TRUST, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 [Set forth the amount on
which the filing fee is calculated and state how it was
determined.]
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ X ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.....................................................................
2) Form, Schedule or Registration Statement No.:
.....................................................................
3) Filing Party:
.....................................................................
4) Date Filed:
<PAGE>
Metropolis Realty Trust, Inc.
c/o Victor Capital Group, L.P.
605 Third Avenue, 26th Floor
New York, New York 10016
INFORMATION STATEMENT
We Are Not Asking You for a Proxy and You Are Requested Not to Send Us a Proxy
This Information Statement is being mailed to stockholders of
Metropolis Realty Trust, Inc., a Maryland corporation (the "Company"), on or
about October 29, 1999, in connection with the approval of the sale (the
"Transaction") by the Company of substantially all of its interests in the
property located at 237 Park Avenue, New York, New York (the "237 Property") for
$372,000,000, subject to customary prorations and certain adjustments, pursuant
to (i) the Interest Purchase Agreement, dated as of September 23, 1999, as
amended (the "Purchase Agreement"), by and among the Company, 237 GP Corp., a
wholly-owned subsidiary of the Company ("237 GP Corp."), 237 Park Investors,
L.L.C. ("Buyer") and the Escrow Agent (as defined therein), as escrow agent, and
(ii) the Restructuring Agreement, dated as of October 28, 1999 (the
"Restructuring Agreement"), by and among the Company, 237 GP Corp., JMB/NYC
Office Building Associates, L.P. ("JMB/NYC"), certain other holders of indirect
interests in the 237 Property and certain affiliates of Buyer.
Pursuant to the charter of the Company (the "Charter"), the
affirmative vote of the holders of at least 662/3% in combined voting power of
shares of the Company's Class A and Class B common stock, par value $10.00 per
share (the "Common Stock"), is required to approve the Transaction. Five of the
Company's largest stockholders, representing 9,458,010 shares of Common Stock
(approximately 72.9% of the outstanding shares of Common Stock), have entered
into an agreement (each, a "Voting Agreement" and, collectively, the "Voting
Agreements") with Buyer to vote their shares in favor of the Transaction and,
pursuant thereto, delivered a proxy (each, a "Proxy" and, collectively, the
"Proxies") in favor of John R. Klopp and Jeremy FitzGerald, with instructions to
vote "for" approval of the Transaction.
A stockholders' meeting (the "Meeting") to consider and act upon the
approval of the Transaction will be held on November 19, 1999 at 11 a.m. (New
York City time) at the offices of Battle Fowler LLP, 75 East 55th Street, New
York, New York 10022. The Company's Board of Directors (the "Board of
Directors") believes that the Transaction is in the best interests of the
Company and its stockholders and has approved the Transaction, subject to
stockholder approval at the Meeting.
The Company estimates that upon the consummation of the Transaction
distributions of approximately $195 million (approximately $15.00 per share)
will be made to the Company's stockholders. The Company intends to make such
distribution shortly after the consummation of the Transaction, although there
can be no assurance that the Transaction will be consummated and that the
distribution will be made. Following the consummation of the Transaction, you
will retain your equity interest in the Company.
BECAUSE THE HOLDERS OF 9,458,010 SHARES OF COMMON STOCK (REPRESENTING
APPROXIMATELY 72.9% OF THE OUTSTANDING SHARES OF COMMON STOCK) HAVE AGREED TO
VOTE THEIR SHARES IN FAVOR OF THE TRANSACTION, THE COMPANY IS NOT ASKING YOU FOR
A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY TO THE COMPANY. The
Transaction will not be consummated until at least 20 days after the date of the
mailing of this Information Statement.
Stockholders of record at the close of business on October 27, 1999,
are entitled to receive this Information Statement and to vote at the Meeting,
each share of Common Stock being entitled to one vote. At the close of business
on that date, there were issued and outstanding 8,034,586 shares of the
Company's Class A Common Stock, par value $10.00 per share, and 4,936,060 shares
of the Company's Class B Common Stock, par value $10.00 per share, each share
being entitled to one vote.
<PAGE>
Holders of shares of Common Stock are not entitled under the Maryland
General Corporation Law (the "MGCL") to dissenters' rights of appraisal in
connection with the approval of the Transaction.
Representatives of Deloitte & Touche LLP, the Company's independent
public accountants, are expected to be present to answer questions at the
Meeting.
Abstentions and broker non-votes will have the effect of votes
against the Transaction. However, as approval of the Transaction is assured
because stockholders representing 9,458,010 shares of Common Stock
(approximately 72.9% of the outstanding shares of Common Stock) have agreed to
vote their shares in favor of the Transaction and have delivered the Proxies,
any abstentions and broker non-votes by other stockholders of the Company will
not have any effect on the result of the stockholder vote at the Meeting.
This Information Statement describes in detail the Company and its
business, the Transaction, the manner in which the Transaction will take place
and certain tax consequences of the Transaction.
Once again, we are not asking you for a proxy and you are requested
not to send us a proxy.
October 29, 1999
ii
<PAGE>
This information statement (the "Information Statement") is being
furnished to holders of shares of Common Stock in connection with the Meeting,
the purpose of which is to:
Approve the sale by the Company of substantially all of its
interests in the 237 Property for $372,000,000 subject to
customary prorations and certain adjustments, pursuant to
the Purchase Agreement and the Restructuring Agreement. See
"SUMMARY OF THE PURCHASE AGREEMENT" and "SUMMARY OF THE
RESTRUCTURING AGREEMENT". Copies of the Purchase Agreement
and Restructuring Agreement are attached to this
Information Statement as Exhibit A and Exhibit B,
respectively.
Consummation of the Transaction is subject to a number of conditions
including, without limitation, the following:
o the representations and warranties of the parties to the
Purchase Agreement being true and correct in all material
respects on and as of the closing date of the Transaction
("Closing Date"), including, but not limited to, the
affirmative vote of the holders of at least 662/3% in combined
voting power of the Common Stock;
o the performance by each of the parties of all covenants and
agreements required to be performed on or prior to the Closing
Date;
o the simultaneous or prior consummation of the transactions
contemplated by the Restructuring Agreement; and
o as a condition to Buyer's obligation to close the Transaction,
delivery to Buyer of evidence of the transfer and assignment of
the mortgage encumbering the 237 Property.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates, and at its
regional offices located at 7 World Trade Center, Suite 1300, New York, New York
10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The
Commission maintains a Website that contains reports, proxy and information
statements and other information regarding registrants such as the Company that
file electronically with the Commission. The address of the Website is
http://www.sec.gov.
FORWARD-LOOKING STATEMENTS
This Information Statement contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Exchange Act, and is subject to the safe harbor
created by such sections. Such statements include, but are not limited to,
statements relating to the Company's operations, economic performance and
financial condition, including the impact on the Company's operations of the
Transaction. Forward-looking statements in this Information Statement involve
known and unknown risks, uncertainties and other factors that may cause the
actual results, performance, or achievements expressed or implied by such
forward-looking statements to vary from those stated in this Information
Statement. Such factors include, among others, the following: general economic
and business conditions, competition, and various other factors referred to in
the Information Statement. The Company assumes no obligation to update the
forward-looking statements or to update the reasons why actual results could
differ from those projected in the forward-looking statements.
iii
<PAGE>
TABLE OF CONTENTS
DESCRIPTION OF THE COMPANY.....................................................1
The Company.........................................................1
Business ..........................................................1
SUMMARY OF THE TRANSACTION.....................................................3
BACKGROUND TO THE TRANSACTION..................................................6
Approval of the Board of Directors; Reasons for the Proposed Sale...7
Certain Consequences of the Transaction.............................7
Tax Consequences of the Transaction.................................7
PRO FORMA CONSOLIDATED BALANCE SHEET AND INCOME STATEMENT......................9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS...................................................13
General .........................................................13
Results of Operations..............................................13
Liquidity and Capital Resources....................................14
Year 2000 Compliance...............................................14
DESCRIPTION OF THE COMPANY'S PROPERTIES.......................................16
The 1290 Property..................................................16
The 237 Property...................................................16
Legal Proceedings..................................................16
Retention of Jurisdiction by Bankruptcy Court......................16
THE PROXIES/STOCKHOLDERS' APPROVAL RIGHT......................................17
SUMMARY OF THE PURCHASE AGREEMENT.............................................18
SUMMARY OF THE RESTRUCTURING AGREEMENT........................................21
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................24
Asset Manager......................................................25
Management and Leasing Agreements..................................25
DISTRIBUTION POLICY...........................................................26
INDEPENDENT AUDITORS..........................................................27
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................27
<PAGE>
DESCRIPTION OF THE COMPANY
The Company
The Company is a Maryland corporation that qualifies as a real estate
investment trust (a "REIT") for federal income tax purposes. The Company's
mailing address and principal executive office is c/o Victor Capital Group,
L.P., 605 Third Avenue, 26th Floor, New York, New York 10016, and its telephone
number is (212) 655-0220. 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. and 1290 Associates, L.L.C. (collectively, the
"Debtors"), dated September 20, 1996 (as amended, the "Plan"), and, thereby,
acquire the interests of the Debtors in the 237 Property and the property
located at 1290 Avenue of the Americas in New York City (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 group of
companies ("O&Y"). The transactions contemplated by the Plan were consummated on
October 10, 1996.
As depicted in the following chart, the Company currently owns a 95%
partnership interest, as general partner, in 237/1290 Lower Tier Associates,
L.P., a Delaware limited partnership ("Lower Tier LP"), 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 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, as
general partner. The remaining 5% interest in the Lower Tier LP (the "LP
Interest") is owned by a limited partnership (the "Upper Tier LP") which is
owned almost entirely by JMB/NYC, 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 LP. For a description of the rights associated
with the LP Interest, see "SUMMARY OF THE RESTRUCTURING AGREEMENT."
Business
The Company's principal assets consist of its beneficial interests in
the Property Owning Partnerships through which it owns the 1290 Property and the
237 Property, as described under "DESCRIPTION OF THE COMPANY'S PROPERTIES." The
Company's principal business objective is to maximize the value of the
Properties and, in turn, maximize stockholder value. As further described under
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" "--Asset Manager" 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. ("Victor Capital Group"), to serve as asset manager and
Tishman Speyer Properties, L.P. (the "Property Manager/Leasing Agent"), to serve
as property manager/leasing agent to manage the day-to-day operations of the
Properties. The Company has also entered into a REIT Management Agreement with
Tishman Speyer Properties, L.P. to perform certain accounting, administrative
and REIT compliance services.
The 1290 Property is a 43-story Class A commercial office building
with approximately 1.9 million 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 1290 Property
serves as the corporate headquarters for The Equitable Life Assurance Society of
the United States, and is currently 98% leased. Through December 2005,
approximately 25% of the total rentable area of the building is subject to
expiring leases.
The 237 Property is a 21-story Class A commercial office building
with approximately 1.1 million rentable square feet of space. The building,
centrally located in midtown Manhattan, is situated off one of New York City's
most prestigious thoroughfares and is within close proximity to Grand Central
Station, a transportation hub. The 237 Property serves as the corporate
headquarters for J. Walter Thompson Company, a major advertising agency, and
Credit Suisse Asset Management ("CSAM"), a financial services company. The 237
Property is currently 98% leased and through December 2005, approximately .6% of
the total rentable area of the building is subject to expiring leases.
1
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[GRAPHIC OMITTED]
2
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SUMMARY OF THE TRANSACTION
The following is a summary of certain information contained elsewhere
in this Information Statement. This summary is qualified in its entirety by the
more detailed information contained in this Information Statement and the
Exhibits hereto. Stockholders are urged to read this Information Statement and
the Exhibits hereto.
The Company has entered into the Purchase Agreement, pursuant to
which the Company has agreed to sell all of its direct and indirect interests in
the 237 Property for an aggregate purchase price of $372 million, subject to
customary prorations and certain adjustments, including, (a) an adjustment to
increase the purchase price by 2.75% of the principal amount of the mortgage
securing the 237 Property that is assigned to Buyer's lender, and (b) an
adjustment to reduce the purchase price by the amount of unpaid tenant
improvements, leasing commissions and the remaining amount of free rent with
respect to the lease with CSAM as of the Closing Date. Upon execution and
delivery of the Purchase Agreement, Buyer deposited $20 million (the "Deposit")
with the Escrow Agent. The Deposit is non-refundable in the event of a breach of
the Purchase Agreement by Buyer.
The Company has also entered into the Restructuring Agreement,
pursuant to which the Company has agreed, directly and through its subsidiaries,
to:
o convert the 237 Property Owning Partnership to a Delaware
limited liability company ("237 LLC");
o liquidate Lower Tier LP and cause Lower Tier LP to distribute
its interests in the 1290 Property Owning Partnership and 237
LLC to the Company and Upper Tier LP in proportion to their
interests in Lower Tier LP;
o cause Upper Tier LP to contribute its interest in 237 LLC to a
partnership affiliated with Buyer (the "Buyer Affiliated
Partnership") in exchange for partnership units in the Buyer
Affiliated Partnership having a market value as of the Closing
Date of $505,050;
o assign to an affiliate of JMB/NYC the Company's interest in
the notes made by another affiliate of JMB/NYC in favor of O&Y
(the "JMB Notes"), which were subsequently assigned to the
Company pursuant to the Plan, and the security agreement and
participation agreement related thereto, pursuant to which the
Company might otherwise have been able to receive payments of
up to $750,000 in respect of the JMB Notes upon the
distribution of cash flow from the Property Owning
Partnerships to Upper Tier LP;
o amend the indemnity agreement between the Company and JMB/NYC
and certain of its affiliates (the "JMB Indemnitors"), by
reducing the maximum amount for which the JMB Indemnitors
could be liable to the Company and its affiliates from
$25,000,000 to approximately $14,286,000 and releasing
approximately 43% of the $10,000,000 collateral securing such
indemnity obligations; and
o amend the 1290 Property Owning Partnership Agreement and the
limited partnership agreement of Upper Tier LP (the "Upper
Tier Partnership Agreement") to provide that (i) if JMB/NYC
exercises its right (the "JMB Put Right"), which right is
exercisable commencing in September, 2001, to cause the
Company to acquire the interest held by Upper Tier LP in the
1290 Property Owning Partnership (the "Upper Tier LP
Interest"), the Company would be required to pay to JMB/NYC
the greater of (x) $1,000,000 and (y) the Put Amount (as
defined in the "SUMMARY OF RESTRUCTURING AGREEMENT"), (ii) if
the Company exercises its right (the "Company Call Right"),
which right is exercisable commencing in March 2001, to
acquire the Upper Tier LP Interest, the Company would be
required to pay to the JMB/NYC the greater of (x) $1,400,000
and (y) the Call Amount (as defined in the "SUMMARY OF
RESTRUCTURING AGREEMENT"), and (iii) the Company may sell the
1290 Property, its partnership interest in the 1290 Property
Owning Partnership or greater than a 51% interest in the
Company itself at any time after January 1, 2000; provided
that in connection with such sale the Company pays to JMB/NYC
$4,500,000.
3
<PAGE>
The Company intends to exercise the Company Call Right in March 2001.
If the Company exercises the Company Call Right in March 2001, the Company
expects that it would be required to pay $1,400,000 to JMB/NYC. Pursuant to the
existing Property Owning Partnership Agreements and the Upper Tier Partnership
Agreement, prior to the amendment thereof in accordance with the Restructuring
Agreement, the Company estimates that it would have been required to pay JMB/NYC
significantly less than $1,000,000 upon the exercise of the JMB Put Right or
$1,400,000 upon the exercise of the Company Call Right. The simultaneous
consummation of the transactions contemplated by the Restructuring Agreement is
a condition to the consummation of the Transaction.
Immediately prior to the consummation of the Transaction, the
existing debt on the 237 Property will be refinanced with new debt of at least
$200 million encumbering the 237 Property. After payment of the release price
under the existing debt encumbering the 237 Property and any other costs
associated with the refinancing, any excess proceeds from such refinancing will
be distributed to the Company as part of the purchase price. In connection with
such refinancing, the Company has agreed to cooperate with Buyer in connection
with (a) converting the 237 Property Owning Partnership to 237 LLC, (b) forming
wholly owned subsidiaries of 237 LLC and (c) effecting a transfer of the 237
Property to such subsidiaries, in each case, immediately prior to the closing.
The Company estimates that upon the consummation of the Transaction
distributions of approximately $195 million (approximately $15.00 per share)
will be made to the Company's stockholders. The Company intends to make such
distribution shortly after the consummation of the Transaction, although there
can be no assurance that the Transaction will be consummated and that the
distribution will be made.
The Company does not need to obtain any federal or state regulatory
approval in order to consummate the Transaction.
4
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[GRAPHIC OMITTED]
5
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BACKGROUND TO THE TRANSACTION
In July 1999, the Board of Directors approved the retention of Victor
Capital Group and Eastdil Realty Company ("Eastdil," and together with Victor
Capital Group, the "Representatives") to explore strategic alternatives for the
Company, including a possible sale of the Company's interests in the 237
Property.
The Representatives commenced formal marketing of the 237 Property on
or about July 20, 1999. The Representatives solicited indications of interests
from approximately 180 potential investors and a Confidential Offering
Memorandum was distributed to approximately 40 potential investors representing
a cross-section of the global real estate investment community. On or about
August 25, 1999, the Representatives received nine all-cash bids. During the
week of August 30, 1999, the Company delivered a form of purchase agreement and
ancillary agreements to the four bidders that offered the highest bids, and
asked each bidder to respond by September 9, 1999 with its final bid and any
comments to the documents. On September 13, 1999, the Company began negotiations
with Buyer because Buyer's offer represented the highest price offered and
because of the Representatives' determination that Buyer's overall offer was
superior to those of the other bidders. After 10 days of negotiations, the
Company and Buyer entered into the Purchase Agreement on September 23, 1999.
The Board of Directors met on September 18, 1999 to discuss the
Buyer's offer and the terms of the original purchase agreement (the "Original
Transaction"). After discussion, the Board of Directors approved the Original
Transaction, subject to the approval of at least 662/3% of the Company's
stockholders, as being in the best interest of the Company and its stockholders.
Ralph F. Rosenberg, a member of the Board of Directors and a Managing Director
at Goldman, Sachs & Co. ("Goldman"), did not attend the meeting at which the
Original Transaction was approved and recused himself from voting based on a
possible conflict of interest resulting from Goldman's potential involvement as
a representative of one of Buyer's proposed lender groups. After the Board of
Directors approved the Original Transaction, five of the Company's largest
stockholders, representing 9,458,010 shares (72.9%) of the outstanding shares of
the Company's Common Stock, entered into voting agreements with Buyer pursuant
to which they agreed to cause their shares of Common Stock to be voted in favor
of the Original Transaction.
The original purchase agreement provided for an aggregate purchase
price of $380 million, subject to customary prorations and certain adjustments,
and was structured in a manner that did not require JMB/NYC's consent. The
original purchase agreement provided Buyer with an opportunity to complete its
due diligence investigation of the 237 Property and with the ability to
terminate the Purchase Agreement for any reason prior to October 6, 1999. The
Company, 237 GP Corp., Buyer and the Escrow Agent extended this date to October
15, 1999 pursuant to three separate amendments to the Purchase Agreement on
October 6, 1999, October 13, 1999 and October 14, 1999.
On September 23, 1999, Buyer and Seller commenced discussions with
JMB/NYC regarding a restructuring of JMB/NYC's indirect interest in the
Properties in order to facilitate Buyer's financing of the 237 Property. Between
September 23, 1999 and October 15, 1999, the Company, Buyer and JMB/NYC held
several telephonic meetings regarding such a restructuring. On October 15, 1999,
the Company, Buyer and JMB/NYC reached an agreement in principle regarding the
terms of the restructuring.
The Board of Directors of the Company met on October 15, 1999 to
discuss the Transaction. After discussion, the Board of Directors approved the
Transaction, subject to the approval of at least 662/3% or more of the Company's
stockholders, as being in the best interest of the Company and its stockholders.
Ralph F. Rosenberg did not attend the meeting at which the Transaction was
approved and recused himself from voting based on a possible conflict of
interest resulting from Goldman's potential involvement as a representative of
one of Buyer's proposed lender groups. After the Board of Directors approved the
Transaction, five of the Company's largest stockholders, representing 9,458,010
shares (72.9%) of the outstanding shares of the Company's Common Stock, entered
into the Voting Agreements with Buyer pursuant to which they agreed to cause
their shares of Common Stock to be voted in favor of the Transaction.
The Company, 237 GP Corp. and Buyer entered into the fourth amendment
to the original purchase agreement on October 15, 1999. Pursuant to that
amendment, the aggregate purchase price was reduced from $380 million to
6
<PAGE>
$372 million, the Company agreed to cooperate with Buyer in implementing the
agreement in principle with JMB/NYC and Buyer's right to terminate the Purchase
Agreement was limited to a failure to enter into definitive agreements that
would implement the agreement in principle. In order to allow time to enter into
definitive agreements, the Company, 237 GP Corp, Buyer and the Escrow Agent
extended the date on which such agreements were to be entered into to October
27, 1999 pursuant to several additional amendments to the Purchase Agreement. On
October 28, 1999, the Company, 237 GP Corp., Buyer and the Escrow Agent executed
the final amendment to the Purchase Agreement, and the Company, Buyer, JMB/NYC
and their respective affiliates entered into the Restructuring Agreement.
Approval of the Board of Directors; Reasons for the Proposed Sale
The Board of Directors believes that the Transaction is in the best
interests of the Company and its stockholders. Accordingly, the Board of
Directors approved the Transaction, subject to shareholder approval at the
Meeting. In reaching its determination, the Board of Directors consulted with
the Company's management as well as its legal and financial advisors, and
considered the following factors:
o Current economic and real estate market conditions relating to
the 237 Property.
o The results of the Representatives' marketing efforts, and the
other alternatives with respect to the sale of the 237
Property.
o The proposed terms and structure of the Transaction, including
the terms of the Purchase Agreement and the Restructuring
Agreement. See "SUMMARY OF THE PURCHASE AGREEMENT" and
"SUMMARY OF THE RESTRUCTURING AGREEMENT".
Certain Consequences of the Transaction
For a description of the consequences of the Transaction, see
"SUMMARY OF THE PURCHASE AGREEMENT" and "SUMMARY OF THE RESTRUCTURING
AGREEMENT."
Tax Consequences of the Transaction
The Company will recognize a gain for Federal and New York income tax
purposes on the sale of the 237 Property in an amount equal to the difference
between the amount realized on the sale and the Company's adjusted tax basis in
those assets. You should consult your own tax advisor regarding the tax
consequences of the Transaction to you.
7
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[GRAPHIC OMITTED]
8
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Metropolis Realty Trust, Inc. and Subsidiaries
Pro Forma Consolidated Balance Sheet
As of June 30, 1999 (unaudited)
The following unaudited Pro Forma Consolidated Balance Sheet has been
presented as if the 237 Property had been sold on June 30, 1999 and the
estimated distributions of $195 million were made on that date. The unaudited
Pro Forma Consolidated Balance Sheet should be read in conjunction with the
consolidated financial statements of the Company and Subsidiaries incorporated
by reference herein. In the Company's opinion, all adjustments necessary to
reflect the sale and distribution have been made. The unaudited Consolidated Pro
Forma Balance Sheet is not necessarily indicative of what the actual financial
position would have been at June 30, 1999, nor does it purport to represent the
future position of the Company and Subsidiaries.
<TABLE>
<CAPTION>
PRO FORMA CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
- -----------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Historical Adjustments Pro Forma
----------------- -------------------- -------------------
<S> <C> <C> <C>
ASSETS
Rental property - net of accumulated depreciation
$652,712 $276,230 (1) $376,482
Cash and cash equivalents 28,290 16,388 (2) 11,902
Lease termination fee receivable 25,855 25,855 (1) --
Escrow deposits 753 288 (1) 465
Tenant security deposits 579 344 (1) 235
Due from tenants - net of allowance for doubtful 4,400 662 (1) 3,738
accounts
Deferred financing costs - net of accumulated 4,969 2,011 (1) 2,958
amortization
Real estate tax refunds 3,175 -- 3,175
Notes receivable - net of unamortized discount 9,412 -- 9,412
Deferred rent receivable 39,569 1,655 (1) 37,914
Prepaid real estate taxes 14,456 5,359 (1) 9,097
Deferred leasing costs - net of accumulated 20,579 9,015 (1) 11,564
amortization
Other assets 256 161 (1) 95
================= ==================== ===================
Total Assets $805,005 $337,968 $467,037
================= ==================== ===================
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------------ -------------------- -----------------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Secured notes $406,875 $163,875 (1)
16,388 (2) $226,612
Accounts payable and accrued expenses 17,334 8,725 (1) 8,609
Dividend payable 6,485 6,485
Tenant security deposits and unearned revenue
1,455 793 (1) 662
------------------ -------------------- -------------------
Total Liabilities 432,149 189,781 242,368
------------------ -------------------- -------------------
Subordinated minority interest 14,855 14,855
------------------ -------------------- -------------------
Stockholders' Equity 358,001 148,187 209,814
------------------ -------------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$805,005 $337,968 $467,037
================== ==================== ===================
(1) Adjustment to reflect the sale of the assets and liabilities associated with
the 237 Property.
(2) Adjustment to reflect repayment of the amount necessary to release the
mortgage lien encumbering the 237 Property. Represents the balance of 110%
of the Allocated Loan Amount under the existing indebtedness.
</TABLE>
-10-
<PAGE>
Metropolis Realty Trust, Inc. and Subsidiaries
Pro Forma Consolidated Income Statement
For the Six Months Ended June 30, 1999 (unaudited) and
For the Year Ended December 31, 1998 (unaudited)
The following unaudited Pro Forma Consolidated Income Statements have been
presented as if the 237 Property had been sold on January 1, 1998 and the
estimated distributions of $195 million were made on that date. The unaudited
Pro Forma Consolidated Income Statements should be read in conjunction with the
consolidated financial statements of the Company and Subsidiaries incorporated
by reference herein. In the Company's opinion, all adjustments necessary to
reflect the sale and distribution have been made. The unaudited Consolidated Pro
Forma Income Statements are not necessarily indicative of what the actual
results of operations of Metropolis Realty Trust and Subsidiaries would have
been had the sale and related transactions actually occurred at January 1, 1998,
nor do they purport to represent the results of operations of the Company and
Subsidiaries for future periods.
<TABLE>
<CAPTION>
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share amounts)
- ------------------------------------------------------------------------------------------------------------------------------------
For the Six Months For the Year ended
ended June 30, 1999 December 31, 1998
----------------------------------------------- ------------------------------------------------
Pro Forma Pro Forma
Historical Adjustments(1) Pro Forma Historical Adjustments(1) ProForma
-------------- ---------------- -------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Base rental income $55,112 $17,648 $37,464 $119,275 $37,241 $82,034
Escalation income 7,726 6,636 1,090 15,479 12,802 2,677
Lease termination income 25,855 25,855 -- -- -- --
Miscellaneous income 3,266 263 3,003 4,889 527 4,362
Interest Income 1,587 385 1,202 3,294 791 2,503
-------------- ---------------- -------------- ------------- ----------------- -------------
Total revenues 93,546 50,787 42,759 142,937 51,361 91,576
-------------- ---------------- -------------- ------------- ----------------- -------------
OPERATING EXPENSES:
Real estate taxes 14,147 5,161 8,986 27,733 10,165 17,568
Operating and maintenance 3,400 1,309 2,091 7,118 2,809 4,309
Utilities 2,914 371 2,543 6,674 839 5,835
Payroll 2,226 848 1,378 4,430 1,696 2,734
General and administrative 656 290 366 4,014 461 3,553
Management fees 1,065 311 754 2,298 742 1,556
-------------- ---------------- -------------- ------------- ----------------- -------------
Total operating expenses 24,408 8,290 16,118 52,267 16,712 35,555
-------------- ---------------- -------------- ------------- ----------------- -------------
OTHER ITEMS:
Interest expense (16,444) (7,303) (9,141) (33,615) (14,927) (18,688)
Depreciation and amortization (8,795) (3,279) (5,516) (16,651) (6,516) (10,135)
-------------- ---------------- -------------- ------------- ----------------- -------------
Total other expenses (25,239) (10,582) (14,657) (50,266) (21,443) (28,823)
-------------- ---------------- -------------- ------------- ----------------- -------------
NET INCOME $43,899 $31,915 $11,984 $40,404 $13,206 $27,198
============== ================ ============== ============= ================= =============
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
NET INCOME PER COMMON SHARE
<S> <C> <C> <C> <C> <C> <C>
Net Income $3.38 $2.46 $0.92 $3.12 $1.02 $2.10
-------------- ----------------- --------------- ------------- ---------------- -------------
Weighted Average
Common Shares Outstanding 12,970,646 12,970,646 12,970,646 12,967,153 12,967,153 12,967,153
-------------- ----------------- --------------- ------------- ---------------- -------------
NET INCOME PER COMMON SHARE
(assuming dilution):
Net Income $3.38 $2.46 $0.92 $3.11 $1.02
$2.09
-------------- ----------------- --------------- ------------- ---------------- -------------
Weighted Average
Common Shares Outstanding 12,998,646 12,998,646 12,998,646 12,993,666 12,993,666 12,993,666
-------------- ----------------- --------------- ------------- ---------------- -------------
(1) Represents the elimination of revenues and expenses related to the 237
Property
</TABLE>
-12-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (In Thousands, Except Share Information and Square Footage)
General
The discussion below relates primarily to the Company's financial
condition as of June 30, 1999 and results of operations for the six months ended
June 30, 1999 and the twelve months ended December 31, 1998. Stockholders are
encouraged to review the financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations for the year ended
December 31, 1998 contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 for a more complete understanding of the Company's
financial condition and results of operations.
As of June 30, 1999, 12,970,646 shares of Common Stock were issued
and outstanding. The shares of Common Stock are not listed on any exchange, and
the Company does not intend to list the shares of Common Stock on any exchange
in the near term.
The assets and results of operations of the Properties are reported
in the consolidated financial statements of the Company using the consolidation
method of accounting.
Results of Operations
Six Months Ended June 30, 1999
Base rental income and escalation income decreased by approximately
$4,341 for the six months ended June 30, 1999 as compared to the same period in
the prior year. This decrease is primarily attributable to the write off of $900
of deferred rent receivable related to the early partial termination of the
lease with E.M. Warburg Pincus & Co., LLC ("Warburg Pincus") at the 237
Property, $2,545 related to the lease assumption of BT Alex Brown at the 1290
Property and the expiration of two leases at the 1290 Property.
As of June 30, 1999, the Company terminated the lease with Swiss
Reinsurance America Corporation ("Swiss Re"), a tenant of the 237 Property. The
termination of the lease resulted in the payment by Swiss Re to the Company of a
one-time lease termination fee of $25,855, which fee was received by the Company
in July 1999. Contemporaneously with the termination of the Swiss Re lease, the
Company entered into a 15-year lease with CSAM with respect to approximately
343,000 square feet of space including all of the former Swiss Re leased space.
The Company incurred leasing commissions of $6,910 in connection with the CSAM
lease that are payable prior to December 31, 1999 and agreed to make tenant
improvements in the amount of $11,491. The CSAM lease also provides for a free
rent period through December 31, 1999.
As of June 30, 1999, the Company entered into an assignment and
assumption agreement pursuant to which BT Alex Brown, a tenant of the 1290
Property, assigned its lease to ABN-AMRO, Incorporated. The assignment of the
lease resulted in BT Alex Brown delivering its space to ABN-AMRO, Incorporated,
and the one-time payment to BT Alex Brown of $8,000 by the Company in June 1999.
During the six months ended June 30, 1999, the Company settled
certain New York City and New York State utility tax claims for all tax years up
to December 31, 1995 with respect to a property located at 2 Broadway that was
owned by the Company's predecessors for an amount that was approximately $2,900
less than the amount the Company had previously reserved for such claims. The
reversal of that reserve resulted in an increase in miscellaneous income of
approximately $2,900 for such period. The Company continues to maintain adequate
reserves for utility tax claims with respect to open tax years.
Operating expenses for the six months ended June 30, 1999 were
$24,408, an increase of .2% from the six months ended June 30, 1998. Operating
expenses as a percentage of base rental income and escalation income increased
to 39% for the six months ended June 30, 1999 from 36% for the six months ended
June 30, 1998.
13
<PAGE>
Depreciation and amortization for the six months ended June 30, 1999
was $8,795 as compared to $8,243 for the same period in the prior year. The
increase of $552 is primarily the result of building and tenant improvements
made subsequent to the second quarter of 1998.
Year Ended December 31, 1998
Base rental income increased by approximately $5,092 for the year
ended December 31, 1998 as compared to the prior year. This increase of 4.5% is
attributable to an overall increase in occupancy at the Properties.
Miscellaneous income increased by approximately $3,699 for the year ended
December 31, 1998 as compared to the prior year primarily as a result of receipt
of net proceeds in excess of accrued amounts related to the settlement of tax
certiorari proceedings with respect to the property located at 2 Broadway.
Operating expenses for the year ended December 31, 1998 were $52,267,
an increase of 2.9% from the year ended December 31, 1997. This increase is
primarily attributable to professional fees and expenses incurred in connection
with the settlement of tax certiorari proceedings related to the property
located at 2 Broadway, totaling $2,238. Operating expenses as a percentage of
base rental income and escalation income remained at 39%.
Depreciation and amortization for the year ended December 31, 1998
was $16,651 as compared to $15,532 for the prior year. The increase of $1,119 is
primarily the result of building and tenant improvements made subsequent to
December 31, 1997.
Liquidity and Capital Resources
During the six months ended June 30, 1999, cash flow from operations
totaled $32,264. The Company used this cash flow from operations for
approximately $9,245 of leasing costs, $8,000 to acquire tenant improvements
related to the early termination of a tenant lease at the 1290 Property,
principal payments on the loan to the Property Owning Partnerships secured by
the 237 Property and the 1290 Property (the "Loan") and $410 to fund building
and tenant improvements.
At June 30, 1999, the Company had unrestricted cash on hand of
approximately $28,290 of which $6,485 was used to pay a dividend on July 15,
1999 to holders of record of the Company's Common Stock on June 30, 1999. The
lease termination payment of $25,855 was received by the Company in July 1999.
On October 10, 1996, the Property Owning Partnerships borrowed the
Loan. The Loan is cross-collateralized by the Properties, and prohibits the
Property Owning Partnerships from incurring any additional indebtedness. The
Loan matures on October 10, 2001. If not repaid or refinanced prior to such
date, 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 on that date or what the terms of any refinancing will be. In
connection with the Transaction, the portion of the Loan secured by the 237
Property will be repaid and the mortgage encumbering the 237 Property will be
transferred to an entity controlled by Buyer. After repayment of the portion of
the Loan secured by the 237 Property, the principal amount of the mortgage
encumbering the 1290 Property will be approximately $226,000. The Company
believes that cash on hand and cash flow from operations are sufficient to
satisfy the Company's foreseeable cash requirements which consist primarily of
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.
Year 2000 Compliance
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a two
digit year is commonly referred to as the Year 2000 Compliance issue. As the
year 2000 approaches, such systems may be unable to accurately process certain
date-based information.
The Company began preparations for the year 2000 in 1996 and has
identified all significant applications that will require modification to ensure
compliance. Internal and external resources have been and continue to be used to
14
<PAGE>
make the required modifications and test Year 2000 Compliance. The modification
process of all significant applications is substantially complete.
In addition, the Company has communicated with others with whom it
does significant business to determine their Year 2000 Compliance and the extent
to which the Company is vulnerable to any third party Year 2000 issues. However,
there can be no guarantee that the systems of other companies on which the
Company's systems rely will be timely converted, or that a failure to convert by
another company, or a conversion that is incompatible with the Company's
systems, would not have a material adverse effect on the Company.
The total cost to the Company of these Year 2000 Compliance
activities has not been and is not anticipated to be material to its financial
position or results of operations in any given year. These costs to complete the
Year 2000 modification and testing processes are based on management's best
estimates, which were derived utilizing numerous assumptions of future events
including the continued availability of certain resources, third party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ from those
plans.
15
<PAGE>
DESCRIPTION OF THE COMPANY'S 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. It 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 financial
institutions, entertainment companies and law firms, including, without
limitation, Warner Communications, Inc., The Bank of New York, EMI Entertainment
World, Inc. and Deutsche Bank.
The average occupancy rates for the 1290 Property for the years 1994
through 1998 were 94%, 78%, 90%, 97%, and 99%, respectively. The average
occupancy rate for the six months ended June 30, 1999 was 98%.
As of December 31, 1998, the 1290 Property was approximately 98%
leased, and there were leases and license agreements with 36 tenants and 4
licensees covering approximately 1,931,000 rentable square feet of space.
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 21-story, first
class commercial office building with approximately 1,142,000 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 with an open full
atrium. Major tenants include J. Walter Thompson Company, Credit Suisse Asset
Management, E.M. Warburg Pincus & Co., LLC and Champion International
Corporation.
The average occupancy rates for the 237 Property for each of the
years 1994 through 1998 were 98%, 98%, 98%, 98% and 99%. The average occupancy
rate for the six months ended June 30, 1999 was 98%.
As of December 31, 1998, the 237 Property was approximately 99%
leased and there were leases and license agreements with 17 tenants and 3
licensees covering approximately 1,126,000 rentable square feet of space.
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 Property Owning Partnerships or the Properties.
Retention of Jurisdiction by Bankruptcy Court
In July 1997, the Bankruptcy Court entered a final decree closing the
reorganization cases of the Debtors.
The Bankruptcy Court may retain jurisdiction, and if the Bankruptcy
Court exercises its retained jurisdiction, it 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 determine any and all adversary
proceedings, applications and contested matters; (b) to allow or disallow any
disputed claim, including tenant reimbursement claims, in whole or in part; (c)
to issue such orders in aid of execution of the Plan, to the extent authorized
by section 1142 of the Bankruptcy Code; (d) to cure any defect or omission, or
reconcile any inconsistency in any order of the Bankruptcy Court, including the
Confirmation Order (as such term is defined in the Plan); (e) to hear and
determine disputes arising in connection with the interpretation,
implementation, or enforcement of the Plan; and (f) 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.
16
<PAGE>
THE PROXIES/STOCKHOLDERS' APPROVAL RIGHT
Pursuant to the Charter, the affirmative vote of the holders of at
least 662/3% in combined voting power of shares of the Company's Common Stock is
required to approve the Transaction. Five of the Company's largest stockholders,
representing 9,458,010 shares of Common Stock (approximately 72.9% of the
outstanding shares of Common Stock), have entered into a Voting Agreement with
Buyer to vote their shares in favor of the Transaction and pursuant thereto each
such stockholder has delivered a Proxy in favor of John R. Klopp and Jeremy
FitzGerald, with instructions to vote "for" approval of the Transaction.
Accordingly, the Company is assured of receiving the requisite approval of the
Transaction at the Meeting. No vote of any other stockholder is necessary and
stockholder votes are not being solicited. The Transaction will not be
consummated until at least 20 days after the mailing of this Information
Statement.
The Company estimates that upon the consummation of the Transaction
approximately $195 million (approximately $15.00 per share) will be made to the
Company's stockholders. The Company intends to make such distributions shortly
after the consummation of the Transaction, although there can be no assurance
that the Transaction will be consummated and that the distribution will be made.
17
<PAGE>
SUMMARY OF THE PURCHASE AGREEMENT
A copy of the Purchase Agreement is attached to this Information
Statement as Exhibit A and incorporated herein by reference. Exhibit A contains
all material amendments to the Purchase Agreement. Amendments that are not
included merely extended of Buyer's right to terminate the Purchase Agreement
described under the caption "BACKGROUND TO THE TRANSACTION." This summary of the
Purchase Agreement and the transactions contemplated thereby is qualified in its
entirety by reference to the full text of the Purchase Agreement. Capitalized
terms not otherwise defined herein shall have the meanings assigned to such
terms in the Purchase Agreement.
Purchase Price. The aggregate purchase price (the "Purchase Price")
for the Class 237 Interest and the GP Interest is $372 million, which will be
comprised of the sum of (i) the amount of cash paid by Buyer to the Company,
(ii) the net proceeds distributed to the Company from the gross proceeds of the
New Indebtedness secured by the 237 Property after payment of the Release Amount
under the existing indebtedness and any other costs associated with the
refinancing of the 237 Property and (iii) the payment of the Release Amount
under the existing indebtedness on behalf of the Company. Buyer has agreed to
pay to the Company, as an adjustment to the Purchase Price, any savings to Buyer
resulting from Buyer not having to pay mortgage recording taxes upon transfer by
Buyer to Seller of that portion of the existing mortgage encumbering the 237
Property. The Company estimates the amount of such adjustment at approximately
$5,500,000. The Purchase Price is also subject to customary prorations and
certain adjustments, including an adjustment to reduce the Purchase Price by the
amount of unpaid tenant improvements, leasing commissions and the remaining
amount of free rent with respect to the lease with CSAM as of the Closing Date.
Upon execution and delivery of the Purchase Agreement, Buyer deposited $20
million with the Escrow Agent. The Deposit is non-refundable in the event of a
breach of the Purchase Agreement by Buyer.
Closing Date. The Closing Date is scheduled for November 19, 1999,
and may be extended to December 10, 1999 unless otherwise agreed to in writing
by the parties to the Purchase Agreement.
Representations and Warranties. The material representations and
warranties of the Company and certain of its affiliates contained in the
Purchase Agreement relate to the following matters:
o good and marketable title to the 237 Property free and clear of
liens and encumbrances, zoning and regulatory violations, tax
liabilities and assessments and environmental liabilities;
o due organization, valid existence and good standing, and
similar corporate matters;
o the requisite power, due authorization, execution and delivery
of the Purchase Agreement and its binding effect on such
parties; and
o the absence of conflicts between the Restructuring Agreement
(and the transactions contemplated thereby) and the articles of
incorporation, by-laws or organizational documents or
partnership or similar agreements to which such entities are
parties, or any law, rule, regulation, order or decree
applicable to such entities.
Conduct of Business Operations Prior to Closing Date. The Purchase
Agreement contains certain covenants customary to a transaction similar to the
Transaction. The Purchase Agreement also contains specific covenants relating to
the conduct of the Company's business prior to the consummation of the
Transaction. The Company has agreed that, until the Closing Date, it:
o will cause the 237 Property Owning Partnership to continue
maintenance, operation, management and marketing of the
Property in the ordinary course of business consistent with
past practice;
o will not, and will cause 237 Property Owning Partnership and
Lower Tier LP not to, engage in any sale or enter into any
transaction, contract or commitment, or incur any liability or
obligation including any indebtedness or guarantee of the type
set forth in Section 8(y) of the Purchase Agreement, other than
in the ordinary course of business;
18
<PAGE>
o will not, and will cause 237 Property Owning Partnership and
Lower Tier LP not to, enter into any new contract (or amend,
modify or terminate any existing contract) which provides for
the expenditure of more than $2,500 per year for goods or
services, or any lease or agreement (other than certain
permitted leases) regarding the 237 Property or the Purchased
Assets unless such contract, lease or agreement will not be
binding upon the 237 Property Owning Partnership or the
Property or will be terminable upon written notice from Buyer,
the 237 Property Owning Partnership, or 237 LLC without payment
of any fee, premium or penalty, in each case without the prior
consent of Buyer (which consent should not be unreasonably
withheld or delayed);
o will not, and will cause 237 Property Owning Partnership and
Lower Tier LP not to, terminate or amend any existing lease or
accept the surrender of any existing lease regarding the 237
Property;
o will (together with Lower Tier LP) cause the 237 Property
Owning Partnership to carry and continue in force through the
Closing Date current levels of fire and extended coverage
insurance, as well as theft, liability and other current
insurance coverage;
o will not, and will cause 237 Property Owning Partnership and
Lower Tier LP not to, amend, modify or restate the 237 Property
Owning Partnership Agreement or the partnership agreement of
Lower Tier LP (the "Lower Tier Partnership Agreement"), in
either case, without the prior written consent of Buyer (which
consent will not be unreasonably withheld or delayed);
provided, however, that such entities may amend, modify or
restate such agreements to the extent required to consummate
the Transaction; and
o will not sell or permit the sale of all or any portion of the
237 Property (including, without limitation, any personal
property, improvements or fixtures).
Conditions to the Parties' Respective Obligations to Consummate the
Transaction. Consummation of the Transaction is subject to a number of
conditions including, without limitation, the following:
o the performance by each of the parties of all covenants and
agreements required to be performed on or prior to the Closing
Date;
o the representations and warranties of the parties to the
Purchase Agreement being true and correct in all material
respects on and as of the Closing Date;
o the execution and delivery of each of the agreements necessary
to consummate the transactions contemplated by the Purchase
Agreement and the Restructuring Agreement (the "Ancillary
Agreements") on or prior to the Closing Date; and
o as a condition to Buyer's obligation to consummate the
Transaction, evidence of the transfer and assignment of the
existing mortgage encumbering the 237 Property are delivered to
Buyer.
Indemnification. The Company is not liable to Buyer under the
indemnification provisions for any breach of the representations, warranties,
covenants and agreements included or provided for in the Purchase Agreement
unless and until the amount of all claims for which Damages are recoverable by
Buyer exceed $2,000,000 (the "Deductible"), in which case Buyer is entitled to
Damages in the amount of up to $20,000,000 in the aggregate (the "Cap") and the
Company will be liable for all Damages, including the Deductible.
Notwithstanding the foregoing, the Company has agreed to indemnify
Buyer against all damages incurred by Buyer in connection with any third party
claims or proceedings, as incurred, to the extent such claims relate to events,
facts and circumstances that occurred prior to the Closing Date with respect to
the Company, the Property, the Purchased Assets (as defined therein), Lower Tier
LP or the 237 Property Owning Partnership (or any-to-be-formed subsidiary
thereof); provided, that the Company will not have any liability or obligation
in respect of (x) claims made
19
<PAGE>
after the date that is 90 days after the sixth anniversary of the Closing Date
(or, if shorter, the applicable statute of limitations with respect to such
claims), and (y) claims first arising out of events occurring after the Closing
Date, notwithstanding that such claims may relate to the financial performance
or operation of the 237 Property prior to Closing Date, the physical condition,
fitness for a particular purpose or merchantability of any of the 237 Property
as of the Closing Date, the status of title and survey with respect to the 237
Property as of the Closing Date, the availability of any air rights or future
development rights with regard to the 237 Property as of the Closing Date, or
the compliance by the Company or the 237 Property with any law, ordinance or
regulation, including, without limitation, those related to the environment,
zoning, land use, subdivision laws, handicap access or building codes, as of the
Closing Date.
Buyer will indemnify, defend and hold harmless the Company from and
against all damages incurred by the Company in connection with any third party
claims or proceedings, as incurred, to the extent such claims relate to, arise
out of or are a result of, events, facts and circumstances that occurred after
the Closing Date with respect to the Company, the 237 Property, the Purchased
Assets (as defined therein), Lower Tier LP or the 237 Property Owning
Partnership (or any-to-be-formed subsidiary thereof). Buyer's obligation to
indemnify the Company for breaches of representations, warranties, covenants and
agreements included or provided for in the Purchase Agreement is subject to the
Company reaching the Deductible, in which case the Company will be entitled to
Damages in an amount up to the Cap, including the Deductible.
Termination. The Purchase Agreement may be terminated at any time
prior to the Closing for the following reasons only:
o mutual written consent of Buyer and the Company;
o by Buyer upon failure of any of the closing conditions
applicable to the Company to be satisfied or waived on and as
of the Closing Date, or, provided Buyer is not itself in
default under the Purchase Agreement, and is ready, willing and
able to close, the Company's failure to consummate the
Transaction on or prior to December 10, 1999 or such earlier
date determined in accordance with the Purchase Agreement;
o by the Company upon failure of any of the closing conditions
applicable to the Buyer to be satisfied or waived on and as of
the Closing Date, or, provided that the Company is not itself
in default under the Purchase Agreement, and is ready, willing
and able to close, the Buyer's failure to consummate the
Transaction on or prior to December 10, 1999 or such earlier
date determined in accordance with the Purchase Agreement;
o by Buyer or the Company if any court of competent jurisdiction
will have issued, enacted, entered, promulgated or enforced any
order, judgment, decree, injunction or ruling which restrains,
enjoins or otherwise prohibits the Transaction and such order,
judgment, decree, injunction or ruling will have become final
and nonappealable; and
o by either party that has not defaulted under the Purchase
Agreement if the transactions contemplated under the Purchase
Agreement and the Restructuring Agreement have not been
consummated prior to December 10, 1999.
20
<PAGE>
SUMMARY OF THE RESTRUCTURING AGREEMENT
A copy of the Restructuring Agreement is attached to this Information
Statement as Exhibit B and is incorporated herein by reference. This summary of
the Restructuring Agreement and the transactions contemplated thereby is
qualified in its entirety by reference to the full text of the Restructuring
Agreement.
Conversion of 237 Property Owning Partnership. The Company, directly
and through its subsidiaries, will convert the 237 Property Owning Partnership
to 237 LLC, will form a wholly-owned subsidiary of 237 LLC and transfer the 237
Property to such subsidiary.
Liquidation of Lower Tier LP. The Company, directly and through its
subsidiaries, will liquidate Lower Tier LP and cause Lower Tier LP to distribute
its interests in the 1290 Property Owning Partnership and 237 LLC to the Company
and Upper Tier LP in proportion to their interests in Lower Tier LP. Thereafter,
Upper Tier LP will contribute its interest in 237 LLC to the Buyer Affiliated
Partnership in exchange for partnership units in the Buyer Affiliated
Partnership having a value as of the Closing Date of $505,050 based on the
market value of the net assets of the Buyer Affiliated Partnership.
Put and Call Rights Regarding 237 Property. After the transfer
described in the preceding paragraph, Upper Tier LP will have the right
(exercisable at JMB/NYC's option) to cause the Buyer Affiliated Partnership to
acquire its partnership units in the Buyer Affiliated Partnership at any time
during the month of July of any calendar year, commencing with the calendar year
2001, upon 90 days' prior written notice, for the greater of $505,050 or the
then current market value of such partnership units, payable in cash, which
amount will be payable to Upper Tier LP.
In addition, the Buyer Affiliated Partnership will have the option to
acquire the Upper Tier LP's partnership units in the Buyer Affiliated
Partnership at any time during the month of January of any calendar year,
commencing with the calendar year 2002, upon 90 days' prior written notice, for
the greater of $656,566 or the then current market value of such partnership
units, payable in cash, which amount will be payable to Upper Tier LP.
JMB Notes. The Company will assign to an affiliate of JMB/NYC its
interest in the JMB Notes and the security agreement and participation agreement
related thereto, pursuant to which the Company might otherwise have been able to
receive payments of up to $750,000 in respect of the JMB Notes upon distribution
of cash flow from the Property Owning Partnership to the Lower Tier LP.
Amendment of Indemnity and Collateral Agreements. The Company will
amend the indemnity agreement between the Company and the JMB Indemnitors,
pursuant to which the JMB Indemnitors have agreed to indemnify the Company and
its affiliates for damages resulting from certain prohibited actions of JMB/NYC
and its affiliates, by reducing the maximum amount for which the JMB Indemnitors
could be liable to the Company from $25,000,000 to approximately $14,286,000 and
releasing approximately 43% of the $10,000,000 collateral securing such
indemnity obligations.
Amendment of Partnership Agreements. The Company, directly and
through its subsidiaries, will amend the 1290 Property Owning Partnership
Agreement and the Upper Tier Partnership Agreement to provide that (i) if
JMB/NYC exercises the JMB Put Right, which is exercisable only in September of
any calendar year, commencing with the calendar year 2000, the Company will be
required to pay to JMB/NYC the greater of (x) $1,000,000 and (y) the Put Amount,
(ii) if the Company exercises the Company Call Right, which is exercisable in
March and April of each year, at any time after March 1, 2001, the Company would
be required to pay to the JMB/NYC, the greater of (x) $1,400,000 and (y) the
Call Amount, and (iii) if the Company sells the 1290 Property, its direct or
indirect ownership interests therein or greater than a 51% interest in the
Company prior to the exercise of the Company Call Right or the JMB Put Right,
the Company would be required to pay to JMB/NYC $4,500,000. The Company does not
intend to engage in any of the transactions described in (iii) prior to March 1,
2001, and intends to exercise the Company Call Right in March 2001.
Pursuant to the Upper Tier Partnership Agreement and the 1290
Property Owning Partnership Agreement, (i) the Put Amount is the amount equal to
the amount that would be distributed to JMB/NYC if the 1290 Property were sold
and the 1290 Property Owning Partnership were liquidated in accordance with the
1290 Property Owning Partnership Agreement for a cash amount equal to the
quotient of (a) the 1290 Property's net operating income for the
21
<PAGE>
immediately preceding calendar year and (b) 0.12; and (ii) the Call Amount is
the amount that would be distributed to JMB/NYC if the 1290 Property were sold
and the 1290 Property Owning Partnership were liquidated in accordance with the
1290 Property Owning Partnership Agreement for a cash amount equal to the
quotient of (a) the product of two times the 1290 Property's net operating
income for the period of January 1, 2000 through June 30, 2000 and (b) 0.12. If
the Company exercises the Company Call Right in March 2001, the Company expects
that it would be required to pay $1,400,000 to JMB/NYC. Pursuant to the existing
Upper Tier Partnership Agreement and the 1290 Property Owning Partnership
Agreement, prior to amendment thereof in accordance with the Restructuring
Agreement, the Company estimates that it would be required to pay JMB/NYC
significantly less than $1,000,000 upon the exercise of the JMB Put Right or
$1,400,000 upon the exercise of the Company Call Right.
Indemnification. In connection with the Restructuring Agreement, the
Company will indemnify Buyer and its affiliates in respect of any claims arising
out of any transaction consummated on or prior to the Closing Date and any
transaction contemplated by the Purchase Agreement and Restructuring Agreement
that results in adverse tax consequences to JMB/NYC. The Company's indemnity
obligations in respect of such claims is not subject to the Deductible or the
Cap and will generally survive until 90 days after the expiration of the
applicable statute of limitations with respect to such claims.
Continuing Rights. Other than as set forth above, the existing
agreements pertaining to the 1290 Property and the ownership thereof will
continue in effect without modification or amendment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth in the following table is furnished as of
September 15, 1999, with respect to any person (including, any "group," as that
term is used in Section 13(d)(3) of 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, its executive officers, and all of
its executive officers and Directors as a group. As of October 27, 1999, there
were 12,970,646 shares of Common Stock outstanding.
<TABLE>
<CAPTION>
Number of Shares Percent of Common
Beneficially Owned Stock
--------------------- ------------------------------
<S> <C> <C>
Principal Stockholders
Apollo Real Estate Investment Fund, L.P. (1) 4,936,060 38.1%
The TCW Group, Inc.(2) 2,254,341 17.4%
Oaktree Capital Management, LLC (3) 1,913,263 14.8%
Whitehall Street Real Estate, Limited Partnership V (4) 1,122,821 8.7%
Angelo, Gordon & Co., L.P. (5) 818,739 6.3%
Intermarket Corp. (6) 890,862 6.9%
Directors and Executive Officers
William L. Mack (7) 3,800 *
Lee S. Neibart (8) 3,800 *
John R.S. Jacobsson (9) 2,800 *
Bruce H. Spector (10) 3,800 *
John R. Klopp (11) 23,800 *
Russel S. Bernard (12) 3,000 *
Ralph F. Rosenberg (13) 3,000 *
David A. Strumwasser (14) 3,800 *
David Roberts (15) 3,000 *
Directors and Executive Officers as a group (9 persons) (16) 50,800 *
</TABLE>
* Less than 1%
(1) Held of record by Atwell & Co., c/o The Chase Manhattan Bank, N.A., 4 New
York Plaza, New York, NY 10004. Apollo Real Estate Advisors, L.P. is the
managing general partner of Apollo Real Estate Investment
22
<PAGE>
Fund, L.P. ("AREIF"), and a joint reporting person with respect to
beneficial ownership of these shares of Common Stock, pursuant to
AREIF's Schedule 13G, filed with the Securities and Exchange
Commission on February 13,1998.
(2) Includes 1,586,814 shares as to which voting and dispositive power is
shared with Oaktree Capital Management, LLC ("Oaktree"), as an
investment sub-adviser to TCW Asset Management Company for various
limited partnerships, trusts and third party accounts for which TCW
Asset Management Company acts as general partner or investment
manager. According to the Schedule 13G filed with the Securities and
Exchange Commission on February 12, 1998, Robert Day, Chairman and
Chief Executive Officer of the TCW Group, Inc. ("TCW"), may be deemed
to be a control person of TCW and certain other holders of the
Company's Common Stock. Also includes 667,527 shares held by various
limited partnerships, trusts and third party accounts for which TCW
Special Credits acts as general partner or investment manager. The
shares shown are held of record by (i) Taylor & Co., c/o Sanwa Bank
California Trust Operations, 1977 Saturn Street, Monterey Park, CA
91754 (1,848,248 shares), and (ii) Cede & Co., c/o Sanwa Bank
California Trust Operations, 1977 Saturn Street, Monterey Park, CA
91754 (406,093 shares). To the extent permitted by applicable law,
The TCW Group, Inc. and Robert Day hereby disclaim beneficial
ownership of such shares.
(3) Includes 1,586,814 shares as to which voting and dispositive power is
shared with TCW Asset Management Company, which acts as general
partner or investment manager for certain funds and accounts for
which Oaktree acts as an investment sub-adviser. According to the
Schedule 13G filed with the Securities and Exchange Commission on
February 12, 1998, Robert Day, Chairman and Chief Executive Officer
of TCW, may be deemed to be a control person of Oaktree and certain
other holders of the Company's Common Stock. Also includes 284,839
shares held by two limited partnerships of which Oaktree is general
partner and 41,210 shares held by a third party account for which
Oaktree acts as investment manager. The 326,049 shares as to which
Oaktree has sole voting and dispositive power are held of record by
Cun & Co., c/o The Bank of New York, One Wall Street, New York, NY
10005. Also includes 400 shares held directly by Oaktree. To the
extent permitted by applicable law, Oaktree hereby disclaims
beneficial ownership of such shares.
(4) Held of record by WSB Realty LLC, (1,122,421 shares) and The Goldman
Sachs Group, L.P. (400 shares), 85 Broad Street, New York, NY 10004.
Pursuant to Schedule 13G/A, filed by The Goldman Sachs Group, L.P.
with the Securities and Exchange Commission on February 16, 1999,
these shares are reported as beneficially owned by: (i) Goldman,
Sachs & Co., (ii) The Goldman Sachs Group, L.P., (iii) WSB Realty,
L.L.C., (iv) Whitehall Street Real Estate Limited Partnership V and
(v) WH Advisors, L.P. V.
(5) Angelo, Gordon & Co., L.P.'s address is 245 Park Avenue, New York, NY
10167. Pursuant to Schedule 13G, filed by Angelo, Gordon & Co., L.P.
with the Securities and Exchange Commission on February 13, 1998,
these shares are reported as beneficially owned by: (i) Angelo,
Gordon & Co., L.P. ("Angelo, Gordon"), (ii) John M. Angelo, in his
capacities as a general partner of AG Partners, L.P., the sole
general partner of Angelo, Gordon, and the chief executive officer of
Angelo, Gordon and (iii) Michael L. Gordon, in his capacities as the
other general partner of AG Partners, L.P., the sole general partner
of Angelo, Gordon, and the chief operating officer of Angelo, Gordon.
(6) Intermarket Corp.'s address is 667 Madison Avenue, New York, NY
10021.
(7) Does not include shares owned by Apollo. Includes 800 shares of
Common Stock and 3,000 shares of Common Stock issuable upon the
exercise of options granted to Mr. Mack under the Company's Stock
Plan. Mr. Mack is the managing partner of Apollo Real Estate
Advisors, L.P., the general partner of Apollo, and the President of
its corporate general partner. Mr. Mack disclaims beneficial
ownership of the shares of Common Stock owned by Apollo.
(8) Does not include shares owned by Apollo. Includes 800 shares of
Common Stock and 3,000 shares of Common Stock issuable upon the
exercise of options granted to Mr. Neibart under the Company's Stock
Plan. Mr. Neibart is a partner of Apollo Real Estate Advisors, L.P.
Mr. Neibart disclaims beneficial ownership of the shares of Common
Stock owned by Apollo.
23
<PAGE>
(9) Does not include shares owned by Apollo or 1,000 shares granted to
Mr. Jacobsson pursuant to the Stock Plan that will not vest until
October 10, 1999. Includes 800 shares of Common Stock and 2,000
shares of Common Stock issuable upon the exercise of options granted
to Mr. Jacobsson under the Company's Stock Plan. Mr. Jacobsson is a
partner of Apollo Real Estate Advisors, L.P. Mr. Jacobsson disclaims
beneficial ownership of the shares of Common Stock owned by Apollo.
(10) Does not include shares owned by Apollo. Includes 800 shares of
Common Stock and 3,000 shares of Common Stock issuable upon the
exercise of options granted to Mr. Spector under the Company's Stock
Plan. Mr. Spector is a partner of Apollo Real Estate Advisors, L.P.
Mr. Spector disclaims beneficial ownership of the shares of Common
Stock owned by Apollo.
(11) Includes 20,800 shares of Common Stock and 3,000 shares of Common
Stock issuable upon the exercise of options granted to Mr. Klopp
under the Company's Stock Plan.
(12) Does not include shares owned by funds and accounts managed by
Oaktree. Includes 3,000 shares of Common Stock issuable upon the
exercise of options granted to Mr. Bernard 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 is required to transfer to
funds managed by Oaktree any shares of Common Stock he either
receives directly under the Company's Stock Plan or purchases upon an
exercise of options granted under the Company's Stock Plan.
(13) Does not include shares owned by Whitehall. Includes 3,000 shares of
Common Stock issuable upon the exercise of options granted to Mr.
Rosenberg under the Company's Stock Plan. Mr. Rosenberg disclaims
beneficial ownership of the shares of Common Stock owned by
Whitehall. Mr. Rosenberg is a Managing Director 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.
(14) Does not include 311,591 shares held by various limited partnerships,
trusts and third party accounts for which Whippoorwill Associates,
Inc. has discretionary authority and acts as general partner or
investment manager. Includes 800 shares of Common Stock and 3,000
shares of Common Stock issuable upon the exercise of options granted
to Mr. Strumwasser under the Company's Stock Plan. Mr. Strumwasser is
a principal of and Managing Director and General Counsel of
Whippoorwill Associates. Mr. Strumwasser disclaims beneficial
ownership of the shares of Common Stock owned by discretionary
accounts managed by Whippoorwill Associates as set forth above.
(15) Does not include shares owned by Angelo, Gordon. Includes 3,000
shares of Common Stock issuable upon the exercise of options granted
to Mr. Roberts 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.
(16) See notes 1 through 15 above with respect to the nature of the
ownership of Directors and Executive Officers as a group, including
disclaimers of beneficial ownership described therein.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Ralph F. Rosenberg, a member of the Company's Board of Directors and
a Managing Director at Goldman, did not attend the meetings at which the
Transaction was approved and recused himself from voting based on a possible
conflict of interest resulting from Goldman's potential involvement as a
representative of one of Buyer's proposed lender groups.
John R. Klopp, a Director, officer and a stockholder of the Company,
and Jeremy FitzGerald, an officer of the Company, are employed by Capital Trust,
the parent company of Victor Capital Group, one of the Company's Representatives
in connection with the Transaction, pursuant to a written retention agreement
between the Company, Eastdil and Victor Capital Group, which provides for a fee
to be paid to Victor Capital Group equal to 0.25% of the
24
<PAGE>
total transaction value and a fee to be paid to Eastdil equal to 0.25% of the
total transaction value. Pursuant to the terms of this retention agreement,
subject to the Company's right to terminate the agreement by providing 30 days
prior written notice, the agreement will terminate on July 12, 2000. Also see
"Asset Manager" below.
Asset Manager
The Company has retained 970 Management, LLC, an affiliate of Victor
Capital Group (the "Asset Manager"), to serve as the Company's asset manager
pursuant to an Asset Management Agreement, dated as of October 10, 1996 (the
"Asset Management Agreement"). John R. Klopp, one of the Company's Directors and
an officer and a stockholder of the Company, is a Managing Partner of Victor
Capital Group. 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 Company's interests in the 237 Property Owning Partnership and the 1290
Property Owning Partnership.
The Asset Management Agreement has a term of one year, which term
will be automatically extended for consecutive one year periods thereafter
unless the Company or the Asset Manager notifies 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
either of the Properties is 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 expects
to terminate the Asset Management Agreement with respect to the 237 Property,
effective on the Closing Date.
The Company pays the Asset Manager a fee (the "Asset Management Fee")
of $25,000 per month. Asset Management Fees incurred for the years ended
December 31, 1998 and 1997 and the period October 10, 1996 to December 31, 1996
aggregated approximately $300,000, $300,000 and $74,000, respectively. 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.
Management and Leasing Agreements
Each of the Property Owning Partnerships entered into a Management
and Leasing Agreement, dated as of October 10, 1996 (the "Property Management
Agreements"), with the Property Manager/Leasing Agent. Nyprop, LLC, a
stockholder of the Company, is an affiliate of 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. Fees under the Property Management
Agreements for the years ended December 31, 1998 and 1997 and the period October
10, 1996 to December 31, 1996 aggregated approximately $3,451,000, $3,333,000
and $392,000, respectively. Upon consummation of the Transaction, the Company
will terminate the Property Management Agreement with respect to the 237
Property.
An affiliate of the Property Manager/Leasing Agent provides the
cleaning services for the Properties. Fees paid for cleaning services for the
years ended December 31, 1998 and 1997 and the period October 10, 1996 through
December 31, 1996 totaled $4,248,000, $4,226,000 and $196,000, respectively.
Upon consummation of the Transaction, the Company will terminate the cleaning
services contract with respect to the 237 Property.
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
25
<PAGE>
Manager/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.
Each 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 Partnership 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 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 October 10, 1996, 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 such
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 such date. Each Property Owning
Partnership will (i) pay the Property Manager/Leasing Agent a 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 continue to receive commissions in
connection with the leasing of space at the 1290 Property and renewals and
extensions of leases (but not with respect to the 237 Property).
The Company entered into a REIT Management Agreement in 1997, (the
"REIT Management Agreement") with the Property Manager/Leasing Agent. The
Property Manager/Leasing Agent is to perform certain accounting, administrative
and monitoring services. The REIT Management Agreement provides for payment to
the Property Manager/Leasing Agent of monthly fees aggregating approximately
$125,000 per annum, a one-time fee of $15,000, and reimbursement of documented
out-of-pocket expenses. Fees incurred under the REIT Management Agreement for
the years ended December 31, 1998 and 1997 aggregated $141,000 and $140,000,
respectively. There were no fees paid under the REIT Management Agreement for
the period October 10, 1996 to December 31, 1996.
DISTRIBUTION POLICY
On March 6, 1997, the Board of Directors adopted a distribution
policy calling for regular quarterly distributions. Since that time, the Company
has made quarterly distributions of $0.50 per share each quarter, except that
dividends for the second and third quarters of 1998 were suspended pending the
Company's consideration of strategic alternatives.
26
<PAGE>
INDEPENDENT AUDITORS
Deloitte & Touche LLP, independent auditors, have audited the
Company's consolidated financial statements as of December 31, 1998 and 1997 and
for the period commencing October 10, 1996 and ending December 31, 1996, and for
the years then ended, all included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1998, as set forth in their respective reports,
which are incorporated by reference in this Information Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Securities and Exchange Commission (File No.0-21849) are incorporated in this
Information Statement by reference:
(a) Annual Report on Form 10-K for the year ended December 31,
1998 as filed on April 1, 1999;
(b) Annual Report on Form 10-K for the year ended December 31,
1997 as filed on March 31, 1998;
(c) Current Report on Form 8-K as filed on October 1, 1999;
(d) Quarterly Report on Form 10-Q for the quarter ended March 31,
1999 as filed on May 14, 1999; and
(e) Quarterly Report on Form 10-Q for the quarter ended June 30,
1999 as filed with on August 16, 1999, as amended by Quarterly
Report on Form 10-Q/A as filed on August 17, 1999.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
date of the Meeting or any adjournment or postponement thereof shall be deemed
to be incorporated by reference in this Information Statement and made a part
hereof from the date of the filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference in this
Information Statement shall be deemed to be modified or superseded for purposes
of this Information Statement to the extent that a statement contained in this
Information Statement or in any other document subsequently filed with the
Securities and Exchange Commission which also is deemed to be incorporated by
reference in this Information Statement modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Information Statement.
We will provide without charge to each person to whom a copy of this
Information Statement is delivered, upon written or oral request of such person,
a copy of any or all of the documents incorporated by referenced in this
Information Statement (not including the exhibits to such documents, unless such
exhibits are specifically incorporated by reference in such documents). Requests
for such copies should be directed to: Metropolis Realty Trust, Inc., c/o Victor
Capital Group, L.P., 605 Third Avenue, 26th Floor, New York, New York 10016,
Attention: Jeremy FitzGerald, telephone: 212-655-0220.
27
<PAGE>
Exhibits
Exhibit A Purchase Agreement
Exhibit B Restructuring Agreement
28
<PAGE>
EXHIBIT A
================================================================================
INTEREST PURCHASE AGREEMENT
by and among
237 PARK INVESTORS, L.L.C.
and
METROPOLIS REALTY TRUST, INC.
and
237 GP CORP.
Dated as of September 23, 1999
================================================================================
<PAGE>
INTEREST PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of
September 23, 1999, by and among 237 Park Investors, L.L.C. a Delaware limited
liability company ("Buyer"), 237 GP Corp., a Delaware corporation ("237 GP
Corp."), and Metropolis Realty Trust, Inc., a Maryland corporation
("Metropolis," and together with 237 GP Corp., "Seller").
RECITALS:
WHEREAS, Metropolis holds a 95% interest as the general partner in
237/1290 Lower Tier Associates, L.P., a Delaware limited partnership ("Lower
Tier LP"), which owns a 99% interest as a limited partner in 237 Park Partners,
L.P., a Delaware limited partnership (the "Property Owning Partnership"), which
owns a direct interest in that certain property commonly known as 237 Park
Avenue as more fully described in Section 1 of the Disclosure Schedule attached
hereto (together with all related personal property, intangibles, improvements
and fixtures (other than such items of personal property set forth in Exhibit A
hereto (the "Excluded Property")), the "Property"); and
WHEREAS, 237 GP Corp. is the sole general partner of the Property
Owning Partnership, having a 1% interest as a general partner therein (the "237
GP Interest"); and
WHEREAS, Metropolis will transfer its 95% interest as the general
partner in Lower Tier LP to 237/1290 LLC, a Delaware limited liability company
(the "LLC"), immediately prior to the Closing (as hereinafter defined) in
consideration for, among other things, 100% of the Class 237 Interests (as
hereinafter defined); and
WHEREAS, Seller desires to sell and Buyer desires to purchase the Class
237 Interests and the 237 GP Interest, pursuant to the terms and conditions set
forth below.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
TERMS AND CONDITIONS:
1. Defined Terms.
-------------
(a) "Additional Deposit" shall have the meaning set forth in Section
4.
(b) "Agreement" shall have the meaning set forth in the preamble.
(c) "Buyer Confidential Information" shall have the meaning set forth
in Section 18(a).
(d) "Buyer" shall have the meaning set forth in the preamble.
(e) "Buyer Property Manager" shall have the meaning set forth in
Section 19(a).
(f) "Cap" shall have the meaning set forth in Section 15(a).
-1-
<PAGE>
(g) "Chase Credit Agreement" shall mean the Credit Agreement, dated as
of October 10, 1996, by and between the Property Owning Partnership and the 1290
Property Owning Partnership, as borrowers, the lenders listed therein and The
Chase Manhattan Bank, as agent, as amended to date.
(h) "Chase Indebtedness" shall mean all of the indebtedness of the
Property Owning Partnership allocable to the Property immediately prior to the
Closing pursuant to the Chase Credit Agreement.
(i) "Chosen Courts" shall have the meaning set forth in Section 18(e).
(j) "Claim Notice" shall have the meaning set forth in Section 15(c).
(k) "Class 1290 Interests" shall have the meaning ascribed to such
term in the LLC Agreement.
(l) "Class 237 Interests" shall have the meaning ascribed to such term
in the LLC Agreement.
(m) "Closing" shall have the meaning set forth in Section 4.
(n) "Closing Date" shall have the meaning set forth in Section 4.
(o) "Contracts" means, with respect to the Property and the Purchased
Assets, all service contracts, equipment leases and other arrangements or
agreements affecting the ownership, repair, maintenance, management, leasing or
operation of the Property or the Purchased Assets, other than the Leases.
(p) "Confidential Information" shall have the meaning set forth in
Section 18(a).
(q) "Current Tax Year" shall have the meaning set forth in Section
14(d).
(r) "Damages" means all losses, damages, liabilities, costs and
expenses (including reasonable attorneys' fees and expenses) incurred in
investigating, preparing or defending any claims covered by Section 15, Section
5(e) or Section 6(c) hereof, provided, that Damages shall not include any
consequential losses, damages, liabilities or expenses.
(s) "Deductible" shall have the meaning set forth in Section 15(a).
(t) "Deposit" shall have the meaning set forth in Section 3(a).
(u) "Environmental Law" means any federal, state or local law,
statute, regulation, code, ordinance, order or decree for the protection of
health or the environment, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss.9601 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss.6901 et seq., the
Toxic Substances Control Act,
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<PAGE>
15 U.S.C. ss.2601 et seq., the Clean Air Act, 42 U.S.C. ss.7401 et seq., and the
Clean Water Act, 33 U.S.C., ss.1251 et seq.
(v) "Escrow Agent" shall have the meaning set forth in Section 3(a).
(w) "First Adjourned Date" shall have the meaning set forth in Section
4.
(x) "Escrow Agreement" shall have the meaning set forth in Section
3(a).
(y) "Exchange Act" shall have the meaning set forth in Section
8(u)(1).
(z) "Excluded Property" shall have the meaning set forth in the
recitals.
(aa) "GAAP" means generally accepted accounting principles and
practices in the United States consistently applied for all periods so as to
properly reflect the financial condition, results of operations and changes in
cash flows of any entity.
(bb) "JMB" shall have the meaning set forth in Section 10(f).
(cc) "JMB Agreements" shall have the meaning set forth in Section
8(ee).
(dd) "Hazardous Materials" means any substance presently defined,
designated or classified as a hazardous substance, hazardous waste, toxic
substance, hazardous material, pollutant or contaminant or which is prohibited,
limited or regulated pursuant to any Environmental Law, radioactive or
dangerous, whether by type or by quantity. Hazardous Materials includes, without
limitation, petroleum or any derivative or by-product thereof, radon,
radioactive material, asbestos, asbestos-containing materials, urea formaldehyde
products, lead and polychlorinated biphenyls.
(ee) "Indemnified Party" and "Indemnifying Party" shall have the
meanings set forth in Section 15(b). -------------
(ff) "Initial Escrow Agent" shall have the meaning set forth in
Section 3(a).
(gg) "Initial Escrow Agreement" shall have the meaning set forth in
Section 3(b).
(hh) "knowledge" means, with respect to the Seller Entities, or Buyer,
as applicable, the actual knowledge of any director or officer (or similar level
of management with respect to any non-corporate entity, as applicable) of such
entity; in each case, who have devoted substantive time and attention to the
Property on behalf of such entity and, in the case of the Seller Entities, after
due inquiry of the on-site property manager.
(ii) "LLC" shall have the meaning set forth in the recitals.
(jj) "LLC Agreement" means the amended and restated Limited Liability
Company Operating Agreement of the LLC to be entered into between Metropolis and
Buyer on or prior to the Closing Date in the form attached as Exhibit D hereto.
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(kk) "Leases" shall mean all leases, licenses, subleases and other
agreements to which the Property Owning Partnership is a party or by which the
Property Owning Partnership is bound for, or by which any person or entity is
entitled to, the use or occupancy of any portion of the Property, together with
all amendments thereto and all guaranties, side letters, consents, assignments
and other documents related thereto.
(ll) "Liquidated Claim" means a claim that has been reduced to a
liquidated amount by (i) agreement between Buyer and Seller or their respective
legal representatives or designees with respect to such claim, (ii) a final,
non-appealable order of a court of competent jurisdiction or an arbitration
tribunal selected by mutual agreement of the parties hereto; or (iii) a written
settlement or compromise of, or judgment with respect to, a Third Party Claim.
(mm) "Lower Tier LP" shall have the meaning set forth in the recitals.
(nn) "Material Adverse Effect" means, with respect to (a) the Seller
Entities (as defined below); or (b) Buyer, as applicable, any effect that is
materially adverse to (x) the financial condition, assets, liabilities,
prospects or results of operations or property of the Seller Entities or Buyer,
as applicable, taken as a whole, or (y) the value, use or operation of the
Property; provided, however, that the following shall not be taken into account
in determining whether there has been a Material Adverse Effect on such
entities: (i) any adverse effect directly arising from or directly relating to
general business or economic conditions; (ii) any adverse effect directly
arising from or directly relating to conditions affecting the national, regional
or New York City commercial real estate business; and (iii) the availability of
any air rights or future development rights with respect to the Property, except
to the extent Seller has breached its representation and warranty contained in
Section 8(aa) hereof or its covenant contained in Section 10(e) hereof.
Notwithstanding the foregoing, with respect to the Seller Entities, in no event
shall the exercise by J. Walter Thompson Company, a Delaware corporation, of its
option to terminate its lease with respect to the eighth and ninth floors (or a
portion thereof) at the Property prior to September 30, 1999 (which termination
will be effective as of September 30, 2000) constitute a Material Adverse Effect
for purposes of this definition.
(oo) "Metropolis" shall have the meaning set forth in the preamble.
(pp) "Mizrahi Amount" shall have the meaning set forth in Section
14(e).
(qq) "New Indebtedness" shall mean indebtedness incurred by the
Property Owning Partnership or its affiliates in connection with the
consummation of the transactions contemplated hereby (including "non-recourse"
mortgage indebtedness in an amount not less than $200 million encumbering the
Property which may in part be secured by the mortgage currently securing the
Chase Indebtedness, which mortgage may, in accordance with Section 3 hereof, be
assigned to Buyer's lender and amended and restated as of the Closing Date), the
net proceeds of which will be used, in whole or in part, to pay the Release
Amount.
(rr) "Notice Period" shall have the meaning set forth in Section
15(c).
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(ss) "Partnership Agreement" means the Agreement of Limited
Partnership, dated as of October 10, 1996, of Lower Tier LP.
(tt) "Property" shall have the meaning set forth in the recitals.
(uu) "Property Manager" shall have the meaning set forth in Section
5(d)(x).
(vv) "Property Owning Partnership" means 237 Park Partners, L.P., a
Delaware limited partnership.
(ww) "Property Owning Partnership Agreement" means the Agreement of
Limited Partnership, dated as of October 10, 1996, of the Property Owning
Partnership.
(xx) "Purchased Assets" means, collectively, the Class 237 Interests
and the 237 GP Interest; provided, however, in no event shall the Purchased
Assets be deemed to include any of the Excluded Property.
(yy) "Purchase Price" shall have the meaning set forth in Section 3.
(zz) "Release Amount" means the amount necessary to cause the mortgage
securing the Chase Indebtedness to be released from the Property, which amount
is equal to (x) product of (i) 1.1, multiplied by (ii) the Allocated Loan Amount
(as such term is defined in the Chase Credit Agreement and as such amount is
reduced by any amortization of principal) attributable to the Property
immediately prior to the Closing, plus (y) any other amounts paid by Buyer on
behalf of the Seller Entities in respect of the Chase Indebtedness.
(aaa) "SEC" shall have the meaning set forth in Section 8(u)(1).
(bbb) "Seller" shall have the meaning set forth in the preamble.
(ccc) "Seller Entities" shall mean the Seller, Lower Tier LP, and the
Property Owning Partnership.
(ddd) "Seller SEC Documents" shall have the meaning set forth in
Section 8(u)(1).
(eee) "Termination Notice" shall have the meaning set forth in Section
3(d).
(fff) "Third Party Claim" shall have the meaning set forth in Section
15(c).
(ggg) "Third Party Claim Notice" shall have the meaning set forth in
Section 15(c).
(hhh) "237 GP Corp." shall have the meaning set forth in the preamble.
(iii) "237 GP Interest" shall have the meaning set forth in the
recitals.
(jjj) "1290 Property Owning Partnership" means 1290 Partners, L.P.
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(kkk) "Warburg Pincus Amount" shall have the meaning set forth in
Section 14(e).
2. Assets Subject to Sale and Purchase. Buyer and Seller hereby agrees
as follows:
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(a) Buyer hereby agrees to purchase from Metropolis, and Metropolis
hereby agrees to sell to Buyer, all of Metropolis' right, title and interest in
and to the Class 237 Interests.
(b) Buyer hereby agrees to purchase from 237 GP Corp., and 237 GP
Corp. hereby agrees, and Metropolis agrees to take all action necessary to cause
237 GP Corp., to sell to Buyer, all of 237 GP Corp.'s right, title and interest
in and to the 237 GP Interest.
Notwithstanding the foregoing provisions of Sections 2(a) and 2(b)
above, in no event does Buyer agree to purchase from Metropolis or 237 GP Corp.,
nor does either Metropolis or 237 GP Corp. agree to sell to Buyer, any of the
Excluded Property.
3. Purchase Price, Deposit, and Payment.
------------------------------------
The aggregate purchase price (the "Purchase Price") shall be
$380,000,000, which shall be comprised of the sum of (i) the amount of cash paid
by Buyer to Seller, (ii) the net proceeds distributed to Seller from the gross
proceeds of the New Indebtedness and (iii) the payment of the Release Amount on
behalf of Seller. If Buyer's lender takes an assignment of the mortgage
currently encumbering the Property, then, Buyer shall pay to Seller, in addition
to the Purchase Price, an amount equal to 2.75% multiplied by the principal
amount of the mortgage on the Property securing, in part, the New Indebtedness.
Buyer hereby agrees that in any event the New Indebtedness will include a
"non-recourse" mortgage encumbering the Property in the amount of $200 million
and Buyer shall notify Seller in writing on or before 5:00 p.m. Eastern Standard
Time on October 6, 1999 (time being of the essence with respect to the delivery
of such notice by such date) whether or not its lender has agreed to take an
assignment of the mortgage currently encumbering the Property. The Purchase
Price will be subject to adjustment for amounts related to the items and
prorations described in Section 14 of this Agreement and Section 3 of the
Disclosure Schedule) and shall be payable as follows:
(a) Buyer has made a deposit in the amount of $20,000,000 (together
with any interest earned thereon the "Deposit"), with Battle Fowler LLP (the
"Initial Escrow Agent"), which Deposit shall be held by the Initial Escrow Agent
in accordance with the terms and conditions of this Agreement and the Initial
Escrow Agreement, dated the date hereof (the "Initial Escrow Agreement"), among
Seller, Buyer and the Initial Escrow Agent. Provided that Buyer shall not have
delivered a Termination Notice (as defined below), Buyer and Seller agree to
enter into a substitute escrow arrangement with a nationally recognized title
insurance company or an acceptable agent thereof (the "Escrow Agent") and to
cause the Initial Escrow Agent to transfer the Deposit to such Escrow Agent on
or prior to September 30, 1999 pursuant to a mutually acceptable escrow
agreement (the "Escrow Agreement").
(b) Buyer shall pay or cause to be paid to Seller the balance of the
Purchase Price (as adjusted pursuant to the prorations and adjustments described
in Section 14 of this Agreement and Section 3 of the
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Disclosure Schedule) by wire transfer of immediately available funds on the
Closing Date to an account or accounts to be designated by Seller not less than
two (2) business days prior to the Closing. Escrow Agent shall, at the written
direction of Buyer, deliver the Deposit to such account or accounts designated
by Seller not less than two (2) business days prior to the Closing.
(c) Escrow Agent shall hold the Deposit in an interest-bearing
account. In the event of a termination of this Agreement by Seller pursuant to
Section 16(c), the Escrow Agent shall release the Deposit to Seller which shall
be deemed liquidated damages to Seller and Seller's sole remedy for the loss of
its bargain, and neither Buyer nor Seller shall have any further liability
hereunder. In the event of a termination of this Agreement pursuant to Section
16(a), (b), (d), (e) or (f) or Section 7, the Escrow Agent shall release the
Deposit to Buyer, and neither Seller nor Buyer shall have any further liability
hereunder or, if Buyer would otherwise have been able to terminate this
Agreement pursuant to Section 16(b) or (f), in lieu of terminating the
Agreement, Buyer shall have the right to seek specific performance and shall be
entitled to the return of the Deposit pending the outcome of such claim unless
Seller is contemporaneously pursuing a claim against Buyer for termination
pursuant to Section 16(c), in which case Escrow Agent shall continue to hold the
Deposit pending the final resolution of such claim. Any interest earned on the
Deposit shall be payable by the Escrow Agent to the party to whom the Deposit is
payable.
(d) Other than as expressly set forth in this Section 3, Section 16 or
Section 7 hereof, the Deposit shall be non-refundable to Buyer; provided,
however, Buyer shall have the right to deliver to Seller a written notice (the
"Termination Notice") of its termination of this Agreement for any reason or no
reason not later than 5:00 p.m. Eastern Standard Time on October 6, 1999. In
such event, this Agreement shall terminate upon receipt by Seller of the
Termination Notice, neither party hereto shall have any further obligations
hereunder (other than those which expressly survive the termination of this
Agreement) and Escrow Agent shall promptly release the Deposit (plus any
interest earned thereon) to Buyer. Time shall be of the essence with respect to
delivery by Buyer to Seller of the Termination Notice within the time frame set
forth in this Section 3(d); should Buyer not so timely deliver the Termination
Notice, then Buyer's right to deliver a Termination Notice shall be null and
void and, except as expressly set forth in this Agreement, Buyer shall have no
further right to terminate this Agreement and the Deposit shall be
non-refundable.
(e) Buyer acknowledges and agrees that any potential Lease between the
Property Owning Partnership and either of National Retail Tenant or Gourmet Food
Store (as referred to in Seller's Offering Memorandum, a copy of which has been
delivered to Buyer) or with respect to the former Ottomanelli space or the
former Colours space was not, and shall not be, taken into account in
determining or adjusting the Purchase Price whether or not such Leases are
entered into and the failure of Seller to enter into any of such Leases shall
not give rise to any right of Buyer to terminate this Agreement.
(f) The parties hereto hereby acknowledge and agree that the value of
the fixtures, furniture, equipment and other personalty included in the
transactions contemplated by this Agreement is de minimis and no part of the
Purchase Price is allocable thereto.
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4. Closing.
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The closing of the transactions contemplated herein (the "Closing")
shall take place at the offices of Battle Fowler LLP, 75 East 55th Street, New
York, NY 10022 (or, if different, the location in New York, New York designated
by the lender in respect of the New Indebtedness) on or prior to October 27,
1999 at 10:00 AM or such other date and place as the parties hereto shall
mutually agree (the "Closing Date"); provided, however, that each of the Seller
and Buyer shall have a one time right to adjourn the Closing and extend the
Closing Date upon written notice from one party to the other prior to October
11, 1999 (time being of the essence with respect to the giving of such notice)
to a date not earlier than 16 days after the date of receipt by Buyer or Seller,
as applicable of such notice and not later than November 11, 1999 (the actual
date of such adjournment is herein referred to as the "First Adjourned Date"),
time being of the essence with respect to the consummation of the transactions
on the First Adjourned Date; provided, that the party which has not exercised
its adjournment right may still exercise its one-time right to adjourn the
Closing Date if its notice is delivered at least 16 days before the First
Adjourned Date and the further adjourned date is no later than November 11,
1999; provided further, that (i) Buyer shall have the further right to adjourn
the Closing and extend the Closing Date, upon written notice from Buyer to
Seller prior to the date that is 16 days prior to the First Adjourned Date, and
the making of an additional deposit of $18 million (the "Additional Deposit")
with the Escrow Agent on such date, (time being of the essence with respect to
the giving of such notice and the making of such Additional Deposit) to a date
not earlier than 16 days after the date of receipt by Seller of such notice and
not later than November 29,1999, time being of the essence with respect to the
consummation of the transactions on such date and (ii) if Seller has given
written notice to Buyer prior to October 6, 1999 that Seller has not received
clearance from the Securities and Exchange Commission with respect to Seller's
Information Statement on Schedule 14(c), Seller shall have the right to adjourn
the Closing and extend the Closing Date to a date not later than December 10,
1999, time being of the essence with respect to the consummation of the
transactions on such date. The consummation of the transactions contemplated by
this Agreement cannot be extended past December 10, 1999 unless mutually agreed
to by Buyer and Seller in writing. The disposition of the Additional Deposit
shall be governed by the terms of Section 3 hereof and the Escrow Agreement, as
if the Additional Deposit were part of the Deposit on the date hereof.
5. Conditions to Buyer's Obligation to Close.
-----------------------------------------
The obligations of the Buyer to acquire the Purchased Assets on the
Closing Date shall be subject to the satisfaction or waiver in writing of the
following conditions precedent on and as of the Closing Date:
(a) All of the covenants to be performed by Seller Entities contained
in this Agreement shall have been performed in all material respects on or
before Closing;
(b) Subject to Section 7 below, the Property shall be in substantially
the same condition as on the date hereof, ordinary wear and tear excepted;
(c) The representations and warranties of the Seller Entities
contained herein shall be true and correct in all material respects on and as of
the Closing Date, as though they had been made on and as of the Closing Date
(except to the extent that they expressly relate to an earlier date) or, if not,
any variances or deviations from said representations and warranties shall not
have a Material Adverse Effect on the transactions contemplated by this
Agreement or the Property, the Purchased Assets, the Property Owning
Partnership, the Lower Tier LP or the LLC;
(d) At Closing, Seller shall deliver, or shall cause to be delivered,
to Buyer the following items:
(i) An executed Assignment and Assumption of Class 237
Interests substantially in the form of Exhibit B annexed
hereto;
(ii) An executed Assignment and Assumption of 237 GP Interest
substantially in the form of Exhibit C annexed hereto;
(iii) The LLC Agreement, executed by Metropolis, in the form
of Exhibit D annexed hereto;
(iv) Provided that Buyer has executed and delivered the LLC
Agreement on or prior to the Closing Date, evidence of
Buyer's admission as a member of the LLC;
(v) Originals, if available, or otherwise copies of all
Contracts listed in Section 8(f) of the Disclosure
Schedule;
(vi) Any and all material business records (including copies
of all tax returns and financial statements of
Metropolis, the Property Owning Partnership, 237 GP
Corp. (if any) and Lower Tier LP (if any), as-built
plans, engineering and architectural drawings,
certificates of occupancy, licenses and permits, rents
rolls and copies of all Leases) related to the Purchased
Assets and the Property in the Seller Entities'
possession (or in the possession of the Property
Manager) not previously provided;
(vii) Certified copies of resolutions of the board of
directors of Metropolis and 237 GP Corp. authorizing the
execution and delivery of this Agreement and the
consummation of the transactions contemplated herein;
(viii) An opinion of Seller's counsel, dated as of the Closing
Date, substantially in the form of Exhibit E hereto;
(ix) Evidence of receipt of all consents listed in Section
8(e) of the Disclosure Schedule;
(x) Evidence of the termination of that certain Property
Management Agreement (with respect to the Property),
dated as of October 10, 1996, between the Property
Owning Partnership and Tishman Speyer Properties, L.P.
(the "Property Manager") together with a release of any
liens such Property Manager may have against the
Property;
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(xi) Evidence of either (a) the transfer and assignment of
the Chase Indebtedness encumbering the Property, or (b)
the satisfaction and release of the Chase Indebtedness
and, in either case, documentation evidencing the
removal of any cross collateralization and/or cross
default provisions affecting the Property;
(xii) An estoppel certificate from each office tenant,
substantially in the form attached as Exhibit F hereto
(provided, however, that this condition shall be deemed
by the parties hereto to be satisfied if Seller delivers
an estoppel in the form and to the extent required by
each such office tenant's lease agreement);
(xiii) An executed FIRPTA affidavit from each of Metropolis and
237 GP Corp.;
(xiv) Evidence of the escrow of the amount required to pay any
disputed amounts under contracts described in the
penultimate sentence of Section 8(f);
(xv) Evidence of the transfer to Buyer or its designee of
accounts and or amounts with respect to tenant security
deposits, tenant escrows (if any) and similar items
required to be held or reserved pursuant to the Leases
(to the extent actually collected);
(xvi) Executed voting agreements from approximately 70% of the
shareholders of Metropolis and evidence reasonably
satisfactory to Buyer that the affirmative vote of the
requisite holders of Metropolis common stock, par value
$10.00 per share, has been received to approve the
consummation of the transactions contemplated hereby;
(xvii) A bringdown certificate reaffirming the representations
and warranties contained in Section 8 herein as of the
Closing Date; and
(xviii) Such other documents and instruments as are required by
this Agreement to effectuate the sale of the Purchased
Assets or as may be reasonably required by Buyer's
lender.
(e) Notwithstanding anything to the contrary contained in this
Agreement, if (i) Buyer becomes aware prior to Closing of any breach of any
representation or warranty of Seller and (ii) the Damages incident to such
breach are reasonably estimated to be less than $1 million, Buyer (1) shall
notify Seller in writing thereof (such notice to include a description of such
breach), (2) shall, nonetheless, consummate the transactions contemplated by
this Agreement and not be permitted to terminate this Agreement by reason of
such breach pursuant to
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Section 16(b) hereof and (3) may make a claim against Seller with respect to
such Damages under Section 15 hereof, it being understood and agreed that such
claim may be made without regard to the Deductible or the Cap. Notwithstanding
anything to the contrary contained in this Agreement, if (i) Buyer becomes aware
prior to Closing of any breach of any representation or warranty of Seller and
(ii) the Damages incident to such breach are reasonably estimated to be equal to
or greater than $1 million and less than $7 million, Buyer shall notify Seller
in writing thereof (such notice to include a description of such breach), and
Buyer may either (1) consummate the transactions contemplated by this Agreement
or (2) terminate this Agreement by reason of such breach pursuant to Section
16(b) hereof; it being understood and agreed that if Buyer determines to
consummate the transactions contemplated by this Agreement, Buyer may make a
claim against Seller with respect to such Damages under Section 15 hereof, it
being understood and agreed that such claim may be made without regard to the
Deductible or the Cap. Notwithstanding anything to the contrary contained in
this Agreement, if (i) Buyer becomes aware prior to Closing of any breach of any
representation or warranty of Seller and (ii) the Damages incident to such
breach are reasonably estimated to be greater than or equal to $7 million, Buyer
shall notify Seller in writing thereof (such notice to include a detailed
description of such breach) and Buyer may either (1) consummate the transactions
contemplated by this Agreement or (2) terminate this Agreement by reason of such
breach pursuant to Section 16(b) hereof; provided, that if Buyer consummates the
transactions contemplated by this Agreement, it shall not be permitted to make a
claim against Seller with respect to such Damages under Section 15 hereof with
respect to such breach and Buyer shall be deemed to have waived the breach of
such representation or warranty. Notwithstanding anything to the contrary
contained in this Agreement, if Buyer executes this Agreement with actual
knowledge of a breach of any representation or warranty of Seller, Buyer shall
not be permitted to (i) terminate this Agreement pursuant to Section 16(b)
hereof on account of such breach, or (ii) make a claim against Seller with
respect to Damages arising from such breach under Section 15 hereof, it being
understood and agreed that mere delivery of due diligence materials by Seller to
Buyer shall not constitute actual knowledge of Buyer as to the contents of such
materials.
(f) With respect to all of the tenants of the Property, Seller will
use commercially reasonable efforts to assist Buyer in obtaining subordination,
non-disturbance and attornment agreements (it being understood and agreed that
delivery of any such agreements shall not be a condition to the consummation of
the transactions contemplated by this Agreement). With respect to retail
tenants, Seller shall use commercially reasonable efforts to deliver, or cause
to be delivered, to Buyer an estoppel certificate in the form annexed hereto as
Exhibit F from each of such retail tenants (it being understood and agreed that
delivery of estoppel certificates from such retail tenants shall not be a
condition to Closing).
6. Conditions to Seller's Obligation to Close.
------------------------------------------
The obligations of the Seller to sell the Purchased Assets on the
Closing Date shall be subject to the satisfaction or waiver in writing of the
following conditions precedent on and as of the Closing Date (which conditions
shall be deemed waived unless this Agreement is terminated by written notice by
the terminating party to the other party prior to the Closing Date):
(a) At Closing, Buyer shall deliver or cause to be delivered to Seller
the following items:
(i) Certified copies of resolutions of Buyer's sole member
authorizing the execution of this Agreement and the
consummation of the transactions contemplated herein;
(ii) The balance of the Purchase Price and such other
payments provided for herein by wire transfer of
immediately available funds to an account or accounts to
be designated by Seller prior to the Closing;
(iii) The LLC Agreement, executed by Buyer, substantially in
the form of Exhibit C annexed hereto;
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(iv) An opinion of Buyer's counsel dated as of the Closing
Date, substantially in the form of Exhibit G hereto;
(v) Such other executed documents and instruments as are
required by this Agreement from the Buyer to consummate
the transactions contemplated herein; and
(vi) a bringdown certificate reaffirming the representations
and warranties contained in Section 9 herein as of the
Closing Date.
(b) The representations and warranties of Buyer contained herein shall
be true and correct in all material respects on and as of the Closing Date, as
though they had been made on and as of the Closing Date (except to the extent
that they expressly relate to an earlier date), or, if not, any variances or
deviations from said representations and warranties shall not have a Material
Adverse Effect on the transactions contemplated by this Agreement.
(c) Notwithstanding anything to the contrary contained in this
Agreement, if (i) Seller becomes aware prior to Closing of any breach of any
representation or warranty of Buyer and (ii) the Damages incident to such breach
are reasonably estimated to be less than $1 million, Seller (1) shall notify
Buyer in writing thereof (such notice to include a description of such breach),
(2) shall nonetheless, consummate the transactions contemplated by this
Agreement and not be permitted to terminate this Agreement by reason of such
breach pursuant to Section 16(c) hereof and (3) may make a claim against Buyer
with respect to such Damages under Section 15 hereof, it being understood and
agreed that such claim may be made without regard to the Deductible or the Cap.
Notwithstanding anything to the contrary contained in this Agreement, if (i)
Seller becomes aware prior to Closing of any breach of any representation or
warranty of Buyer and (ii) the Damages incident to such breach are reasonably
estimated to be equal to or greater than $1 million and less than $7 million,
Seller shall notify Buyer in writing thereof (such notice to include a
description of such breach), and Seller may either (1) consummate the
transactions contemplated by this Agreement or (2) terminate this Agreement by
reason of such breach pursuant to Section 16(c) hereof; it being understood and
agreed that if Seller determines to consummate the transactions contemplated by
this Agreement, Seller may make a claim against Buyer with respect to such
Damages under Section 15 hereof, it being understood and agreed that such claim
may be made without regard to the Deductible or the Cap. Notwithstanding
anything to the contrary contained in this Agreement, if (i) Seller becomes
aware prior to Closing of any breach of any representation or warranty of Buyer
and (ii) the Damages incident to such breach are reasonably estimated to be
greater (c)than or equal to $7 million, Seller shall notify Buyer in writing
thereof (such notice to include a detailed description of such breach) and
Seller may either (1) consummate the transactions contemplated by this Agreement
or (2) terminate this Agreement by reason of such breach pursuant to Section
16(c) hereof; provided, that if Seller consummates the transactions contemplated
by this Agreement, it shall not be permitted to make a claim against Buyer with
respect to such Damages under Section 15 hereof with respect to such breach and
Seller shall be deemed to have waived the breach of such representation or
warranty. Notwithstanding anything to the contrary contained in this Agreement,
if Seller executes this Agreement with actual knowledge of a breach of any
representation or warranty of Buyer, it shall not be permitted to (i) terminate
this Agreement pursuant to Section 16(c) hereof on account of such breach, or
(ii) make a claim against Buyer with respect to Damages arising from such breach
under Section 15 hereof.
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7. Risk of Loss.
------------
The risk of material loss or damage to the Property by fire or other
casualty or by taking by eminent domain prior to the Closing, shall be assumed
by the Seller Entities and, upon the happening of such event, Buyer shall have
the right to (i) terminate this Agreement without further liability hereunder in
which case the Deposit shall be returned to Buyer or (ii) complete this purchase
and receive the insurance monies collectible by the Seller Entities for such
loss or damage or the award for such taking by eminent domain and, in connection
therewith, Buyer shall be responsible for any insurance deductible associated
therewith; provided, however, that Buyer shall not be entitled to terminate this
Agreement if the amount of the loss or damage to the Property is less than 7.5%
of the Purchase Price or if such casualty or condemnation results in the
termination of Leases aggregating less than 110,000 square feet of office space
at the Property; provided that in such event, Buyer shall elect either to (i)
proceed to close the transactions contemplated by this Agreement with a credit
against the Purchase Price in the total amount of any awards, insurance proceeds
or other proceeds received by Seller on or before the Closing Date with respect
to any such taking, fire or other casualty (as applicable), and at Closing
Seller shall assign to Buyer all of Seller's right to any and all awards,
insurance proceeds or other proceeds, including rental interruption insurance,
paid or payable thereafter by reason of any taking, fire or other casualty (as
applicable), or (ii) require Seller to promptly repair and restore the same at
Seller's own expense to a condition substantially the same as existed prior to
such casualty, and the Closing Date shall be postponed for a reasonable period
of time (in no event to exceed ninety (90) days after the casualty) necessary
for the substantial completion of repairs and restoration); provided, however,
that if Seller shall be diligently pursuing but not have completed such repair
and restoration within six (6) months from the date of the casualty, then Buyer
shall have the right, upon notice in writing to Seller delivered within ten (10)
days following the expiration of such six (6) month period, to terminate this
Agreement, and thereupon the parties shall be released and discharged from any
further obligations to each other, this Agreement shall become null and void,
and the Deposit shall be refunded to Buyer.
This Section 7 shall constitute an express provision to the contrary
within the meaning of Section 5-1311 of The General Obligations Law.
8. Representations and Warranties of Seller.
----------------------------------------
Seller represents and warrants to Buyer as follows:
(a) Metropolis is a corporation duly formed, validly existing and
in good standing under the laws of the State of Maryland and
has full power and authority to carry on its current business
and to own, use and sell its assets and properties.
(b) 237 GP Corp. is a corporation duly formed, validly existing
and in good standing under the laws of the State of Delaware
and has qualified to do business and is in good standing in
the State of New York, and has full power and authority to
carry on its current business and to own, use and sell its
assets and properties.
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(c) Lower Tier LP is limited partnership duly formed, validly
existing and in good standing under the laws of the State of
Delaware and has qualified to do business and is in good
standing in the State of New York, and has full power and
authority to carry on its current business and to own, use and
sell its assets and properties.
(d) The Property Owning Partnership is limited partnership duly
formed, validly existing and in good standing under the laws
of the State of Delaware and has qualified to do business and
is in good standing in the State of New York, and has full
power and authority to carry on its current business and to
own, use and sell its assets and properties.
(e) Seller has full power and authority and all necessary
approvals to enter into this Agreement (subject, as of the
date of execution of this Agreement, but not as of the Closing
Date, to the affirmative vote of its stockholders approving
the consummation of the transactions contemplated hereby). The
execution and delivery of this Agreement and the transactions
contemplated hereby do not and will not violate any provision
of any agreement, document, or instrument affecting the
Property or the Purchased Assets to which Seller or any other
Seller Entity is a party or by which Seller, any other Seller
Entity, the Purchased Assets or the Property is bound, except
as otherwise set forth in this Agreement or in Section 8(e) of
the Disclosure Schedule and except for such violations as
would not have a Material Adverse Effect. None of the Seller
Entities has made any other agreements with any other party
with respect to the Purchased Assets or the Property which
would have a Material Adverse Effect. Except as set forth in
Section 8(e) of the Disclosure Schedule, the Purchased Assets
are owned by Seller free and clear of any lien or encumbrance
and are assignable and transferable without the consent of any
third party.
(f) Section 8(f) of the Disclosure Schedule sets forth a list of
Contracts and commitments related to the Purchased Assets and
the Property and requiring annual expenditures in excess of
$2,500. Except as set forth in Section 8(f) of the Disclosure
Schedule, to the Seller Entities' knowledge, each material
contract or agreement, commitment and instrument to which any
Seller Entity is a party or by which any Seller Entity is
bound is in full force and effect, and neither Seller nor any
other Seller Entity has received or delivered written notice
that it or any other party is in breach of, or default under,
any such contract, agreement, commitment or instrument, and,
to Seller's knowledge, no event has occurred that with notice
or passage of time or both would constitute such a breach or
default thereunder by any Seller Entity, or to the knowledge
of Seller, any other party thereto, except for such failures
to be in full force and effect and such breaches and defaults
which, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect. All amounts
required to be paid under such Contracts have been paid by
Seller other than amounts described in Section 8(f) of the
Disclosure Schedule, which are, in good faith, currently in
dispute and which, if determined adversely to Seller, would
not reasonably be expected to result in a lien on the
Property. True and correct copies of such Contracts have been
delivered to Buyer.
(g) Except as set forth in Section 8(g) of the Disclosure
Schedule, there is no litigation, proceeding, suit, action,
controversy, or claim existing, pending, or, to the Seller
Entities'
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<PAGE>
knowledge, threatened in writing against Seller or any other
Seller Entity which would have a Material Adverse Effect on
the consummation of the transactions contemplated by this
Agreement, the Seller Entities, the LLC, the Purchased Assets
or the Property. At or prior to the Closing, Seller and the
other Seller Entities will have complied in all material
respects with all laws, regulations, and ordinances applicable
to the transfer of the Purchased Assets and the Property.
There are no judgments existing, whether or not filed, against
Seller, any other Seller Entity or the Property which might
affect the Purchased Assets, the Property or Lower Tier LP,
except as set forth on Section 8(g) of the Disclosure
Schedule.
(h) Except as set forth in Section 8(h) of the Disclosure
Schedule, neither Seller nor any other Seller Entity has
received written notice of any violations of any laws,
ordinances, regulations, rules or orders issued by any
federal, state, or local governmental authority.
(i) Except as set forth in Section 8(i) of the Disclosure
Schedule, there are no options to purchase, rights of first
refusal or other similar agreements with respect to the
Purchased Assets or the Property or the Lower Tier LP
Interests which give any other person the right to purchase
the Purchased Assets, the Property or the Lower Tier LP
Interests or, in each case, any part thereof.
(j) Neither Metropolis nor any other Seller Entity has any
employees. The Property is managed by the Property Manager on
behalf of the Property Owning Partnership. Seller has provided
Buyer with a true and correct list of all union employees of
Property Manager relating to the Property.
(k) Metropolis is the sole stockholder of 237 GP Corp.
(l) Metropolis is the sole general partner of Lower Tier LP and
holds a 95% interest as the general partner therein. 237/1290
Upper Tier Associates, L.P., a Delaware limited partnership
("Upper Tier LP"), is the sole limited partner of Lower Tier
LP and holds a 5% interest as the limited partner therein.
Except as set forth in Section 8(l) of the Disclosure
Schedule, as of the date hereof, there are no outstanding
options, warrants, calls, subscriptions or other securities or
rights to purchase interests as a general partner or interests
as a limited partner in Lower Tier LP or securities
convertible into or exchangeable for interests as a general
partner or interests as a limited partner in Lower Tier LP.
There are no unfunded capital contribution obligations to
either Upper Tier LP or Lower Tier LP.
(m) 237 GP Corp. is the sole general partner of the Property
Owning Partnership and holds a 1% interest as general partner
therein. The sole limited partner of the Property Owning
Partnership is Lower Tier LP which holds the remaining 99%
interest as limited partner therein. Except as set forth in
Section 8(m) of the Disclosure Schedule, as of the date
hereof, there are no outstanding options, warrants, calls,
subscriptions or other securities or rights to purchase
interests as a general partner or interests as a limited
partner in the Property Owning Partnership or securities
convertible into or exchangeable for interests as a general
partner or interests as a limited partner in the Property
Owning Partnership.
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<PAGE>
There are no unfunded capital contribution obligations to the
Property Owning Partnership.
(n) The Property Owning Partnership has good and marketable fee
simple title to the Property free and clear of all liens and
encumbrances, except as set forth in Section 8(n) of the
Disclosure Schedule.
(o) Seller has delivered to Buyer a survey of the Property, dated
December 7, 1982 and re-certified December 13, 1996 to Chicago
Title Company.
(p) Except as set forth on Section 8(p) of the Disclosure
Schedule, there are no taxes outstanding against the Property,
other than those for which adjustment in the Purchase Price
are to be made.
(q) None of the Seller Entities is a foreign entity, foreign
corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Internal Revenue
Code and income tax regulations).
(r) The Seller Entities have filed all federal, state, county and
local tax returns required to be filed by them and have paid
all taxes, interest and penalties that have become due and
payable by each such entity, as applicable. There is no tax
deficiency or penalty owing with respect to the Property or
the Property Owning Partnership or Lower Tier LP.
(s) Except as set forth in Section 8(s) of the Disclosure
Schedule, none of the Seller Entities has any knowledge of,
nor have the Seller Entities received any written notice of,
any special taxes or assessments relating to the Property or
any part thereof or any planned public improvements that may
result in a special tax or assessment against the Property
which is not of public record.
(t) Metropolis has made available to Buyer copies of each
registration statement, report, proxy statement, information
statement or schedule filed with the SEC by Metropolis or its
predecessor since October 10, 1996 (the "Seller SEC
Documents"). As of their respective dates, with respect to
statements, financial data and all other disclosure directly
related to the Property, Lower Tier LP, the Property Owning
Partnership or 237 GP Corp., the Seller SEC Documents complied
in all material respects with the applicable requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the applicable rules and regulations of the
Securities and Exchange Commission (the "SEC") promulgated
thereunder, and, with respect to statements, financial data
and all other disclosure directly related to the Property,
Lower Tier LP, the Property Owning Partnership or 237 GP
Corp., none of such Seller SEC Documents contained any untrue
statement of a material fact or omitted 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 were made, not misleading.
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<PAGE>
(u) To Seller Entities' knowledge, except as set forth in Section
8(u)(i) of the Disclosure Schedule, (i) the Property and the
current use and operation thereof do not violate any material
federal, state, municipal and other governmental statutes,
ordinances, by-laws, rules, regulations or any other legal
requirements, including, without limitation, those relating to
construction, occupancy, zoning, subdivision, land use,
adequacy of parking, occupational health and safety and fire
safety applicable thereto except where any such violation
would not have a Material Adverse Effect; and (ii) the
Property Owning Partnership holds, and there are presently in
effect, all licenses, permits and other authorizations
necessary for the current use, occupancy and operation
thereof, except for such licenses, permits and other
authorizations the failure to have which would not have a
Material Adverse Effect. Except as set forth in Section
8(u)(ii) of the Disclosure Schedule, no Seller Entity has
received written notice of any threatened request,
application, proceeding, plan, study or effort which would
have a Material Adverse Effect on the current use or zoning of
the Property or which would materially adversely modify or
realign any adjacent street or highway.
(v) Except as set forth in Section 8(v) of the Disclosure Schedule
or as described in any environmental report delivered to
Buyer, to Seller's knowledge, the Property Owning Partnership
has not stored or disposed of (or engaged in the business of
storing or disposing of) or released or caused the release of
any Hazardous Materials on the Property, or any portion
thereof, the removal of which is required or the maintenance
of which is prohibited or penalized by any Environmental Law,
and, to Seller's knowledge, except as described in any
environmental report delivered to Buyer, the Property is free
from any such Hazardous Materials, except any such materials
maintained in the ordinary course of business in accordance
with applicable law.
(w) Except as otherwise expressly provided in this Agreement or
any documents to be delivered to Buyer at the Closing and
subject to Section 13(a) hereof, Seller disclaims the making
of any representations or warranties, express or implied,
whether made by Seller, on Seller's behalf or otherwise, by
any agent, broker or realtor, officer, director or
representative of Seller, including, without limitation,
representations or warranties with respect to the physical
condition of the Property, title to or the boundaries of the
Property, pest control matters, soil conditions, the presence,
existence or absence of Hazardous Materials or other
environmental matters, compliance with building, health,
safety, land use and zoning laws, regulations and orders,
structural and other engineering characteristics, traffic
patterns, market data, economic conditions or projections, and
any other information pertaining to the Property or the market
and physical environments in which it is located.
(x) Except as described in Section 8(x) of the Disclosure
Schedule, neither the Seller Entities nor the Property Manager
are a party to any union, labor or collective bargaining
agreements or other employment agreements affecting the
Property.
(y) Except as set forth in Section 8(y) of the Disclosure
Schedule, neither Lower Tier LP nor the Property Owning
Partnership has any indebtedness (other than trade payables in
the
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ordinary course of business): (i) for borrowed money or for
the deferred purchase price of property, (ii) evidenced by a
note, bond, debenture or similar instrument (other than the
Chase Indebtedness), (iii) secured by a lien on any property
owned by such party (other than the Chase Indebtedness)
(whether or not such indebtedness has been assumed) except
obligations for impositions which are not yet due and payable,
or (iv) in the nature of a direct or indirect guarantee of any
indebtedness or other obligation of any other person in any
manner. Metropolis has no indebtedness of the type described
in the preceding sentence which is secured, in whole or in
part, by the Purchased Assets or the Property.
(z) Seller represents and warrants that Section 8(z) of the
Disclosure Schedule sets forth a true and correct list of all
pending tax certiorari proceedings filed by Seller with
respect to the Property and the name of the attorney
representing Seller in connection therewith.
(aa) Seller represents and warrants that it has not sold, assigned,
transferred, encumbered or otherwise conveyed any air rights
or future development rights, if any, with respect to the
Property. To Seller's knowledge (without any independent
investigation, except as required by the definition of
"knowledge" herein) no other person or entity has sold,
assigned, transferred, encumbered or otherwise conveyed any
air rights or future development rights, if any, with respect
to the Property. Notwithstanding anything to the contrary
contained in this Agreement, Seller is not making any
representation or warranty regarding the existence or
non-existence of any air rights, future development rights or
other zoning matters with respect to the Property, nor shall
the non-existence thereof give Buyer any right to terminate
this Agreement, except in connection with a breach by Seller
of the representation and warranty set forth in this Section
8(aa) or Seller's covenant in Section 10(e).
(bb) Section 8(bb)(1) of the Disclosure Schedule sets forth a list
of all Leases affecting the Property. Seller represents and
warrants that it has delivered to Buyer true and correct
copies of all such Leases and that no person has any right to
occupy the Property except pursuant to such Leases. Seller
represents and warrants that, except as set forth in Section
8(bb)(2) of the Disclosure Schedule, (i) there are no
outstanding tenant improvement allowances payable to any
tenant pursuant to any Lease, (ii) no rent under any Lease has
been paid more than one (1) month in advance, (iii) Seller has
not received written notice of any landlord default or lease
termination under any Lease, (iv) Seller has not sent written
notice of any default or termination under any Lease to any
tenant, (v) there are no unpaid leasing commissions under any
Lease and (vi) there are no rent abatements under any Lease.
(cc) Seller has delivered to Buyer true and correct copies of the
organizational documents of each of the Seller Entities,
together with all amendments and supplements thereto, and,
except as set forth in Section 8(cc) of the Disclosure
Schedule, such documents have not been amended or modified as
of the date hereof.
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(dd) Seller represents and warrants that all personalty necessary
for the use, maintenance and operation of the Property is
owned by the Seller Entities free and clear of any liens or
encumbrances.
(ee) Seller represents and warrants that (i) Section 8(cc) of the
Disclosure Schedule sets forth a true and complete list of all
agreements relating to the arrangements between any of the
Seller Entities and JMB or its affiliates (the "JMB
Agreements") and (ii) Seller has delivered to Buyer true and
correct copies of all such agreements.
9. Representations and Warranties of Buyer.
---------------------------------------
Buyer hereby represents and warrants to Seller as follows:
(a) Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has full power and authority to carry on its
current business and to own, use and sell its assets and
properties.
(b) Buyer has full power and authority and all necessary approvals
to enter into this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby will have been duly authorized by Buyer's
sole member. The execution and delivery of this Agreement and
the transactions contemplated hereby do not and will not (i)
violate any provision of any agreement, document, or
instrument to which Buyer is a party or by which Buyer is
bound, except as otherwise set forth in this Agreement, or
(ii) violate any provision of the organizational documents of
Buyer. Buyer has made no other agreements with any other party
with respect to the Purchased Assets or the Property which
would have a Material Adverse Effect.
(c) Except as set forth in Section 9(c) of the Disclosure
Schedule, there is no litigation, proceeding, suit, action,
controversy, or claim existing, pending, or, to the best of
Buyer's knowledge, threatened against Buyer which might affect
the Purchased Assets or the Property or the transfer thereof
to Buyer, and there is no basis known to Buyer for any such
litigation, proceeding, suit, action, controversy, or claim.
At Closing, Buyer will have complied with all laws,
regulations, and ordinances applicable to the transfer of the
Purchased Assets and the Property. At the date hereof and at
Closing there will be no judgments or liens existing, whether
or not filed, against Buyer which would have a Material
Adverse Effect on the Purchased Assets, except as herein set
forth.
(d) Buyer is not a foreign entity, foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms
are defined in the Internal Revenue Code and income tax
regulations).
(e) Buyer has or shall have at the Closing sufficient cash,
available lines of credit or other sources of immediately
available funds to enable it to make payment of the Purchase
Price and any other amounts paid by it to hereunder.
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<PAGE>
(f) Except as otherwise expressly provided in this Agreement or
any documents to be delivered to Buyer at the Closing, Buyer
disclaims the making of any representations or warranties,
express or implied, whether made by Buyer, on Buyer's behalf
or otherwise.
10. Covenants of Seller.
--------------------
(a) Closing Status. As of the Closing Date,
(i) The LLC shall not have issued any interests other than
the Class 237 Interests and the Class 1290 Interests.
There shall be no outstanding options, warrants, calls,
subscriptions or other securities or rights to purchase
any Class 237 Interests or securities convertible into
or exchangeable for Class 237 Interests. As of the
Closing Date, all of the issued and outstanding Class
237 Interests shall be duly authorized and validly
issued, fully paid, non-assessable and free of
preemptive rights with respect thereto;
(ii) The LLC shall be a limited liability company duly
formed, validly existing and in good standing under the
laws of the State of Delaware and shall have full power
and authority to carry on its business and to own, use
and sell its assets and properties;
(iii) Metropolis shall be the sole and managing member of the
LLC and shall hold a 100% interest as the sole member
therein including all of the Class 237 Interests free
and clear of all liens and encumbrances other than such
liens and encumbrances resulting from the consummation
of the transactions contemplated by this Agreement in
favor of Buyer, if any; and
(iv) The LLC shall be the sole general partner of Lower Tier
LP and shall hold a 95% interest as the general partner
therein free and clear of all liens and encumbrances
other than such liens and encumbrances resulting from
the consummation of the transactions contemplated by
this Agreement in favor of Buyer, if any. There shall
be no outstanding options, warrants, calls,
subscriptions or other securities or rights to purchase
any of the LLC's interest in Lower Tier LP or
securities convertible into or exchangeable for
interests in Lower Tier LP.
(v) Lower Tier LP shall be the sole limited partner of the
Property Owning Partnership and shall hold a 99%
interest as the limited partner therein free and clear
of all liens and encumbrances other than such liens and
encumbrances resulting from the consummation of the
transactions contemplated by this Agreement in favor of
Buyer, if any.
(b) Conduct of Business Prior to Closing. Seller covenants that
from and after the date hereof and until the consummation of
the Closing or the earlier termination of this Agreement in
accordance with its terms, unless otherwise agreed in writing
by Buyer:
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(i) Seller shall cause the Property Owning Partnership to
continue maintenance, operation, management and
marketing of the Property in the ordinary course of
business consistent with past practice.
(ii) Seller shall not, and shall cause the other Seller
Entities not to, engage in any sale or enter into any
transaction, contract or commitment, or incur any
liability or obligation including any indebtedness of
the type set forth in Section 8(y), other than in the
ordinary course of business.
(iii) Seller shall not, and shall cause the other Seller
Entities not to, enter into any new contract which
provides for the expenditure of more than $2,500 per
year for goods or services, or any lease or agreement
(including the leases described in Section 10(b)(iii)
of the Disclosure Schedule) regarding the Property or
the Purchased Assets unless such contract, lease or
agreement shall not be binding upon the Property Owning
Partnership or the Property or shall be terminable upon
written notice from Buyer or the Property Owning
Partnership without payment of any fee, premium or
penalty, in each case without the prior written consent
of Buyer (which consent shall not be unreasonably
withheld or delayed).
(iv) Seller shall not, and shall cause the other Seller
Entities not to, terminate or amend any existing Lease
or accept the surrender of any existing Lease regarding
the Property.
(v) Seller and the Lower Tier LP shall cause the Property
Owning Partnership to carry and continue in force
through the Closing Date current levels of fire and
extended coverage insurance, as well as theft,
liability and other current insurance coverage, it
being agreed that in the event of a casualty prior to
the Closing Date, the rights and liabilities of the
parties shall be determined in accordance with Section
7 hereof.
(vi) Seller shall not, and shall cause the other Seller
Entities not to, amend, modify or terminate any
Contract which provides for the expenditure of more
than $2,500 per year for goods or services without
Buyer's consent (which consent (i) shall not be
unreasonably withheld or delayed and (ii) shall not be
required if such amendment, modification or termination
would not be binding upon the Buyer or the Property
Owning Partnership after Closing or if such amendment,
modification or termination does not significantly
increase the economic obligations of Seller, Buyer or
the Property Owning Partnership).
(vii) Seller shall not, and shall cause the other Seller
Entities not to, amend, modify or restate the
Partnership Agreement or the Property Owning
Partnership Agreement without the prior written consent
of Buyer (which consent shall not be unreasonably
withheld or delayed); provided, however, that the
Seller Entities may amend, modify or restate such
agreements to the extent required to consummate the
transactions contemplated hereby.
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(viii) Seller shall not sell or permit the sale of all or any
portion of the Property (including, without limitation,
any personal property, improvements or fixtures).
(c) Notwithstanding the foregoing Sections 10(a) and 10(b), Seller
may consummate the leasing transactions described in the
footnotes of Section 3 of the Disclosure Schedule and make the
capital expenditures described in the footnotes of Section 3
the Disclosure Schedule, in each case upon the prior written
consent of Buyer (which consent shall not be unreasonably
withheld or delayed).
(d) Seller shall, and shall cause the Seller Entities to, use
commercially reasonable efforts to cooperate with Buyer in
connection with obtaining the New Indebtedness, which
cooperation shall include, (i) assisting with any required
amendments or modifications to the existing loan documents for
the Chase Indebtedness and/or the organizational documents of
the Seller Entities as may be reasonably requested by Buyer's
lender to the extent permitted under the JMB Agreements, (ii)
to the extent not previously distributed to Buyer or its
representatives, providing Buyer's lender with any information
regarding the Seller Entities and the Property in their
possession (or which can be reasonably obtained by them
without undue cost) which can be disclosed without violating
any applicable law or breaching any applicable confidentiality
agreement (including financial statements) that, in the
reasonable opinion of such lender, is necessary or desirable,
(iii) forming limited liability companies that are directly or
indirectly wholly owned by the Property Owning Partnership to
own the Property, (iv) amending, to the extent permitted under
the JMB Agreements, the Property Owning Partnership Agreement,
and (v) assisting Buyer in obtaining the items reasonably
required by its lender as a condition to closing the New
Indebtedness, including tenant estoppel certificates,
subordination, non-disturbance and attornment agreements,
title insurance, insurance certificates, third-party reports
and other customary closing deliveries; provided, that; (x)
Buyer shall reimburse Seller for its out-of-pocket costs
incurred in connection with such cooperation and (y) the
failure to accomplish any of the foregoing shall not give rise
to an independent right in favor of Buyer to terminate this
Agreement.
(e) After the date hereof and prior to the Closing Date, Seller
covenants that it will not sell, assign, transfer or otherwise
convey any air rights or future development rights, if any,
with respect to the Property. Notwithstanding anything to the
contrary contained in this Agreement, Seller is not making any
representation or warranty regarding the existence or
non-existence of any air rights, future development rights or
other zoning matters with respect to the Property, nor shall
the non-existence thereof give Buyer any right to terminate
this Agreement, except to the extent Seller has breached its
representation and warranty contained in Section 8(aa) hereof
or its covenant contained in Section 10(e) hereof.
(f) From and after the date hereof, Buyer and its representatives
may contact JMB/NYC Office Building Associates, L.P. ("JMB")
and its representatives for purposes of discussing the
transactions contemplated hereby and a restructuring of JMB's
interest in 237/1290 Upper Tier Limited Partnership, L.P.;
provided, that no such contact or
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discussions shall occur unless, in each instance, Seller or
its representatives are present and permitted to participate
in such discussions or give their consent in writing to Buyer
proceeding without such presence. Seller agrees to cooperate
with reasonable requests of Buyer with respect to scheduling
such contacts and meetings, the negotiations regarding such
restructuring, and, if Buyer, Seller and JMB agree to
restructure the transactions contemplated hereby and/or the
timing thereof, Seller agrees to cooperate in the
implementation of such restructuring. Notwithstanding anything
to the contrary contained in this Agreement, Seller shall not
be required to take any action reasonably determined by Seller
to adversely affect any of the Seller Entities, the Purchased
Assets or the Property.
(g) Seller shall not, and shall not permit the Property Owning
Partnership or the Lower Tier LP to, make any distribution of
funds or otherwise declare any dividend or payment, with
respect to any income (including insurance and loss proceeds
of any kind) received by the Property Owning Partnership or
the Lower Tier LP relating to any extraordinary event such as
a casualty, condemnation, lease termination, litigation,
financing or refinancing (other that the New Indebtedness) or
any other non-recurring or capital event; it being understood
and agreed that (i) any escrows related to the Chase
Indebtedness released by Chase, (ii) the Warburg Pincus
Amount, (iii) the Mizrahi Amount and (iv) any cash held by the
Property Owning Partnership as of the date hereof (other than
the amount described in Section 5(d)(xv) above) and/or
generated from the Property Owning Partnership's operations
prior to the Closing Date, may be distributed at any time and
from time to time prior to the Closing Date by the Property
Owning Partnership to the Lower Tier LP and, in turn, from the
Lower Tier LP to Metropolis.
11. Brokerage.
---------
(a) Seller represents and warrants that, except as set forth in
Section 11(a) of the Disclosure Schedule, Seller has had no
dealings with respect to the transactions contemplated hereby
with any agent, broker or realtor. Seller agrees that any
broker's commission payable to any agent, broker or realtor
(including any person set forth in Section 11(a) of the
Disclosure Schedule) as a result of the consummation of the
transactions contemplated by this Agreement shall be paid by
Seller, and Seller agrees to hold Buyer harmless from any
claim or cost for such a commission.
(b) Buyer represents and warrants that, except as set forth in
Section 11(b) of the Disclosure Schedule, Buyer has had no
dealings with respect to the transactions contemplated hereby
with any agent, realtor, or broker. Buyer agrees that any
broker's commission payable to any agent, broker or realtor
retained by Buyer shall be paid by Buyer, and Buyer agrees to
hold Seller harmless from any claim or cost for such a
commission.
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12. Tax Status.
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It is understood that neither of the parties hereto has made any
representations or warranties (except as specifically set forth herein) to the
others as to the tax status or effect of the transactions contemplated by this
Agreement, and each is relying on its respective counsel as to such matters.
13. Limitations and Survival of Representations and Warranties.
----------------------------------------------------------
(a) Buyer acknowledges that it has conducted and will complete its
own due diligence with respect to the Purchased Assets and the Property prior to
Closing and is familiar with the operations of Lower Tier LP, 237 GP Corp. and
the Property Owning Partnership, the Purchased Assets and the Property, and,
except as otherwise expressly provided herein and in documents provided by
Seller at or prior to Closing, shall accept the Purchased Assets and the
Property "as is, where is" and in their present condition, subject to reasonable
use, wear, tear and natural deterioration to the Purchased Assets or the
Property between date hereof and the Closing Date, without any reduction in the
Purchase Price for any change in such condition. Upon delivery by the Seller
Entities to Buyer of all documents attached or referred to in the Disclosure
Schedule or exhibits hereto, or specifically requested by Buyer in writing on or
before October 6, 1999 , Buyer shall be deemed to have received and examined to
its satisfaction all such documents. Except as expressly set forth herein,
Seller has not made and does not make any representations or warranties, either
express or implied, with respect to Seller or any other Seller Entity, the
Purchased Assets, or the Property, including, without limitation, the present or
future financial performance of the Property, the operations of the Property,
the physical condition, fitness for a particular purpose or merchantability of
any of the Property, the status of title and survey with respect to the
Property, the availability of any air rights or future development rights with
regard to the Property (and Buyer's ability to obtain any requisite approvals or
permits for same shall not be a condition or contingency to the performance of
Buyer's obligations under this Agreement) or the compliance by the Seller or the
Property with any law, ordinance or regulation, including, without limitation,
those related to the environment, zoning, land use, subdivision laws, handicap
access or building codes. In entering into this Agreement, except as
specifically set forth herein, (i) Buyer has not been induced by and has not
relied upon any representations, warranties or statements, whether express or
implied, made by any third party, including, without limitation, the Seller
Entities (other than Seller), their respective brokers or agents, employees,
affiliates, or other representatives, or by any broker or any other person
representing or purporting to represent Seller, which are not expressly set
forth herein or in any document to be delivered to Buyer at the Closing, and
(ii) Buyer has entered into this Agreement with the intention of making and
relying upon its own investigation or that of third parties with respect to the
physical, environmental, economic and legal condition of each Property.
(b) Without negating the covenants, representations and warranties of
Seller under this Agreement, Buyer further acknowledges that it has not received
from or on behalf of Seller or any other Seller Entity any accounting, tax,
legal, architectural, engineering, property management or other advice with
respect to this transaction and is relying solely upon the advice of third party
accounting, tax, legal, architectural, engineering, property management and
other advisors.
(c) Subject to Sections 5(e) and 6(c) hereto, the representations,
warranties, covenants, and agreements herein contained on the part of each of
the parties hereto shall be deemed and construed to be
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continuing representations, warranties, covenants, and agreements of each such
party, that shall survive the Closing for the period of one (1) year after
Closing; provided, however, that with respect to tax matters related to the
Seller Entities, such representations, warranties, covenants and agreements
shall survive until thirty (30) days after expiration of the applicable statute
of limitations related to such tax matters. Seller and Buyer each agree
respectively to indemnify and hold harmless the other against and with respect
to all Damages in accordance with Section 15 hereof. Seller covenants and agrees
not to liquidate or dissolve itself prior to the first anniversary of the
Closing Date. Thereafter, if Seller seeks to liquidate or dissolve itself, it
shall make adequate provision for the discharge of its obligations under Section
15 hereof in a manner reasonably satisfactory to Buyer including, without
limitation, the establishment of an escrow or the posting of a letter of credit
in respect of such obligations.
14. Covenant of Further Assurances; Covenants of Buyer and Seller;
Apportionments Reconciliation.
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(a) From time to time, before and for the period of one (1) year
after Closing, Seller will execute and deliver such further instruments of
conveyance and transfer reasonably requested and take such other action as Buyer
reasonably may require to more effectively convey and transfer to Buyer the
Purchased Assets and otherwise fulfill its agreements hereunder. From time to
time, before and for a period of one (1) year after Closing, Buyer, will execute
and deliver such further instruments and take such other actions as Seller may
reasonably require with respect to this Agreement.
(b) The parties hereto agree to allocate 99% of the Purchase Price to
the Class 237 Interest and the remaining 1% of the Purchase Price to the 237 GP
Interest.
(c) If at any time after the Closing Date, the amount of any
adjustments and prorations shall prove to be incorrect (whether as a result of
an error in calculation or a lack of complete and accurate information as of the
Closing), the party in whose favor the error was made shall promptly pay to the
other party the sum necessary to correct such error upon receipt of proof of
such error, provided that such proof is delivered to the party from whom payment
is requested no later than the one (1) year anniversary of the Closing Date. The
provisions of this Section shall survive the Closing.
(d) Seller shall have the right to process and pursue an application
for the reduction of the assessed valuation of the Property or any portion
thereof for real estate tax years for the City of New York prior to the real
estate tax year which commenced July 1, 1999 and ends June 30, 2000 (the
"Current Tax Year"). Buyer shall have the right to process and pursue an
application for the reduction of the assessed valuation of the Property or any
portion thereof for the Current Tax Year and all subsequent years. Buyer and
Seller shall cooperate with each other in connection with any such proceeding
and Seller shall provide Buyer with information regarding any such proceeding
instituted by Seller which could affect the real estate taxes payable for the
Current Tax Year or any subsequent year. Neither Seller nor Buyer, as the case
may be, shall withdraw, settle or otherwise compromise any protest or reduction
proceeding affecting real estate taxes relating to the Current Tax Year without
the prior consent of the other party, which consent shall not be unreasonably
withheld, conditioned or delayed. All refunds for tax years prior to the Current
Tax Year (net of reasonable out-of-pocket costs and amounts required to be
returned to tenants under any current or prior Lease) shall belong solely to
Seller and, upon receipt by Buyer, its successors or assigns, same shall be held
in trust by Buyer for Seller and paid within five (5) business days to, or as
directed in writing
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by, Seller. The amount of any tax refunds with respect to any portion of the
Property for the Current Tax Year shall be apportioned between Seller and Buyer
as of midnight on the day preceding the Closing Date and Seller's share thereof
shall be paid to Seller within five (5) business days of Buyer's receipt thereof
(provided, Seller's share shall be determined after reducing the tax refund by
any amounts payable to tenants and the out-of-pocket costs incurred in
connection with procuring such refund). If in lieu of a tax refund, a tax credit
is received, then within thirty (30) days after receipt by Seller or Buyer, as
the case may be, of evidence of the actual amount of such tax credit, the tax
credit apportionment shall be readjusted between Buyer and Seller. Promptly
after application by Buyer of the amount of such tax credit against taxes next
due and payable Buyer shall deliver to Seller the amount of Seller's share of
such tax credit (less amounts payable to tenants and the reasonable costs of
obtaining such tax credit). The provisions of this Section shall survive the
Closing. Seller covenants and agrees that without the written consent of Buyer
(which consent shall not be unreasonably withheld or delayed) Seller shall not,
and shall cause the Seller Entities not to, settle real estate tax claims with
respect to any year that could reasonably be expected to adversely affect the
Current Tax Year or future years.
(e) Buyer acknowledges that Seller shall retain all right, title and
interest in and to (i) that certain note repayment in the amount of
$4,354,758.09 (the "Warburg Pincus Amount") due on October 31, 1999 from E.M.
Warburg Pincus & Co., LLC and (ii) the amount of $27,500.00 (the "Mizrahi
Amount") due on or before January 15, 2000 from Albert Mizrahi et. al. pursuant
to that certain Stipulation of Settlement dated as of July, 1999. If and to the
extent either such amounts are delivered to Buyer, Buyer shall hold such amounts
in trust for and for the benefit of Seller and promptly remit such amount to
Seller.
15. Indemnification.
---------------
(a) Deductible and Cap. (i) Indemnification by Seller. In no event
shall Seller be liable to Buyer for any breach of the representations,
warranties, covenants and agreements included or provided for herein or in any
schedule or certificate or other document delivered pursuant to this Agreement,
unless and until all claims for which Damages are recoverable hereunder by Buyer
exceed $2,000,000 (the "Deductible"), in which case Buyer shall be entitled to
Damages in the amount up to $20,000,000 in the aggregate (the "Cap") and Seller
shall be liable for all such Damages, including the Deductible.
(ii) Indemnification by Buyer. In no event shall Buyer be liable to
Seller for any breach of the representations, warranties, covenants and
agreements included or provided for herein or in any schedule or certificate or
other document delivered pursuant to this Agreement, unless and until all claims
for which Damages are recoverable hereunder by Seller exceed the Deductible, in
which case Seller shall be entitled to Damages in the amount up to the Cap,
including the Deductible.
(b) Indemnification. (i) For a period commencing on the Closing Date
and ending upon the expiration of the period specified in Section 13(c) hereof,
Seller, on the one hand, or Buyer, on the other hand (the "Indemnifying Party"),
shall, subject to the limitations set forth in Sections 5(e), 6(c) and 13(c)
hereof, indemnify respectively, Buyer, on the one hand, or Seller, on the other
hand, as the case may be (the "Indemnified Party"), against and in respect of
Damages sustained or incurred by such Indemnified Party or any of their
respective subsidiaries, officers, directors, members, partners, agents and
representatives arising out of any breaches of the Indemnifying Party's
representations, warranties,
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covenants and agreements set forth in this Agreement. Subject to Subsection (d)
below, any payments pursuant to this Section 15(b) shall be treated as an
adjustment to the Purchase Price for tax purposes.
(ii) Following the Closing, the indemnity provided herein as it
relates to this Agreement and the transactions contemplated by this Agreement
shall be the sole and exclusive remedy of the parties hereto, their affiliates,
successors and assigns with respect to any and all claims for Damages sustained
or incurred arising out of this Agreement and the transactions contemplated by
this Agreement. Payments to Buyer or Seller, as the case may be, hereunder in
respect of any Damages shall be deducted from the Cap, including the Deductible.
(iii) Following the Closing, Seller shall indemnify, defend and
hold harmless Buyer from and against all Damages incurred by Buyer in connection
with any third party claims or proceedings, as incurred, to the extent such
claims relate to, arise out of or are a result of, events, facts and
circumstances that occurred prior to the Closing Date with respect to Seller,
the Property, the Purchased Assets, LLC, Lower Tier LP or the Property Owning
Partnership, including the personal injury claims and proceedings set forth in
Section 8(g) of the Disclosure Schedule; provided, that Seller shall not have
any liability or obligation under this Section 15(b)(iii) in respect of (x)
claims made after the date that is 90 days after the sixth anniversary of the
Closing Date (or, if shorter, the applicable statute of limitations with respect
to such claims), and (y) claims first arising out of events occurring after the
Closing, notwithstanding that such claims may relate to the financial
performance or operation of the Property prior to Closing, the physical
condition, fitness for a particular purpose or merchantability of any of the
Property as of the Closing, the status of title and survey with respect to the
Property as of the Closing, the availability of any air rights or future
development rights with regard to the Property (except to the extent Seller has
breached its representation and warranty contained in Section 8(aa) hereof or
its covenant contained in Section 10(e) hereof) as of the Closing, or the
compliance by the Seller or the Property with any law, ordinance or regulation,
including, without limitation, those related to the environment, zoning, land
use, subdivision laws, handicap access or building codes, as of the Closing.
(iv) Following the Closing, Buyer shall indemnify, defend and hold
harmless Seller, LLC and the other Seller Entities from and against all Damages
incurred by Seller in connection with any third party claims or proceedings, as
incurred, to the extent such claims relate to, arise out of or are a result of,
events, facts and circumstances that occurred after the Closing Date with
respect to Seller, the Property, the Purchased Assets, LLC, Lower Tier LP or the
Property Owning Partnership.
(c) Method of Asserting Claims, etc. All claims for indemnification
by any Indemnified Party hereunder shall be asserted and resolved as set forth
in this Section 15(c). Upon mutual agreement of the parties hereto, any claim
arising under this Agreement may be submitted to an arbitration tribunal for
resolution, which resolution shall be binding on all parties hereto. No party
hereto shall be entitled to indemnification payments unless the underlying claim
is a Liquidated Claim; provided, that the out-of-pocket costs (including,
without limitation, reasonable attorneys' fees) of investigating, asserting,
prosecuting or defending such a claim shall be payable on a current basis as
incurred. If any written claim or demand for which an Indemnifying Party could
be liable to any Indemnified Party hereunder is asserted against or sought to be
collected from any Indemnified Party by a third party (a "Third Party Claim"),
such Indemnified Party shall promptly, but in no event more than 15 days
following such Indemnified Party's receipt of such claim or demand, notify the
Indemnifying Party of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not in any
manner
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prejudice the right of the Indemnified Party to indemnification to the fullest
extent provided hereunder (the "Third Party Claim Notice") and in the event that
an Indemnified Party shall assert a claim for indemnity under this Section 15,
not including a Third Party Claim, the Indemnified Party shall notify the
Indemnifying Party promptly following its discovery of the facts or
circumstances giving rise thereto (together with a Third Party Claim Notice, a
"Claim Notice"); provided, that the failure to notify on the part of the
Indemnified Party in the manner set forth herein shall not foreclose any rights
otherwise available to such Indemnified Party hereunder, except to the extent
that the Indemnifying Party is prejudiced by such failure to notify. The
Indemnifying Party shall have 30 days from the receipt of the Claim Notice
(except that such period shall be decreased to a time 10 days before a scheduled
appearance date in a litigation matter) (the "Notice Period") to notify the
Indemnified Party (i) whether or not the Indemnifying Party disputes the
liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such claim or demand and (ii) whether or not it desires to defend the
Indemnified Party against such claim or demand, which it shall not be entitled
to do until the Deductible is exceeded. If the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against such claim or demand, which it shall not be entitled
to do until the Deductible is exceeded, the Indemnifying Party shall have the
right to defend the Indemnified Party by appropriate proceedings and by counsel
reasonably acceptable to the Indemnified Party. If any Indemnified Party desires
to participate in, but not control, any such defense or settlement it may do so
at its sole cost and expense. The Indemnifying Party shall not settle a claim or
demand without (a) the consent of the Indemnified Party, which consent shall not
be unreasonably withheld or delayed or (b) an unconditional release of the
Indemnified Party from all liability arising out of such action.
(d) Computation of Damages Subject to Indemnification. The actual
amount of any Damages for which indemnification is provided pursuant to this
Section 15 shall be computed net of any net insurance proceeds received by the
Indemnified Party in connection with such Damages. For purposes of this
subsection, the term "net insurance proceeds" shall mean the insurance proceeds
received by the Indemnified Party less the amount of any premiums paid directly
in respect thereof and any retrospective premium adjustments or reimbursement
obligations relating thereto and less any increase in premiums directly
attributable thereto.
16. Termination. This Agreement may be terminated at any time prior to the
Closing for the following reasons only:
(a) Mutual written consent of Buyer and Seller.
(b) By Buyer, upon failure of Seller to (i) satisfy any of the
conditions set forth in Section 5 hereof, or (ii) provided
Buyer is not itself in default hereunder and is ready, willing
and able to close, Seller's failure to consummate the
transactions contemplated by this Agreement, in each case, on
or prior to December 10, 1999 or such earlier date determined
in accordance with Section 4 hereof.
(c) By Seller, upon failure of Buyer to (i) satisfy any of the
conditions set forth in Section 6 hereof, or (ii) provided
Seller is not itself in default hereunder and is ready,
willing and able to close, Buyer's failure to consummate the
transactions contemplated by this
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Agreement, in each case, on or prior to December 10, 1999 or
such earlier date determined in accordance with Section 4
hereof.
(d) By Buyer or Seller if any court of competent jurisdiction
shall have issued, enacted, entered, promulgated or enforced
any order, judgment, decree, injunction or ruling which
restrains, enjoins or otherwise prohibits the transactions
contemplated by this Agreement and such order, judgment,
decree, injunction or ruling shall have become final and
non-appealable.
(e) By Buyer in accordance with Section 3(d).
(f) By either party that has not defaulted hereunder if the
transactions contemplated by this Agreement have not been
consummated prior to December 10, 1999.
In the event of termination of this Agreement by either or both Buyer and Seller
pursuant to Section 16(a) through (e), written notice thereof shall forthwith be
given by the terminating party to the other party hereto, and this Agreement
shall thereupon terminate and become void and have no effect, the Deposit shall
be distributed in accordance with Section 3 hereof, and the transactions
contemplated hereby shall be abandoned without further action by the parties
hereto, except that the provisions of Section 18(e) (Governing Law) and 18(d)
(Notices) shall survive the termination of this Agreement; provided, however,
that such termination shall not relieve any party hereto of any liability for
any breach of this Agreement, it being understood and agreed that such liability
shall be limited in accordance with the provisions of Section 3 hereof.
17. Expenses.
Except as otherwise specifically provided herein, each party shall
pay its own expenses in connection with this Agreement and the
consummation of the transactions contemplated herein. In particular,
(i) Seller shall pay all transfer taxes, conveyance fees, documentary
stamps and other similar taxes and charges imposed by any
governmental authority in connection with the conveyance of the
Purchased Assets or subsequent transfer of the Property to Buyer
regardless of customary practice in each jurisdiction and (ii) Buyer
shall pay any and all recording fees, if any, payable to any taxing
authority relating to the deed and other instruments of conveyance
and any mortgage or deed of trust recording taxes or fees in
connection with any financing obtained by Buyer. To the extent not
paid on or prior to Closing, Seller hereby agrees to deposit in
escrow with the Escrow Agent, at Closing, out of the Purchase Price,
an amount sufficient to pay such transfer taxes, conveyance fees,
documentary stamps and other similar taxes and charges imposed by any
governmental authority in connection with the conveyance of the
Purchased Assets to Buyer, or subsequent transfers of the Property
the amount and terms of such escrow to be reasonably satisfactory to
Buyer.
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18. Miscellaneous.
(a) (1) Buyer acknowledges that as a result of the relationship
formed by this Agreement and the LLC Agreement, it may come
into possession of certain material non-public information
with respect to the Seller Entities or their respective
operations or other assets thereof, including, without
limitation, with respect to the Seller Entities' and their
affiliates' direct and indirect interests in that certain real
property known as 1290 Avenue of the Americas ("Confidential
Information"). Buyer agrees not to, directly or indirectly,
use, publish, disseminate, describe or otherwise disclose any
such Confidential Information; provided, however, that Buyer
may disclose Confidential Information (i) to its partners,
officers, directors, employees, affiliates, investors, agents,
advisors and lenders (including without limitation any
accountants, attorneys, financial advisors) (the
"Representatives") who need to know such information for the
purpose of evaluating the transactions contemplated hereby or
in connection with the Purchased Assets or the Property (it
being understood and agreed that Buyer shall advise such
persons of their obligations concerning the confidentiality of
all client affairs and information and shall instruct such
persons to maintain the confidentiality of such Confidential
Information in accordance with the terms of this agreement),
(ii) pursuant to a subpoena or other legal process received in
connection with a judicial, administrative or regulatory
proceeding in which Buyer or any of its Representatives are
involved, subject to the provisions of Section 18(e); and
(iii) to the extent that it is required to be disclosed by law
or the rules or regulations of any relevant regulatory
organization, or otherwise deemed advisable in the opinion of
counsel to Buyer; provided, that, in the case of (ii) and
(iii), Buyer shall provide Seller promptly with prior written
notice of such matter and cooperate with Seller (at Seller's
cost and expense) to the extent Seller seeks a protective
order to prevent the disclosure of all or any portion of such
Confidential Information.
(2) The Seller Entities acknowledge that as a result of the
relationship formed by this Agreement and the LLC Agreement,
the Seller Entities may come into possession of certain
material non-public information with respect to the Buyer and
its investors and affiliates. The Seller Entities will not,
without the prior written consent of Buyer, disclose to any
person (including any other potential buyer) (i) the identity
of Buyer, or any of its investors or affiliates, (ii) the fact
that this Agreement with Buyer exists, (iii) the status of the
discussions or negotiations relating to the transactions
contemplated by this Agreement, or (iv) copies of, or the
terms and provisions contained in, this Agreement, the New
Indebtedness or any other documents or agreements necessary to
the consummation of the transactions contemplated hereby
(collectively, the "Buyer Confidential Information");
provided, however, that the Seller Entities may disclose Buyer
Confidential Information (i) to their respective partners,
officers, directors, employees, affiliates, investors, agents,
advisors and lenders (including without limitation any
accountants, attorneys, financial advisors) (the
"Representatives") who need to know such information for the
purpose of evaluating the transactions contemplated hereby or
in connection with the Purchased Assets or the Property (it
being understood and agreed that the Seller Entities shall
advise such persons of their obligations concerning the
confidentiality of all client affairs and information and
shall instruct such persons to maintain the confidentiality of
such Buyer Confidential Information in accordance with the
terms of this Agreement), (ii) pursuant
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to a subpoena or other legal process received in connection
with a judicial, administrative or regulatory proceeding in
which the Seller Entities or any of their respective
Representatives are involved, subject to the provisions of
Section 18(e); and (iii) to the extent that it is required to
be disclosed by law or the rules or regulations of any
relevant regulatory organization, or otherwise deemed
advisable in the opinion of counsel to Seller Entities;
provided, that, in the case of (ii) and (iii), the Seller
Entities shall provide Buyer promptly with prior written
notice of such matter and cooperate with Buyer (at Buyer's
cost and expense) to the extent Buyer seeks a protective order
to prevent the disclosure of all or any portion of such Buyer
Confidential Information.
(3) Neither Buyer nor the Seller Entities shall issue any
press release or make any other public announcement (provided,
the parties agree that the provisions of this clause (3) shall
apply to voluntary press releases or public announcements in
contrast to required press releases or public announcements
which are governed by the provisions of Section 16(a) above)
with respect to this Agreement or the transactions
contemplated hereby without the prior consent of the other;
provided, that such persons may issue a press release or make
a public announcement if in the reasonable opinion of counsel
to such persons, it is required to be disclosed by law or the
rules or regulations of any relevant regulatory organization
and such press release or public announcement does not involve
the disclosure of any Confidential Information or Buyer
Confidential Information.
(b) This Agreement shall be binding upon and inure to the benefit
of the respective heirs, personal representatives, fiduciaries
and successors of Seller and Buyer.
(c) This Agreement may not be assigned by either party without the
prior written consent of the other party; provided, however,
that Buyer may assign this Agreement to the persons or
entities set forth in Section 18(c) of the Disclosure Schedule
or any entity that is controlled by or under common control of
Buyer or the persons or entities set forth in Section 18(c) of
the Disclosure Schedule (or to a joint venture controlled by
any of such persons or entities).
(d) All notices and other communications hereunder shall be
sufficiently given for all purposes hereunder if in writing
and delivered personally, sent by documented overnight
delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to
the appropriate address or number as set forth below. Notices
to the Seller shall be addressed to:
Metropolis Realty Trust, Inc.
c/o Victor Capital Group
605 Third Avenue
New York, NY 10016
Attention: John R. Klopp
Telecopy Number: (212) 655-0044
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with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Louis Vitali, Esq.
Telecopy Number: (212) 856-7818
or at such other address and to the attention of such other
person as the Seller may designate by written notice to Buyer.
Notices to Buyer shall be addressed to:
c/o Max Capital Management Corp.
230 Park Avenue, 17th Floor
New York, NY 10169
Attention: Adam Hochfelder, Esq.
Telecopy Number: (212) 490-7266
with a copy to:
Cleary Gottlieb Steen & Hamilton
1 Liberty Plaza
New York, NY 10006
Attention: Steven L. Wilner
Telecopy Number: (212) 225-3999
and
Kelly Hart & Hallman
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Attention: Marc Epstein, Esq.
Telecopy Number: (817) 878-9280
or at such other address and to the attention of such other
person as the Buyer may designate by written notice to Seller.
Notices to Initial Escrow Agent shall be addressed to:
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
Attention: Louis Vitali, Esq.
Telecopy Number: (212) 856-7818
or at such other address and to the attention of such other
person as the Escrow Agent may designate by written notice to
Buyer and Seller.
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(e) This Agreement shall be construed and enforced in accordance
with the laws of the State of New York without giving effect
to such state's conflict of law principles. EACH PARTY HERETO
AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING IN RESPECT
OF ANY CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS
AGREEMENT, WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY,
EXCLUSIVELY IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK OR THE SUPREME COURT OF THE
STATE OF NEW YORK FOR THE COUNTY OF NEW YORK, IN EACH CASE,
LOCATED IN THE BOROUGH OF MANHATTAN (THE "CHOSEN COURTS") AND
(I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
CHOSEN COURTS, (II) WAIVES ANY OBJECTION TO LAYING VENUE IN
ANY SUCH ACTION OR PROCEEDING IN THE CHOSEN COURTS, (III)
WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN
INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY
HERETO, AND (IV) AGREES THAT SERVICE OF PROCESS UPON SUCH
PARTY IN ANY SUCH ACTION OR PROCEEDING SHALL BE EFFECTIVE IF
NOTICE IS GIVEN IN ACCORDANCE WITH SECTION 18(D) OF THIS
AGREEMENT.
(f) A waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed as a waiver of
any other subsequent breach thereof or of any other provision.
(g) This Agreement, the Disclosure Schedule and Exhibits annexed
hereto and the Confidentiality Agreement, dated July 23, 1999,
by and between Buyer and Metropolis, represent the entire
agreement between the parties hereto with respect to the
transactions contemplated hereby and may be modified only by a
subsequent written document executed by the party to be
charged therewith.
(h) The headings of the Sections of this Agreement are inserted
for convenience only and do not constitute a part of this
Agreement.
(i) This Agreement may be signed in counterparts, each of which
shall be deemed to be an original and all of which together
shall constitute one and the same instrument.
19. Covenants Regarding Employees
-----------------------------
(a) (i) Buyer shall, in the property management agreement it enters
into with Max Capital Management Corp., or such other property management
company as Buyer shall elect in its sole discretion, (the "Buyer Property
Manager"), require the Buyer Property Manager to offer employment to all
Existing Employees (as hereinafter defined). The parties hereto hereby
acknowledge and agree that no employees other than the Existing Employees shall
be required to be offered employment by the Buyer Property Manager and neither
Buyer nor the Buyer Property Manager shall have any liability in connection with
the termination of any employees which are not Existing Employees. With respect
to the Existing Employees set forth in Section 19 of the Disclosure Schedule
represented by a labor union, such offers shall comply
-33-
<PAGE>
with the provisions of the applicable Collective Bargaining Agreement (as
defined below). "Existing Employees" means, collectively, all individuals
employed at the Property and set forth in Section 19 of the Disclosure Schedule.
(ii) Effective upon the Closing, Buyer shall require the Buyer
Property Manager to assume and be bound by all terms and conditions of the
collective bargaining agreements and amendments entered into with The Realty
Advisory Board on Labor Relations, Inc. (collectively the "Collective Bargaining
Agreement"). Promptly after this Agreement is executed (to the extent required
by the Collective Bargaining Agreement), Buyer and Seller shall jointly advise
each union which is a party to such agreement of the pending sale of the
Purchased Assets.
(b) Buyer and Seller shall reasonably cooperate, and shall use
commercially reasonable effort to cause Buyer Property Manager and the Property
Manager to reasonably cooperate, in accordance with Internal Revenue Service
procedures, to avoid causing Existing Employees to pay employment taxes beyond
the statutory maximum amount as a result of the consummation of the transactions
contemplated by this Agreement.
[Signature page follows]
-34-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day and year first written above.
BUYER:
237 PARK INVESTORS, L.L.C.
By: 237 Management, Inc., its manager
By: /s/ Adam Hochfelder
-------------------------------
Name: Adam Hochfelder
Title: Vice President
SELLER:
METROPOLIS REALTY TRUST, INC.
By: /s/ Andrew Cohen
----------------------------------
Name: Andrew Cohen
Title: Vice President
237 GP CORP.
By: /s/ Andrew Cohen
---------------------------------
Name: Andrew Cohen
Title: Vice President
INITIAL ESCROW AGENT:
Battle Fowler LLP (solely with respect
to Section 3(a) and 3(c) hereto)
By: /s/ Louis Vitali
----------------------------------
Name: Louis Vitali
Title: Partner
<PAGE>
AMENDMENT NO. 4 TO
INTEREST PURCHASE AGREEMENT
THIS AMENDMENT NO. 4 to the INTEREST PURCHASE AGREEMENT (this
"Amendment") is made and entered into as of October 15, 1999, by and among 237
Park Investors, L.L.C., a Delaware limited liability company ("Buyer"), 237 GP
Corp., a Delaware corporation ("237 GP Corp."), and Metropolis Realty Trust,
Inc., a Maryland corporation ("Metropolis," and together with 237 GP Corp.,
"Seller").
RECITALS:
WHEREAS, Buyer and Seller are parties to that certain Interest Purchase
Agreement dated as of September 23, 1999, as the same was amended pursuant to
that certain letter agreement dated as of October 6, 1999, as the same was
further amended pursuant to that certain letter agreement dated as of October
13, 1999, and as the same was further amended pursuant to that certain letter
agreement dated as of October 14, 1999 (as so amended, the "Original
Agreement"); and
WHEREAS, Buyer and Seller desire to make certain amendments to the
Original Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree to amend the Original Agreement as follows:
1. Defined Terms.
(a) The definition of "Class 1290 Interests" in Article 1 of the
Original Agreement is hereby deleted and all references to such defined term in
the Original Agreement are hereby deleted.
(b) The definition of "Class 237 Interests" in Article 1 of the Original
Agreement is hereby deleted in its entirety and the following is substituted in
lieu thereof:
"`Class 237 Interests' shall mean (i) all the right, title and
interest of Metropolis in and to all of the distributions, profits,
losses and all other economic and other rights and obligations
attributable to the Property as the owner of a 95% limited
partnership interest in Lower Tier LP, and (ii) upon the
consummation of the transactions contemplated by Section 10(a)(i)
hereof, the 94.05% limited partnership interest in the Property
Owning Partnership owned by Metropolis (or, following the
conversion of the Property Owning Partnership to a Delaware limited
liability company, the equivalent membership interest in the
Property Owning Partnership)."
(c) The definition of "LLC" in Article 1 of the Original Agreement is
hereby deleted and all references to such defined term in the Original Agreement
are hereby deleted.
<PAGE>
(d) The definition of "LLC Agreement" in Article 1 of the Original
Agreement is hereby deleted and all references to such defined term in the
Original Agreement are hereby deleted.
(e) The definition of "New Indebtedness" in Article 1 of the Original
Agreement is hereby amended and restated in its entirety as follows:
"`New Indebtedness' shall mean indebtedness incurred by the
Property Owning Partnership or its affiliates in connection with
the consummation of the transactions contemplated hereby including
"non-recourse" indebtedness encumbering the Property which (x)
shall be in an amount, and shall be allocated and maintained, as
provided in Section 4.02(a) of the Omnibus Agreement and (y) which
may in part be secured by the mortgage currently securing the Chase
Indebtedness (which mortgage may, in accordance with Section 3 of
the Original Agreement and Section 11 of this Amendment, be
assigned to Buyer's lender and amended and restated as of the
Closing Date), the net proceeds of which will be used, in whole or
in part, to pay the Release Amount."
(f) The definition of "Property Owning Partnership" in Article 1 of the
Original Agreement is hereby amended to read in its entirety as follows:
"`Property Owning Partnership' means (1) 237 Park Partners, L.P., a
Delaware limited partnership, and (2) after conversion of such
limited partnership to a Delaware limited liability company, such
limited liability company."
(g) The following definitions are inserted in Article 1 of the Original
Agreement in alphabetical order:
"`Amendment and Release Agreement' shall mean that certain
Amendment and Release Agreement dated as of October __, 1999, to be
entered into by and among Metropolis and the other parties
signatory thereto."
"`Omnibus Agreement' shall mean that certain Agreement dated as of
October __, 1999, to be entered into by and among Metropolis and
the other parties signatory thereto."
"`Property Owning Subsidiary' shall have the meaning set forth in
Section 10(a)(ii) hereof."
(h) The definition of "Seller Entities" in Article 1 of the Original
Agreement is hereby amended to read in its entirety as follows:
"`Seller Entities' shall mean the Seller, the Property Owning
Partnership (and each direct or indirect wholly-owned subsidiary
thereof), and, for so long as the same shall not have been
liquidated pursuant to Section 10(a)(i) hereof, Lower Tier LP."
2
<PAGE>
(i) The definition of "Leases" in the Original Agreement is hereby
amended by adding the language "(or the Property Owning Subsidiary)" after the
words "Property Owning Partnership".
(j) The phrase "(the "237 GP Interest")" is hereby deleted from the
second recital of the Original Agreement.
(k) The definition of "237 GP Interest" in Article 1 of the Original
Agreement is hereby amended to read in its entirety as follows:
"`237 GP Interest' shall mean (1) the 1% interest as general
partner held by 237 GP Corp. in the Property Owning Partnership, or
(2) after the conversion of the Property Owning Partnership to a
Delaware limited liability company, the 1% membership interest held
therein by 237 GP Corp."
(l) All references to "Agreement" in the Original Agreement shall be
deemed to refer to the Original Agreement as amended by this Amendment.
1A. Purchase Price, Deposit, and Payment; etc.
(a) Section 3 of the Original Agreement is hereby amended as follows:
(i) the figure "$380,000,000" is hereby deleted from the
first paragraph thereof and the figure "$372,000,000" is hereby
substituted in lieu thereof;
(ii) the phrase "will include a "non-recourse" mortgage
encumbering the Property in the amount of $200 million" is hereby
deleted from the first paragraph thereof and the phrase "will
include "non-recourse" indebtedness which shall be in an amount, and
shall be allocated and maintained, as provided in Section 4.02(a) of
the Omnibus Agreement" is hereby substituted in lieu thereof;
(iii) the last sentence of paragraph (a) is hereby deleted in
its entirety and all references in the Original Agreement to the
term "Escrow Agent" shall be deemed to mean the Initial Escrow
Agent, and all references to the term "Escrow Agreement" shall be
deemed to mean the Initial Escrow Agreement; and
(iv) the first sentence of paragraph (d) is hereby deleted in
its entirety and the following language is hereby substituted in
lieu thereof:
"Other than as expressly set forth in this Section 3, Section 16 or
Section 7 hereof, the Deposit shall be non-refundable to Buyer;
provided, however, Buyer shall have the right to deliver to Seller
a written notice (the "Termination Notice") of its termination of
this Agreement (x) for any reason or no reason not later than 2:00
p.m. Eastern Standard Time on October 15, 1999, and (y) not later
than 5:00 p.m. Eastern Standard Time on October 18, 1999, if the
Omnibus Agreement has not been fully executed by all parties
thereto by such date (with execution by Buyer to be in Buyer's sole
discretion)."
3
<PAGE>
(b) Section 4 of the Original Agreement is hereby amended by (i)
deleting the reference to "November 5, 1999" and substituting the language
"November 11, 1999", (ii) deleting the reference to "October 15, 1999" and
substituting the language "October 26, 1999", (iii) deleting the references to
"November 11, 1999" and substituting the language "November 18, 1999", (iv)
deleting the words "on such date" (appearing in clause (i) of Section 4) and
substituting the language "on the First Adjourned Date", (v) deleting the
references to "November 29, 1999" and substituting the language "December 10,
1999", and (vi) adding the text "(unless otherwise agreed to by The Chase
Manhattan Bank)" immediately after each reference to "16 days" appearing in
Section 4.
2. Conditions to Buyer's Obligation to Close.
(a) Sections 5(d)(iii) and 5(d)(iv) of the Original Agreement are hereby
deleted.
(b) A new Section 5(d)(xix) is hereby added to the Original Agreement as
follows:
"(xix) Fully executed copies of Omnibus Agreement and
Amendment and Release Agreement, in form and substance reasonably
satisfactory to Buyer.
(c) A new Section 5(g) is hereby added to the Original Agreement as
follows:
"(g) Immediately prior to or simultaneously with the Closing
hereunder, all transactions contemplated by the Omnibus Agreement
shall have been fully consummated (and all conditions to the closing
of such transactions shall either have been satisfied or waived)."
(d) A new Section 5(h) is hereby added to the Original Agreement as
follows:
"(h) Buyer shall have received evidence reasonably
satisfactory to it that the AFA Protective Systems contract, dated
as of December 15, 1997, between 237 Park Partners, L.P. - Tishman
Speyer Properties and AFA Protective Systems, Inc., shall have been
terminated as contemplated pursuant to Section 10(h) hereof and that
any liens that AFA Protective Systems may have or have had against
the Property shall have been released."
(e) A new Section 5(i) is hereby added to the Original Agreement as
follows:
"(i) Each of the transactions described in Section 10(a)(i)
and Section 10(a)(ii) shall have been consummated in its entirety."
(f) A new Section 5(j) is hereby added to the Original Agreement as
follows:
"(j) Any and all transfer taxes payable in respect of the
transactions contemplated hereby and in the Omnibus Agreement shall
have been paid (or arrangements satisfactory to Buyer for the
payment of the same shall have been entered into)."
4
<PAGE>
3. Conditions to Seller's Obligation to Close. Section 6(a)(iii) of the
Original Agreement is hereby deleted.
4. Representations and Warranties of the Seller.
(a) Section 8(e) of the Original Agreement is hereby amended by adding
the phrase "Except for the Omnibus Agreement and the Amendment and Release
Agreement," prior to the first word of the penultimate sentence thereof.
(b) The phrase "and as set forth in the Omnibus Agreement" is hereby
added to Section 8(i) of the Original Agreement immediately following the phrase
"of the Disclosure Schedule" and immediately prior to the phrase ", there are no
options to purchase".
(c) Sections 8(n), 8(u) and 8(y) of the Original Agreement shall be
amended by adding after all references to "the Property Owning Partnership", the
phrase "(or the Property Owning Subsidiary)".
(d) Section 8(w) of the Original Agreement is hereby amended by deleting
therefrom the phrase "this Agreement or any documents" and substituting in its
place the phrase "this Agreement, the Omnibus Agreement, the Amendment and
Release Agreement or any other documents".
(e) A new Section 8(ff) is hereby added to the Original Agreement as
follows:
"(ff) Seller represents and warrants that (i) a true and correct
copy of (A) that certain Agreement of Sublease (the "Furman
Sublease") between Furman Selz Incorporated ("Furman") and J.
Walter Thompson Company ("JWT") dated as of October 22, 1993, and
(B) that certain Amendment to Lease (the "JWT Amendment") between
237 Park Avenue Associates ("237 Associates") and JWT dated as of
May 1, 1995, are attached hereto as Exhibit H; (ii) the Property
Owning Partnership is the successor-in-interest to 237 Associates;
(iii) the JWT Amendment, and, to Seller's knowledge, the Furman
Sublease, remain in full force and effect, and neither the JWT
Amendment, nor, to Seller's knowledge, the Furman Sublease have
been in any way, amended, terminated, superseded, supplemented or
otherwise modified; (iv) to Seller's knowledge, Furman did not
deliver to JWT a "Termination Notice" on or before September 30,
1999 as contemplated by Section 24 of the Furman Sublease; (v) JWT
has not delivered to Seller a "Put Notice" pursuant to Section 3 of
the JWT Amendment; (vi) to Seller's knowledge, JWT does not intend
to deliver to Seller any such "Put Notice" pursuant to the JWT
Amendment and (v) the Property Owning Partnership has delivered
possession to Credit Suisse Asset Management of the premises
demised by that certain lease dated June 30, 1999."
4A. Representations and Warranties of the Buyer.
(a) Section 9(b) of the Original Agreement is hereby amended by
inserting the phrase "Except for the Omnibus Agreement and the Amendment and
Release Agreement," before the first word of the last sentence thereof.
5
<PAGE>
(b) Section 9(f) of the Original Agreement is hereby amended by deleting
the phrase "this Agreement or any documents" and substituting in its place the
phrase "this Agreement, the Omnibus Agreement, the Amendment and Release
Agreement or any other documents".
5. Covenants of Seller.
(a) Section 10(a) of the Original Agreement is hereby deleted in its
entirety and replaced with the following:
"(a) Closing Status. As of the Closing Date,
(i) In accordance with the provisions of the Omnibus
Agreement, the Property Owning Partnership shall have been converted
into a Delaware limited liability company, and Lower Tier LP shall
have been liquidated, and pursuant to such liquidation, each of
Metropolis, as general partner, and 237/1290 Upper Tier Associates,
L.P., as limited partner, shall have received an in-kind
distribution of its pro rata portion of Lower Tier LP's interests in
the Property Owning Partnership, all on terms reasonably acceptable
to Buyer (it being agreed by the parties hereto that, as a result of
the foregoing, but not giving effect to the transactions described
in Section 10(a)(ii), the ownership structure of Seller and its
affiliates immediately prior to the Closing shall be as set forth in
Exhibit I attached hereto).
(ii) Seller shall have caused the Property Owning Partnership
(x) to form a wholly-owned subsidiary (the "Property Owning
Subsidiary") pursuant to organizational documents in form and
substance reasonably satisfactory to both Buyer and Seller, which
subsidiary shall at all times, remain a wholly-owned subsidiary of
the Property Owning Partnership, (y) to transfer ownership of the
Property to the Property Owning Subsidiary, and (z) thereafter, to
form one or more additional wholly-owned subsidiaries as may be
required by Buyer's lenders in conjunction with the New Indebtedness
pursuant to organizational documents in form and substance
reasonably satisfactory to both Buyer and Seller, which additional
subsidiaries shall at all times, remain a wholly-owned subsidiaries
of the Property Owning Partnership.
(iii) Following the occurrence of the transactions
contemplated in Sections 10(a)(i) and 10(a)(ii) and the Omnibus
Agreement: (A) the Property Owning Partnership shall not have
outstanding or have, at any time, issued any interests other than
the Class 237 Interests, the 237 GP Interests and the 4.95%
membership interest (the "Upper Tier Interests") held by 237/1290
Upper Tier Associates, L.P; (B) except as expressly contemplated by
this Agreement, the Omnibus Agreement and the Amendment and Release
Agreement, there shall be no outstanding options, warrants, calls,
subscriptions or other securities or rights to purchase any Class
237 Interests, 237 GP Interests or Upper Tier Interests or
securities convertible or exchangeable therefor; and (C) all of the
issued and outstanding Class 237 Interests, 237 GP Interests and
Upper Tier Interests shall be
6
<PAGE>
duly authorized and validly issued, fully paid, non-assessable
and free of pre-emptive rights with respect thereto.
(iv) Following the occurrence of the transactions
contemplated in Sections 10(a)(i) and 10(a)(ii) and the Omnibus
Agreement, the Property Owning Partnership (and any direct or
indirect wholly-owned subsidiary thereof) shall be a limited
liability company, duly formed, validly existing and in good
standing under the laws of the State of Delaware and shall have full
power and authority to carry on its business and to own, use and
sell its assets and properties.
(v) Following the occurrence of the transactions contemplated
in Sections 10(a)(i) and 10(a)(ii) and the Omnibus Agreement,
Metropolis shall hold a 94.05% membership interest in the Property
Owning Partnership, including all of the Class 237 Interests, free
and clear of all liens and encumbrances other than such liens and
encumbrances resulting from the consummation of the transactions
contemplated by this Agreement in favor of Buyer, if any.
(vi) Following the occurrence of the transactions
contemplated in Sections 10(a)(i) and 10(a)(ii) and the Omnibus
Agreement, 237 GP Corp. shall be the sole managing member of the
Property Owning Partnership and shall hold a 1% membership interest
therein, free and clear of all liens and encumbrances other than
such liens and encumbrances resulting from the consummation of the
transactions contemplated by this Agreement in favor of Buyer, if
any.
(vii) Following the occurrence of the transactions
contemplated in Sections 10(a)(i) and 10(a)(ii) and the Omnibus
Agreement, the Property Owning Subsidiary shall hold a 100% interest
in the Property free and clear of all liens and encumbrances other
than such liens and encumbrances resulting from the consummation of
the transactions contemplated by this Agreement in favor of Buyer,
if any.
(viii) The bringdown certificate required to be delivered by
Seller at Closing pursuant to Section 5(d)(xvii) shall contain
updated representations and warranties in conformity with Sections
10(a)(iii), 10(a)(iv), 10(a)(v), 10(a)(vi) and 10(a)(vii).
(b) Exhibits H and I attached to this Amendment are hereby deemed to be
Exhibits H and I of the Original Agreement.
(c) Sections 10(b)(i), (iii), (v) and (vi) of the Original Agreement are
hereby amended by adding "(or the Property Owning Subsidiary)" immediately
following any references to the Property Owning Partnership.
(d) Section 10(b)(ii) of the Original Agreement is hereby amended by
inserting the phrase "Except as expressly contemplated hereby and by the Omnibus
Agreement and the Amendment and Release Agreement," before the first word
thereof.
7
<PAGE>
(e) Section 10(b)(viii) of the Original Agreement is hereby amended by
adding ", except to the extent required to consummate the transactions
contemplated hereby" prior to the period therein.
(f) Section 10(g) of the Original Agreement is hereby amended by adding
"(or the Property Owning Subsidiary)" immediately following any references to
the Property Owning Partnership.
(g) New Sections 10(h) and(i) are hereby added to the Original Agreement
as follows:
"(h) Seller shall terminate or cause to be terminated prior to
Closing, on terms reasonably satisfactory to the Buyer, that
certain AFA Protective Systems contract, dated as of December 15,
1997, between 237 Park Partners, L.P. - Tishman Speyer Properties
and AFA protective Systems, Inc. without liability or obligation to
the Property Owning Partnership or the Property Owning Subsidiary."
"(i) The Purchase Price shall be reduced in an amount equal to the
sum of any unpaid amounts in respect of (w) the final installment
payment under that certain Brokerage Agreement, dated as of April
23, 1999, between Julien J. Studley, Inc. and the Property Owning
Partnership; (x) the final installment payment under that certain
Brokerage Agreement, dated as of February 20, 1998, between Julien
J. Studley, Inc. and the Property Owning Partnership; (y) the
November 1999 payment under that certain Brokerage Agreement dated
as of March 17, 1999 between Grubb & Ellis New York, Inc. and the
Property Owning Partnership; and (z) the January, 2000, payment
under that certain Brokerage Agreement, dated as of March 31, 1999,
between New Spectrum Realty Services, Inc. and the Property Owning
Partnership. Seller specifically agrees and acknowledges that the
indemnification provisions of Section 15(b)(iii) shall apply with
respect to the payments identified under the foregoing Brokerage
Agreements in the event that the amount of such payments, when
actually due and payable, are in excess of the reduction in the
Purchase Price made on the Closing Date. Buyer shall reimburse to
Seller the amount (if any) by which such reduction in Purchase
Price exceeds the amount of such payments under the referenced
Brokerage Agreements, when actually due and payable.
6. Indemnification.
(a) Sections 15(b)(iii) and (iv) of the Original Agreement are hereby
amended by adding "(or the Property Owning Subsidiary)" immediately following
any references therein to the Property Owning Partnership.
(b) Section 15(b)(iii) of the Original Agreement is hereby amended by
adding the following sentence after the last period therein:
"Notwithstanding anything to the contrary contained in this
Agreement, including, without limitation, in Section 5(e) hereof,
Seller hereby agrees
8
<PAGE>
and acknowledges that the indemnification
provided by this Section 15(b)(iii) shall specifically cover any
Damages incurred by Buyer relating to the status of the real
property tax exemption granted by the Industrial Commercial
Incentive Board, any breach of the related exemption agreement with
the Industrial Commercial Incentive Board (or any successor
thereto), and any claims relating to such tax exemption (subject to
the terms and conditions set forth above in this Section
15(b)(iii))."
(c) A new Section 15(b)(v) is hereby added to the Original Agreement as
follows:
"(v) Notwithstanding anything to the contrary contained in this
Agreement, the obligations of Buyer and Seller pursuant to Sections
15(b)(iii) and (iv) hereof shall apply independently of, and in
addition to, the obligations of the respective parties under
Section 15(a) and Sections 15(b)(i) and (b)(ii) of this Agreement
(so that, for example, the obligations of the parties pursuant to
Sections 15(b)(iii) and 15(b)(iv) shall not be subject to the
Deductible or the Cap)."
7. Expenses.
(a) Section 17 of the Original Agreement is hereby amended by adding
after all references to "the Purchased Assets" the following:
"(including, without limitation, any conveyance of the Property or
the Purchased Assets in anticipation of the Closing as required
by Section 10(a))."
(b) Section 17 of the Original Agreement is hereby amended by inserting
the text "(provided that Seller shall not be required to pay more than one
transfer tax to the City of New York on account of any conveyance of the
Property and the Purchased Assets in accordance with this Agreement)" after the
words "customary practice in each jurisdiction".
(c) Section 17 of the Original Agreement is hereby amended by (i)
deleting therefrom the phrase "subsequent transfers of the Property" appearing
in the last sentence thereof and substituting the language "the conveyance of
the Property to the Property Owning Subsidiary", and (ii) inserting the text
"(provided that Seller shall not be required to pay more than one transfer tax
to the City of New York on account of any conveyance of the Property and the
Purchased Assets in accordance with this Agreement)" after the words "transfer
tax" .
8. Disclosure Schedules.
(a) Section 3 of the Disclosure Schedules delivered pursuant to the
Original Agreement is hereby amended as follows:
(i) Item number 1 shall be amended by deleting the figure "$380,000,000"
and inserting the figure "$372,000,000" in lieu thereof.
(ii) Item number 5 shall be amended by deleting the word "Addition" and
inserting the word "Subtraction" in lieu thereof.
9
<PAGE>
(iii) Item number 7 shall be amended by deleting the footnote reference
to footnote "2" applying to the phrase "leasing commissions", and adding
a footnote reference to footnote "1" in lieu thereof.
(iv) The following new items number 10 and 11 shall be added:
<TABLE>
<S> <C> <C> <C> <C>
"10. Addition Buyer's share of the JMB related costs (subject to
adjustment to an amount acceptable to both Buyer and
Seller, such that both Buyer and Seller shall bear 50% $594,000"
of the costs associated with implementing the
transactions contemplated by the Omnibus Agreement)
"11. Subtraction Outstanding brokerage fees described in Section 10(i)
(to be determined as of the Closing Date)
$------"
</TABLE>
(iv) Footnote 2 is hereby amended to read in its entirety as follows:
"2 Represent incurred but unpaid capital improvements for
the installation of new lighting in the lobby, the upgrade
of the electrical system, the exterior facade caulking, the
cooling tower upgrade, the Tech Serv electrical monitoring
contract, and any other contracts currently in effect."
(b) Sections 8(l), 8(m) and 8(cc) of the Disclosure Schedules delivered
pursuant to the Original Agreement are hereby amended, in each case, deleting
the word "none" and inserting in its place the phrase "other than pursuant to
the Omnibus Agreement and the Amendment and Release Agreement."
9. No Further Amendment. Except as expressly amended hereby, the
Original Agreement shall remain in full force and effect.
10. Counterparts. This Amendment Agreement may be executed in
counterparts, each of which when so executed shall together constitute one and
the same agreement.
11. Assignment of Existing Chase Mortgage. In accordance with the provisions of
Section 3 of the Original Agreement, Buyer hereby notifies Seller that Buyer's
lender has agreed to take an assignment of (and to amend and restate) the
mortgage currently encumbering the Property subject to such lender's receipt of
(i) appropriate documentation and affidavits in connection with such assignment
(including, without limitation a 255 Affidavit and a 275 Affidavit), (ii) an
acceptable assignment and assumption agreement from The Chase Manhattan Bank
(including its consent to the transfer of the Property to the Property Owning
Subsidiary subject to the Chase Indebtedness immediately prior to the assignment
of the mortgage), (iii) an acceptable endorsement of the existing note
evidencing the Chase Indebtedness, and (iv) satisfactory evidence (which may
include an endorsement to such lender's title insurance policy) that all
10
<PAGE>
applicable transfer and recording taxes have been fully paid. Seller hereby
agrees to use commercially reasonably efforts to cooperate with Buyer's lender
to satisfy the foregoing conditions. Buyer hereby confirms that it will pay to
Seller (in addition to the Purchase Price), on the Closing Date, an amount equal
to 2.75% multiplied by the principal amount of the amended and restated mortgage
recorded against the Property as security for the New Indebtedness.
[SIGNATURE PAGE FOLLOWS]
11
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Amended Agreement
as of the date first above written.
BUYER:
237 PARK INVESTORS, LLC
By: 237 Management, Inc., its manager
By: /s/ Adam Hochfelder
---------------------------
Name: Adam Hochfelder
Title: Vice President
SELLER:
METROPOLIS REALTY TRUST, INC.
By: /s/ William L. Mack
---------------------------------
Name: William L. Mack
Title: Chairman of the Board
237 GP CORP.
By: /s/ William L. Mack
---------------------------------
Name: William L. Mack
Title: Chairman of the Board
12
<PAGE>
Metropolis Realty Trust, Inc. 237 Park Investors, L.L.C.
237 GP Corp. c/o Max Capital Management Corp.
c/o Victor Capital Group 230 Park Avenue
605 Third Avenue 17th Floor
New York, New York 10016 New York, New York 10169
October 26, 1999
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Louis Vitali
RE: 237 Park Avenue
Reference is made to the Interest Purchase Agreement, dated
as of September 23, 1999, among 237 Park Investors, L.L.C. ("Buyer"), Metropolis
Realty Trust, Inc. ("Metropolis"), 237 GP Corp. ("GP Corp") and Battle Fowler,
LLP, as escrow agent ("Escrow Agent"), as modified by those certain letter
agreements, dated October 6, 1999, October 13, 1999 and October 14, 1999, each
among Buyer, Metropolis, GP Corp. and Escrow Agent, Amendment No. 4 to the
Purchase Agreement, dated as of October 15, 1999, among Buyer, Metropolis and
237 GP Corp., and those certain letter agreements, dated October 18, 1999,
October 19, 1999, October 20, 1999, October 21, 1999, October 22, 1999 and
October 25, 1999 among Buyer, Metropolis, GP Corp and Escrow Agent (as so
amended, the "Purchase Agreement").
The undersigned agree that the first sentence of paragraph
(d) of Section 3 of the Purchase Agreement is hereby deleted in its entirety and
the following language is hereby substituted in lieu thereof:
"Other than as expressly set forth in this Section 3,
Section 7 or Section 16 hereof, the Deposit shall be
non-refundable to Buyer; provided, however, Buyer shall
have the right to deliver to Seller a written notice (the
"Termination Notice") of its termination of this Agreement
not later than 5:00 p.m. Eastern Standard Time on October
27, 1999, if the Restructuring Agreement has not been fully
executed by all parties thereto by such date (with
execution by Buyer to be in Buyer's sole discretion)."
<PAGE>
The undersigned agree that Section 4 of the Purchase
Agreement is hereby deleted in its entirety and the following language is hereby
substituted in lieu thereof:
"4. Closing.
The closing of the transactions contemplated
herein (the "Closing") shall take place at the offices of
Battle Fowler LLP, 75 East 55th Street, New York, NY 10022
(or, if different, the location in New York, New York
designated by the lender in respect of the New
Indebtedness) on or prior to November 19, 1999 at 10:00 AM
or such other date and place as the parties hereto shall
mutually agree (the "Closing Date"); provided, however,
that each of the Seller and Buyer shall have a one time
right to adjourn the Closing and extend the Closing Date
upon written notice from one party to the other prior to
November 2, 1999 (time being of the essence with respect to
the giving of such notice) to a date (other than November
18, 1999) not earlier than 16 days after the date of
receipt by Buyer or Seller, as applicable, of such notice
and not later than November 24, 1999 (the actual date of
such adjournment is herein referred to as the "First
Adjourned Date"), time being of the essence with respect to
the consummation of the transactions on the First Adjourned
Date; provided that the party which has not exercised its
adjournment right may still exercise its one-time right to
adjourn the Closing Date if its notice is delivered at
least 16 days before the First Adjourned Date and the
further adjourned date is no later than November 24, 1999;
provided further, that Buyer shall have the further right
to adjourn the Closing and extend the Closing Date, upon
written notice from Buyer to Seller prior to the date that
is 16 days prior to the First Adjourned Date, and the
making of an additional deposit of $18 million (the
"Additional Deposit") with the Escrow Agent on the First
Adjourned Date (time being of the essence with respect to
the giving of such notice and the making of such Additional
Deposit) to a date not earlier than 16 days after the
receipt by Seller of such notice and not later than
December 10, 1999, time being of the essence with respect
to the consummation of the transactions on such date. The
consummation of the transactions contemplated by this
Agreement cannot be extended past December 10, 1999 unless
mutually agreed to by Buyer and Seller in writing. The
disposition of the Additional Deposit shall be governed by
the terms of Section 3 hereof and the Escrow Agreement, as
if the Additional Deposit were part of the Deposit on the
date hereof."
The undersigned agree that Section 2(b) of the Escrow
Agreement (as such term is defined in the Purchase Agreement) is hereby deleted
in its entirety and the following language is hereby substituted in lieu
thereof:
"Notwithstanding anything to the contrary contained herein,
Buyer and Seller hereby expressly acknowledge, and hereby
direct Initial Escrow Agent, that upon the written
2
<PAGE>
notice of Buyer that the Purchase Agreement has been
terminated in accordance with Section 3(d) of the Purchase
Agreement, at any time on or prior to October 27, 1999,
Initial Escrow Agent shall immediately release the Escrow
Fund (together with any interest thereon) to Buyer without
any notice to or consent of Seller, or satisfaction of any
other condition."
Buyer hereby revokes and rescinds any and all termination
notices delivered by Buyer to GP Corp. and Metropolis prior to the execution and
delivery hereof.
Except as set forth above, the terms of the Purchase
Agreement shall remain unchanged and in full force and effect.
This Agreement may be signed in counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument.
[Signature page follows]
3
<PAGE>
METROPOLIS REALTY TRUST, INC.
By: /s/ John R. S. Jacobsson
------------------------------
Name: John R. S. Jacobsson
Title: Vice President
237 GP CORP.
By: /s/ John R. S. Jacobsson
------------------------------
Name: John R. S. Jacobsson
Title: Vice President
237 PARK INVESTORS, L.L.C.
By: 237 Management, Inc., its manager
By: /s/ Adam Hochfelder
--------------------------
Name: Adam Hochfelder
Title: Vice President
ACKNOWLEDGED AND AGREED:
BATTLE FOWLER LLP
By: /s/ Louis Vitali
---------------------------
Name: Louis Vitali
Title: Partner
4
<PAGE>
EXHIBIT B
RESTRUCTURING AGREEMENT
THIS RESTRUCTURING AGREEMENT (this "Agreement") is entered into as
of the 27th day of October, 1999, by and among OAK HILL STRATEGIC PARTNERS,
L.P., a Delaware limited partnership ("OHSP"), 237/1290 UPPER TIER ASSOCIATES,
L.P., a Delaware limited partnership ("UTLP"); 237/1290 UPPER TIER GP CORP., a
Delaware corporation ("UTLP GP Corp."); 237 GP CORP., a Delaware corporation
("237 GP Corp."), JMB/NYC OFFICE BUILDING ASSOCIATES, L.P., an Illinois limited
partnership ("JMB/NYC"); PROPERTY PARTNERS, L.P., a Delaware limited partnership
("Property Partners"); CARLYLE-XIII ASSOCIATES, L.P., a Delaware limited
partnership ("Carlyle XIII"); CARLYLE-XIV ASSOCIATES, L.P., a Delaware limited
partnership ("Carlyle XIV"); CARLYLE MANAGERS, INC., a Delaware corporation
("JMB/NYC Special"); 237 PARK PARTNERS, L.P., a Delaware limited partnership
("237 Park L.P."); 1290 PARTNERS, L.P., a Delaware limited partnership ("1290
L.P."); 1290 GP CORP., a Delaware corporation ("1290 GP Corp."); METROPOLIS
REALTY TRUST, INC., a Maryland Corporation ("Metropolis") and, solely for the
purpose of agreeing to certain obligations set forth in Sections 4.02(b) and (d)
hereof, FW STRATEGIC ASSET MANAGEMENT, L.P. ("FW Strategic"), a Texas limited
partnership (collectively, the "Parties").
WHEREAS, Metropolis holds a 95% interest as the general partner of
237/1290 Lower Tier Associates, L.P., a Delaware limited partnership ("LTLP"),
which owns (x) a 99% interest as limited partner in 237 Park L.P., which owns a
direct interest in that certain property known as 237 Park Avenue, New York, New
York (together with all related personal property, intangibles, improvements and
fixtures, the "237 Property"), and (y) a 99% interest as a limited partner in
1290 L.P., which owns a direct interest in that certain property known as 1290
Avenue of the Americas, New York, New York (together with all related personal
property, intangibles, improvements and fixtures, "1290 Sixth"); and
WHEREAS, UTLP holds a 5% interest as the limited partner of LTLP;
and
WHEREAS, it is intended that 237 Park L.P. shall be converted into a
Delaware limited liability company ("237 Park LLC"); and
WHEREAS, it is intended that following such conversion, Metropolis
and UTLP shall cause LTLP to liquidate, and pursuant to such liquidation, each
of Metropolis and UTLP shall receive an in-kind distribution of its pro rata
portion of LTLP's interests in 237 Park LLC and 1290 L.P.; and
WHEREAS, Metropolis and 237 GP Corp, as sellers, and 237 Park
Investors, L.L.C. (an affiliate of OHSP), as buyer, have entered into the
Interest Purchase Agreement (as defined below) pursuant to which 237 Park
Investors, L.L.C. will acquire the respective interests of Metropolis and 237 GP
Corp in 237 Park LLC (following the conversion); and
<PAGE>
WHEREAS, UTLP and OHSP desire to enter into a Contribution Agreement
(the "Contribution Agreement") in connection with UTLP's contribution of its
membership interest in 237 Park LLC for Class A Partnership Units in OHSP (the
"UTLP OHSP Units") as more particularly described herein; and
WHEREAS, the JMB/NYC Partners (as defined below) and Metropolis
desire to enter into an Amendment and Release Agreement (the "Amendment and
Release Agreement") relating to the Indemnification Agreement (as defined below)
in connection with the transactions contemplated by this Agreement and the
Interest Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions herein contained, and for other good, valid and binding consideration
(including, without limitation, the terms, covenants and conditions set forth in
the Interest Purchase Agreement), the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows:
SECTION 1
DEFINITIONS
When used herein, the following capitalized terms shall have the
following meanings:
"Agreement" shall have the meaning set forth in the first paragraph
hereof.
"Amendment and Release Agreement" shall have the meaning set forth
in the recitals hereto.
"Closing" shall have the meaning set forth in Section 2.02 hereof.
"Closing Date" shall have the meaning set forth in Section 2.02
hereof.
"Closing Transactions" shall have the meaning set forth in Section
2.01 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidential Information" shall have the meaning set forth in
Section 4.06(a) hereof.
"Contribution Agreement" shall have the meaning set forth in the
recitals hereto.
"Effective Time" shall have the meaning set forth in Section 2.02
hereof.
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"Fair Market Value" shall have the meaning set forth in Section 5.5
of the OHSP Partnership Agreement.
"FW Strategic" shall have the meaning set forth in the first
paragraph hereof.
"Indemnifiable Action" shall have the meaning set forth in Section
7.02(a)(ii) hereof.
"Indemnification Agreement" shall mean that certain Indemnification
Agreement dated as of October 10, 1996 by and among the JMB/NYC Partners and
Metropolis.
"Interest Purchase Agreement" shall mean that certain Interest
Purchase Agreement, by and among 237 Park Investors L.L.C., Metropolis Reality
Trust, Inc. and 237 GP Corp., dated as of September 23, 1999, as the same was
modified by letters dated October 6, 1999, October 13, 1999, October 14, 1999,
and October 18, 1999, and by an Amendment No. 4 to Interest Purchase Agreement
dated October 15, 1999, as the same may be further modified or amended from time
to time.
"JMB/NYC Controlled Entity" shall mean JMB/NYC, its partners
(including, without limitation, any Indemnitor), stockholders, agents or
affiliates.
"JMB/NYC" shall have the meaning set forth in the first paragraph of
this Agreement.
"JMB/NYC Indemnifiable Action" shall have the meaning set forth in
Section 7.02(a)(i) hereof.
"JMB/NYC Partners" shall mean Property Partners, Carlyle XIII and
Carlyle XIV.
"JMB/NYC Special" shall have the meaning set forth in the first
paragraph of this Agreement.
"Losses" shall mean 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.
"LTLP" shall have the meaning set forth in the recitals hereto.
"LTLP LP Agreement" shall mean that certain Agreement of Limited
Partnership of 237/1290 Lower Tier Associates, L.P., dated as of October 10,
1996, and entered into by and between Metropolis and UTLP.
"Metropolis" shall have the meaning set forth in the first paragraph
hereof.
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<PAGE>
"New 237 Park Indebtedness" shall mean any non-recourse indebtedness
secured by the 237 Property or by an interest in a limited liability company
which is directly or indirectly wholly-owned by 237 Park LLC and through which
the 237 Property is wholly owned (or any refinancing thereof), which
indebtedness shall constitute a "nonrecourse liability" allocable to UTLP
pursuant to U.S. Treasury regulation section 1.752-1(a)(2) and shall qualify as
qualified non-recourse financing within the meaning of Section 465(b)(6) of the
Code.
"OHSP Adverse Transaction" shall mean (i) any sale, disposition,
transfer or exchange of the 237 Property, or of any of OHSP's interests in the
237 Park Entities, (ii) any release, discharge or reduction of New 237 Park
Indebtedness of the 237 Park Entities below $200 million (other than through
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 the
assets of the 237 Park Entities (other than distributions of cash and other
distributions by the 237 Park Entities in the ordinary course of business), or
(iv) any other transaction or agreement to which OHSP or the 237 Park Entities
is a party, if as a result of any such transaction or agreement described in
(i), (ii), (iii), or (iv) above, JMB/NYC would be required to recognize a
material amount of taxable income or gain prior to the earlier of (1) the
exercise by FW Strategic of the right set forth in Section 4.02(c) hereof and
the receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to be
received under such Section 4.02(c), and (2) the exercise by JMB/NYC of the
right set forth in the proviso of Section 4.02(d)(ii) hereof and the receipt by
JMB/NYC, in accordance with Section 4.02(e), of all amounts to be received under
such Section 4.02(d). "OHSP Adverse Transactions" shall specifically exclude (A)
distribution of income of the 237 Park Entities or OHSP derived in the ordinary
course of the 237 Park Entities' business, (B) incurrence of New 237 Park
Indebtedness of the properties owned by the 237 Park Entities on commercially
reasonable terms in an aggregate amount equal to not less than $200,000,000, (C)
payment of amortization on non-recourse financing encumbering the assets owned
by the 237 Park Entities, provided that the outstanding balance of such
financing is not reduced below $200,000,000, in the aggregate, between the date
hereof and the earlier of (1) the exercise by FW Strategic of the right set
forth in Section 4.02(c) hereof and the receipt by JMB/NYC, in accordance with
Section 4.02(e), of all amounts to be received under such Section 4.02(c), and
(2) the exercise by JMB/NYC of the right set forth in the proviso of Section
4.02(d)(ii) hereof and the receipt by JMB/NYC, in accordance with Section
4.02(e), of all amounts to be received under such Section 4.02(d), and other
repayments of principal as described 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), (D) a transfer of
the 237 Property owned by any of the 237 Park Entities pursuant to an
involuntary foreclosure or similar action arising from a default by any of the
237 Park Entities with respect to its obligations under its indebtedness, (E) a
transfer of the 237 Property to any 237 Park Entity in connection with the
obligations of any 237 Park Entity under its indebtedness, and (F) a transfer of
the 237 Property pursuant to a voluntary foreclosure or similar action arising
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<PAGE>
from a default by any of the 237 Park Entities with respect to such entities'
obligations under the New 237 Park Indebtedness; provided that, in the case of a
consensual foreclosure or deed in lieu of foreclosure by reason of a default
under the New 237 Park Indebtedness (as defined pursuant to the terms thereof),
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 237
Park Indebtedness and 237 Park LLC, or any member thereof or any affiliate of
either, attributable to any commonality of ownership between the beneficial
ownership of the New 237 Park Indebtedness and 237 Park LLC or any member
thereof or any affiliate of either.
"OHSP" shall have the meaning set forth in the first paragraph
hereof.
"OHSP Indemnifiable Action" shall have the meaning set forth in
Section 7.02(a)(ii) hereof.
"OHSP Partnership Agreement" shall mean that certain agreement of
limited partnership relating to OHSP, as the same may be amended or modified
from time to time.
"Parties" shall have the meaning set forth in the first paragraph
hereof.
"Property Partners" shall have the meaning set forth in the first
paragraph of this Agreement.
"Representatives" shall have the meaning set forth in Section
4.06(a) hereof.
"Termination Date" shall have the meaning set forth in Section
6.01(b) hereof.
"Transaction Agreements" shall mean this Agreement, the Contribution
Agreement, the Amendment and Release Agreement, and the Interest Purchase
Agreement.
"1290 GP Corp." shall have the meaning set forth in the first
paragraph of this Agreement.
"1290 L.P." shall have the meaning set forth in the first paragraph
hereof.
"1290 LP Agreement" shall mean that certain agreement of limited
partnership relating to 1290 L.P., as the same may be amended or modified from
time to time.
"1290 Sixth" shall have the meaning set forth in the recitals
hereto.
"237 Book/Tax Amount" shall have the meaning set forth in Section
4.02(a) hereof.
"237 GP Corp." shall have the meaning set forth in the first
paragraph hereof.
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<PAGE>
"237 Park Entities" shall mean 237 Park LLC and any other direct or
indirect wholly-owned, single member, limited liability company subsidiary of
237 Park LLC formed in connection with the New 237 Park Indebtedness financing.
"237 Park LLC" shall have the meaning set forth in the recitals
hereto.
"237 Park L.P." shall have the meaning set forth in the recitals
hereto.
"237 Park Partners LP Agreement" shall mean that certain agreement
of limited partnership relating to 237 Park L.P., as the same may be amended or
modified from time to time.
"237 Property" shall have the meaning set forth in the recitals
hereto.
"UTLP" shall have the meaning set forth in the first paragraph
hereof.
"UTLP GP Corp." shall have the meaning set forth in the first
paragraph hereof.
"UTLP LP Agreement" shall mean that certain Second Amended and
Restated Limited Partnership Agreement of UTLP, dated as of October 14, 1997,
entered into by and between UTLP GP Corp., JMB/NYC and JMB/NYC Special.
"UTLP OHSP Units" shall have the meaning set forth in the recitals
hereto.
SECTION 2
CLOSING
2.01 Transactions on the Closing Date. Subject to the terms and on
the conditions of this Agreement, at or before Closing, each of the following
transactions (the "Closing Transactions") shall be consummated in the following
order (and only upon the completion of the transaction set forth in the
paragraph immediately prior to it):
(a) Conversion of 237 Park L.P. (i) LTLP, Metropolis, 237 GP Corp.
and 237 Park L.P. shall, and LTLP, Metropolis and 237 GP Corp. shall cause 237
Park L.P. to, (A) take all actions necessary in order to effect the conversion
of 237 Park L.P. from a Delaware limited partnership to a Delaware limited
liability company, and (B) immediately following such conversion, appoint OHSP
as the manager (and submit to OHSP the written resignation of each other
manager, if any) of 237 Park LLC, and amend its certificate of formation to
reflect such changes.
(ii) It is hereby expressly agreed by the Parties that, in
conjunction with, and to effectuate, the closing under the Interest Purchase
Agreement, OHSP shall have the right, in its
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<PAGE>
sole discretion, to amend, restate or otherwise modify the terms of the 237 Park
Partners LP Agreement and, upon the execution thereof, the limited liability
company agreement of 237 Park LLC.
(b) Amendments to the UTLP and 1290 LP Agreements. (i) The UTLP LP
Agreement shall be amended so that such agreement shall conform in both form and
substance to the form attached to this Agreement as Exhibit A.
(ii) The 1290 LP Agreement shall be amended so that such agreement
shall conform in both form and substance to the form attached to this Agreement
as Exhibit B.
(c) Liquidation. Metropolis, UTLP and UTLP GP Corp. shall cause LTLP
to liquidate in accordance with the terms of a liquidation agreement attached
hereto as Exhibit C, and in connection with such liquidation, each of Metropolis
and UTLP shall receive an in-kind distribution of its pro rata portion of LTLP's
interests in 237 Park LLC and 1290 LP.
(d) Creation of 237 Park Entities; Transfer of 237 Property. In
accordance with the provisions of the Interest Purchase Agreement, Metropolis,
237 GP Corp. and UTLP shall cause 237 Park LLC to, and 237 Park LLC shall (x)
form a subsidiary, which subsidiary shall at all times, remain a direct or
indirect wholly-owned subsidiary of 237 Park LLC; (y) transfer ownership of the
237 Property to such subsidiary, and (z) thereafter, form one or more additional
subsidiaries as may be required by the lenders in conjunction with the New 237
Park Indebtedness, which additional subsidiaries shall at all times, remain
direct or indirect wholly-owned subsidiaries of 237 Park LLC. Such subsidiaries
shall, together with 237 Park LLC, constitute the 237 Park Entities as defined
herein.
(e) Contribution of 237 Park LLC Membership Interests. Subsequent to
the sale by Metropolis and 237 GP Corp. of their respective partnership
interests (or, following the conversion of 237 Park L.P., of their respective
membership interests) in 237 Park L.P. or 237 Park LLC, as applicable, to 237
Park Investors, L.L.C., UTLP shall contribute its membership interest in 237
Park LLC to OHSP as consideration for UTLP's receipt of Class A Partnership
Units in OHSP with a Fair Market Value and initial Capital Account on the
Closing Date of $505,050.
2.02 The Closing; Effective Time. The closing (the "Closing") with
respect to the Closing Transactions shall take place (i) at the same time (the
"Effective Time"), on the same date (the "Closing Date") and at the same
location of the closing under the Interest Purchase Agreement, subject to
satisfaction or waiver of the conditions set forth in Section 3 hereof, or (ii)
at such other place, time and/or date as the Parties shall mutually agree in
writing.
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<PAGE>
SECTION 3
CONDITIONS TO CLOSING
The obligation of each Party to consummate the Closing Transactions
shall be conditioned as follows:
3.01 Subscription. It shall be a condition of OHSP's obligation to
close hereunder that, simultaneous to the occurrence of the Closing Transactions
as set forth above, UTLP shall be delivering to OHSP a Contribution Agreement in
the form set forth in Exhibit D hereto.
3.02 Closing Under Interest Purchase Agreement. It shall be a
condition of OHSP's, Metropolis's, UTLP's and JMB/NYC's obligation to close
hereunder that, simultaneous to the occurrence of the Closing Transactions as
set forth above, the closing of the purchase under the Interest Purchase
Agreement shall be occurring (and all conditions to such closing shall either
have been satisfied or waived).
3.03 Execution of the Amendment and Release Agreement. It shall be a
condition of JMB/NYC's obligation to close hereunder that, simultaneous to the
occurrence of the Closing Transactions as set forth above, the execution and
delivery of the Amendment and Release Agreement in the form set forth in Exhibit
E hereto by the JMB/NYC Partners and Metropolis shall be occurring.
3.04 Participation Extinguished. It shall be a condition of
JMB/NYC's obligation to close hereunder that, simultaneous to the occurrence of
the Closing Transactions as set forth above, Metropolis shall assign its
interest in (i) that certain Second Amended, Restated and Consolidated Note,
dated as of October 10, 1996, made by JMB/NYC in favor of Metropolis in an
original principal amount of $88,572,780 (a true and correct copy of which is
attached hereto as Exhibit F); (ii) that Second Amended, Restated and
Consolidated Security Agreement, dated as of October 10, 1996, between JMB/NYC
and Metropolis; and (iii) that certain Participation Agreement, dated as of
October 10, 1996, between Metropolis and Michigan Avenue, L.L.C., a Delaware
limited liability company ("Michigan Avenue, LLC"), to Michigan Avenue, LLC.
3.05 Representations and Warranties; Covenants. It shall be a
condition of each Party's obligation to close hereunder, that, with respect to
each other Party:
(a) such Party's respective representations and warranties contained
in this Agreement shall be true at and as of the Effective Time with the
same effect as though made at and as of such time; provided, however,
that, with respect to representations and
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warranties which expressly speak as of a different date, the same shall be
true as of such date.
(b) such Party shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to
be performed or complied with by it (and, with respect to Section 2.01,
such performance or compliance shall have occurred in the appropriate
order) on or before the Effective Time.
SECTION 4
COVENANTS AND AGREEMENTS
4.01 Pre-Closing Covenants and Agreements. After the date hereof and
prior to the Effective Time (unless otherwise agreed to in writing by all of the
Parties):
(a) JMB Consent. JMB/NYC, the JMB/NYC Partners and JMB/NYC Special
shall (and hereby do) expressly acknowledge, and grant their unconditional
consent and, as applicable, approval to, all of the Closing Transactions
expressly provided for in Section 2.01 hereof and all acts which must be
taken by any Party in connection therewith.
(b) [Intentionally Omitted]
4.02 Post-Closing Covenants and Agreements.
(a) OHSP will treat and report UTLP's Code Section 704(c) book/tax
difference with respect to UTLP's interest in OHSP (taking into account
the remedial allocation under Section 4.02(b)(ii)) as equal to
approximately $191,400,000 as of the Effective Time (the "237 Book/Tax
Amount").
(b) From the Closing Date to the earlier of (x) the exercise by FW
Strategic of the right set forth in Section 4.02(c) hereof, and the
receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to
be received under Section 4.02(c), and (y) the exercise by JMB/NYC of the
right set forth in the proviso of Section 4.02(d)(ii) hereof, and the
receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to
be received under Section 4.02(d)(ii):
(i) Maintenance and Allocation of Indebtedness. OHSP shall, or
shall cause the 237 Park Entities to, (A) maintain outstanding
New 237 Park Indebtedness in a principal amount equal at least
to $200 million which indebtedness shall qualify as qualified
non-recourse financing (within the meaning of section
465(b)(6)(B) of the Code); (B) report a portion of the New 237
Park Indebtedness in a principal amount equal to not less than
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the 237 Book/Tax Amount (as reduced each year by the amount
allocated to UTLP under the "remedial method" pursuant to
clause (ii) of this Section 4.02(b)) as being allocated to
UTLP for U.S. federal income tax purposes; (C) file all U.S.
federal and state income tax returns in a manner consistent
with such allocation of the New 237 Park Indebtedness; (D)
report all of the liabilities allocated to UTLP as qualified
non-recourse financing (within the meaning of section
465(b)(6)(B) of the Code); and (E) in preparing any income tax
return, not make any statement or file any attachment that
indicates that there is more than one activity with respect to
the 237 Park Entities for purposes of section 465 of the Code.
(ii) Election of Remedial Method. UTLP and JMB/NYC hereby expressly
recognize and agree that OHSP shall elect to make U.S. federal
income tax allocations in respect of the 237 Property in
accordance with the "remedial method" described in U.S.
Treasury regulation section 1.704-3(d). OHSP agrees that the
effect of using the "remedial method" described in U.S.
Treasury regulation section 1.704-3(d) shall be that UTLP
shall receive an annual remedial income allocation from the
237 Property in an amount equal to approximately $4,600,000.
(iii) OHSP Classification. OHSP shall be classified as a partnership
(and not as a publicly traded partnership) for federal income
tax purposes.
(c) FW Strategic Call Right. FW Strategic shall, upon ninety (90)
days' prior written notice to UTLP and JMB/NYC, have the continuing right,
exercisable at any time during the month of January of each calendar year
commencing with 2002, to purchase, or to cause its designee to purchase,
the UTLP OHSP Units free and clear of all liens, restrictions, and
encumbrances, for a cash amount (which cash amount shall not be reduced or
increased in any way in respect of any costs or fees imposed by any Party)
equal to the greater of the Fair Market Value of such UTLP OHSP Units or
$656,566.
(d) Non-Transferability and Non-Redeemability of the UTLP OHSP Units
and JMB/NYC Put Right. After the Effective Time:
(i) UTLP shall not in any way transfer, assign, sell, abandon,
hypothecate, pledge, exchange or otherwise dispose of or
encumber any of the UTLP OHSP Units or any interest therein
without the consent of OHSP, which consent may be withheld in
OHSP's sole and absolute discretion.
(ii) notwithstanding any of the provisions of the OHSP Partnership
Agreement to the contrary, UTLP shall not have any rights to
redeem, or to cause the redemption of, the UTLP OHSP Units;
provided, however, that JMB/NYC shall, upon ninety (90) days'
prior written notice to UTLP, FW Strategic
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and OHSP, have the continuing right, exercisable at any time
during the month of July of each calendar year commencing with
2001, to cause the sale by UTLP of the UTLP OHSP Units, and,
in the event of the exercise of such right, (x) UTLP shall
have the obligation, and hereby agrees, to sell, and (y) FW
Strategic and OHSP, jointly and severally, shall have the
obligation, and hereby agree, to purchase (either directly or
through their respective assigns or designees), the UTLP OHSP
Units free and clear of all liens, restrictions, and
encumbrances, for a net cash amount (which cash amount shall
not be reduced or increased in any way in respect of any costs
or fees imposed by any Party) equal to the greater of the Fair
Market Value of such UTLP OHSP Units or $505,050.
(e) Payment Directions. Notwithstanding anything to the contrary in
this Agreement or otherwise, any payments to be made by FW Strategic or OHSP
pursuant to Section 4.02(c) or 4.02(d)(ii) of this Agreement shall be made
directly by wire transfer to the partners of UTLP in the ratio of 99.001% of the
funds to be paid pursuant to such sections to JMB/NYC pursuant to the written
wire instructions of JMB/NYC and .999% of the funds to be paid pursuant to such
sections to UTLP GP Corp. pursuant to the written wire instructions of UTLP GP
Corp., without reduction for any fees, expenses or costs.
(f) 1290 L.P. will treat and report UTLP's Code Section 704(c)
book/tax difference with respect to UTLP's interest in 1290 L.P. as equal
to approximately $129,700,000 as of the Effective Time.
(g) From and after the Closing Date to the date UTLP is no longer a
partner in 1290 L.P., (i) 1290 L.P. agrees that the effect of using the
"remedial method" described in U.S. Treasury regulation section 1.704-3(d)
shall be that UTLP shall receive an annual remedial income allocation from
1290 L.P. in an amount equal to approximately $3,300,000; (ii) 1290 L.P.
shall qualify and report all of the liabilities allocated to UTLP as
qualified non-recourse financing (within the meaning of section
465(b)(6)(B) of the Code); and (iii) in preparing any income tax return,
1290 L.P. shall not make any statement or file any attachment that
indicates that there is more than one activity for purposes of Section 465
of the Code.
4.03 OHSP Adverse Transactions. OHSP hereby covenants that no OHSP
Adverse Transaction shall occur from the Closing Date hereof to the earlier of
(x) the exercise by FW Strategic of the right set forth in Section 4.02(c)
hereof, and the receipt by JMB/NYC, in accordance with Section 4.02(e), of all
amounts to be received pursuant to Section 4.02(c), and (y) the exercise by
JMB/NYC of the right set forth in the proviso of Section 4.02(d)(ii) hereof, and
the receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to be
received under Section 4.02(d)(ii), it being hereby expressly agreed that in no
event shall the consummation of any of the Closing Transactions be deemed to be
an "OHSP Adverse Transaction".
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4.04. Further Assurances. After the date hereof and at any time
thereafter, each Party shall, subject to the fulfillment of each of the
covenants and conditions of performance set forth herein or the waiver thereof,
use its reasonable best efforts (a) to perform such further acts and execute
such documents as may be required to (i) effect the transactions expressly
provided in the Transaction Agreements, (ii) obtain in a timely manner all
necessary waivers, consents and approvals, and effect all necessary filings, in
each case as required in order to effect the transactions expressly provided in
the Transaction Agreements, and, (b) to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things reasonably necessary,
proper or advisable to consummate and make effective as promptly as practicable
the provisions of the Transaction Agreements and the transactions expressly
provided therein.
4.05. Negative Covenant. After the date hereof and at any time
thereafter, no Party shall take or refuse to take any action (including, without
limitation, refusing to approve or otherwise consent to any act for which the
approval or consent of such Party is required) so as to hinder, delay or
otherwise impair the ability of any Party to consummate the transactions
expressly provided for in the Transaction Agreements.
4.06. Confidentiality. (a) Each Party hereby agrees that it will
not, without the prior written consent of the other Parties, disclose to any
person (i) the identities of the other Parties or any of their investors or
affiliates, (ii) the fact that this Agreement or the other Parties exist, (iii)
the status of the discussions or negotiations relating to the transactions
expressly provided for in the Transaction Agreements, (iv) copies of, or the
terms and provisions contained in, this Agreement, the Contribution Agreement,
the Amendment and Release Agreement, or any other documents or agreements
necessary to the consummation of the transactions expressly provided for in the
Transaction Agreements, or (v) any other material confidential information with
respect to the Parties or their respective operations or other assets thereof
(collectively, "Confidential Information"); provided, however, that any Party
may disclose Confidential Information (A) to its partners or members (as
applicable), officers, directors, employees, affiliates, investors, agents,
advisors and lenders (including, without limitation, any accountants, attorneys
or financial advisors) (the "Representatives") who need to know such information
for the purpose of evaluating the transactions contemplated by the Transaction
Agreements (it being understood and agreed that such Party shall advise such
persons of their obligations concerning the confidentiality of such Confidential
Information and shall instruct such persons to maintain the confidentiality of
such Confidential Information in accordance with the terms of this Agreement),
(B) pursuant to a subpoena or other legal process received in connection with a
judicial, administrative or regulatory proceeding in which such Party or its
Representatives are involved, subject to the provisions of Section 8.02, and (C)
to the extent that it is required to be disclosed by law or the rules or
regulations of any relevant regulatory organization, or that it is otherwise
deemed advisable in the opinion of counsel to such Party; provided, further
that, in the case of the foregoing clause (B), the applicable Party shall
provide the other Parties promptly with prior written notice of the applicable
matter and cooperate with the other Parties (at such other Parties' sole cost
and expense) to the extent such Parties seek any protective order to prevent the
disclosure of all or any portion of any Confidential Information.
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(b) No Party shall issue any press release or make any other public
announcement (it being agreed that the provisions of this paragraph (b) shall
apply to voluntary press releases or public announcement in contrast to the
required press releases or public announcements which are governed by the
provisions of paragraph (a) above) with respect to the Transaction Agreements
without the prior written consent of the other Parties; provided, however, that
any Party may issue a press release or make a public announcement if, in the
reasonable opinion of counsel to such Party, (x) the information contained
therein is required to be disclosed by law or the rules or regulations of any
relevant regulatory organization and (y) such press release or public
announcement does not involve the disclosure of any Confidential Information.
4.07 OHSP shall furnish to UTLP, within sixty (60) days after the
close of its fiscal year, a statement required pursuant to Section 7.3 of the
OHSP Partnership Agreement.
4.08 Each Party to this Agreement hereby covenants that it shall
notify in writing each other Party to this Agreement, prior to the occurrence of
and at the Closing hereunder, upon its having knowledge of any facts or
circumstances that would make any of the representations, warranties, covenants
or agreements contained in this Agreement untrue or incorrect as of such date
and as of the Closing Date.
4.09 237 Park L.P., 237 GP Corp., Metropolis, OHSP and UTLP agree
that if there is an actual or deemed liquidation of 237 Park L.P. (or, following
conversion, 237 Park LLC), UTLP will be allocated for federal income tax
purposes the same amount of any indebtedness secured by the 237 Property or by
an interest in 237 Park L.P. (or, following conversion, 237 Park LLC) or in a
partnership or limited liability company which is directly or indirectly
wholly-owned by 237 Park L.P. (or, following conversion, 237 Park LLC) as was
allocated to UTLP immediately prior to the actual or deemed liquidation.
SECTION 5
REPRESENTATIONS AND WARRANTIES
5.01. OHSP hereby represents and warrants as of the date hereof and
as of the Closing, as follows:
(a) It is duly organized, validly existing and in good standing as a
limited partnership under the laws of the State of Delaware, with full
power and authority to perform its obligations under this Agreement.
(b) It has all partnership power and authority to enter into this
Agreement, and the person signing this Agreement on behalf of it has been
duly authorized by it to do so.
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(c) This Agreement has been duly authorized and duly executed and
delivered by it and, assuming the due authorization, execution and
delivery by the other Parties, constitutes the valid and binding
instrument or agreement of it, enforceable in accordance with its terms
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(d) Neither the execution, delivery and performance of this
Agreement by OHSP nor the consummation of any other of the transactions
herein contemplated by OHSP nor the fulfillment of the terms hereof or
thereof by OHSP will conflict with, result in a breach or violation of, or
constitute a default (or any event which with the giving of notice or the
lapse of time or both would constitute a default) under the organizational
documents of OHSP or the terms of any indenture, loan agreement, bond,
note, evidence of indebtedness, mortgage, deed of trust, lease, license,
permit, franchise, certificate or other agreement or instrument to which
OHSP is a party or by which it is bound or to which any of its properties
are subject, or require any authorization or approval under or pursuant to
any of the foregoing, or violate in any material respect any statute,
treaty, rule, regulation, ordinance, judgment, order, writ, ruling,
injunction or decree applicable to OHSP of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over OHSP.
(e) No consent, approval, authorization or order of, or
qualification with, any court or governmental authority is required in
connection with the execution, delivery or performance by OHSP of this
Agreement, except for any of the foregoing which have been obtained.
(f) OHSP will not, (i) immediately after UTLP contributes its
membership interests in 237 Park LLC to OHSP in return for the UTLP OHSP
Units, be a partnership described in section 721(b) of the Code (i.e., a
partnership that would be an "investment company" within the meaning of
section 351(e) of the Code if it were incorporated) or (ii) at the time
that UTLP contributes its membership interests in 237 Park LLC to OHSP in
return for the UTLP OHSP Units, (A) have any plan or intention to become a
partnership described in section 721(b) of the Code or (B) have any
obligation to acquire additional assets or dispose of assets that would
cause it to become a partnership described in section 721(b) of the Code.
(g) OHSP will be classified as a partnership (and not as a publicly
traded partnership) for federal income tax purposes.
(h) The audited financial statements of OHSP as of and for the year
ended December 31, 1998, and the unaudited financial statements of OHSP as
of and for the periods ended June 30, 1999, and September 30, 1999,
respectively, provided by OHSP to JMB/NYC present fairly in all material
respects the financial condition and results of
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operations of OHSP as of and for the periods ended on the dates thereof.
Since September 30, 1999, there has been no material adverse change in the
financial condition, assets, operations or prospects of OHSP other than in
the ordinary course of its business or fluctuations in the market value of
its assets in the ordinary course.
(i) OHSP is not subject to any litigation, claim, action or
proceeding that could, if adversely determined, have a material adverse
effect on the financial condition, assets, operations or prospects of OHSP
and nothing has come to the attention of OHSP to cause it to believe that
any entity in which it has invested is subject to any litigation, claim,
action or proceeding that could, if adversely determined, have a material
adverse effect on the financial condition, assets, operations or prospects
of OHSP.
5.02. UTLP GP Corp. hereby represents and warrants, with respect to
UTLP, as of the date hereof and as of the Closing, as follows:
(a) It is duly organized, validly existing and in good standing as a
limited partnership under the laws of the State of Delaware, with full
power and authority to perform its obligations under this Agreement.
(b) It owns a 5% limited partnership interest in LTLP, free and
clear of any liens, restrictions, and encumbrances (except for those
liens, restrictions or encumbrances provided in the LTLP LP Agreement
running in favor of the partners of LTLP or their affiliates).
(c) It has all partnership power and authority to enter into this
Agreement, and the person signing this Agreement on behalf of it has been
duly authorized by it to do so.
(d) This Agreement has been duly authorized and duly executed and
delivered by it and, assuming the due authorization, execution and
delivery by the other Parties, constitutes the valid and binding
instrument or agreement of it, enforceable in accordance with its terms
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(e) Neither the execution, delivery and performance of this
Agreement by UTLP nor the consummation of any other of the transactions
herein contemplated by UTLP or the fulfillment of the terms hereof or
thereof by UTLP will conflict with, result in a breach or violation of, or
constitute a default (or any event which with the giving of notice or the
lapse of time or both would constitute a default) under the organizational
documents of UTLP or the terms of any indenture, loan agreement, bond,
note, evidence of indebtedness, mortgage, deed of trust, lease, license,
permit, franchise, certificate or other agreement or instrument to which
UTLP is a party or by which it is bound or to which any of its properties
are subject, or require any authorization or approval under or
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pursuant to any of the foregoing, or violate in any material respect any
statute, treaty, rule, regulation, ordinance, judgment, order, writ,
ruling, injunction or decree applicable to UTLP of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over UTLP.
(f) No consent, approval, authorization or order of, or
qualification with, any court or governmental authority is required in
connection with the execution, delivery or performance by UTLP of this
Agreement, except for any of the foregoing which have been obtained.
(g) It has not been formed or recapitalized for the specific purpose
of acquiring the UTLP OHSP Units.
5.03. JMB/NYC, the JMB/NYC Partners and JMB/NYC Special hereby
represent and warrant (each only as to itself) as of the date hereof and as of
the Closing, as follows:
(a) With respect to JMB/NYC, it is duly organized, validly existing
and in good standing as a limited partnership under the laws of the State
of Illinois, with full power and authority to perform its obligations
under this Agreement. With respect to Property Partners, Carlyle XIII and
Carlyle XIV, each is duly organized, validly existing and in good standing
as a limited partnership under the laws of the State of Illinois, with
full power and authority to perform its obligations under this Agreement.
With respect to JMB/NYC Special, it is duly organized, validly existing
and in good standing as a corporation, under the laws of the State of
Delaware, with full power and authority to perform its obligations under
this Agreement.
(b) JMB/NYC owns a 98.901% limited partnership interest, and JMB/NYC
Special owns a 0.1% general partnership interest, in UTLP, in each case,
free and clear of any liens, restrictions, and encumbrances (except for
those liens, restrictions or encumbrances provided in the UTLP LP
Agreement running in favor of the partners of UTLP or their affiliates or
that certain Amended, Restated and Consolidated Security Agreement, dated
October 10, 1996 by and between JMB/NYC and Metropolis). Property
Partners, Carlyle XIII and Carlyle XIV collectively own 100% of the
limited partnership interests in JMB/NYC. JMB/NYC Special is the sole
general partner of JMB/NYC.
(c) JMB/NYC, JMB/NYC Special and each of the JMB/NYC Partners have
all requisite power and authority to enter into this Agreement, and the
person signing this Agreement on behalf of each such entity has been duly
authorized by it to do so.
(d) This Agreement has been duly authorized and duly executed and
delivered by JMB/NYC, JMB/NYC Special and each of the JMB/NYC Partners
and, assuming the
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due authorization, execution and delivery by the other Parties,
constitutes the valid and binding instrument or agreement of each such
entity, enforceable in accordance with its terms subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(e) Neither the execution, delivery and performance of this
Agreement by JMB/NYC, JMB/NYC Special or any of the JMB/NYC Partners nor
the consummation of any other of the transactions herein contemplated by
any such entity or the fulfillment of the terms hereof or thereof by any
such entity will conflict with, result in a breach or violation of, or
constitute a default (or any event which with the giving of notice or the
lapse of time or both would constitute a default) under the organizational
documents of any such entity or the terms of any indenture, loan
agreement, bond, note, evidence of indebtedness, mortgage, deed of trust,
lease, license, permit, franchise, certificate or other agreement or
instrument to which such entity is a party or by which it is bound or to
which any of its properties are subject, or require any authorization or
approval under or pursuant to any of the foregoing, or violate in any
material respect any statute, treaty, rule, regulation, ordinance,
judgment, order, writ, ruling, injunction or decree applicable to such
entity of any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over such entity.
(f) No consent, approval, authorization or order of, or
qualification with, any court or governmental authority is required in
connection with the execution, delivery or performance by JMB/NYC, JMB/NYC
Special or any of the JMB/NYC Partners of this Agreement, except for any
of the foregoing which have been obtained.
5.04. Metropolis hereby represents and warrants as of the date
hereof and as of the Closing, as follows:
(a) It is duly organized, validly existing and in good standing as a
corporation under the laws of the State of Maryland, with full power and
authority to perform its obligations under this Agreement.
(b) It owns 100% of the capital stock of 237 GP Corp., free and
clear of any liens, restrictions, and encumbrances. It owns a 95% general
partnership interest in LTLP, free and clear of any liens, restrictions,
and encumbrances.
(c) It has all corporate power and authority to enter into this
Agreement, and the person signing this Agreement on behalf of it has been
duly authorized by it to do so.
(d) This Agreement has been duly authorized and duly executed and
delivered by Metropolis and, assuming the due authorization, execution and
delivery by the other Parties constitutes the valid and binding instrument
or agreement of Metropolis,
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enforceable in accordance with its terms subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(e) Neither the execution, delivery and performance of this
Agreement by Metropolis nor the consummation of any other of the
transactions herein contemplated by Metropolis or the fulfillment of the
terms hereof or thereof by Metropolis will conflict with, result in a
breach or violation of, or constitute a default (or any event which with
the giving of notice or the lapse of time or both would constitute a
default) under the organizational documents of Metropolis or the terms of
any indenture, loan agreement, bond, note, evidence of indebtedness,
mortgage, deed of trust, lease, license, permit, franchise, certificate or
other agreement or instrument to which Metropolis is a party or by which
it is bound or to which any of its properties are subject, or require any
authorization or approval under or pursuant to any of the foregoing, or
violate in any material respect any statute, treaty, rule, regulation,
ordinance, judgment, order, writ, ruling, injunction or decree applicable
to Metropolis of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over Metropolis.
(f) No consent, approval, authorization or order of, or
qualification with, any court or governmental authority is required in
connection with the execution, delivery or performance by Metropolis of
this Agreement, except for any of the foregoing which have been obtained.
(g) Attached hereto as Exhibit G is a schedule reflecting the
relevant dates and amounts of (i) all capital contributions and loans
(including the identity of the lender and a description of the terms
thereof) received by LTLP, 237 Park L.P. (and, following conversion, 237
Park LLC) and 1290 L.P. and (ii) all distributions made by LTLP, 237 Park
L.P. (and, following conversion, 237 Park LLC) and 1290 L.P. for the
period commencing October 10, 1996 through the date hereof and updated as
of the Closing after giving effect to the transactions expressly provided
for in the Transaction Agreements.
(h) Attached hereto as Exhibit H is a schedule reflecting all cash
and cash equivalents held by each of 237 Park L.P. (and, following
conversion, 237 Park LLC), 1290 Park L.P. and LTLP as of the date hereof
and updated as of the Closing after giving effect to the transactions
expressly provided for in the Transaction Agreements.
5.05. UTLP GP Corp. hereby represents and warrants as of the date
hereof and as of the Closing, as follows:
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(a) It is duly organized, validly existing and in good standing as a
corporation under the laws of the State of Delaware, with full power and
authority to perform its obligations under this Agreement.
(b) 100% of the capital stock of UTLP GP Corp. is owned by
Metropolis. UTLP GP Corp. owns a 0.999% general partnership interest in
UTLP, free and clear of any liens, restrictions, and encumbrances.
(c) It has all corporate power and authority to enter into this
Agreement, and the person signing this Agreement on behalf of it has been
duly authorized by it to do so.
(d) This Agreement has been duly authorized and duly executed and
delivered by UTLP GP Corp. and, assuming the due authorization, execution
and delivery by the other Parties, constitutes the valid and binding
instrument or agreement of UTLP GP Corp, enforceable in accordance with
its terms subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(e) Neither the execution, delivery and performance of this
Agreement by UTLP GP Corp. nor the consummation of any other of the
transactions herein contemplated by UTLP GP Corp. or the fulfillment of
the terms hereof or thereof by UTLP GP Corp. will conflict with, result in
a breach or violation of, or constitute a default (or any event which with
the giving of notice or the lapse of time or both would constitute a
default) under the organizational documents of UTLP GP Corp. or the terms
of any indenture, loan agreement, bond, note, evidence of indebtedness,
mortgage, deed of trust, lease, license, permit, franchise, certificate or
other agreement or instrument to which UTLP GP Corp. is a party or by
which it is bound or to which any of its properties are subject, or
require any authorization or approval under or pursuant to any of the
foregoing, or violate in any material respect any statute, treaty, rule,
regulation, ordinance, judgment, order, writ, ruling, injunction or decree
applicable to UTLP GP Corp. of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over UTLP GP
Corp.
(f) No consent, approval, authorization or order of, or
qualification with, any court or governmental authority is required in
connection with the execution, delivery or performance by UTLP GP Corp. of
this Agreement, except for any of the foregoing which have been obtained.
5.06. 237 Park L.P. hereby represents and warrants as of the date
hereof and as of the Closing, as follows:
(a) 237 Park L.P. is duly organized, validly existing and in good
standing as a limited partnership under the laws of the State of Delaware,
with full power and authority
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to perform its obligations under this Agreement; provided, however, that,
upon conversion of 237 Park L.P. to 237 Park LLC, 237 Park LLC shall be
and shall continue to be through the time of Closing, duly organized,
validly existing and in good standing as a limited liability company under
the laws of the State of Delaware.
(b) 237 Park L.P. has all partnership power and authority to enter
into this Agreement, and the person signing this Agreement on behalf of it
has been duly authorized by it to do so.
(c) This Agreement has been duly authorized and duly executed and
delivered by 237 Park L.P. and, assuming the due authorization, execution
and delivery by the other Parties, constitutes the valid and binding
instrument or agreement of 237 Park L.P. and, following conversion, 237
Park LLC, enforceable in accordance with its terms subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(d) Neither the execution, delivery and performance of this
Agreement by 237 Park L.P. or 237 Park LLC nor the consummation of any
other of the transactions herein contemplated by 237 Park L.P. or 237 Park
LLC or the fulfillment of the terms hereof or thereof by 237 Park L.P. or
237 Park LLC will conflict with, result in a breach or violation of, or
constitute a default (or any event which with the giving of notice or the
lapse of time or both would constitute a default) under the organizational
documents of 237 Park L.P. or 237 Park LLC or the terms of any indenture,
loan agreement, bond, note, evidence of indebtedness, mortgage, deed of
trust, lease, license, permit, franchise, certificate or other agreement
or instrument to which 237 Park L.P. or 237 Park LLC is a party or by
which it is bound or to which any of its properties are subject, or
require any authorization or approval under or pursuant to any of the
foregoing, or violate in any material respect any statute, treaty, rule,
regulation, ordinance, judgment, order, writ, ruling, injunction or decree
applicable to 237 Park L.P. or 237 Park LLC of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over 237 Park L.P. or 237 Park LLC.
(e) No consent, approval, authorization or order of, or
qualification with, any court or governmental authority is required in
connection with the execution, delivery or performance, as applicable, by
237 Park L.P. or 237 Park LLC of this Agreement, except for any of the
foregoing which have been obtained.
5.07. FW Strategic hereby represents and warrants as of the date
hereof and as of the Closing, as follows:
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(a) It is duly organized, validly existing and in good standing as a
limited partnership under the laws of the State of Texas, with full power
and authority to perform its obligations under this Agreement.
(b) It has all partnership power and authority to enter into this
Agreement, and the person signing this Agreement on behalf of it has been
duly authorized by it to do so.
(d) This Agreement has been duly authorized and duly executed and
delivered by it and, assuming the due authorization, execution and
delivery by the other Parties constitutes the valid and binding instrument
or agreement of it, enforceable in accordance with its terms subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(e) Neither the execution, delivery and performance of this
Agreement by FW Strategic nor the consummation of any other of the
transactions herein contemplated by FW Strategic or the fulfillment of the
terms hereof or thereof by FW Strategic will conflict with, result in a
breach or violation of, or constitute a default (or any event which with
the giving of notice or the lapse of time or both would constitute a
default) under the organizational documents of FW Strategic or the terms
of any indenture, loan agreement, bond, note, evidence of indebtedness,
mortgage, deed of trust, lease, license, permit, franchise, certificate or
other agreement or instrument to which FW Strategic is a party or by which
it is bound or to which any of its properties are subject, or require any
authorization or approval under or pursuant to any of the foregoing, or
violate in any material respect any statute, treaty, rule, regulation,
ordinance, judgment, order, writ, ruling, injunction or decree applicable
to FW Strategic of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over FW Strategic.
(f) No consent, approval, authorization or order of, or
qualification with, any court or governmental authority is required in
connection with the execution, delivery or performance by FW Strategic of
this Agreement, except for any of the foregoing which have been obtained.
5.08. 237 GP Corp. hereby represents and warrants as of the date
hereof and as of the Closing, as follows:
(a) It is duly organized, validly existing and in good standing as a
corporation under the laws of the State of Delaware, with full power and
authority to perform its obligations under this Agreement.
(b) 100% of the capital stock of 237 GP Corp. is owned by
Metropolis. 237 GP Corp. owns a 1% general partnership interest (the sole
general partnership interest) in
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237 Park L.P. (or, following the conversion, a 1% membership interest in
237 Park LLC) free and clear of any liens, restrictions, and encumbrances.
(c) It has all corporate power and authority to enter into this
Agreement, and the person signing this Agreement on behalf of it has been
duly authorized by it to do so.
(d) This Agreement has been duly authorized and duly executed and
delivered by 237 GP Corp. and, assuming the due authorization, execution
and delivery by the other Parties, constitutes the valid and binding
instrument or agreement of 237 GP Corp, enforceable in accordance with its
terms subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(e) Neither the execution, delivery and performance of this
Agreement by 237 GP Corp. nor the consummation of any other of the
transactions herein contemplated by 237 GP Corp. or the fulfillment of the
terms hereof or thereof by 237 GP Corp. will conflict with, result in a
breach or violation of, or constitute a default (or any event which with
the giving of notice or the lapse of time or both would constitute a
default) under the organizational documents of 237 GP Corp. or the terms
of any indenture, loan agreement, bond, note, evidence of indebtedness,
mortgage, deed of trust, lease, license, permit, franchise, certificate or
other agreement or instrument to which 237 GP Corp. is a party or by which
it is bound or to which any of its properties are subject, or require any
authorization or approval under or pursuant to any of the foregoing, or
violate in any material respect any statute, treaty, rule, regulation,
ordinance, judgment, order, writ, ruling, injunction or decree applicable
to 237 GP Corp. of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over 237 GP Corp.
(f) No consent, approval, authorization or order of, or
qualification with, any court or governmental authority is required in
connection with the execution, delivery or performance by 237 GP Corp. of
this Agreement, except for any of the foregoing which have been obtained.
5.09. 1290 L.P. hereby represents and warrants as of the date hereof
and as of the Closing, as follows:
(a) It is duly organized, validly existing and in good standing as a
limited partnership under the laws of the State of Delaware, with full
power and authority to perform its obligations under this Agreement.
(b) It has all partnership power and authority to enter into this
Agreement, and the person signing this Agreement on behalf of it has been
duly authorized by it to do so.
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(c) This Agreement has been duly authorized and duly executed and
delivered by it and, assuming the due authorization, execution and
delivery by the other Parties, constitutes the valid and binding
instrument or agreement of it, enforceable in accordance with its terms
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(d) Neither the execution, delivery and performance of this
Agreement by 1290 L.P. nor the consummation of any other of the
transactions herein contemplated by 1290 L.P. or the fulfillment of the
terms hereof or thereof by 1290 L.P. will conflict with, result in a
breach or violation of, or constitute a default (or any event which with
the giving of notice or the lapse of time or both would constitute a
default) under the organizational documents of 1290 L.P. or the terms of
any indenture, loan agreement, bond, note, evidence of indebtedness,
mortgage, deed of trust, lease, license, permit, franchise, certificate or
other agreement or instrument to which 1290 L.P. is a party or by which it
is bound or to which any of its properties are subject, or require any
authorization or approval under or pursuant to any of the foregoing, or
violate in any material respect any statute, treaty, rule, regulation,
ordinance, judgment, order, writ, ruling, injunction or decree applicable
to 1290 L.P. of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over 1290 L.P.
(e) No consent, approval, authorization or order of, or
qualification with, any court or governmental authority is required in
connection with the execution, delivery or performance by 1290 L.P. of
this Agreement, except for any of the foregoing which have been obtained.
5.10. 1290 GP Corp. hereby represents and warrants as of the date
hereof and as of the Closing, as follows:
(a) It is duly organized, validly existing and in good standing as a
corporation under the laws of the State of Delaware, with full power and
authority to perform its obligations under this Agreement.
(b) 100% of the capital stock of 1290 GP Corp. is owned by
Metropolis. 1290 GP Corp. owns a 1.0% general partnership interest in 1290
L.P., free and clear of any liens, restrictions, and encumbrances.
(c) It has all corporate power and authority to enter into this
Agreement, and the person signing this Agreement on behalf of it has been
duly authorized by it to do so.
(d) This Agreement has been duly authorized and duly executed and
delivered by 1290 GP Corp. and, assuming the due authorization, execution
and delivery by the
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other Parties, constitutes the valid and binding instrument or agreement
of 1290 GP Corp, enforceable in accordance with its terms subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(e) Neither the execution, delivery and performance of this
Agreement by 1290 GP Corp. nor the consummation of any other of the
transactions herein contemplated by 1290 GP Corp. or the fulfillment of
the terms hereof or thereof by 1290 GP Corp. will conflict with, result in
a breach or violation of, or constitute a default (or any event which with
the giving of notice or the lapse of time or both would constitute a
default) under the organizational documents of 1290 GP Corp. or the terms
of any indenture, loan agreement, bond, note, evidence of indebtedness,
mortgage, deed of trust, lease, license, permit, franchise, certificate or
other agreement or instrument to which 1290 GP Corp. is a party or by
which it is bound or to which any of its properties are subject, or
require any authorization or approval under or pursuant to any of the
foregoing, or violate in any material respect any statute, treaty, rule,
regulation, ordinance, judgment, order, writ, ruling, injunction or decree
applicable to 1290 GP Corp. of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over 1290 GP
Corp.
(f) No consent, approval, authorization or order of, or
qualification with, any court or governmental authority is required in
connection with the execution, delivery or performance by 1290 GP Corp. of
this Agreement, except for any of the foregoing which have been obtained.
SECTION 6
TERMINATION AND AMENDMENT
6.01 Termination. This Agreement may be terminated at any time
before the Closing Date (except as otherwise provided herein) as follows:
(a) by mutual written consent of all of the Parties;
(b) by any of the Parties, if the Closing shall not have occurred on
or before December 31, 1999 (the "Termination Date"); provided, however, that
the right to terminate this Agreement under this Section 6.0l shall not be
available to any Party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Closing to
occur on or before the Termination Date; and
(c) by OHSP or Metropolis, upon written notice from either such
Party delivered to each of the other Parties hereto that the Interest Purchase
Agreement has been terminated.
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6.02 Effect of Termination. In the event of the termination of this
Agreement pursuant to this Section 6, this Agreement shall become void and of no
effect with no liability to any Party; provided, however, that (i) no such
termination shall relieve any Party from any liability for the damages
(excluding consequential damages) resulting from any willful and intentional
breach of this Agreement, and (ii) this Section 6, as well as Sections 4.06,
7.02, 8.02, 8.08 and 8.15 shall survive such termination.
SECTION 7
INDEMNIFICATION
7.01 [Intentionally Omitted]
7.02 Post-Closing Indemnification.
(a) Indemnification. From and after the Closing Date:
(i) JMB/NYC shall indemnify and hold OHSP harmless from and
against any and all Losses which OHSP (or, in the case of a
breach relating to Section 4.02(c) hereof, FW Strategic) may
incur as a result of the JMB Controlled Entities' taking or
refusing to take any action which would either (i) cause or
result in the material inaccuracy or breach of any
representation or warranty of JMB/NYC contained in this
Agreement, or (ii) cause the material breach of any covenant
or agreement of JMB/NYC contained in this Agreement
(including, without limitation, by prohibiting or otherwise
interfering with the exercise of the right of FW Strategic
which is set forth in Section 4.02(c) hereof) (each, a
"JMB/NYC Indemnifiable Action"); provided that any such
JMB/NYC Indemnifiable Action is not revoked or rescinded
within thirty (30) days of JMB/NYC's receipt of notice from
OHSP that such an action has occurred.
(ii) OHSP shall indemnify and hold JMB/NYC harmless from and
against any and all Losses which JMB/NYC may incur as a result
of OHSP's (or, in the case of a breach relating to the proviso
in Section 4.02(d)(ii) hereof, FW Strategic's) taking or
refusing to take any action which would either (i) cause or
result in the material inaccuracy or breach of any
representation or warranty of OHSP contained in this
Agreement, or (ii) cause the material breach of any covenant
or agreement of OHSP or, in the case of the agreement set
forth in the proviso of Section 4.02(d)(ii) hereof, of FW
Strategic, contained in this Agreement (including, without
limitation, by prohibiting or otherwise interfering with the
exercise of the right of JMB/NYC which is set forth in Section
4.02(d)(ii) hereof) (each such action, a "OHSP Indemnifiable
Action", and, together with each
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JMB/NYC Indemnifiable Action, an "Indemnifiable Action");
provided that any such OHSP Indemnifiable Action is not
revoked or rescinded within thirty (30) days of OHSP's receipt
of notice from JMB/NYC that such an action has occurred.
(b) Method of Asserting Claims, etc. The Parties hereby acknowledge
and agree that, in the event that any of the applicable parties set forth
in Section 7.02(a) take any applicable Indemnifiable Action (and provided
that the applicable Indemnifiable Action is not revoked or rescinded
within the time periods set forth in Section 7.02(a)(i) and (ii)), the
applicable indemnifying party shall absolutely and unconditionally be
liable to pay, and shall pay, the applicable indemnified party for any and
all Losses suffered as a result thereof. Notwithstanding anything to the
contrary in this Section 7.02, the foregoing sentence shall not limit the
remedies which either JMB/NYC or OHSP may have against any other Party and
the right of JMB/NYC or OHSP to seek injunctive relief with respect to the
applicable Indemnifiable Actions or specific performance of the obligation
underlying the same.
SECTION 8
MISCELLANEOUS PROVISIONS
8.01. Successors. Except as otherwise provided herein, this
Agreement and all of the terms and provisions hereof shall be binding upon and
inure to the benefit of the Parties and their respective heirs, executors,
administrators, successors, trustees and legal representatives.
8.02. GOVERNING LAW. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING LAWS
RELATING TO THE VALIDITY, INTERPRETATION AND EFFECT OF THIS AGREEMENT, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(b) EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY
CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK AND THE COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF
NEW YORK FOR ANY LITIGATION ARISING OUT OF, RELATING TO OR EXPRESSLY PROVIDED
FOR IN THE TRANSACTION AGREEMENTS (AND AGREES NOT TO COMMENCE ANY LITIGATION
RELATING HERETO EXCEPT IN SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF ANY
PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO ITS RESPECTIVE
ADDRESS SET FORTH IN SECTION 8.04 SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY
LITIGATION BROUGHT AGAINST IT IN ANY SUCH COURT. EACH OF THE PARTIES HEREBY
IRREVOCABLY
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AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE IN ANY
LITIGATION ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER TRANSACTIONS
EXPRESSLY PROVIDED FOR IN THE TRANSACTION AGREEMENTS IN THE COURTS OF THE STATE
OF NEW YORK OR THE COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE
OF NEW YORK AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES
NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION
ARISING OUT OF, RELATING TO OR EXPRESSLY PROVIDED FOR IN THE TRANSACTION
AGREEMENTS.
8.03. Modification, Waiver in Writing. Neither this Agreement nor
any of the terms hereof may be amended, changed, waived, discharged or
terminated, unless such amendment, change, waiver, discharge or termination is
in writing signed by each Party.
8.04. Notices.
(a) All notices, requests, directions and other communications
permitted or provided for hereunder shall be in writing (including, unless the
context expressly otherwise provides, facsimile transmission) and mailed, faxed
or delivered, (i) if to Metropolis, to the following address: c/o Victor Capital
Group, 605 Third Avenue, New York, NY 10016, Attention: John R. Klopp, (ii) if
to JMB/NYC, JMB/NYC Partners or JMB/NYC Special, to the following address: 900
North Michigan Avenue, 19th Floor, Chicago, Illinois 60611, Attention: Stuart C.
Nathan and Gary Nickele, (iii) if to UTLP or UTLP GP Corp., to the following
address: c/o Victor Capital Group, 605 Third Avenue, New York, NY 10016,
Attention: John R. Klopp, (iv) if to 237 Park L.P. or 237 GP Corp., to the
following address: c/o Victor Capital Group, 605 Third Avenue, New York, NY
10016, Attention: John R. Klopp, (v) if to 1290 Park L.P. or 1290 GP Corp., to
the following address: c/o Victor Capital Group, 605 Third Avenue, New York, NY
10016, Attention: John R. Klopp, (vi) if to OHSP or FW Strategic, to Oak Hill
Strategic Asset Management, L.P., 201 Main Street, Suite 3100, Fort Worth, Texas
76102, Attention: John Fant, or in each case, to such other address as shall be
designated by such Party in a written notice to the other Parties hereunder from
time to time.
(b) All such notices and communications transmitted by overnight
delivery shall be effective when delivered or upon refusal to accept delivery
(in the case of overnight delivery) or if mailed or delivered, upon receipt or
upon refusal to accept delivery. All notices hereunder sent by facsimile
transmission shall be deemed sufficiently served or given for all purposes
hereunder upon transmission as confirmed by the sender's verified facsimile
transmission or certified facsimile activity report, provided that such
transmission is promptly followed by another form of notice allowed by this
Section 8.04.
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8.05. Headings. The Section and Sub-Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
8.06. 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.
8.07 Assignment.
(a) This Agreement shall not be assigned or otherwise transferred by
any party hereto whether by operation of law or otherwise without the express
written consent of each of the other Parties.
(b) The Parties hereby agree that any purported assignment in
contravention of the preceding paragraph (a) shall be null and void.
(c) Subject to the preceding paragraph (a), this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the Parties and
their respective permitted successors and assigns.
8.08. Specific Performance. The Parties acknowledge and agree that a
breach of the provisions hereof could not be adequately compensated for by money
damages and that the subject matter of the transactions contemplated hereby is
unique. The Parties therefore agree that any Party will be entitled, in addition
to any other right or remedy available to him or it, to an injunction
restraining such breach or a threatened breach and to specific performance of
any such provision of this Agreement.
8.09. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
8.10. No Third-Party Beneficiaries. This Agreement and the
Contribution Agreement are solely for the benefit of the Parties to this
Agreement or the parties to the Contribution Agreement and JMB/NYC, and nothing
contained in this Agreement or the Contribution Agreement shall be deemed to
confer upon any other person or entity any right to insist upon or to enforce
the performance or observance of any of the obligations contained herein or
therein.
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8.11. Prior Agreements. The Transaction Agreements contain the
entire agreements of the Parties hereto and thereto in respect of the
transactions expressly set forth therein, and all prior agreements among or
between such Parties (other than those letters dated October 14, 1996, regarding
the reimbursement of certain fees and expenses of JMB/NYC), whether oral or
written, are superseded by the terms of such Transaction Agreements.
8.13. Good Faith. All Parties shall act in good faith in the
implementation of the foregoing provisions.
8.14 Survival. Except as otherwise provided herein, all
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing until the later of (x) the earlier of (a)
the exercise by FW Strategic of the right set forth in Section 4.02(c) hereof,
and the receipt by JMB/NYC, in accordance with to Section 4.02(e), of all
amounts to be received under Section 4.02(c), and (b) the exercise by JMB/NYC of
the right set forth in the proviso of Section 4.02(d)(ii) hereof and the receipt
by JMB/NYC, in accordance with Section 4.02(e), of all amounts to be received
under Section 4.02(d)(ii), and (y) the date JMB/NYC no longer holds a direct or
indirect interest in 1290 LP.
8.15 Limit of Liability. Any liability of JMB/NYC or any JMB/NYC
Partner under this Agreement shall be limited to its respective assets. In no
event shall a deficit capital account of any partner of any such partnership or
any obligations of any partner to restore any deficit capital account be deemed
an asset of any such partnership.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed this Restructuring
Agreement as of the date and year first above written.
OAK HILL STRATEGIC PARTNERS, L.P.
By: F.W. Strategic Asset Management,
L.P., General Partner
By: STRATEGIC GENPAR, INC.,
General Partner
By: /s/ James N. Alexander
Name: James N. Alexander
Title: Vice President
237/1290 UPPER TIER ASSOCIATES, L.P.
By: 237/1290 Upper Tier GP Corp., General
Partner
By: /s/ Andrew Cohen
Name: Andrew Cohen
Title: Vice President
237/1290 UPPER TIER GP CORP.
By: /s/ Andrew Cohen
Name: Andrew Cohen
Title: Vice President
237 PARK PARTNERS, L.P.
By: 237 GP Corp., General Partner
By: /s/ Andrew Cohen
Name: Andrew Cohen
Title: Vice President
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237 GP CORP.
By: /s/ Andrew Cohen
Name: Andrew Cohen
Title: Vice President
1290 PARTNERS, L.P.
By: 1290 GP Corp., General Partner
By: /s/ Andrew Cohen
Name: Andrew Cohen
Title: Vice President
1290 GP CORP.
By: /s/ Andrew Cohen
Name: Andrew Cohen
Title: Vice President
JMB/NYC OFFICE BUILDING
ASSOCIATES, L.P.
By: Carlyle Managers, Inc., General
Partner
By: /s/ Stuart C. Nathan
Name: Stuart C. Nathan
Title: President
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PROPERTY PARTNERS, L.P.
By: Carlyle Investors, Inc., General
Partner
By: /s/ Stuart C. Nathan
Name: Stuart C. Nathan
Title: President
CARLYLE-XIII ASSOCIATES, L.P.
By: Carlyle Investors, Inc., General
Partner
By: /s/ Stuart C. Nathan
Name: Stuart C. Nathan
Title: President
CARLYLE-XIV ASSOCIATES, L.P.
By: Carlyle Investors, Inc., its general
partner
By: /s/ Stuart C. Nathan
Name: Stuart C. Nathan
Title: President
CARLYLE MANAGERS, INC.
By: /s/ Stuart C. Nathan
Name: Stuart C. Nathan
Title: President
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METROPOLIS REALTY TRUST, INC.
By: /s/ Andrew Cohen
Name: Andrew Cohen
Title: Vice President
F.W. STRATEGIC ASSET MANAGEMENT, L.P.
(solely for the purpose of agreeing to
certain obligations set forth in
Sections 4.02(c)and (d) hereof)
By: Strategic Genpar, Inc., General
Partner
By: /s/ James N. Alexander
Name: James N. Alexander
Title: Vice President
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