UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ______ to ______
Commission File Number 0-21849
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METROPOLIS REALTY TRUST, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 13-3910684
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
605 Third Avenue
26th Floor
New York, New York 10016
(Address of principal executive offices, including zip code)
(212) 655-0220
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of
the Act:
Title of Class
--------------
Class A Common Stock, par value $10.00 per share
Class B Common Stock, par value $10.00 per share
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
Of the Company's 12,997,646 shares of Common Stock outstanding, 9,354,410 shares
are held by affiliates of the Registrant and 3,643,236 of the Company's shares
are held by non-affiliates of the Registrant. The Common Stock is not listed on
any exchange; the Company does not intend to list the Common Stock on any
exchange in the near term; there is not currently a public market for the Common
Stock; and there can be no assurance that an active trading market for the
Common Stock will develop or be sustained.
As of February 29, 2000, there were 12,997,646 shares of the Registrant's Common
Stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
The Exhibits to the Company Registration Statement on Form 10, as amended, and
the Exhibits to the Company's definitive Information Statement on Schedule 14C,
filed with the Commission on October 29, 1999, are hereby incorporated by
reference in Item 14 of this Annual Report on Form 10-K.
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<PAGE>
TABLE OF CONTENTS
PART I .....................................................................1
ITEM 1. BUSINESS..................................................1
ITEM 2. PROPERTY..................................................6
ITEM 3. LEGAL PROCEEDINGS........................................10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......10
PART II ....................................................................11
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS......................................11
ITEM 6. SELECTED FINANCIAL DATA..................................12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS......................13
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK........................................16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..............17
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE......................30
PART III ....................................................................31
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......31
ITEM 11. EXECUTIVE COMPENSATION...................................33
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT...........................................34
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...........37
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K..............................................39
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CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE SECURITIES LITIGATION REFORM ACT OF 1995
WHEN USED IN THIS ANNUAL REPORT ON FORM 10-K, THE WORDS "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-K PURSUANT TO THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH IN "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND
"BUSINESS -- QUALIFICATION AS A REIT". READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE
HEREOF OR THEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE
FORWARD- LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES OCCURRING AFTER
THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. THE
COMPANY'S ACTUAL RESULTS OR OUTCOMES MAY DIFFER MATERIALLY FROM THOSE
ANTICIPATED.
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<PAGE>
PART I
ITEM 1. BUSINESS
Overview
Metropolis Realty Trust, Inc., a Maryland corporation (the
"Company"), is a real estate investment trust (a "REIT"). The Company was formed
on May 13, 1996 to facilitate the consummation of the Second Amended Joint Plan
of Reorganization of 237 Park Avenue Associates, L.L.C. ("237 LLC") and 1290
Associates, L.L.C. ("1290 LLC" and, together with 237 LLC, the "Predecessors"),
dated September 20, 1996 (as amended, the "Plan"), and, thereby, acquire the
interests of 237 LLC and 1290 LLC in the properties located in New York City at
237 Park Avenue (the "237 Property") and 1290 Avenue of the Americas (the "1290
Property," and together with the 237 Property, the "Properties"). The
Predecessors were two of the many companies, partnerships and joint ventures
that collectively constituted the United States operations of the Olympia & York
("O&Y") group of companies. The transactions contemplated by the Plan were
consummated on October 10, 1996 (the "Effective Date").
On November 22, 1999, the Company sold all of its interests in
the 237 Property. Following such sale and as of December 31, 1999, the Company
owns a 94.05% partnership interest, as limited partner, in 1290 Partners, L.P.,
a Delaware limited partnership (the "1290 Property Owning Partnership"). The
1290 Property Owning Partnership owns the 1290 Property. A wholly-owned
subsidiary of the Company ("1290 GP Corp.") owns a 1% interest, as general
partner, in the 1290 Property Owning Partnership. The remaining 4.95% interest
in the 1290 Property Owning Partnership is owned by 237/1290 Upper Tier
Associates, L.P., a Delaware limited partnership (the "Upper Tier LP"). The
4.95% interest is subordinated to the 94.05% partnership interest of the Company
with respect to certain priority distributions from the 1290 Property Owning
Partnership. The Upper Tier LP and the 1290 Property Owning Partnership are
hereinafter referred to, collectively, as the "Partnerships."
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[GRAPHIC OMITTED]
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Sale of 237 Property
On September 23, 1999, the Company entered into an Interest
Purchase Agreement (the "Purchase Agreement") with 237 Park Investors, L.L.C.
(the "237 Buyer"), pursuant to which the Company agreed to sell all of its
interests in the 237 Property for an aggregate purchase price of $372,000,000,
subject to customary prorations and certain adjustments (the "237 Property
Sale").
On October 27, 1999, in connection with 237 Property Sale, the
Company entered into a Restructuring Agreement ("Restructuring Agreement") with
the 237 Buyer and certain other holders of indirect interests in the 237
Property, pursuant to which the Company agreed, directly and through its
subsidiaries, to (i) convert the partnership that owned the 237 Property to a
Delaware limited liability company ("237 Property LLC"); (ii) liquidate the
partnership that held the interests in the 237 Property and the 1290 Property
(the "Lower Tier LP") and cause Lower Tier LP to distribute its interest in the
1290 Property Owning Partnership and 237 Property LLC to the Company and Upper
Tier LP in proportion to their interests in Lower Tier LP; (iii) cause Upper
Tier LP to contribute its interest in 237 Property LLC to a partnership
affiliated with the 237 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; (iv) assign to an affiliate of JMB/NYC
Office Building Associates, L.P. ("JMB/NYC"), the Company's interest in notes
pursuant to which the Company might otherwise have been able to receive payments
of up to $750,000 upon the distribution of cash flow from 237 Property LLC and
1290 Property Owning Partnership; (v) 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 (vi) amend the partnership agreement of the 1290
Property Owning Partnership (the "1290 Property Owning Partnership Agreement")
and the limited partnership agreement of Upper Tier LP (the "Upper Tier
Partnership Agreement") to provide that (A) 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 below), (B) 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 JMB/NYC the
greater of (x) $1,400,000 and (y) the Call Amount (as defined below), and (C)
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. "Put Amount" means the price based upon
a multiple of the net operating income of the 1290 Property for the immediately
preceding calendar year reduced by the debt encumbering the 1290 Property and
any priority distributions to which the Company is entitled as general partner
of the Lower Tier Limited Partnership. "Call Amount" means the price based upon
a multiple of twice the net operating income of the 1290 Property for the period
of January 1, 2000 through June 30, 2000 reduced by the debt encumbering the
1290 Property and any priority distributions to which the Company is entitled as
general partner of the Lower Tier Limited Partnership.
The Company does not intend to sell the 1290 Property prior to
March 2001 and 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 agreements
that existed prior to their amendment 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.
On November 22, 1999, the Company consummated the 237 Property
Sale. After repayment of the mortgage indebtedness encumbering the 237 Property
of approximately $162,708,000, the net proceeds of the 237 Property Sale were
distributed to the Company's stockholders as part of the dividend of $15.00 per
share of the Company's Common Stock on December 10, 1999.
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The Refinancing of the 1290 Property
On December 13, 1999, the 1290 Property Owning Partnership
repaid mortgage indebtedness secured by the 1290 Property of approximately
$224,900,000 and obtained a $425,000,000 mortgage loan (the "1290 Mortgage
Loan"). Interest on the 1290 Mortgage Loan is based on LIBOR plus 2% and
requires interest only payments through maturity on January 2, 2003. The 1290
Property Owning Partnership has a one time right, at its option to extend the
maturity for a period of 12 months (subject to achieving certain conditions,
including a debt service coverage ratio, loan to value ratio and the payment of
a 25 basis point extension fee). The 1290 Mortgage Loan may not be prepaid prior
to June 30, 2000. If prepaid between July 1, 2000 and December 31, 2000, the
1290 Mortgage Loan can be repaid with a prepayment premium equal to one-half of
one percent (.5%) of the outstanding principal balance. The 1290 Mortgage Loan
may be repaid in whole after December 31, 2000, without penalty. The costs
associated with securing the 1290 Mortgage Loan of approximately $12,823,000 are
included in deferred financing costs and are amortized over the term of the 1290
Mortgage Loan. Unamortized costs associated with the prior mortgage indebtedness
of approximately $2,307,000 were written off.
Business
The Company's principal assets consist of its interests in the
Partnerships through which it owns the 1290 Property, as described below under
"ITEM 2. -- PROPERTY." The Company's principal business objective is to operate
the 1290 Property in a manner that will maximize the 1290 Property's revenues
and value and in turn maximize funds from operations and stockholder value. The
Company may acquire additional properties in the future, although it has no
present plans to do so. As further described under "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS -- Asset Manager" and " -- Management and Leasing
Agreements," the 1290 Property Owning Partnership has retained 970 Management,
LLC (the "Asset Manager"), an affiliate of Victor Capital Group, L.P. ("VCG"),
to serve as asset manager and Tishman Speyer Properties, L.P. (the "Property
Manager/Leasing Agent"), to serve as property manager/leasing agent to manage
the day-to-day operations of the 1290 Property.
Competition
Numerous office building properties in New York City compete
with the 1290 Property in attracting tenants to lease space. Some of these
competing properties are newer or better located than the 1290 Property. The
amount of space available in competitive commercial properties in the New York
City area could have a material effect on the 1290 Property Owning Partnership's
ability to lease space in the 1290 Property and on the rents charged. However,
the 1290 Property is currently approximately 99% leased, with leases aggregating
approximately 21% of the total rentable square feet expiring over the next five
years. See "Item 2 -- Property."
Employees
The Company does not have any employees. The 1290 Property
Owning Partnership assumed the Predecessors' labor agreements with respect to
union employees employed at the 1290 Property. The Property Manager/Leasing
Agent has employed such union employees on behalf of the 1290 Property Owning
Partnership. The Company believes that there are no unfunded retiree benefits
liabilities under the pension plans established pursuant to the labor agreements
referred to above.
Qualification as a REIT
The Company has elected to be taxed as a REIT under Sections
856 through 860 of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), commencing with its taxable year ended December 31, 1996. As a
REIT, the Company (subject to certain exceptions) will not be subject to federal
income taxation at the corporate level on income it distributes to stockholders
so long as it distributes at least 95% of its REIT taxable income. For any year
in which the Company does not meet the requirements for qualifying to be taxed
as a REIT, it will be taxed as a corporation. Although the Company believes that
it will operate in such a manner so as
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<PAGE>
to qualify to be taxed as a REIT, qualification as a REIT involves the
application of highly technical and complex Internal Revenue Code provisions for
which there are only limited judicial or administrative interpretations. The
determination of various factual matters and circumstances not entirely within
the Company's control may affect its ability to qualify and to continue to
qualify as a REIT. Moreover, no assurance can be given that legislation, new
regulations, administrative interpretations or court decisions will not change
the tax laws with respect to qualification as a REIT or the Federal income tax
consequences of such qualification.
To obtain the favorable tax treatment accorded to a REIT under
the Internal Revenue Code, the Company generally will be required each year to
distribute to its stockholders at least 95% of its taxable income. The Company
will be subject to income tax on any of its undistributed taxable income and net
capital gains, and to a 4% nondeductible excise tax on the amount, if any, by
which certain distributions paid by it with respect to any calendar year are
less than the sum of 85% of its ordinary income plus 95% of its capital gain net
income for the calendar year, plus 100% of its undistributed income from prior
years.
The Company intends to make distributions to its stockholders
to comply with the distribution provisions of the Internal Revenue Code and to
avoid Federal income taxes and the nondeductible 4% excise tax. A substantial
portion of the Company's income will consist of the income of the 1290 Property
Owning Partnership and the Company's cash flow will consist primarily of
distributions from the 1290 Property Owning Partnership.
Differences in timing between the receipt of income and the
payment of expenses in arriving at taxable income of the Company or the 1290
Property Owning Partnership, the effect of nondeductible capital expenditures,
the creation of reserves or required debt amortization payments could require
the Company to borrow funds on a short-term or long-term basis to meet the
distribution requirements that are necessary to continue to qualify as a REIT.
In such circumstances, the Company might need to borrow funds to avoid adverse
tax consequences even if the Company's management believes that the then
prevailing market conditions generally are not favorable for such borrowings or
that such borrowings are not advisable in the absence of such tax
considerations. There is no assurance that the Company will be able to continue
to satisfy the annual distribution requirement so as to qualify as a REIT.
In order for the Company to qualify as a REIT under the
Internal Revenue Code, not more than 50% in value of its outstanding stock may
be owned, directly or indirectly, by five or fewer individuals (defined in the
Internal Revenue Code to include certain entities) during the last half of a
taxable year (other than the first year) (the "Five or Fewer Requirement"), and
such shares of stock must be beneficially owned by 100 or more persons during at
least 335 days of a taxable year of 12 months (other than the first year) or
during a proportionate part of a shorter taxable year. In order to protect the
Company against the risk of losing its status as a REIT on account of a
concentration of ownership among its stockholders, the Company's Amended and
Restated Articles of Incorporation (the "Charter"), subject to certain
exceptions, provides that no Person (as defined in the Charter) may beneficially
own, or be deemed to own by virtue of the attribution provisions of the Internal
Revenue Code, more than 7.9% (the "Ownership Limit") of the aggregate value of
the Company's shares of stock. The restrictions contained in the Charter,
however, may not ensure that the Company will be able to satisfy the Five or
Fewer Requirement in all cases. If the Company fails to satisfy such
requirement, the Company's status as a REIT will terminate, and the Company will
not be able to prevent such termination. If the Company were to fail to qualify
as a REIT in any taxable year, the Company would be subject to Federal income
tax (including any applicable alternative minimum tax) on its taxable income at
regular corporate rates, and would not be allowed a deduction in computing its
taxable income for amounts distributed to its stockholders. Moreover, unless
entitled to relief under certain statutory provisions, the Company also would be
ineligible for qualification as a REIT for the four taxable years following the
year during which qualification was lost. Such disqualification would reduce the
net earnings of the Company available for investment or distribution to its
stockholders due to the additional tax liability of the Company for the years
involved.
Subject to certain exceptions, the Charter does not permit any
person to acquire or own (either actually or constructively under the applicable
attribution rules of the Code) more than the Ownership Limit. In addition, no
holder may own or acquire (either actually or constructively under the
applicable attribution rules of the Code) shares of any class of the Company's
common stock, par value $10.00 per share (the "Common Stock"), if such
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ownership or acquisition (i) would cause more than 50% in value of the
outstanding Common Stock to be owned by five or fewer individuals or (ii) would
otherwise result in the Company failing to qualify as a REIT. The Charter
provides that the foregoing ownership restrictions will not apply to persons
designated by Apollo Real Estate Investment Fund, L.P. ("Apollo") provided that
the aggregate percentage by which all individuals permitted, by designation, to
exceed the Ownership Limit will not be greater than 10%.
Any attempted acquisition (actual or constructive) of Common
Stock by a person who, as a result of such acquisition, would violate certain of
the limitations set forth in the Charter will cause the Common Stock purportedly
transferred to be automatically transferred to the trustee of a trust for the
benefit of a charitable beneficiary and such shares will not be entitled to
voting rights or rights to distributions and the transfer resulting in such
violation may be deemed void ab initio. Violations of the ownership limitations
may result in a repurchase by the Company of shares in excess of the Ownership
Limit.
ITEM 2. PROPERTY
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
1,970,000 rentable square feet of space. The building is centrally located in
midtown Manhattan and is connected to the famed "Rockefeller Center" complex via
an underground passageway.
The average occupancy rates for the 1290 Property for the
years 1995 through 1999 were approximately 78%, 90%, 97%, 99% and 99%,
respectively.
As of December 31, 1999, the 1290 Property was approximately
99% leased and there were leases and license agreements with 32 tenants and 4
licensees covering approximately 1,938,000 rentable square feet of space. For
the year ended December 31, 1999, the annual average rent (including electricity
and additional rent payable on account of operating expenses, porters wage, and
real estate tax escalations) for office space leased in the building was
approximately $43.02 per square foot. For the year ended December 31, 1999,
approximately 73,000 square feet of space was under lease to retail tenants, at
an average annual rent (including electricity and additional rent payable on
account of operating expenses, porters wage and real estate tax escalations) of
approximately $66.81 per rentable square foot. As of December 31, 1999,
approximately 29,000 rentable square feet of office and storage space was
available for rent.
The building serves as the corporate headquarters of The
Equitable Life Assurance Society of the United States ("Equitable"). In addition
to Equitable, the building houses a variety of tenants, including financial
institutions, entertainment companies and law firms.
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The following table summarizes certain information regarding
the largest leases at the 1290 Property as of December 31, 1999:
<TABLE>
<CAPTION>
Annual Base Rent Gross Rent Date(s) of
Leased square per square per square Lease
Tenant Nature of Business footage(1) foot leased(2) foot leased(3) Expiration
- ------ ------------------ ------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Equitable Insurance/Financial
Services 625,261 $36.59(4) $39.17(4) 12/31/11(5)
Warner Communications, Inc. Entertainment 276,345 $40.03(6) $43.05(6) 6/30/12(7)
The Bank of New York Financial Services 107,448 $39.44(8) $41.09(8) 12/31/10(9)
EMI Entertainment World, Inc. Entertainment 129,927 $36.97(10) $40.51(10) 9/30/02(11)
Deutsche Bank, AG Financial Services 125,243 $40.81 $42.65 2/14/14(12)
Robinson Silverman Law Firm 99,954 $49.15(13) $53.94(13) 3/31/04
Morrison Foerster Law Firm 93,606 $49.96(14) $53.25(14) 9/30/12
ABN-AMRO Financial Services 87,626 $57.00(15) $57.41(15) 10/31/14
GMAC Financial Services 81,892 $33.50 $34.28 12/31/10
Other Office and Retail Tenants Various 311,029 $43.12 $49.41 2000-2013
</TABLE>
(1) Leased square footage does not include approximately 32,000 square feet of
vacant storage and office space and the building office.
(2) Annual Base Rent means the amount contractually due (excluding adjustments
related to recoveries from tenants for operating expenses, porters wage,
real estate taxes, utilities or other items and rent concessions) for the
year ended December 31, 1999. The Company believes that base rent is a
conservative and appropriate measure for comparative purposes of commercial
real estate rental revenue from office building properties that do not
generate percentage rents based on sales.
(3) Gross Rent means Annual Base Rent plus recoveries from tenants for
operating expenses, porters wage, real estate taxes, utilities and other
items.
(4) Does not include 22,411 square feet leased in the basement at an Annual
Base Rent of $24.00 per square foot and Gross Rent of $27.66 per square
foot.
(5) Leases with Equitable expire December 31, 2011 (with respect to 554,322
square feet and 22,411 square feet in the basement) and December 30, 2008
(with respect to 48,528 square feet).
(6) Does not include 11,097 square feet of space leased in the basement at an
Annual Base Rent of $15.42 per square foot and Gross Rent of $16.98 per
square foot.
(7) Leases with Warner expire February 28, 2000 (with respect to 28,056 square
feet and 8,482 square feet in the basement); September 30, 2004 (with
respect to 79,801 square feet); and June 30, 2012 (with respect to 157,391
square feet and 2,615 square feet in the basement). Of the space expiring
February 28, 2000, Equitable has leased 28,056 square feet, commencing
March 1, 2000 at an Annual Base Rent of $51.82 per square foot with six
months of free rent and reimbursement of tenant improvements of $40.00 per
square foot; and 5,940 square feet in the basement at an Annual Base Rent
of $30.00 per square foot.
(8) Does not include 11,633 square feet of space leased in the basement at an
Annual Base Rent and Gross Rent of $45.00 per square foot.
(9) Leases with The Bank of New York expire April 30, 2003 (with respect to
31,402 square feet and 11,633 square feet in the basement); and December
31, 2010 (with respect to 64,413 square feet).
(10) Does not include 2,456 square feet of space leased in the basement at an
Annual Base Rent of $26.80 per square foot and Gross Rent of $29.22 per
square foot.
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(11) Leases with EMI expire September 30, 2002 (with respect to 100,848 square
feet and 923 square feet in the basement) and September 30, 2012 (with
respect to 26,623 square feet and 1,533 square feet in basement). Of the
space expiring September 30, 2002, Morrison Foerster has leased 25,158
square feet through September 30, 2012. EMI has the option to terminate its
lease effective September 30, 2007 by giving the 1290 Property Owning
Partnership written notice on or before September 30, 2006 and by paying a
termination fee of $1,258,000.
(12) Leases with Deutsche Bank expire on December 31, 1999 with respect to
24,863 square feet and on February 14, 2014 with respect to 100,380 square
feet. Equitable has leased the 24,863 square feet commencing January 1,
2000 at an Annual Base Rent of $48.00 per square foot with six months of
free rent and reimbursement of tenant improvements of $40.00 per square
foot.
(13) Does not include 1,800 square feet of space leased in the basement at an
Annual Base Rent of $23.50 per square foot and Gross Rent of $24.25 per
square foot.
(14) Does not include 879 square feet of space leased in the basement at an
Annual Base Rent of $27.75 per square foot and Gross Rent of $30.11 per
square foot.
(15) Does not include 6,746 square feet of space leased in the basement at an
Annual Base Rent and Gross Rent of $26.65 per square foot.
Expenditures for capital projects for the 1290 Property in
1999 aggregated approximately $760,000 and related primarily to (i) the
continuation of the elevator modernization program and (ii) removal of asbestos
in certain mechanical rooms. Anticipated expenditures for capital projects for
the 1290 Property in 2000 are approximately $1,310,000 and relate primarily to:
(i) the completion of the elevator modernization program; (ii) asbestos
abatement and replacement of concourse and subcellar VAT flooring; and (iii)
installation of a 100 ton chiller for the lobby.
An environmental report prepared for the 1290 Property
indicated that the 1290 Property contained asbestos or asbestos containing
materials in several mechanical rooms and certain other locations. The remaining
cost of removing the asbestos in accordance with the operations and maintenance
plan for the 1290 Property is estimated to be approximately $130,000 and is
anticipated to be completed in 2000.
The following table shows anticipated lease expirations on an
aggregate basis for each calendar year from 2000 through and including 2009.
Such chart assumes that there will be no early terminations of leases and that
leases expire without extension by existing tenants pursuant to lease options.
<TABLE>
<CAPTION>
Percentage of Total
Property Owning
Partnership Annual
Rentable Square Annual Base Rent Base Rent
Year of Lease Number of Feet Subject to Represented by Represented
Expiration Leases Expiring Expiring Leases Expiring Leases by Expiring Leases
------------ --------------- --------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C>
2000 4 48,141 $ 1,612,490 2.49%
2001 3 5,803 $ 157,724 .20%
2002 3 101,974 $ 3,727,188 4.78%
2003 2 43,607 $ 1,978,703 2.60%
2004 5 222,401 $ 10,995,148 14.89%
2005 6 51,345 $ 2,259,186 3.31%
2006 2 91,042 $ 3,811,650 6.00%
2007 - - - -
2008 2 116,070 $ 6,362,037 10.85%
2009 1 10,000 $ 150,000 .26%
</TABLE>
Annual real estate taxes assessed against the 1290 Property
for the fiscal years ended June 30, 2000, 1999, 1998 and 1997 were $17,755,000,
$17,964,000, $17,152,000 and $17,300,000, respectively, which amounts were
8
<PAGE>
calculated on assessed values of approximately $185,400,000, $175,500,000,
$168,750,000 and $168,750,000, respectively. See -- "Tax Certiorari Proceedings
and Tenant Reimbursement Claims."
The 237 Property
The 237 Property Owning Partnership and its successor in
interest, 237 Property LLC, held fee title to the 237 Property and all
improvements thereon through November 22, 1999. On November 22, 1999, the
Company sold all of its interests in the 237 Property for an aggregate purchase
price of $372,000,000, subject to customary prorations and certain adjustments.
Such prorations and adjustments reduced the aggregate purchase price to
approximately $357,862,000.
Other Assets
Tax Certiorari Proceedings and Tenant Reimbursement Claims
2 Broadway Associates, L.P. ("2 Broadway LP") commenced tax
certiorari proceedings against the City of New York for over-assessment of
property taxes for the tax years ended June 30, 1988 through June 30, 1995 with
respect to the 2 Broadway Property. The rights to the proceeds of the 2 Broadway
Property tax certiorari proceedings were assigned to the Company pursuant to the
Plan. The Company settled such proceedings with the City of New York on July 14,
1998 and received net proceeds of approximately $8,342,000 after reimbursements
to tenants and $2,238,000 of fees and expenses incurred in connection with such
proceedings. Such net proceeds were approximately $3,280,000 in excess of
estimated net proceeds and are included in miscellaneous income in 1998. Tax
certiorari proceedings have been commenced which remain outstanding against the
City of New York, for over-assessment of property taxes for the tax years ending
June 30, 1995 through June 30, 1998 with respect to the 237 Property and for the
tax years ending June 30, 1991 through June 30, 2001 with respect to the 1290
Property. The Company transferred to the 237 Buyer the right to pursue, and
receive the proceeds of, such actions with respect to the 237 Property. The
Company has reflected real estate tax proceeds of $3,175,000 and the
corresponding tenant reimbursements, fees and expenses of $2,800,000 related to
the 1290 Property in the balance sheet as of December 31, 1999.
Priority Utility Tax Claims
2 Broadway
Pursuant to the reorganization plan related to the 2 Broadway
Property (the "2 Broadway Plan"), and an Assumption and Indemnification
Agreement, dated as of the Effective Date, (i) the Company assumed any and all
remaining obligations of 1290 LLC and 2 Broadway LP in connection with any
claims reserved pursuant to section 9.3 of the 2 Broadway Plan, and (ii) the
Company received all amounts remaining in the 2 Broadway claims reserve. The
obligations assumed, and amounts remaining in the 2 Broadway claims reserve,
related primarily to settlement of potential utility tax claims against 2
Broadway LP by the taxing authorities of the City and State of New York (the "2
Broadway Utility Tax Claims"). In December 1997, the Company entered into a
resolution with New York City settling the 2 Broadway Utility Tax Claims with
respect to the New York City utility taxes for an aggregate of $177,000. No New
York City utility tax exposure exists for 2 Broadway.
Also during 1997, the Company executed a Voluntary Disclosure
Agreement with New York State on behalf of 2 Broadway LP with regard to utility
tax exposure through 1995. The amount paid under the Voluntary Disclosure
Agreement was approximately $16,000, approximately $2,900,000 less than the
Company had budgeted for such claim. The Agreement was finalized and accepted by
New York State in June 1999, and a document was forwarded from New York State to
the Company stating that it is up to date for utility tax through the end of
calendar year 1995. No New York State utility tax exposure exists for 2
Broadway.
9
<PAGE>
1290 Property and 237 Property
The New York City taxing authorities also filed claims in the
Predecessors bankruptcy cases alleging nonpayment of New York City utility taxes
in respect of the 1290 Property and the 237 Property (the "Priority Utility Tax
Claims"). The Plan granted the Company the exclusive right to compromise and
settle such claims; provided, that in connection with any such compromise or
settlement, the Company is required to indemnify the previous holders of equity
interests in the Predecessors (and their successors and assigns) from all claims
which may be made by the City or State of New York in respect of utility taxes,
interest and penalties related to the 1290 Property and 237 Property unless such
settlement includes a release of such holders from all such claims.
In December 1997, the Company entered into a resolution with
New York City settling the Priority Utility Tax Claims with respect to New York
City utility taxes for an aggregate of $93,000, approximately $357,000 less than
the original assessment. No New York City utility tax exposure exists for the
1290 Property and the 237 Property.
For New York State Utility Tax purposes, returns were timely
filed in respect of the 1290 Property and the 237 Property for tax years 1992
through 1996. As of March 15, 2000, no New York State utility tax exposure
exists for the 1290 Property and the 237 Property.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business of the Company, against
or involving the Company, the Partnerships or the 1290 Property.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of the Company's stockholders was held on
November 22, 1999. At such meeting, the Company's stockholders voted to approve
the sale of the 237 Property.
10
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Common Stock is not listed on any exchange, the Company
does not intend to list the Common Stock on any exchange in the near term, there
is not currently a public market for the Common Stock and there can be no
assurance that an active trading market for the Common Stock will develop or be
sustained. As of February 29, 2000, there were approximately 105 holders of
record of the Company's Class A Common Stock and one holder of record of the
Company's Class B Common Stock.
Distribution Policy
On March 6, 1997, the Board of Directors adopted a
distribution policy calling for regular quarterly distributions. The Board of
Directors, in its sole discretion, determines the actual distribution rate based
on a number of factors, including the amount of cash available for distribution,
the Company's financial condition, capital expenditure requirements for the 1290
Property, the annual distribution requirements under the REIT provisions of the
Internal Revenue Code and such other factors as the Board of Directors deems
relevant. The Company intends to make distributions to comply with the REIT
distribution requirements. In order to maintain its qualification as a REIT, the
Company must make annual distributions to stockholders of at least 95% of its
taxable income (excluding capital gains). The Company has made the following
distributions for its two most recent fiscal years:
Amount of Distribution
Date of Distribution Type of Distribution (Per Share)
-------------------- -------------------- -----------
March 17, 1998 Regular $0.50
December 31, 1998 Regular $0.50
Special $0.50
April 15, 1999 Regular $0.50
July 15, 1999 Regular $0.50
October 15, 1999 Regular $0.50
December 10, 1999 Special $15.00(1)
December 27, 1999 Special $15.00(2)
(1) Includes net proceeds of the 237 Property's sale.
(2) Includes net proceeds of the refinancing of the 1290 Property.
On March 23, 2000 the Company announced a regular quarterly dividend of
$0.15 per share, which is payable on April 14, 2000 to stockholders of record as
of March 31, 2000.
11
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected historical financial data.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands, except share amounts)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period October
10, 1996
(commencement
of operations) to
Years Ended December 31, December 31,
1999 1998 1997 1996
---- ---- ---- ----
REVENUES
<S> <C> <C> <C> <C>
Rental income $126,434 $134,754 $129,617 $28,141
Lease termination income 26,455 - - -
Miscellaneous income 4,669 4,889 1,190 1,965
----------- ---------- ---------- ----------
Total revenues 157,558 139,643 130,807 30,106
----------- ---------- ---------- ----------
OPERATING EXPENSES
Real estate taxes 27,414 27,733 26,813 6,208
Operating and maintenance 6,756 7,119 7,553 1,774
Utilities 6,991 6,674 6,870 1,195
Payroll 4,323 4,430 4,332 1,170
Management fees 2,198 2,298 2,121 426
Professional fees 1,960 3,451 2,055 384
General and administrative 1,565 562 1,032 204
Depreciation and amortization 17,440 16,651 15,532 3,457
----------- ---------- ---------- ----------
Total operating expenses 68,647 68,918 66,308 14,818
----------- ---------- ---------- ----------
OTHER ITEMS
Interest income 3,759 3,293 3,676 779
Interest expense (32,387) (33,615) (34,048) (7,484)
Write-off of note receivable (1,088) - - -
Write off of deferred financing costs (2,307) - - -
------------ ---------- ---------- ----------
Total other items (32,023) (30,322) (30,372) (6,705)
------------ ---------- ---------- ----------
GAIN ON SALE OF PROPERTY 50,445 - - -
------------ ---------- ---------- ----------
NET INCOME $ 107,333 $ 40,403 $ 34,127 $ 8,583
============ ========== =========== ==========
Net Income Per Common Share:
Net income $ 8.27 $ 3.12 $ 2.63 $ 0.66
------------ ---------- ----------- ----------
Weighted average common shares
outstanding 12,971,262 12,967,153 12,963,963 12,963,046
------------ ---------- ----------- ----------
Net Income Per Common Share
(assuming dilution):
Net income $ 8.26 $ 3.11 $ 2.63 $ 0.66
------------ ---------- ----------- ----------
Weighted average common shares
outstanding (assuming dilution): 12,998,646 12,993,666 12,988,963 12,990,046
------------ ---------- ----------- ----------
Total assets as of year end $ 475,276 $ 767,771 $ 757,932 $ 766,219
------------ ---------- ----------- ----------
Long-term debt as of year end $ 425,000 $ 410,625 $ 418,125 $ 420,000
------------ ---------- ----------- ----------
Cash dividends declared per common share $ 31.50 $ 1.50 $ 2.75 $ 0.50
------------ ---------- ----------- ----------
</TABLE>
12
<PAGE>
On November 22, 1999, the Company sold the 237 Property. The following
represents the condensed results of operations for the 237 Property for the
period January 1, 1999 through November 21, 1999:
(In thousands)
REVENUES:
Rental income $43,618
Lease termination income 25,855
Miscellaneous income 495
----------
Total revenues 69,968
---------
OPERATING EXPENSES:
Real estate taxes 9,324
Operating and maintenance 2,300
Utilities 572
Payroll 1,539
Management fees 635
Professional fees 515
General and administrative 285
Depreciation and amortization 5,624
----------
Total operating expenses 20,794
----------
OTHER ITEMS:
Interest income 1,100
Interest expense (11,801)
---------
Total other items (10,701)
---------
NET INCOME $38,473
=========
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
Selected Financial Data and the financial statements included in "ITEM 6. --
SELECTED FINANCIAL DATA" and "ITEM 8. -- FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA."
Overview
The Company was formed on May 13, 1996 and commenced operations on
October 10, 1996, upon acquisition of the 237 Property and the 1290 Property
pursuant to the Plan. The Company is a Maryland corporation that qualifies as a
REIT for tax purposes.
Prior to November 22, 1999, the Company owned and operated the 237
Property and the 1290 Property. On November 22, 1999, the Company sold its
interests in the 237 Property to the 237 Buyer. Consequently, the Company's
principal business objective is to operate the 1290 Property in a manner that
will maximize the 1290 Property's revenues and value and in turn maximize funds
from operations and stockholder value.
The 1290 Property is a 43-story Class A commercial office building
with approximately 1,970,000 rentable square feet of space. The building is
centrally located in midtown Manhattan and is connected to the famed
"Rockefeller Center" complex via an underground passageway. The 1290 Property
serves as the corporate headquarters for The
13
<PAGE>
Equitable Life Assurance Society of the United States, and is currently
approximately 99% leased. Over the next five years, approximately 21% of the
total rentable area of the building is subject to expiring leases.
The Company, through the 1290 Property Owning Partnership, has
retained Tishman Speyer Properties, L.P. to serve as the property manager and
leasing agent, which is responsible for managing the daily operations of the
1290 Property, and 970 Management, LLC, an affiliate of Victor Capital Group,
L.P., to serve as the Asset Manager. The Company has also entered into a REIT
Management Agreement with Tishman Speyer Properties, L.P. to perform certain
accounting, administrative and REIT compliance monitoring services.
As of December 31, 1999, 12,995,646 shares of Class A and Class B
Common Stock, par value $10.00 per share, were issued and outstanding. The
Common Stock of the Company is not listed on any exchange, and the Company does
not intend to list the Common Stock on any exchange in the near term.
The assets and results of operations of the 1290 Property are
reported in the consolidated financial statements of the Company using the
consolidation method of accounting.
Historical Consolidated Statement of Income, year ended December
31, 1999
Rental income for the year ended December 31, 1999 decreased by
approximately $8,320, a decrease of 6.2% from the year ended December 31, 1998.
This decrease was the result of the sale of the 237 Property on November 22,
1999, a decrease in rents and escalations at the 237 Property due to the early
termination of the Swiss Reinsurance Company ("Swiss Re") lease, the write off
of deferred rent receivable related to the early partial termination of the
lease with Warburg Pincus at the 237 Property and the write off of deferred rent
receivable related to the early termination of B.T. Alex Brown's lease at the
1290 Property. This decrease is partially offset by an increase in base rents
associated with the Credit Suisse Asset Management ("CSAM") lease at the 237
Property in comparison to the base rents associated with the Swiss Re lease.
The Company received lease termination income of $26,455 for the
year ended December 31, 1999. The termination of the Swiss Re lease at the 237
Property resulted in the payment by Swiss Re to the Company of a lease
termination fee of $25,855 in July 1999. The Company also received a $600 lease
buyout payment in May 1999 from EMI Entertainment World, Inc. at the 1290
Property.
Miscellaneous income in 1998 includes $3,309 related to the
settlement of tax certiorari proceedings for all tax years up to December 31,
1995 with respect to the property located at 2 Broadway that was owned by the
Predecessors. Miscellaneous income in 1999 includes approximately $2,900 related
to the reversal of a reserve for utility tax claims settled during 1999.
Operating expenses for the year ended December 31, 1999 were
$68,647, a decrease of .4% from the year ended December 31, 1998. This decrease
was the result of the discontinuance of recording depreciation and amortization
with respect to the 237 Property in July 1999 in connection with the Company's
decision to sell the property, the sale of the 237 Property on November 22, 1999
and a decrease in professional fees as a result of the settlement of certain tax
certiorari proceedings in 1998. These decreases were partially offset by
increases in utilities, repairs and maintenance, professional fees, real estate
taxes, and an increase in the reserve for doubtful accounts at the 1290 Property
and an increase in depreciation and amortization related to additions to
building and tenant improvements in 1998 and 1999. Operating expenses as a
percentage of base rental income and escalation income is 54.3% in 1999 versus
51.1% in 1998.
Write off of note receivable represents the difference between the
carrying amount of a tenant note receivable of $5,088 and the settlement amount
of $4,000.
The Company wrote off $2,307 of unamortized deferred financing
costs in 1999 in connection with the refinancing of mortgage indebtedness at the
1290 Property.
14
<PAGE>
Gain on sale of property represents the gain on the sale of the 237
Property on November 22, 1999. The Company sold its interests in the 237
Property for $372,000, subject to customary prorations and certain adjustments
which resulted in a net gain of $50,445.
Historical Consolidated Statement of Income, year ended December
31, 1998
Rental income increased by approximately $5,137 for the year ended
December 31, 1998 as compared to the prior year. This increase of 4.0% is
attributable to an overall increase in occupancy at the 1290 Property.
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 2 Broadway, a property previously owned
by the Predecessors.
Operating expenses for the year ended December 31, 1998 were
$68,918, an increase of 3.9% 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 2
Broadway, totaling $2,238 and an increase in depreciation and amortization of
$1,119, which is primarily the result of building and tenant improvements made
in 1997 and 1998. Operating expenses as a percentage of rental income is 51.1%.
Historical Consolidated Statement of Income, year ended December
31, 1997
The Company's revenues of $130,807 for the year consisted of base
rental income of $114,183 (87.3%), escalation income of $15,434 (11.8%), and
miscellaneous income of $1,190 (.9%). This revenue is achieved based on the 237
Property and the 1290 Property being approximately 98% and 97% leased,
respectively, during the year.
Liquidity and Capital Resources
During 1999, the Company generated cash flows from operations of
approximately $72,431. In addition, net proceeds from the sale of the 237
Property were $344,259 and net proceeds from the refinancing of the 1290
Property were $412,177. The Company used this cash to repay mortgage loans of
$410,625, pay dividends in the amount of $408,950, pay leasing commissions of
approximately $21,250 and fund building and tenant improvements of approximately
$12,308.
At December 31, 1999, the Company had unrestricted cash on hand of
approximately $9,113. At December 31, 1998, the Company had unrestricted cash on
hand of approximately $25,357.
On November 22, 1999, the Company consummated the 237 Property
Sale. After repayment of the mortgage indebtedness encumbering the 237 Property
of approximately $162,708, the net proceeds of the 237 Property Sale were
distributed to the Company's stockholders as part of the dividend of $15.00 per
share of the Company's Common Stock on December 10, 1999.
On December 13, 1999, the 1290 Property Owning Partnership
repaid mortgage indebtedness secured by the 1290 Property of approximately
$224,900, and obtained a $425,000 mortgage loan (the "1290 Mortgage Loan").
Interest on the 1290 Mortgage Loan is based on LIBOR plus 2% and requires
interest only payments through maturity on January 2, 2003. The 1290 Property
Owning Partnership has a one time right at its option to extend the maturity for
a period of 12 months (subject to achieving certain conditions, including a debt
service coverage ratio, loan to value ratio and the payment of a 25 basis point
extension fee). The 1290 Mortgage Loan may not be prepaid prior to June 30,
2000. If prepaid between July 1, 2000 and December 31, 2000, the 1290 Mortgage
Loan can be repaid with a prepayment premium equal to one-half of one percent
(.5%) of the outstanding principal balance. The 1290 Mortgage Loan may be repaid
in whole after December 31, 2000, without penalty. The costs associated with
securing the 1290 Mortgage Loan of approximately $12,823 are included in
deferred financing costs and are amortized over the term of the 1290 Mortgage
Loan. Unamortized costs associated with the prior mortgage indebtedness of
approximately $2,307 were written off.
15
<PAGE>
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 was commonly referred to as the Year 2000 Compliance issue. The
Company encountered no problems related to the Year 2000 Compliance issue. The
Company is continuing to monitor the situation, but does not expect to encounter
Year 2000 Compliance issues.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Property Owning Partnerships and the lead lender under the Loan
entered into an Interest Rate Exchange Agreement effective October 10, 1996 (the
"Swap Agreement"). The Swap Agreement had a term of 5 years and provided that
the Property Owning Partnerships would pay interest at an effective rate of
7.987% per annum on the notional amount of $420,000,000. The Company terminated
the Swap Agreement on December 13, 1999.
The 1290 Property Owning Partnership and Morgan Stanley Derivative
Products, Inc. entered into an Interest Rate Exchange Agreement effective
December 13, 1999 (the "1290 Swap Agreement"). The 1290 Swap Agreement provides
that the 1290 Property Owning Partnership will pay interest at an effective rate
of 8.4995% per annum on the notional amount of $425,000,000. Management believes
that the risk of incurring losses related to the credit risk is remote and that
any losses would be immaterial.
Management believes that the fair value of the 1290 Swap Agreement
generally offsets gains or losses on the 1290 Mortgage Loan being hedged and
changes the nature of such underlying financial instruments. Because the
maturity date of the 1290 Mortgage Loan and the termination date of the 1290
Swap Agreement are identical, the fair value of the 1290 Swap Agreement which
approximates $2,251,000 at December 31, 1999 is of limited usefulness.
16
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
METROPOLIS REALTY TRUST, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
HISTORICAL FINANCIAL STATEMENTS
<S> <C>
Independent Auditors' Report.................................................................... 18
Consolidated Balance Sheets as of December 31, 1999 and 1998.................................... 19
Consolidated Statements of Income for the years ended December 31, 1999, 1998 and 1997.......... 20
Consolidated Statements of Stockholders' Equity for years ended December 31, 1999, 1998
and 1997....................................................................................... 21
Consolidated Statements of Cash Flows for years ended December 31, 1999, 1998
and 1997........................................................................................ 22
Notes to Consolidated Financial Statements...................................................... 24
</TABLE>
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders of Metropolis Realty Trust, Inc.
We have audited the accompanying consolidated balance sheets of Metropolis
Realty Trust, Inc. and Subsidiaries as of December 31, 1999 and 1998 and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Metropolis Realty Trust, Inc. and
Subsidiaries as of December 31, 1999 and 1998 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
January 21, 2000
18
<PAGE>
METROPOLIS REALTY TRUST, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
December 31,
1999 1998
---- ----
<S> <C> <C>
Rental property - net of accumulated depreciation of $27,316 and $30,172, $374,282 $ 651,003
respectively
Cash and cash equivalents 9,113 25,357
Escrow deposits 3,179 3,084
Tenant security deposits 226 644
Due from tenants - net of doubtful accounts of $3,651 and $2,696, respectively 2,446 4,088
Deferred financing costs - net of amortization of $207 and $4,863, respectively 12,616 6,062
Real estate tax refunds 3,175 3,175
Notes receivable - net of unamortized discount of $0 and $187, respectively - 9,307
Deferred rent receivable 46,110 39,831
Prepaid real estate taxes 8,658 14,138
Deferred leasing costs, net of amortization of $1,232 and $538, respectively 14,864 10,628
Other assets 607 454
-------- ---------
TOTAL ASSETS $475,276 $ 767,771
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Secured notes $ 425,000 $ 410,625
Accounts payable and accrued expenses 8,700 11,927
Tenants' security deposits and unearned revenue 1,462 3,292
----------- ------------
Total Liabilities 435,162 425,844
---------- -----------
Subordinated Minority Interest 14,409 14,855
---------- -----------
Stockholders' Equity
Preferred Stock- $10 par value, 10,000,000 shares authorized, none issued
or outstanding
Common Stock - $10 par value, 50,000,000 shares authorized, (Class A -
outstanding - 8,059,586 and 8,034,586 shares, respectively;
Class B - outstanding - 4,936,060 and 4,936,060 shares, respectively) 129,956 129,706
Paid-in capital 175,844 175,844
Retained earnings (deficit) (280,095) 21,522
---------- ----------
Total Stockholders' Equity 25,705 327,072
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 475,276 $ 767,771
========= =========
</TABLE>
See notes to consolidated financial statements.
19
<PAGE>
METROPOLIS REALTY TRUST, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years ended December 31,
1999 1998 1997
---- ---- ----
REVENUES:
<S> <C> <C> <C>
Base rental income $114,983 $119,275 $114,183
Lease termination income 26,455 - -
Operating escalation income 11,451 15,479 15,434
Miscellaneous income 4,669 4,889 1,190
---------- ---------- -----------
Total revenues 157,558 139,643 130,807
---------- ---------- -----------
OPERATING EXPENSES:
Real estate taxes 27,414 27,733 26,813
Operating and maintenance 6,756 7,119 7,553
Utilities 6,991 6,674 6,870
Payroll 4,323 4,430 4,332
Management fees 2,198 2,298 2,121
Professional fees 1,960 3,451 2,055
General and administrative 1,565 562 1,032
Depreciation and amortization 17,440 16,651 15,532
---------- ---------- -----------
Total operating expenses 68,647 68,918 66,308
---------- ---------- -----------
OTHER ITEMS:
Interest income 3,759 3,293 3,676
Interest expense (32,387) (33,615) (34,048)
Write-off of note receivable (1,088) - -
Write off of deferred financing costs (2,307) - -
---------- ---------- -----------
Total other items (32,023) (30,322) (30,372)
---------- ---------- -----------
GAIN ON SALE OF PROPERTY 50,445 - -
---------- ---------- -----------
NET INCOME $ 107,333 $ 40,403 $ 34,127
========== ========== ==========
NET INCOME PER COMMON SHARE:
Net income 8.27 $ 3.12 $ 2.63
---------- ---------- ----------
Weighted average common shares outstanding 12,971,262 12,967,153 12,963,963
---------- ---------- ----------
NET INCOME PER COMMON SHARE
(assuming dilution):
Net income $8.26 $3.11 $2.63
----- ----- -----
Weighted average common shares outstanding
(including 3,000, 28,000, and 25,000 shares of
common stock issuable upon the exercise of
outstanding options as of December 31, 1999, 1998 and
1997, respectively). 12,998,646 12,993,666 12,988,963
---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
20
<PAGE>
METROPOLIS REALTY TRUST, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
- -------------------------------------------------------------------------------------------------------------------
Common
Stock at Retained Total
Par Paid-in Earnings Stockholders'
Value Capital (Deficit) Equity
------------- -------------- -------------------------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 $129,630 $175,615 $ 2,102 $307,347
Shares issued under Directors' Stock Plan 36 121 - 157
Net income - - 34,127 34,127
Dividends declared - - (35,656) (35,656)
-------- -------- ----------- -----------
BALANCE, DECEMBER 31, 1997 129,666 175,736 573 305,975
Shares issued under Directors' Stock Plan 40 108 - 148
Net income - - 40,403 40,403
Dividends declared - - (19,454) (19,454)
-------- -------- ----------- -----------
BALANCE, DECEMBER 31, 1998 129,706 175,844 21,522 327,072
Shares issued under Directors' Stock Plan 250 - - 250
Net income - - 107,333 107,333
Dividends paid - - (408,950) (408,950)
-------- -------- ---------- -----------
BALANCE, DECEMBER 31, 1999 $129,956 $175,844 $(280,095) $ 25,705
======== ======== ========== =========
</TABLE>
See notes to consolidated financial statements.
21
<PAGE>
<TABLE>
<CAPTION>
METROPOLIS REALTY TRUST, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
- ----------------------------------------------------------------------------------------------------------------------------
Years Ended December 31,
1999 1998 1997
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $107,333 $40,403 $34,127
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of property (50,445) - -
Write-off of deferred financing costs 2,307 - -
Depreciation and amortization 17,440 16,651 15,532
Amortization of discount - notes receivable - (545) (504)
Bad debt expense 585 - -
Write-off of note receivable 1,088 - -
Change in:
(Increase)/Decrease in escrow deposits (2,516) (175) 10,848
Decrease/(Increase) in due from tenants 1,057 (1,084) 947
Decrease in tenant security deposits 416 - -
Decrease/(Increase) in prepaid expenses and other assets 5,345 (535) 199
Decrease in real estate tax refunds 2,421 10,913 -
Increase in deferred rent receivable (15,229) (12,976) (20,279)
Increase/(Decrease) in accounts payable and accrued expenses 3,619 (5,041) 547
(Decrease)/Increase in unearned revenue (990) 1,279 848
--------- --------- --------
Net cash provided by operating activities 72,431 48,890 42,265
-------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 344,259 - -
Additions to building and equipment (12,308) (15,903) (6,559)
Leasing costs (21,250) (5,790) (5,206)
Collections on notes receivable 8,218 339 307
-------- --------- --------
Net cash provided (used) in investing activities 318,919 (21,354) (11,458)
-------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage note payable 425,000 - -
Financing costs (12,823) - -
Payments on secured notes (410,625) (7,500) (1,875)
Dividends paid (408,950) (19,454) (42,137)
Distribution to subordinated minority interest (446) - -
Issuance of shares of common stock 250 148 157
-------- --------- --------
Net cash used in financing activities (407,594) (26,806) (43,855)
-------- --------- --------
(DECREASE)/INCREASE IN CASH AND CASH (16,244) 730 (13,048)
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 25,357 24,627 37,675
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 9,113 $ 25,357 $ 24,627
======== ======== ========
</TABLE>
22
<PAGE>
METROPOLIS REALTY TRUST, INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years Ended December 31,
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
<S> <C> <C> <C>
Interest paid $ 32,387 $ 33,489 $ 33,905
========= ======== ========
Dividends declared $408,950 $ 19,454 $ 35,656
======== ======== ========
NON CASH INVESTING AND FINANCING ACTIVITIES
Liabilities disposed of in connection with sale of property $170,009
</TABLE>
See notes to consolidated financial statements.
23
<PAGE>
METROPOLIS REALTY TRUST, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(In thousands, except share amounts)
1. BACKGROUND, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization - Metropolis Realty Trust, Inc., a Maryland corporation
("Metropolis" or the "Company"), was formed on May 13, 1996 to facilitate the
consummation of the Second Amended Joint Plan of Reorganization of 237 Park
Avenue Associates, L.L.C. ("237 LLC") and 1290 Associates, L.L.C. ("1290 LLC"
and together with 237 LLC, the "Predecessors"), dated September 20, 1996 (the
"Plan"). Pursuant to the Plan, on October 10, 1996, the date operations
commenced ("Effective Date"), the Company acquired the interests of 237 LLC
and 1290 LLC in the properties located at 237 Park Avenue (the "237
Property") and 1290 Avenue of the Americas (the "1290 Property," and together
with the 237 Property, the "Properties").
On November 22, 1999, the Company sold all of its interests in the 237
Property. Following such sale and as of December 31, 1999, the Company owns
a 94.05% partnership interest, as limited partner, in 1290 Partners, L.P., a
Delaware limited partnership (the "1290 Property Owning Partnership"). The
1290 Property Owning Partnership owns the 1290 Property. A wholly-owned
subsidiary of the Company ("1290 GP Corp.") owns a 1% interest, as general
partner, in the 1290 Property Owning Partnership. The remaining 4.95%
interest in the 1290 Property Owning Partnership is owned by 237/1290 Upper
Tier Associates, L.P., a Delaware limited partnership (the "Upper Tier LP").
The 4.95% interest is subordinated to the 94.05% partnership interest of the
Company with respect to certain priority distributions from the 1290 Property
Owning Partnership. The Upper Tier LP and the 1290 Property Owning
Partnership are hereinafter referred to, collectively, as the "Partnerships."
Basis of Presentation - The consolidated financial statements include
Metropolis and each of the entities through which Metropolis indirectly owns
the Properties. The presentation of the consolidated financial statements
requires estimates and assumptions that affect the reported amounts of assets
and liabilities at the balance sheet date. Actual results could differ from
those estimates. Certain 1997 and 1998 amounts have been reclassified to
conform with the 1999 presentation.
Rental Property - Rental property is carried at cost, net of accumulated
depreciation and amortization, and includes land, building, tenant
improvements and building improvements. Land is carried at $63,500 and
$134,518, as of December 31, 1999 and 1998, respectively. Building, tenant
improvements and building improvements are carried at $338,098 and $546,656
as of December 31, 1999 and December 31, 1998, respectively. If a property is
determined to be impaired, it must be written down to its estimated fair
value. Fair value is defined as the amount for which the asset could be
bought or sold in a current transaction, that is, other than a forced or
liquidation sale.
Cash and Cash Equivalents - Cash and cash equivalents includes investments
purchased with an original maturity of three months or less.
Depreciation and Amortization - Building and building improvements are
depreciated over their useful life of 40 years. Furniture and fixtures are
depreciated over their useful life, ranging from 5 to 7 years. Tenant
improvements are amortized on a straight-line basis over the terms of the
respective leases.
Deferred Charges - Deferred financing costs are amortized over the term of
the related loan. Direct costs related to leasing are amortized over the
related lease term.
24
<PAGE>
Rental Income - Rental income is recognized on a straight-line basis over the
terms of the related leases. Differences between actual base amounts due from
tenant leases and the straight-line basis are included in deferred rent
receivable.
Escrow Deposits - Escrow deposits include reserves for certain claims made in
conjunction with the Plan and escrow deposits for tenant improvements,
leasing commissions, insurance and real estate taxes.
Income Taxes - The Company qualifies as a REIT under the Internal Revenue
Code, as amended, and will generally not be taxed at the corporate level on
income it currently distributes to its stockholders so long as it, among
other things, distributes at least 95% of its REIT taxable income.
2. SALE OF PROPERTY
On September 23, 1999, the Company entered into an Interest Purchase
Agreement (the "Purchase Agreement") with 237 Park Investors, L.L.C. (the
"237 Buyer"), pursuant to which the Company agreed to sell all of its
interests in the 237 Property for an aggregate purchase price of $372,000,
subject to customary prorations and certain adjustments (the "237 Property
Sale").
On November 22, 1999, the Company consummated the 237 Property Sale and
recognized a gain of $50,445. Net assets as of the date of sale were
$293,814. The following represents the condensed results of operations for
the 237 Property for the period January 1, 1999 through November 21, 1999:
REVENUES:
Rental income $ 43,618
Lease termination income 25,855
Miscellaneous income 495
------------
Total revenues 69,968
----------
OPERATING EXPENSES:
Real estate taxes 9,324
Operating and maintenance 2,300
Utilities 572
Payroll 1,539
Management fees 635
Professional fees 515
General and administrative 285
Depreciation and amortization 5,624
----------
Total operating expenses 20,794
----------
OTHER ITEMS:
Interest income 1,100
Interest expense (11,801)
------
Total other items (10,701)
--------
NET INCOME $ 38,473
=========
25
<PAGE>
3. REAL ESTATE TAX REFUNDS
2 Broadway Associates, L.P. ("2 Broadway LP") commenced tax certiorari
proceedings against the City of New York for over-assessment of property
taxes for the tax years ended June 30, 1988 through June 30, 1995 with
respect to the 2 Broadway Property. The rights to the proceeds of the 2
Broadway Property tax certiorari proceedings were assigned to the Company
pursuant to the Plan. The Company settled such proceedings with the City of
New York on July 14, 1998 and received net proceeds of approximately $8,342
after reimbursements to tenants and $2,238 of fees and expenses incurred in
connection with such proceedings. Such net proceeds were approximately $3,280
in excess of estimated net proceeds and are included in miscellaneous in
income in 1998. Tax certiorari proceedings have been commenced which remain
outstanding against the City of New York, for over-assessment of property
taxes for the tax years ending June 30, 1995 through June 30, 1998 with
respect to the 237 Property and for the tax years ending June 30, 1991
through June 30, 2001 with respect to the 1290 Property. The Company
transferred to the 237 Buyer the right to pursue, and receive the proceeds of
such actions with respect to the 237 Property. The Company has reflected real
estate tax refunds of $3,175 and the corresponding tenant reimbursements,
fees and expenses of $2,800 related to the 1290 Property in the balance sheet
as of December 31, 1999.
4. NOTES RECEIVABLE
Included in Notes Receivable as of December 31, 1998 are two tenant notes
aggregating approximately $9,307. On October 1, 1999, the Company entered
into a Settlement Agreement regarding the first note, dated April 1, 1999
with a face amount of $6,500 and a maturity date of September 1, 1999. Under
the Settlement Agreement $4,000 was paid to the Company in full satisfaction
of the note, which had a carrying value of $5,088 at the date of settlement.
The uncollected balance of $1,088 was written off. The second note, dated
August 20, 1985, with a face value of $4,355, is carried at $4,075 as of
December 31, 1998 net of unamortized discount. The second note does not bear
interest and was payable on October 31, 1999. The Company received payment in
full of such note on October 29, 1999.
5. MORTGAGE NOTES
Secured Notes as of December 31, 1998 consist of promissory notes ("Loan")
issued by the Property Owning Partnerships in the original principal amount
of $420,000 pursuant to a Credit Agreement ("Agreement") among the Property
Owning Partnerships, the lenders as signatories thereto in the Agreement and
the lead lender. The Loan had a balance at December 31, 1998 of $410,625.
Subsequent to the sale of the 237 Property, the 1290 Property Owning
Partnership refinanced mortgage indebtedness secured by the 1290 Property of
approximately $224,900, and obtained a $425,000 mortgage loan (the "1290
Mortgage Loan"). Interest on the 1290 Mortgage Loan is based on LIBOR plus 2%
and requires interest only payments through maturity on January 2, 2003. The
1290 Property Owning Partnership has a one time right (subject to achieving
certain conditions, including a debt service coverage ratio, loan to value
ratio and the payment of a 25 basis point extension fee), at its option to
extend the maturity for a period of twelve months. The 1290 Mortgage Loan may
not be prepaid prior to July 1, 2000. If prepaid between July 1, 2000 and
December 31, 2000, the 1290 Mortgage Loan can be repaid with a prepayment
premium equal to one-half of one percent of the outstanding principal
balance. The 1290 Mortgage Loan may be repaid in whole after December 31,
2000, without penalty. The costs associated with securing the 1290 Mortgage
Loan of approximately $12,283 are included in deferred financing costs and
are amortized over the term of the 1290 Mortgage Loan. Unamortized costs
associated with the prior mortgage indebtedness of approximately $2,307 were
written off.
The 1290 Property Owning Partnership and Morgan Stanley Derivative Products,
Inc. entered into an Interest Rate Exchange Agreement effective December 13,
1999 (the "1290 Swap Agreement"). The 1290 Swap Agreement provides that the
1290 Property Owning Partnership will pay interest at an effective rate of
8.4995% per annum of the notional amount of $425,000. Management believes
that the risk of incurring losses related to the credit risk is remote and
that any losses would be immaterial.
26
<PAGE>
Management believes that the fair value of the 1290 Swap Agreement generally
offsets gains or losses on the 1290 Mortgage Loan being hedged and changes
the nature of such underlying financial instruments. Because the maturity
date of the 1290 Mortgage Loan and the termination date of the 1290 Swap
Agreement are identical, the fair value of the 1290 Swap Agreement which
approximates $2,251 at December 31, 1999 is of limited usefulness.
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses include property operating expenses
payable, funded reserves held by the Company for utility tax claims, and
tenant claims against real estate tax proceeds.
7. SUBORDINATED MINORITY INTEREST
The Subordinated Minority Interest represents the 99% limited partnership
interest of JMB/NYC Office Building Associates, L.P. ("JMB/NYC") in the
limited partnership (the "Upper Tier Limited Partnership") which owns a
subordinated 5% limited partnership interest in the 1290 Property Owning
Partnership (the "Subordinated Minority Interest"). Pursuant to the 1290
Property Owning Partnership's Amended and Restated Agreement of Limited
Partnership (the "1290 Partnership Agreement"), (A) 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 and (y) the Put Amount (as defined below), (B) 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 JMB/NYC the greater of (x) $1,400 and (y) the
Call Amount (as defined below), and (C) 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 $4,500
to JMB/NYC. "Put Amount" means the price based upon a multiple of the net
operating income of the 1290 Property for the immediately preceding calendar
year reduced by the debt encumbering the 1290 Property and any priority
distributions to which the Company is entitled as general partner of the
Lower Tier Limited Partnership. "Call Amount" means the price based upon a
multiple of twice the net operating income of the 1290 Property for the
period of January 1, 2000 through June 30, 2000 reduced by the debt
encumbering the 1290 Property and any priority distributions to which the
Company is entitled as general partner of the Lower Tier Limited Partnership.
The Company does not intend to sell the 1290 Property prior to March 2001 and
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 to JMB/NYC. Pursuant to the agreements that
existed prior to their amendment in accordance with the Restructuring
Agreement, the Company estimates that it would have been required to pay
JMB/NYC significantly less than $1,000 upon the exercise of the JMB Put Right
or $1,400 upon the exercise of the Company Call Right.
Management believes, however, that no economic obligation exists to JMB/NYC
as of December 31, 1999 and that JMB/NYC would not be entitled to receive any
distributions in excess of amounts under the Put Right and Call Right in
respect of the Subordinated Minority Interest. Management believes that, upon
exercise by the Company of the Company Call Right, JMB/NYC would only be
entitled to receive $1,400 in respect of the Subordinated Minority Interest.
Pursuant to the 1290 Partnership Agreement, JMB/NYC would be entitled to
distributions only after the Company has received certain priority
distributions as more fully described below.
The 1290 Partnership Agreement provides that the aggregate Available Cash (as
defined in the 1290 Partnership Agreement) will be distributed no less
frequently than quarterly to the partners of the 1290 Property Owning
Partnership as follows:
(i) 100% to the Company, until it has received, aggregate distributions on
or after November 22, 1999 (the "Closing Date") equal to an amount which,
when added to all prior distributions to the Company on or after the
Closing Date pursuant to this clause and clauses (i) and (iv) of the
succeeding paragraph, aggregate distributions
27
<PAGE>
equal to a cumulative compounded return, of 12% per annum on the sum of
(x) approximately $274,375 and (y) any additional capital contributions
made by the Company, as general partner, to the 1290 Property Owning
Partnership (the amounts in (x) and (y), as reduced by distributions in
respect of such amounts referred to herein as the "Adjusted GP
Contribution");
(ii) 100% to the Company, until it has received aggregate distributions on
or after the Closing Date pursuant to this clause equal to an amount
which, when added to all prior distributions to the Company on or after
the Closing Date pursuant to clauses (ii) and (v) below, equals the
Adjusted GP Contribution; and
(iii) the balance, 94.05% to the Company, 1% to 1290 GP Corp. and 4.95% to
the Upper Tier Limited Partnership.
The Amended and Restated Partnership Agreement of the 1290 Property Owning
Partnership provides that distributions from the 1290 Property Owning
Partnership after the Closing Date related to any sale, refinancing,
condemnation or insurance recovery of the 1290 Property or any loan made to
the 1290 Property Owning Partnership will be distributed by the 1290 Property
Owning Partnership to its partners as follows:
(i) 100% to the Company, until it has received, together with all prior
distributions pursuant to this clause (i) and clause (i) of the
immediately preceding paragraph, aggregate distributions equal to the
product of (x) 0.5 and (y) a 12% per annum cumulative compounded return on
the Adjusted GP Contribution;
(ii) 100% to the Company, until it has received, together with all prior
distributions pursuant to this clause (ii) and clause (ii) of the
immediately preceding paragraph, aggregate distributions equal to the
approximately $107,172;
(iii) of the next $500, 90% (i.e., $450) to the Upper Tier Limited
Partnership and 10% to the Company;
(iv) 100% to the Company, until it has received, together with all prior
distributions pursuant to this clause (iv), clause (i) of this paragraph
and clause (i) of the immediately preceding paragraph, a 12% per annum
cumulative compounded return on the Adjusted GP Contribution;
(v) 100% to the Company, until it has received, together with all prior
distributions pursuant to this clause (v), clause (ii) of this paragraph
and clause (ii) of the immediately preceding paragraph, aggregate
distributions equal to the Adjusted GP Contribution; and
(vi) the balance 94.05% to the Company, 1% to 1290 GP Corp. and 4.95% to
the Upper Tier Limited Partnership.
As a result of the distribution of the net proceeds from the sale of the 237
Property and the refinancing of the 1290 Property $446 was paid to JMB/NYC in
1999.
8. STOCKHOLDERS' EQUITY
The Company has the authority to issue 50,000,000 shares of common stock, par
value $10 per share (the "Common Stock"), and 10,000,000 shares of Preferred
Stock, par value $10 per share. As of December 31, 1999, there were
12,995,646 shares of the Company's Common Stock issued and outstanding,
8,059,586 of which were Class A Common Stock and 4,936,060 of which were
Class B Common Stock. The Class A Common Stock and the Class B Common Stock
have identical rights and privileges, and are treated as a single class, with
respect to all matters (other than certain voting rights) including, without
limitation, the payment of distributions and upon liquidation.
28
<PAGE>
9. STOCK PLAN AND REGISTRATION RIGHTS
The Board of Directors of the Company adopted a Directors' Stock Plan
effective October 10, 1996. Pursuant to the Stock Plan, the Board of
Directors of the Company has the authority to issue to members of the
Company's Board of Directors options to purchase, in the aggregate, 100,000
shares of Common Stock. On the Effective Date, the initial members of the
Company's Board of Directors were granted options entitling each director to
purchase an aggregate of 3,000 shares of Common Stock at an exercise price of
$25 per share.
Pursuant to the Stock Plan, each Director received 400 shares of Common Stock
in September 1997 in consideration for services rendered to the Company
during the Company's first fiscal year of operations. The value of such
shares was based upon the most recent price at which shares of the Company's
Common Stock were traded prior to such grant of shares and is included as an
operating expense. Each Director received an additional 400 shares of Common
Stock at the 1998 annual meeting of the Company's stockholders and will
receive shares at each subsequent annual meeting.
In March 1998, a new director was granted 400 shares of Common Stock and
options entitling him to purchase an aggregate of 3,000 shares of Common
Stock at an exercise price of $42.50 per share. Such shares and options were
issued in July 1998. Of such options, 1,000 were immediately exercisable,
1,000 became exercisable on October 10, 1998 and 1,000 became exercisable on
October 10, 1999. 25,000 options were exercised in 1999. Total outstanding
options at December 31, 1999 and 1998 aggregated 3,000 and 28,000,
respectively.
The Company has entered into a Registration Rights Agreement between the
Company and the holders of Common Stock. The Registration Rights Agreement
permits certain of the Company's stockholders to demand, subject to certain
conditions, that the Company register their Common Stock for sale and
provides all of the Company's stockholders with the right to participate
proportionally in any public offering of the Company's securities.
10. RELATED PARTY TRANSACTIONS
Asset Management - The Company has entered into an Asset Management Agreement
with a company ("Asset Manager") that is directly affiliated with two of
Metropolis' shareholders. One of these shareholders is also a Director and
Officer of the Company. The Asset Manager provides asset advisory,
consultation and management services for the Company. Fees for such services
are payable in arrears, on a monthly basis of $25. The Asset Management
Agreement also provides for reimbursement for costs and expenses for
contractors and professional fees, payable as incurred. Asset management fees
incurred for the years ended December 31, 1999, 1998 and 1997 were
approximately $300 each year.
Property Management - The Company has also entered into a Management and
Leasing Agreement with a company ("Property Manager/Leasing Agent") that is
an affiliate of a shareholder. The Property Manager/Leasing Agent is to
manage and operate the property and provide all supervisory, management and
leasing services. The Management and Leasing Agreement provides for a fee of
1.5% of Gross Revenues, payable monthly and reimbursement for overhead and
all reasonable out-of-pocket expenses incurred. The Management and Leasing
Agreement also provides for leasing commissions to be calculated on a sliding
scale percentage basis of the lease's base rent. Fees under Management and
Leasing Agreement for the years ended December 31, 1999, 1998 and 1997 were
approximately $5,528, $3,451 and $3,333 respectively.
An affiliate of the Property Manager/Leasing Agent provides the cleaning
services for the 1290 Property. Fees paid for cleaning services for the years
ended December 31, 1999, 1998 and 1997 totaled $4,569, $4,248 and $4,226
respectively.
REIT Management - The Company has entered into a REIT Management Agreement
with the Property Manager/Leasing Agent ("REIT Manager"). The REIT Manager is
to perform certain accounting, administrative and monitoring services. The
REIT Management Agreement provides for compensation to the REIT Manager of a
monthly fee and reimbursement of documented out-of-pocket expenses. Fees and
reimbursable expenses incurred
29
<PAGE>
under the REIT Management Agreement for the years ended December 31, 1999,
1998 and 1997 aggregate $141, $141 and $140 respectively.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, escrow deposits, tenant
security deposits, tax refunds receivable, and accounts receivable are a
reasonable estimate of their fair value due to their short-term nature. The
Company believes the fair value of the 1290 Swap Agreement generally offsets
gains or losses on the being hedged and changes the nature of such underlying
financial instruments. Because the maturity date of the 1290 Mortgage Loan
and the termination date of the 1290 Swap Agreement are identical, the fair
value of the 1290 Swap Agreement, which approximates $2,251 as of December
31, 1999 is of limited usefulness.
Management believes the fair market value of the 1290 Mortgage Loan
approximates the carrying value at December 31, 1999.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1999.
12. LEASES
Minimum future rents (excluding escalation rentals) due to the Company under
noncancellable leases as of December 31, 1999 are as follows:
2000 $77,970
2001 77,503
2002 75,552
2003 73,353
2004 69,949
Thereafter 439,509
-------
$813,836
=======
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
30
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of the Company as of December 31, 1999 are
as follows:
Name Age Position
William L. Mack................... 60 Director and Chairman of the Board
Lee S. Neibart.................... 49 Director and President
Bruce H. Spector.................. 57 Director
John R.S. Jacobsson............... 31 Director and Secretary
John R. Klopp..................... 46 Director and Vice President
Russel S. Bernard................. 42 Director
Ralph F. Rosenberg................ 35 Director
David A. Strumwasser.............. 48 Director
David Roberts..................... 38 Director
Each of the officers and directors listed above, other than John R.
Klopp and John Jacobsson, has served in the positions listed for the Company
since September 1996. Mr. Klopp has served as a Director since September 1996
and as an officer since December 1996. Mr. Jacobsson has served as a Director
since October 1997 and as an officer since December 1996.
William L. Mack is the managing partner of Apollo Real Estate Advisors,
L.P., the manager of four opportunistic real estate investment funds, which he
founded in 1993 and serves as President of its corporate general partner.
Beginning in 1969, Mr. Mack served as Managing Partner of the Mack Company,
where he oversaw the dynamic growth of the Mack Company's office, industrial,
retail and hotel facilities. Mr. Mack has served as a director of Mack-Cali
Realty Corporation ("Mack-Cali") since the 1997 merger of the Mack Company's
office portfolio into Mack-Cali. Mr. Mack is also a director of The Bear Stearns
Companies, Inc., an investment banking firm, Koger Equity, Inc., a REIT which
owns and operates suburban office parks in the Southeast and the Southwest, Vail
Resorts, Inc., an owner and operator of Colorado ski resorts and Wyndham
International, Inc., a hotel company. Mr. Mack attended the Wharton School
of Business and Finance at the University of Pennsylvania and received a B.S.
degree in business administration, finance and real estate from New York
University.
Lee S. Neibart is a partner of Apollo Real Estate Advisors, L.P., with
which he has been associated since 1993, and directs portfolio and asset
management. From 1979 to 1993, he was Executive Vice President and Chief
Operating Officer of the Robert Martin Company, a private real estate
development and management firm. Mr. Neibart is a director of Atlantic Gulf
Communities Corp., a land development company, Koger Equity, Inc., NextHealth,
Inc., an owner and operator of spa and wellness facilities, Roland International
Corporation, a land development company, Wyndham International, Inc., and
Meadowbrook Golf Group, Inc., an owner and operator of golf courses. Mr. Neibart
received a B.A. from the University of Wisconsin and an M.B.A. from New York
University.
Bruce H. Spector is a partner of Apollo Real Estate Advisors, L.P.,
with which he has been associated since 1993, and has been responsible for
advising on matters of reorganization strategy. From 1967 to 1992, Mr. Spector
was a member of the law firm of Stutman, Treister and Glatt, spending a
substantial amount of that time as a senior
31
<PAGE>
partner and head of the firm's executive committee. Mr. Spector is a director of
Telemundo Group, Inc., a national Spanish-language oriented television producer,
Pacer International, Inc., a national intermodal and logistics company, and Vail
Resorts, Inc. Mr. Spector received a B.A. from the University of Southern
California and a J.D. from the UCLA School of Law.
John R.S. Jacobsson is a partner of Apollo Real Estate Advisors, L.P.
with which he has been associated since 1993 and is responsible for investments.
Prior to 1993, Mr. Jacobsson was associated with the acquisitions group of
Trammell Crow Ventures, a real estate investment firm. Mr. Jacobsson is a
director of Koger Equity, Inc., Roland International Corporation and Oasis Car
Wash, Inc. Mr. Jacobsson received a B.A. from Harvard College in 1990.
John R. Klopp is a Director, the Chief Executive Officer and a Vice
Chairman of Capital Trust, Inc., a specialty finance company focused on the
commercial real estate industry. Mr. Klopp is a founder and has been a Managing
Partner of Victor Capital Group L.P. (a subsidiary of Capital Trust) since 1989.
From 1982 to 1989, Mr. Klopp was a Managing Director and co-head of Chemical
Realty Corporation ("Chemical Realty"), the real estate investment banking
affiliate of Chemical Bank. Prior to founding Chemical Realty, he held various
positions in Chemical Bank's Real Estate Division and was responsible for
originating, closing and monitoring portfolios of construction and interim
loans. He received a B.A. from Tufts University in 1976 with a major in
economics, and an M.B.A. in 1978 from the Wharton School at the University of
Pennsylvania with a major in real estate and finance.
Russel S. Bernard is a principal of Oaktree Capital Management, LLC
("Oaktree"), with which he has been involved since 1995, and is the portfolio
manager of Oaktree's real estate and mortgage funds. Prior to joining Oaktree in
1995, Mr. Bernard was a Managing Director of Trust Company of the West (TCW).
Under subadvisory relationships with Oaktree, Mr. Bernard continues to serve as
portfolio manager for the TCW Special Credits distressed mortgage funds. From
1986 to 1994, Mr. Bernard was a partner in Win Properties, Inc., a national real
estate investment company, where he was responsible for the acquisition,
financing and operation of a national real estate portfolio. Mr. Bernard holds a
B.S. in Business Management and Marketing from Cornell University.
Ralph F. Rosenberg has been a Managing Director in the Merchant Banking
Division at Goldman Sachs & Co. ("Goldman Sachs"), since November 1998. Prior to
that he was a Vice President in the Investment Banking Division at Goldman Sachs
since 1994. Mr. Rosenberg joined the Real Estate Department of Goldman Sachs as
an Associate in 1990, transferred to their Real Estate Principal Investment Area
at its inception in 1992 and became a Vice-President in 1994. Mr. Rosenberg
serves on the Whitehall Investment Committee and the Goldman Sachs Emerging
Market Real Estate Investment Committee. Additionally, he serves on the Board of
Directors of Rockefeller Center Properties. He received a B.A. from Brown
University in 1986, and an M.B.A. from the Stanford Graduate School of Business
in 1990.
David A. Strumwasser is a principal of Whippoorwill Associates,
Incorporated ("Whippoorwill"), an investment management firm, and has served as
a Managing Director and General Counsel of Whippoorwill since 1993. From 1984 to
1993, Mr. Strumwasser was a Partner and co-head of the Bankruptcy and
Reorganization Practice at the New York law firm of Berlack, Israels & Liberman
LLP. Prior to that, he practiced bankruptcy law at Anderson Kill & Olick, LLP,
from 1981 to 1984, and at Weil, Gotshal & Manges LLP, from 1976 to 1979. From
1979 to 1981, Mr. Strumwasser was an Assistant Vice President at Citicorp
Industrial Credit, Inc. Mr. Strumwasser is a director of Barneys New York, Inc.,
a luxury retailer. Mr. Strumwasser received a B.A. in political science from the
State University of New York at Buffalo in 1973, and a J.D. from Boston College
Law School in 1976.
David Roberts has been a Managing Director of Angelo, Gordon & Co.,
L.P. ("Angelo, Gordon") an investment management firm, since 1993, where he
oversees the firm's real estate and special situations investment activities.
From 1988 until 1993, Mr. Roberts was a principal of Gordon Investment
Corporation, a Canadian merchant bank, where he participated in a wide variety
of principal transactions including investments in the real estate and mortgage
banking industries. Prior to that, Mr. Roberts worked in the Corporate Finance
Department of L.F. Rothschild & Co. Incorporated, an investment bank, as a
Senior Vice President specializing in mergers and acquisitions. Mr. Roberts has
a B.S. in Economics from the Wharton School of the University of Pennsylvania.
32
<PAGE>
Pursuant to the Charter, until the occurrence of a Simplification Event
(as hereinafter defined), the Company's nine-member Board of Directors is
divided into five classes. The Class I Director, Lee S. Neibart, was elected by
the holder of the Class B Common Stock; the Class II Directors consist of Bruce
H. Spector and David Roberts, both elected by the holders of the Class A Common
Stock and Class B Common Stock; the Class III Directors consist of John
Jacobsson, a director designated by the holder of the Class B Common Stock and
David A. Strumwasser, a director designated by the holders of Class A Common
Stock; the Class IV Directors consist of William L. Mack, a director designated
by the holder of the Class B Common Stock and Ralph F. Rosenberg, a director
designated by Whitehall Street Real Estate, Limited Partnership V (the
"Whitehall"); and the Class V Directors consist of Russel S. Bernard, a director
designated by Oaktree and John R. Klopp, a director designated by the Company's
stockholders (other than Apollo, Whitehall and Oaktree).
The initial terms of Class I, Class II and Class III directors of the
Company expired in 1997, 1998 and 1999, respectively and the initial terms of
the Class IV and Class V directors expire in 2000 and 2001, respectively. As the
term of each class expires, directors in that class will be elected by the
stockholders of the Company for a term of years which will expire in 2001, after
which time all five classes of directors will be elected for one year terms. The
Charter provides that the Company will at all times have at least two directors
that are not affiliated with Apollo, any Transferee (as defined in the Charter)
or any other stockholder of more than 10% of the stock of the Company.
"Simplification Event" means the earliest to occur of (i) the date on
which Apollo and its affiliates (taken together) or any transferee and its
affiliates (taken together) no longer hold a number of shares of Common Stock
representing at least 30% of the combined voting power of all outstanding shares
of stock of the Company; (ii) the date on which Apollo and its affiliates (taken
together) or any transferee and its affiliates (taken together) or any other
person or entity and its affiliates (taken together) holds a number of shares of
Common Stock representing at least 75% of the combined voting power of all
outstanding shares of stock of the Company; (iii) the fifth anniversary of the
Effective Date; and (iv) the date of the annual meeting of stockholders in 2001.
ITEM 11. EXECUTIVE COMPENSATION
The Company has no employees. In 1999, each member of the Board of
Directors earned (i) $20,000 as an annual retainer and (ii) $750.00 per meeting
of the Board of Directors attended by such member. In 2000, the members of the
Board of Directors will receive (i) $15,000 in cash as an annual retainer, (ii)
400 shares of Common Stock to be issued under the Company's 1996 Directors'
Stock Option Plan (as amended, the "Stock Plan"). Such stock and cash will be
paid to the then current members of the Board of Directors at the time of 2000
stockholder meeting and (iii) $750.00 per meeting of the Board of Directors
attended by such member. Upon election to the Board of Directors, each initial
Director received options (the "Options") to purchase 3,000 shares of the
Company's Class A Common Stock which vested over two years.
On November 29, 1999, the Board of Directors authorized a distribution
by the Company of $15.00 per share of the Company's Common Stock, on December
10, 1999 to the holders of record of the Company's Common Stock on December 9,
1999. In response to the payment of such dividend, on December 13, 1999, the
Board of Directors decreased the exercise price of all outstanding Options by
$15.00 per share. On December 23, 1999, each member of the Board of Directors
(except Mr. Jacobsson) exercised his Options.
On December 13, 1999, the Board of Directors authorized a distribution
by the Company of $15.00 per share of the Company's Common Stock on December 27,
1999 to the holders of record of the Company's Class A and Class B Common Stock
on December 23, 1999. In response to the payment of such dividend, on December
28, 1999, the Board of Directors decreased the exercise price of Mr. Jacobsson's
Options by $15.00 per share, to $12.50 per share. See "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Description of the Company's Stock
Plan."
The Company has purchased a directors' and officers' liability
insurance policy in the amount of $10,000,000.
33
<PAGE>
The directors of the Company and the Upper Tier GP Corp. are identical.
John R. S. Jacobsson, Lee S. Neibart and John R. Klopp are the directors of 1290
GP Corp. The officers of the Company, the 237/1290 Upper Tier GP Corp. and 1290
GP Corp. are identical. The officers of the Company will not receive any
compensation from the Company, other than any compensation they may receive as
Directors. The directors and officers of the Upper Tier GP Corp. and 1290 GP
Corp will not receive any compensation from the Upper Tier GP Corp. or 1290 GP
Corp.
In January 2000, the Directors of the Company appointed Lee S. Neibart,
John R. S. Jacobsson and John R. Klopp to serve as the members of the Company's
audit committee. Messrs. Neibart and Jacobsson are partners of Apollo Real
Estate Advisors, L.P., which is the general partner of Apollo Real Estate
Investment Fund, L.P., a significant stockholder of the Company. Mr. Klopp is a
Managing Partner of VCG, whose relationship to the Company is described under
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS--Asset Manager." The audit
committee does not serve pursuant to a written charter. Its purposes are to (i)
make recommendations concerning the engagement of Company's independent public
accountants, (ii) review with the Company's independent public accountants the
policies, procedures and results of the audit engagement, (iii) approve
professional services provided by the Company's independent public accountants,
(iv) review the independence of the Company's independent public accountants,
(v) consider the range of audit and non-audit fees, (vi) review the adequacy of
the Company's internal accounting controls, and (vii) recommend information to
be included in the Company's quarterly reports on Forms 10-Q and annual reports
on Forms 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth in the following table is furnished as of
March 29, 2000, with respect to any person (including, any "group," as that term
is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) who is known to the Company to be the beneficial owner of
more than 5% of any class of the Company's voting securities, and as to those
shares of the Company's equity securities beneficially owned by each of its
Directors, its executive officers, and all of its executive officers and
Directors as a group. As of December 31, 1999, there were 12,995,646 shares of
Common Stock outstanding.
34
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percent of Common
Beneficially Owned Stock
------------------ -----
Principal Stockholders
<S> <C> <C>
Apollo Real Estate Investment Fund, L.P. (1) 4,936,060 38.0%
The TCW Group, Inc.(2) 2,254,341 17.3%
Oaktree Capital Management, LLC (3) 1,916,663 14.7%
Whitehall Street Real Estate, Limited Partnership V (4) 1,125,821 8.6%
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) 3,800 *
Bruce H. Spector (10) 3,800 *
John R. Klopp (11) 23,800 *
Russel S. Bernard (12) 0 *
Ralph F. Rosenberg (13) 0 *
David A. Strumwasser (14) 3,800 *
David Roberts (15) 0 *
---------
Directors and Executive Officers as a group (9 persons) (16) 42,800 *
=========
</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, 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, Montrerey 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. 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 3,800 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, (1,125,421 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.
35
<PAGE>
(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 issued upon the exercise of options granted
to Mr. Mack under the Company's Stock Plan. Mr. Mack is a 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 issued 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.
(9) 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. 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 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 issued 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
issued 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 and
does not include 3,000 shares of Common Stock issued 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 and does not include 3,000
shares of Common Stock issued 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 289,503 shares held by various limited partnerships, a
trust 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 issued
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 issued 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.
Description of Stock Plan
The following is a summary of the material terms of the Stock Plan, as
amended. Such summary does not purport to be complete and is qualified in its
entirety by reference to the Stock Plan, a copy of which is attached as Exhibit
10.5 hereto.
The Board of Directors adopted the Stock Plan on the Effective Date,
and amended the Stock Plan on December 13, 1999. The purpose of the Stock Plan
is to attract and retain qualified persons as Directors. Pursuant to the Stock
Plan, the Board of Directors of the Company has the authority to issue to
members of the Company's Board of Directors options to purchase, in the
aggregate, 100,000 shares of Class A Common Stock. Pursuant to the Plan and the
Stock Plan, on the Effective Date, the initial members of the Company's Board of
Directors were each granted 3,000 Options. After the adjustment of the Options'
exercise prices, each such Director exercised his Options on December 23, 1999,
as more particularly described under "EXECUTIVE COMPENSATION." In March 1998,
John R. S. Jacobsson was granted options entitling him to purchase an aggregate
of 3,000 shares of Common Stock at an exercise price of $42.50 per share. Such
options were issued in July 1998, and became fully exercisable on
36
<PAGE>
October 10, 1999. The exercise price of Mr. Jacobsson's options was adjusted to
$27.50 and to $12.50 on December 13, 1999 and December 28, 1999, respectively,
as more particularly described under "EXECUTIVE COMPENSATION."
Each Director who is elected or appointed after the Effective Date will
be granted options to purchase 3,000 shares of Class A Common Stock on the date
of the meeting of the Company's stockholders at which such Director is first
elected to the Board of Directors or the date of the Board of Directors meeting
at which such Director is first appointed to the Board of Directors to fill a
vacancy on the Board of Directors. Each holder of an option issued under the
Stock Plan will be entitled to exercise the option to purchase one-third of the
shares of Common Stock covered by such option on the date of original issuance
thereof, one-third on the first anniversary of such date and one-third on the
second anniversary of such date, in each case, any time prior to the tenth
anniversary of the date of grant.
If the holder of an option ceases to serve as a Director of the Company
for any reason, options that have been previously granted to such holder and
that have not been vested will be forfeited and options that are vested as of
the date of such cessation may be exercised by such holder in accordance with
and subject to the Stock Plan. If the holder of an option dies while serving as
a Director of the Company, options that have been previously granted to such
holder and that are vested as of the date of such holder's death may be
exercised by such holder's legal representative in accordance with and subject
to the Stock Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Asset Manager
The Company has retained 970 Management, LLC, an affiliate of Victor
Capital Group, L.P., ("VCG") to serve as the Company's Asset Manager pursuant to
an Asset Management Agreement, dated as of the Effective Date (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 VCG. 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 1290 Property and
the Company's interests in 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 the
Properties are sold or if there is a change in control of the Asset Manager. The
Asset Manager may terminate the Asset Management Agreement if the Company
defaults in the payment of any amount due and payable to the Asset Manager and
such failure continues for 30 days after the Asset Manager's written notice of
such failure. Either party may terminate the Asset Management Agreement by
giving notice to the other upon the occurrence of certain events relating to the
bankruptcy or insolvency of the other party.
The Company will pay the Asset Manager a fee (the "Asset Management
Fee") in an amount equal to $25,000 per month. Asset management fees incurred
for each of the years ended December 31, 1999, 1998 and 1997 aggregated
approximately $300,000. In addition to the payment of the Asset Management Fee,
the Company will reimburse the Asset Manager for certain expenses. 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.
37
<PAGE>
Management and Leasing Agreements
The 1290 Property Owning Partnership entered into a Management and
Leasing Agreement, dated as of the Effective Date (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, 1999, 1998 and 1997 were approximately $5,528,000, $3,451,000
and $3,333,000, respectively.
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, 1999, 1998 and 1997 totaled $4,569,000, $4,248,000 and
$4,226,000, respectively.
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 the 1290 Property Owning Partnership notifies the
Property 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.
The 1290 Property Owning Partnership may terminate the Property
Management Agreement on 60 days notice if the 1290 Property is either sold by
the 1290 Property Owning Partnership or refinanced by the 1290 Property Owning
Partnership pursuant to a securitized financing of the 1290 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. The 1290 Property
Owning Partnerships may terminate the Property Management Agreement (i) after a
certain cure period, upon notice to the Property Manager/Leasing Agent if the
Property Manager/Leasing Agent breaches a material term of the Property
Management Agreement, and (ii) immediately upon notice to the Property
Manager/Leasing Agent if (x) the Property Manager/Leasing Agent or any principal
of the Property Manager/Leasing Agent intentionally misappropriates funds of
1290 Property Owning Partnership or commits fraud against the 1290 Property
Owning Partnership or if there is a change in control of the Property
Manager/Leasing Agent. The Property Manager/Leasing Agent may terminate the
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 1290 Property Owning Partnership if the 1290 Property Owning Partnership
fails to provide funds on a consistent basis to operate and maintain the 1290
Property. Either party may terminate the 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.
The 1290 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 1290 Property, which fee will be paid monthly, and (ii) reimburse the
Property Manager/Leasing Agent for all reasonable out-of-pocket expenses
incurred by the Property Manager/Leasing Agent related to the performance of its
responsibilities under the Property Management Agreement, to the extent set
forth in the annual budget. In addition, the Property Manager/Leasing Agent will
be entitled to receive commissions in connection with the leasing of space at
the Property and renewals and extensions of leases.
The Company has entered into a REIT Management Agreement with the
Property Manager/Leasing Agent ("REIT Manager"). The REIT Manager is to perform
certain accounting, administrative and monitoring services. The REIT Management
Agreement provides for compensation to the REIT Manager of monthly fees
aggregating approximately $125,000 per annum, and reimbursement of documented
out-of-pocket expenses. Fees and reimbursables incurred under the REIT
Management Agreement for the years ended December 31, 1999, 1998 and 1997
aggregated $141,000, $141,000 and $140,000.
38
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements are included in response to Item 8 hereof.
(a)(2) Financial Statement Schedules have been omitted because they
are inapplicable, not required, or the information is included
in the financial statements or notes thereto.
(a)(3) Exhibits
2.1 Second Amended Joint Plan of Reorganization of 237 Park Avenue
Associates, L.L.C. and 1290 Associates, L.L.C.*
2.2 Technical Amendment to Second Amended Joint Plan of Reorganization
of 237 Park Avenue Associates, L.L.C. and 1290 Associates, L.L.C.*
2.3 Second Technical Amendment to Second Amended Joint Plan of
Reorganization of 237 Park Avenue Associates, L.L.C. and 1290
Associates, L.L.C.*
3.1 Articles of Amendment and Restatement of Metropolis Realty, Trust,
Inc., dated October 7, 1996.*
3.2 Amended and Restated By-Laws of Metropolis Realty Trust, Inc.*
10.1 Agreement and Plan of Merger among 1290 Associates, L.L.C., 237
Park Avenue Associates, L.L.C. and 237/1290 Upper Tier Associates,
L.P., as of October 10, 1996.*
10.2 Amended and Restated Partnership Agreement of 1290 Partners, L.P.,
dated November 22, 1999.
10.3 Third Amended and Restated Limited Partnership Agreement of
237/1290 Upper Tier Associates, L.P., dated November 19, 1999.
10.4 Redemption and Substitution Agreement among JMB/NYC Office Building
Associates, L.P., O&Y Equity Company, L.P., O&Y NY Building Corp.,
237/1290 Upper Tier GP Corp., and 237/1290 Upper Tier Associates,
L.P., dated October 10, 1996.*
10.5 Amended and Restated Metropolis Realty Trust, Inc. 1996 Directors'
Stock Plan.
10.6 Form of Metropolis Realty Trust, Inc. Stock Option Agreement for
Directors.*
10.7 Form of Indemnification Agreement, dated as of October 10, 1996.*
10.8 Registration Rights Agreement, dated as of October 10, 1996.*
10.9 Indemnification Agreement given by Property Partners, L.P.,
Carlyle-XIII Associates, L.P., and Carlyle-XIV Associates, L.P. to
Metropolis Realty Trust, Inc., dated as of October 10, 1996.*
10.10 Modification of Operating Agreement of 237 Park Avenue Associates,
L.L.C., dated as of October 10, 1996.*
10.11 Debt Contribution Agreement, dated as of October 10, 1996, among
Metropolis Realty Trust, Inc., 237/1290 Lower Tier Associates,
L.P., 237 Park Partners, L.P., and 1290 Partners, L.P.*
10.12 Debt Assumption, Release and Security Agreement (237 Excess amount)
dated October 10, 1996.*
- --------
* Incorporated by reference to the Registrant's Registration
Statement on Form 10 (File No. 0-21849) and any amendments thereto.
39
<PAGE>
10.13 Debt Assumption, Release and Security Agreement (1290 Excess
amount) dated October 10, 1996.*
10.14 Release of Assumed Debt and Termination of Security Interest by
Bankers Trust Company for the benefit of O&Y NY Building Corp. and
O&Y Equity Company, L.P., dated as of October 10, 1996.*
10.15 237 Property Contribution Agreement between 237/1290 Upper Tier
Associates, L.P., 237/1290 Lower Tier Associates, L.P. and 237 Park
Partners, L.P., dated as of October 10, 1996.*
10.16 1290 Property Contribution Agreement among 237/1290 Upper Tier
Associates, L.P., 237/1290 Lower Tier Associates, L.P. and 1290
Partners, L.P., dated as of October 10, 1996.*
10.17 Loan Agreement among 1290 Partners, L.P., Lenders Party thereto and
General Electric Capital Corporation, dated December 13, 1999.
10.18 Amended, Restated and Consolidated Promissory Note, made by 1290
Partners, L.P. in favor of General Electric Capital Corporation,
dated December 13, 1999.
10.19 Amended, Restated and Consolidated Mortgage and Security Agreement,
between 1290 Partners, L.P. and General Electric Capital
Corporation, dated December 13, 1999.
10.20 Indemnification and Pledge Agreement between 1290 Partners, L.P.
and Apollo Real Estate Investment Fund, L.P., dated December 13,
1999.
10.21 Management and Leasing Agreement between 237 Park Partners, L.P.
and Tishman Speyer Properties, L.P.*
10.22 Management and Leasing Agreement between 1290 Partners, L.P. and
Tishman Speyer Properties, L.P.*
10.23 Asset Management Agreement between Metropolis Realty Trust, Inc.
and 970 Management, L.L.C., dated as of October 10, 1996.*
10.24 Interest Purchase Agreement between Metropolis Realty Trust, Inc.,
237 GP Corp., 237 Park Investors, L.L.C. and Escrow Agent, dated as
of September 23, 1999.**
10.25 Restructuring Agreement between Metropolis Realty Trust, Inc., 237
GP Corp., JMB/NYC Office Building Associates, L.P., certain other
holders of indirect interests in 237 Park Avenue and certain
affiliates of 237 Park Investors, L.L.C., dated as of October 28,
1999.**
27.1 Financial Data Schedule as of, and for the year ended, December 31,
1999.
(b) Reports on Form 8-K incorporated by reference.
(i) Report on Form 8-K filed with the Securities and
Exchange Commission on October 1, 1999 with respect to
Metropolis Realty Trust, Inc.'s announcement that it
entered into an agreement to sell 237 Park Avenue.
(ii) Report on Form 8-K filed with the Securities and
Exchange Commission on November 30, 1999 with respect
to the consummation of the sale of 237 Park Avenue.
(iii) Report on Form 8-K filed with the Securities and
Exchange Commission on December 14, 1999 with
respect to refinancing of 1290 Avenue of the
Americas.
- --------
* Incorporated by reference to the Registrant's Registration Statement
on Form 10 (File No. 0-21849) and any amendments thereto.
** Incorporated by reference to the Registrant's definitive
Information Statement on Schedule 14C filed with the Securities and
Exchange Commission on October 29, 1999.
40
<PAGE>
(c) Exhibits.
Refer to paragraph (a)(3) under this Item 14.
(d) Not applicable.
41
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
METROPOLIS REALTY TRUST, INC.
By: /s/ Lee S. Neibart
-------------------------
Name: Lee S. Neibart
Title: President and Director
By: /s/ Stuart Koenig
-------------------------
Name: Stuart Koenig
Title: Principal Financial Officer
Date: March __, 2000
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Lee S. Neibart President and Director March 30, 2000
- ----------------------------
Lee S. Neibart
/s/ William L. Mack Chairman of the Board and March 30, 2000
- ---------------------------
William L. Mack Director
/s/ John R. S. Jacobsson Secretary and Director March 30, 2000
- ---------------------------
John R. S. Jacobsson
/s/ John R. Klopp Vice President and Director March 30, 2000
- ---------------------------
John R. Klopp
/s/ Bruce H. Spector Director March 30, 2000
- ---------------------------
Bruce H. Spector
S-1
<PAGE>
Signature Title Date
/s/ Russel S. Bernard Director March 30, 2000
- ---------------------------
Russel S. Bernard
/s/ Ralph F. Rosenberg Director March 30, 2000
- ---------------------------
Ralph F. Rosenberg
/s/ David A. Strumwasser Director March 30, 2000
- ---------------------------
David A. Strumwasser
/s/ David Roberts Director March 30, 2000
- ---------------------------
David Roberts
S-2
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
OF
1290 PARTNERS, L.P.
Dated as of November 22, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<S> <C> <C>
ARTICLE 1
EFFECTIVENESS OF AGREEMENT....................................................................................2
ARTICLE 2
DEFINED TERMS.................................................................................................2
ARTICLE 3
ORGANIZATIONAL MATTERS.......................................................................................16
Section 3.1 Formation.............................................................................16
Section 3.2 Name..................................................................................17
Section 3.3 Registered Office and Agent; Principal Office.........................................17
Section 3.4 Power of Attorney.....................................................................17
Section 3.5 Term..................................................................................19
Section 3.6 Foreign Qualifications................................................................19
ARTICLE 4
PURPOSE......................................................................................................19
Section 4.1 Purpose and Business..................................................................19
Section 4.2 Powers................................................................................20
ARTICLE 5
CAPITAL CONTRIBUTIONS........................................................................................20
Section 5.1 Capital Contributions of the Partners.................................................20
Section 5.2 Additional Funds; Restrictions on General Partner.....................................20
Section 5.3 Issuance of Additional Partnership Interests; Admission of Additional
Limited Partners......................................................................21
Section 5.4 No Third Party Beneficiary............................................................21
Section 5.5 No Interest; No Return................................................................21
Section 5.6 No Preemptive Rights..................................................................21
ARTICLE 6
DISTRIBUTIONS................................................................................................22
Section 6.1 Regular Distributions.................................................................22
Section 6.2 Qualification as a REIT...............................................................22
Section 6.3 Withholding...........................................................................22
Section 6.4 Additional Partnership Interests......................................................22
Section 6.5 Distributions Upon Liquidation........................................................22
</TABLE>
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<S> <C> <C>
ARTICLE 7
ALLOCATIONS..................................................................................................23
ARTICLE 8
MANAGEMENT AND OPERATIONS OF BUSINESS........................................................................23
Section 8.1 Management............................................................................23
Section 8.2 Certificate of Limited Partnership....................................................28
Section 8.3 Reimbursement of the General Partner..................................................28
Section 8.4 Outside Activities of the General Partner.............................................29
Section 8.5 Contracts with Affiliates.............................................................29
Section 8.6 Indemnification.......................................................................30
Section 8.7 Liability of the General Partner......................................................31
Section 8.8 Other Matters Concerning the General Partner..........................................32
Section 8.9 Title to Partnership Assets...........................................................33
Section 8.10 Reliance by Third Parties.............................................................33
ARTICLE 9
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS...................................................................34
Section 9.1 Limitation of Liability...............................................................34
Section 9.2 Management of Business................................................................34
Section 9.3 Outside Activities of Limited Partners................................................34
Section 9.4 Return of Capital.....................................................................34
Section 9.5 Rights of Limited Partners Relating to the Partnership................................35
ARTICLE 10
BOOKS, RECORDS, ACCOUNTING AND REPORTS.......................................................................36
Section 10.1 Records and Accounting................................................................36
Section 10.2 Fiscal Year...........................................................................36
Section 10.3 Reports...............................................................................36
ARTICLE 11
TAX MATTERS..................................................................................................37
Section 11.1 Preparation of Tax Returns............................................................37
Section 11.2 Tax Elections.........................................................................37
Section 11.3 Tax Matters Partner...................................................................38
Section 11.4 Organizational Expenses...............................................................38
Section 11.5 Withholding...........................................................................38
ARTICLE 12
TRANSFERS AND WITHDRAWALS....................................................................................39
Section 12.1 Transfer..............................................................................39
</TABLE>
ii
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<TABLE>
Page
<S> <C> <C>
Section 12.2 General Partner's Purchase Right; Limited Partner's Put Rights........................39
Section 12.3 Transfer of the General Partner Interest..............................................42
Section 12.4 Limited Partner's Rights to Transfer..................................................42
Section 12.5 Substituted Limited Partners..........................................................42
Section 12.6 General Provisions....................................................................43
ARTICLE 13
ADMISSION OF PARTNERS........................................................................................44
Section 13.1 Admission of Successor General Partner................................................44
Section 13.2 Admission of Additional Limited Partners..............................................44
Section 13.3 Amendment of Agreement and Certificate of Limited Partnership.........................45
ARTICLE 14
DISSOLUTION, LIQUIDATION AND TERMINATION.....................................................................45
Section 14.1 Dissolution...........................................................................45
Section 14.2 Winding Up............................................................................46
Section 14.3 No Obligation to Contribute Deficit...................................................47
Section 14.4 Rights of Limited Partners............................................................48
Section 14.5 Notice of Dissolution.................................................................48
Section 14.6 Termination of Partnership and Cancellation of Certificate of Limited
Partnership...........................................................................48
Section 14.7 Reasonable Time for Winding-Up........................................................48
Section 14.8 Waiver of Partition...................................................................48
ARTICLE 15
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS.................................................................49
Section 15.1 Amendments............................................................................49
Section 15.2 Meetings of the Partners..............................................................50
ARTICLE 16
GENERAL PROVISIONS...........................................................................................51
Section 16.1 Addresses and Notice..................................................................51
Section 16.2 Titles and Captions...................................................................51
Section 16.3 Pronouns and Plurals..................................................................51
Section 16.4 Further Action........................................................................51
Section 16.5 Binding Effect........................................................................51
Section 16.6 Creditors.............................................................................51
Section 16.7 Waiver................................................................................52
Section 16.8 Counterparts..........................................................................52
Section 16.9 Applicable Law........................................................................52
Section 16.10 Invalidity of Provisions..............................................................52
</TABLE>
iii
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<TABLE>
Page
<S> <C> <C>
Section 16.11 Insolvency Proceedings................................................................52
Section 16.12 Entire Agreement......................................................................53
</TABLE>
EXHIBITS
Exhibit A - Allocations
Exhibit B - Restructuring Agreement
Exhibit C - Partners' Contributions and Partnership Interests
Exhibit D - Form of Confidentiality Agreement
iv
<PAGE>
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
OF
1290 PARTNERS, L.P.
THIS AMENDED AND RESTATED PARTNERSHIP AGREEMENT OF 1290
PARTNERS, L.P. (the "Partnership"), dated as of November 22, 1999 (this
"Agreement"), is entered into by and between Metropolis Realty Trust, Inc., a
Maryland corporation, as a limited partner ("Metropolis"), 237/1290 Upper Tier
Associates, L.P., a Delaware limited partnership, as a limited partner (the
"Limited Partner"), and 1290 GP Corp., a Delaware corporation, as general
partner (the "General Partner").
WHEREAS, the General Partner and 237/1290 Lower Tier
Associates, L.P., a Delaware limited partnership ("Lower Tier LP"), formed the
Partnership pursuant to the Limited Partnership Agreement of the Partnership,
dated as of October 10, 1996 (the "Original Agreement"), and in accordance with
the Delaware Revised Uniform Limited Partnership Act, as amended (the "Act"),
and with the terms and conditions of the Joint Plan of Reorganization of 237
Park Avenue Associates, L.L.C. and 1290 Associates, L.L.C. (collectively, the
"Debtors"), filed under title 11 of the United States Code, 11 U.S.C. Sections
101 et seq. (the "Plan");
WHEREAS, Lower Tier LP has been liquidated pursuant to the
Liquidation Agreement, dated as of the date hereof, and pursuant thereto the
interests of Lower Tier LP in the Partnership have been distributed to
Metropolis and the Limited Partner;
WHEREAS, the parties hereto desire to enter into this
Agreement to evidence the withdrawal of Lower Tier LP from, and the admission of
the Limited Partner and Metropolis to, the Partnership;
WHEREAS, the Partnership, Metropolis and the Limited Partner
are parties to the Restructuring Agreement, dated as of October 28, 1999 (the
"Restructuring Agreement"), and the execution and delivery of this Agreement is
a condition to the consummation of the transactions expressly provided for in
the Restructuring Agreement; and
WHEREAS, the parties hereto desire to enter into this
Agreement to govern the affairs of the Partnership and to set forth their
respective rights, obligations and understandings with respect to the
Partnership, and to amend and restate the Original Agreement, in its entirety.
1
<PAGE>
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties do hereby agree as follows:
ARTICLE 1
EFFECTIVENESS OF AGREEMENT
The Original Agreement was effective from October 10, 1996 up
to, but not including, the Effective Date. This Agreement shall become effective
on the Effective Date (as hereinafter defined).
ARTICLE 2
DEFINED TERMS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" has the meaning set forth in the recitals.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 5.3 hereof and who is shown
as such on the books and records of the Partnership.
"Adjusted Capital Account Deficit" means with respect to any
Partner, the negative balance, if any, in such Partner's Capital Account as of
the end of any relevant fiscal year, determined after giving effect to the
following adjustments:
(a) credit to such Capital Account any portion of such
negative balance which such Partner (i) is treated as obligated to
restore to the Partnership pursuant to the provisions of Section
1.704-1(b)(2)(ii)(c) of the Regulations, or (ii) is deemed to be
obligated to restore to the Partnership pursuant to the penultimate
sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations; and
(b) debit to such Capital Account the items described in
Sections 1.704- 1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
"Adjusted Contribution" means as of any time such amount is
being determined, $274,375,365 reduced (without duplication for any amount for
any particular transaction) by (i) the total distributions made at any time on
or after the Effective Date pursuant to paragraphs 4(a)(ii), 4(b)(ii) and
4(b)(v) of Exhibit A to this Agreement and (ii) the aggregate amount (or the
fair market value of property) received at any time on or after the Effective
Date by Metropolis
2
<PAGE>
and/or its stockholders (as applicable) from a Metropolis Sale or from the sale,
exchange, transfer, encumbrance or other disposition (whether by or through any
intervening entity or entities) of Metropolis' Partnership Interest or the
Property.
"Adverse Transaction" means (i) any sale, disposition,
transfer or exchange of the Property, (ii) any release, discharge or reduction
of the non-recourse indebtedness of the Partnership (other than through payment
of scheduled amortization (so long as the non-recourse indebtedness of the
Partnership remains at all times greater than $129,700,000), actions taken by a
secured lender such as application of insurance proceeds or condemnation awards
or the exercise of remedies, or in the case where the released indebtedness is
concurrently being replaced with other non-recourse indebtedness complying with
clause (B) below), (iii) any distribution of Partnership assets (other than
distributions of cash and other distributions by the Partnership in the ordinary
course of business), or (iv) any other transaction or agreement to which the
Partnership is a party, if as a result of any such transaction or agreement
described in (i), (ii) (iii) or (iv) above, JMB/NYC LP as a partner in the
Limited Partner would be required to recognize a material amount of taxable
income or gain prior to the Approval Right Termination Date. Adverse
Transactions shall specifically exclude (A) Partnership income derived in the
ordinary course of the Partnership's business, (B) non-recourse refinancing of
the Property on commercially reasonable terms in an aggregate amount equal to
not less than $129,700,000, (C) payment of amortization on non-recourse
financing encumbering the Property, provided that the outstanding balance of
such financing is not reduced below $129,700,000, in the aggregate and except as
otherwise provided in the parenthetical of clause (ii) above (i.e. actions taken
by a secured lender such as application of insurance proceeds or condemnation
awards or the exercise of remedies, or in the case where released indebtedness
is concurrently being replaced with other non-recourse indebtedness complying
with clause (B) above), (D) the consummation of the transactions expressly
provided for in Section 2.01 of the Restructuring Agreement, (E) a transfer of
the Property pursuant to an involuntary foreclosure or similar action arising
from a default by the Partnership with respect to its obligations under its
indebtedness, (F) a transfer of the Property pursuant to a consensual
foreclosure or similar action (including, without limitation, a deed in lieu of
foreclosure) arising from a default by the Partnership with respect to its
obligations under its indebtedness; provided that 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 such indebtedness and Metropolis or any
shareholders or Affiliates of Metropolis or any of their partners, members or
Affiliates attributable to any commonality of ownership between the beneficial
ownership of such indebtedness and any such Person, (G) any Metropolis Sale or
sale, exchange, transfer, encumbrance or other disposition (whether by or
through any intervening entity or entities) of Metropolis' Partnership Interest
or the Property during the period commencing on January 1, 2000 and ending on
February 28, 2001 if, simultaneous with any such transaction, JMB/NYC LP
receives its proportionate share of an amount (the "Limited Partner Sale
Distribution Amount") equal to the greater of (x) the Formula Price and (y)
$4,545,455, and (H) payment of the Limited Partner Sale Distribution Amount or
the authorized exercise of the Purchase Right or the Put Right and the
consummation of the transactions incidental to the exercise of such rights.
3
<PAGE>
"Affiliate" means, (a) with respect to any individual Person,
any member of the Immediate Family of such Person or a trust established for the
benefit of such member, or (b) with respect to any Entity, any Person which,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, any such Entity.
"Agreement" means this Agreement of Limited Partnership, as
originally executed and as amended, modified, supplemented or restated from time
to time, as the context requires.
"Amendment and Release Agreement" means the Amendment and
Release Agreement, dated as of the Effective Date, between Metropolis and the
JMB/NYC Indemnitors.
"Approval Right Termination Date" means the earliest of (i)
March 1, 2001, (ii) the date on which the Limited Partner no longer holds any
Partnership Interest as a result of the authorized exercise of the Purchase
Right or the Put Right pursuant to Sections 12.2A or 12.2C of this Agreement or
pursuant to such other transaction which does not constitute an Adverse
Transaction, (iii) the date on which the Partnership no longer holds title to
the Property pursuant to a transaction which does not constitute an Adverse
Transaction, (iv) the date on which JMB/NYC LP no longer holds any partnership
interest in the Limited Partner, and (v) the Default Date.
"Assignee" means a Person to whom Limited Partner Interests
have been transferred in a manner permitted under this Agreement, but who has
not become a Substituted Limited Partner, and who has the rights set forth in
Section 12.4.
"Asset Management Agreement" means the Asset Management
Agreement, dated October 10, 1996, between Metropolis and Victor Capital Group,
L.P., providing for the overall oversight of the property of Metropolis, as same
may be amended, and any substitutions or replacements therefor.
"Available Cash" means, with respect to the applicable period
of measurement after the Effective Date (i.e., any period beginning on the first
day of the fiscal year, quarter or other period commencing immediately after the
Effective Date, the last day of the fiscal year, quarter or other applicable
period for purposes of the prior calculation of Available Cash for or with
respect to which a distribution has been made, and ending on the last day of the
fiscal year, quarter or other applicable period immediately preceding the date
of the calculation) the excess, if any, as of such date, of (a) the gross cash
receipts of the Partnership for such period from all sources whatsoever,
including, without limitation, the following:
(i) all rents, revenues, income and proceeds derived by the
Partnership from its operations, including, without limitation,
distributions received by the Partnership from any Entity in which the
Partnership has an interest; (ii) all proceeds and revenues received by
the Partnership on account of any sales of property of the Partnership
or any Entity in which the Partnership has an interest or as a
refinancing of or payments of principal,
4
<PAGE>
interest, costs, fees, penalties or otherwise on account of any
borrowings or loans made by the Partnership or any Entity in which the
Partnership has an interest or financings or refinancings of any
property of the Partnership or any Entity in which the Partnership has
an interest; (iii) the amount of any insurance proceeds and
condemnation awards received by the Partnership; (iv) all cash Capital
Contributions made by any Partner after the Effective Date or by any
Person admitted as an additional Partner pursuant to Article 5 hereof
or loans received by the Partnership from its Partners; (v) all cash
amounts previously reserved by the Partnership, to the extent such
amounts are no longer needed for the specific purposes for which such
amounts were reserved; and (vi) the proceeds of liquidation of the
Partnership's property in accordance with this Agreement,
over (b) the sum of:
(i) all operating costs and expenses, including costs relating
to tenant improvements, brokerage expenses, taxes and other expenses of
the Property, of the Partnership and capital expenditures made during
such period (without deduction, however, for any capital expenditures,
charges for Depreciation or other expenses not paid in cash or
expenditures from reserves described in (viii) below) by the
Partnership or any Entity in which the Partnership has an interest;
(ii) all costs and expenses expended or paid during such period in
connection with the sale or other disposition, or financing or
refinancing, of property of the Partnership or any Entity in which the
Partnership has an interest or the recovery of insurance or
condemnation proceeds; (iii) all fees provided for under this
Agreement, the Asset Management Agreement, and the Property Management
and Leasing Agreement; (iv) all debt service, including principal and
interest, paid during such period on all indebtedness (including under
any line of credit) of the Partnership or any Entity in which the
Partnership has an interest; (v) all capital contributions, advances,
reimbursements or similar payments made to any Entity in which the
Partnership has an interest; (vi) all loans made by the Partnership in
accordance with the terms of this Agreement; (vii) all reimbursements
to the General Partner or its Affiliates during such period; and (viii)
any new reserves or increases in reserves reasonably determined by the
General Partner to be necessary for working capital, capital
improvements, payments of periodic expenditures, debt service or other
purposes for the Partnership or any Person in which the Partnership has
an interest.
Notwithstanding the foregoing, Available Cash shall not
include any cash received or reductions in reserves, or take into account any
disbursements made or reserves established, after commencement of the
dissolution and liquidation of the Partnership.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
codified under title 11 of the United States Code and in effect on the
Confirmation Date.
"Bankruptcy Court" means the District Court of the United
States District Court for the Southern District of New York having jurisdiction
over the Reorganization Cases and, to
5
<PAGE>
the extent of having reference under section 157, title 28, United States Code,
the unit of such District Court constituted under section 151, title 28, United
States Code.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy
Procedure as in effect on the Petition Date.
"Capital Account" means with respect to any Partner, the
Capital Account maintained for such Partner in accordance with the following
provisions:
a. to each Partner's Capital Account there shall be credited
(i) such Partner's Capital Contributions, (ii) such Partner's
distributive share of Net Income and any items in the nature of income
or gain which are specially allocated to such Partner pursuant to
Paragraphs 1 and 2 of Exhibit A and (iii) the amount of any Partnership
liabilities assumed by such Partner or which are secured by any asset
distributed to such Partner;
b. to each Partner's Capital Account there shall be debited
(i) the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this
Agreement, (ii) such Partner's distributive share of Net Losses and any
items in the nature of expenses or losses which are specially allocated
to such Partner pursuant to Paragraphs 1 and 2 of Exhibit A and (iii)
the amount of any liabilities of such Partner assumed by the
Partnership or which are secured by any asset contributed by such
Partner to the Partnership; and
c. if all or a portion of a Partnership Interest is
transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to
the extent it relates to the transferred Partnership Interest.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Sections 1.704-1(b) and 1.704-2 of the Regulations, and shall be
interpreted and applied in a manner consistent with such Regulations. If the
General Partner shall reasonably determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed assets or which are assumed by the
Partnership, the General Partner, Metropolis or the Limited Partner) are
computed in order to comply with such Regulations, the General Partner may make
such modification; provided that it does not have an adverse effect on the
amounts distributable to any Partner at any time.
"Capital Contribution" means, with respect to any Partner, any
cash, cash equivalents or the Gross Asset Value of property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Article 5
hereof.
6
<PAGE>
"Capital Transaction" shall mean the occurrence on or after
the Effective Date of any one of the following events: (i) any Metropolis Sale
or any sale, exchange, transfer, encumbrance or other disposition (whether by or
through any intervening entity or entities) of Metropolis' Partnership Interest
or the Property (other than a Metropolis Sale or a sale, exchange, transfer,
encumbrance or other disposition, whether by or through any intervening entity
or entities, of Metropolis' Partnership Interest or the Property if,
simultaneous with any such transaction JMB/NYC LP receives its proportionate
share of the Limited Partner Sale Distribution Amount), (ii) any loan made to
the Partnership, (iii) the refinancing of indebtedness affecting the Property,
(iv) the condemnation of all or any part of a Property (v) any insurance
recovery relating to the Property (other than rental interruption insurance) or
(vi) any issuance of additional Partnership Interests in the Partnership.
Notwithstanding anything to the contrary contained herein, "Capital Transaction"
shall not include payment of the Limited Partner Sale Distribution Amount or the
authorized exercise of the Purchase Right or the Put Right and the consummation
of the transactions incidental to the exercise of such rights.
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed on September 30, 1996 in the office of the
Delaware Secretary of State, as amended from time to time in accordance with the
terms hereof and the Act.
"Charter" means the Articles of Incorporation of Metropolis,
as amended and restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Confirmation Date" means the date on which the Clerk of the
Bankruptcy Court entered the Confirmation Order.
"Confirmation Order" means the order of the Bankruptcy Court
confirming the Plan.
"Consent" means the consent or approval of a proposed action
by a Partner given in accordance with Section 15.2 hereof.
"Debtors" has the meaning set forth in the recitals.
"Default Date" has the meaning set forth in Section 12.2.
"Depreciation" means, with respect to any asset of the
Partnership for any fiscal year or other period, the depreciation, depletion,
amortization or other cost recovery deduction, as the case may be, allowed or
allowable for federal income tax purposes in respect of such asset
7
<PAGE>
for such fiscal year or other period; provided, however, that except as
otherwise provided in Section 1.704-2 of the Regulations, if there is a
difference between the Gross Asset Value (including the Gross Asset Value, as
increased pursuant to paragraph 1 of the definition of Gross Asset Value) and
the adjusted tax basis of such asset at the beginning of such fiscal year or
other period, Depreciation for such asset shall be an amount that bears the same
ratio to the beginning Gross Asset Value of such asset as the federal income tax
depreciation, depletion, amortization or other cost recovery deduction for such
fiscal year or other period bears to the beginning adjusted tax basis of such
asset; provided, further, that if the federal income tax depreciation,
depletion, amortization or other cost recovery deduction for such asset for such
fiscal year or other period is zero, Depreciation of such asset shall be
determined with reference to the beginning Gross Asset Value of such asset using
any reasonable method selected by the General Partner.
"Effective Date" means the date of the consummation of all
Closing Transactions (as such term is defined in the Restructuring Agreement).
"Entity" means any general partnership, limited partnership,
corporation, joint venture, trust, business trust, real estate investment trust,
limited liability company, cooperative or association.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"Fiscal Year" means the period commencing on any January 1 and
ending on the earlier to occur of (A) the next December 31 and (B) the date on
which all assets of the Partnership are distributed pursuant to Article 14
hereof and the Certificate has been cancelled pursuant to the Act.
"Formula Price" is defined in Section 12.2.
"GAAP" means United States generally accepted accounting
principles, as in effect from time to time.
"GAAP Net Income" for any period means the net income (or
loss) of the Partnership for such period, determined in accordance with GAAP,
consistently applied, excluding (without duplication) to the extent included
therein (a) all extraordinary gains, including, without limitation, any
extraordinary gains arising from, or in connection with a Capital Transaction,
and (b) non-recurring gains. GAAP Net Income with respect to the Property shall
be determined in good faith by the General Partner and such determination shall
be final and binding on all parties hereto.
"General Partner" has the meaning set forth in the preamble.
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"General Partner Interest" means a Partnership Interest held
by the General Partner, in its capacity as general partner.
"Gross Asset Value" means, with respect to any asset of the
Partnership, such asset's adjusted basis for federal income tax purposes, except
as follows:
1. the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, without reduction for liabilities, as determined by the
contributing Partner and the Partnership on the date of contribution
thereof;
2. if the General Partner reasonably determines that an
adjustment is necessary or appropriate to reflect the relative economic
interests of the Partners, the Gross Asset Values of all Partnership
assets shall be adjusted in accordance with Sections 1.704-
1(b)(2)(iv)(f) and (g) of the Regulations to equal their respective
gross fair market values, without reduction for liabilities, as
reasonably determined by the General Partner, as of the following
times:
a. a Capital Contribution (other than a de minimis Capital
Contribution) to the Partnership by a new or existing Partner as
consideration for a Partnership Interest; or
b. the distribution by the Partnership to a Partner of more
than a de minimis amount of Partnership assets as consideration for
the repurchase of a Partnership Interest; or
c. the liquidation of the Partnership within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Regulations;
3. the Gross Asset Values of Partnership assets distributed to
any Partner shall be the gross fair market values of such assets
without reduction for liabilities, as reasonably determined by the
General Partner as of the date of distribution; and
4. the Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Sections 734(b) or 743(b) of the Code,
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Section 1.704- 1(b)(2)(iv)(m)
of the Regulations (as set forth in Exhibit A); provided, however, that
Gross Asset Values shall not be adjusted pursuant to this paragraph (4)
to the extent that the General Partner reasonably determines that an
adjustment pursuant to this paragraph (4) would duplicate an adjustment
pursuant to paragraph (2) of this definition.
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At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of computing
Net Income and Net Loss.
"Immediate Family" means, with respect to any natural Person,
such Person's spouse, parents, parents-in-law, descendants, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law, stepchildren, sons-in-law
and daughters-in-law or any trust solely for the benefit of any of the foregoing
family members whose sole beneficiaries include the foregoing family members.
"Incapacity" or "Incapacitated" means, (i) as to any
individual Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating him incompetent to manage his person or his
estate; (ii) as to any corporation which is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership; (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect; (b) the Partner is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner; (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors; (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above; (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties; (f) any
proceeding seeking liquidation, reorganization or other relief of or against
such Partner under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof; (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver or liquidator has not been
vacated or stayed within ninety (90) days of such appointment; or (h) an
appointment referred to in clause (g) which has been stayed is not vacated
within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding
by reason of (A) such Person's status as (1) the General Partner, (2) a
stockholder, partner, director, trustee or officer of the Partnership or the
General Partner, or (3) a director, trustee or officer of any other Entity, each
Person serving in such capacity at the request of the Partnership or the General
Partner, or (B) his or its liabilities, pursuant to a loan guarantee or
otherwise, for any indebtedness of the Partnership (including, without
limitation, any indebtedness which the Partnership has assumed or taken assets
subject to); and (ii) such other Persons (including Affiliates of the General
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Partner or the Partnership) as the General Partner may designate from time to
time (whether before or after the event giving rise to potential liability), in
its sole and absolute discretion.
"Indenture" means that certain Mortgage Spreader and
Consolidation Agreement and Trust Indenture dated as of March 20, 1984 among O&Y
Equity Corp., Olympia & York Holdings Corporation, FAME Associates, Olympia &
York 2 Broadway Land Company, Olympia & York 2 Broadway Company and
Manufacturers Hanover Trust Company as Trustee, as supplemented by that certain
Supplemental Indenture No. 1 dated as of March 20, 1984, that certain
Supplemental Indenture No. 2 dated as of December 30, 1986, that certain
Supplemental Indenture No. 3 dated as of March 30, 1988, that certain Instrument
of Resignation, Appointment and Acceptance dated as of October 28, 1992 among 2
Broadway Associates, 2 Broadway Land Company, 237 Park Avenue Associates, 1290
Associates, NationsBank of Tennessee, N.A., and Manufacturers Hanover Trust
Company, that certain Supplemental Indenture No. 4 dated August 17, 1995 and
that certain Supplemental Indenture No. 5 dated as of September 18, 1995 and as
the same may be further supplemented from time to time in accordance with the
terms thereof prior to the date of the Supplemental Indenture.
"IRS" shall mean the Internal Revenue Service of the United
States.
"JMB/NYC" means JMB/NYC Office Building Associates, an
Illinois general partnership.
"JMB/NYC Collateral" shall have the meaning provided in
Section 12.2B hereof.
"JMB/NYC Indemnitors" means Property Partners, L.P.,
Carlyle-XIII Associates, L.P. and Carlyle-XIV Associates, L.P.
"JMB/NYC Indemnity" means the Indemnification Agreement, dated
October 10, 1996, by the JMB/NYC Indemnitors in favor of Metropolis, as amended
pursuant to the Amendment and Release Agreement.
"JMB/NYC LP" means JMB/NYC Office Building Associates, L.P.,
an Illinois limited partnership.
"JMB/NYC Notes" means that certain (i) Promissory Note dated
July 27, 1984, reissued July 25, 1985, made by JMB/NYC to O&Y DFC in the
principal amount of $9,758,363 secured by certain liens and security interests
granted under the Security Agreement dated July 27, 1984 between JMB/NYC and
OYHC and assigned by O&Y DFC to O&Y MFC pursuant to the Assignment and
Assumption Agreement dated September 28, 1987; (ii) Promissory Note dated August
14, 1984, reissued July 25, 1985, made by JMB/NYC to O&Y DFC in the principal
amount of $4,514,229 secured by certain liens and security interests granted
under the Security Agreement dated August 14, 1984 between JMB/NYC and OYHC and
assigned by O&Y DFC to O&Y MFC pursuant to the Assignment and Assumption
Agreement dated September 28, 1987;
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and (iii) Amended, Restated and Consolidated Promissory Note dated May 31, 1995
between JMB/NYC LP and O&Y MFC in the principal amount of $78,605,779 secured by
certain liens and security interests granted under the Amended, Restated and
Consolidated Security Agreement dated May 31, 1995 between JMB/NYC LP and O&Y
MFC, which Notes and Security Agreements have been assigned to Metropolis
(subject to the interest of the participant under a Participation Agreement) and
were amended and restated pursuant to the Second Amended, Restated and
Consolidated Promissory Note in the principal amount of $88,572,780 and the
Second Amended, Restated and Consolidated Security Agreement, which Second
Amended Restated and Consolidated Promissory Note, Second Amended, Restated and
Consolidated Security Agreement and Participation Agreement are being assigned
by Metropolis to Michigan Avenue L.L.C. as of the Effective Date.
"Lien" means any lien, security interest, mortgage, deed of
trust, charge, claim, encumbrance, pledge, option, right of first offer or first
refusal and any other right or interest of others of any kind or nature, actual
or contingent, or other similar encumbrance of any nature whatsoever.
"Limited Partner" has the meaning given thereto in the
preamble.
"Limited Partner Interest" means a Partnership Interest of a
Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Partners and includes any and all benefits to which
the holder of such a Partnership Interest may be entitled, as provided in this
Agreement, together with all obligations of such Person to comply with the terms
and provisions of this Agreement.
"Limited Partner Sale Distribution Amount" is defined in the
definition of Adverse Transaction.
"Liquidating Event" has the meaning set forth in Section 14.1
hereof.
"Liquidator" has the meaning set forth in Section 14.2 hereof.
"Lower Tier LP" has the meaning set forth in the recitals.
"Metropolis" has the meaning set forth in the preamble.
"Metropolis Sale" means the transfer, sale or other
disposition of more than 51% of the outstanding shares of all classes of common
stock of Metropolis taken together, as part of a single transaction or series of
related transactions.
"Net Income" or "Net Loss" means, for each fiscal year or
other applicable period, an amount equal to the Partnership's taxable income or
loss for such year or period as determined for federal income tax purposes by
the General Partner, determined in accordance with
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Section 703(a) of the Code (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Section 703(a) of the
Code shall be included in taxable income or loss), adjusted as follows: (a) by
including as an item of gross income any tax-exempt income received by the
Partnership and not otherwise taken into account in computing Net Income or Net
Loss; (b) by treating as a deductible expense any expenditure of the Partnership
described in Section 705(a)(2)(B) of the Code (or which is treated as a Section
705(a)(2)(B) expenditure pursuant to Section 1.704-1(b)(2)(iv)(i) of the
Regulations) and not otherwise taken into account in computing Net Income or Net
Loss, including amounts paid or incurred to organize the Partnership (unless an
election is made pursuant to Section 709(b) of the Code) or to promote the sale
of interests in the Partnership and by treating deductions for any losses
incurred in connection with the sale or exchange of Partnership property
disallowed pursuant to Section 267(a)(1) or 707(b) of the Code as expenditures
described in Section 705(a)(2)(B) of the Code; (c) by taking into account
Depreciation in lieu of depreciation, depletion, amortization and other cost
recovery deductions taken into account in computing taxable income or loss; (d)
by computing gain or loss resulting from any disposition of Partnership property
with respect to which gain or loss is recognized for federal income tax purposes
by reference to the Gross Asset Value of such property rather than its adjusted
tax basis; (e) if an adjustment of the Gross Asset Value of any Partnership
asset which requires that the Capital Accounts of the Partnership be adjusted
pursuant to Sections 1.704-1(b)(2)(iv)(e), (f) and (g) of the Regulations, by
taking into account the amount of such adjustment as if such adjustment
represented additional Net Income or Net Loss pursuant to Exhibit A; and (f) by
not taking into account in computing Net Income or Net Loss items separately
allocated to the Partners pursuant to Paragraphs 1 and 2 of Exhibit A.
"Net Operating Income" for any period means the amount equal
to (a) the Partnerships' GAAP Net Income for such fiscal year, plus (b) the sum,
without duplication (and only to the extent such amounts are deducted from
revenues in determining such GAAP Net Income), of (i) the interest expense for
such period of the Partnership, and (ii) the real estate related depreciation
and amortization expenses for such period of the Partnership in respect of the
Property. Net Operating Income with respect to the Property shall be determined
in good faith by the General Partner and such determination shall be final and
binding on all parties hereto.
"Nonrecourse Deductions" has the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Regulations.
"Nonrecourse Liabilities" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Partner" means Metropolis, the General Partner or the Limited
Partner, and "Partners" means Metropolis, the General Partner and the Limited
Partner, collectively.
"Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner
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Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership taxable
year shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the
Act and the Plan and pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the
Partnership representing a Capital Contribution by any Partner and includes any
and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement.
"Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in a Partnership Minimum Gain, for a
Partnership taxable year shall be determined in accordance with the rules of
Regulations Section 1.704-2(d).
"Partnership Record Date" means the record date established by
the General Partner for the distribution of Available Cash pursuant to Section
6.1 hereof.
"Partnership Year" means the fiscal year of the Partnership.
"Permitted Partners" has the meaning set forth in subparagraph
1(b) of Exhibit A.
"Permitted Transferee" means any person to whom Limited
Partner Interests are Transferred in accordance with Section 12.4 of this
Agreement.
"Person" means an individual or Entity.
"Petition Date" the date on which the Debtors filed their
voluntary petitions under chapter 11 of the Bankruptcy Code.
"Plan" has the meaning set forth in the recitals.
"Precontribution Gain" has the meaning set forth in
subparagraph 3(c) of Exhibit A.
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"Prohibited Action" has the meaning set forth in Section 12.2B
hereof.
"Property" means 1290 Avenue of the Americas, New York, New
York.
"Property Management and Leasing Agreements" means the
Property Management and Leasing Agreements, dated October 10, 1996, between the
Partnership and Tishman Speyer Properties, L.P., providing for the day-to-day
management of, and leasing services related to, the Property, as same may be
amended, and any substitutions or replacements therefor.
"Purchase Price Amount" has the meaning set forth in Section
12.2.
"Purchase Right Notice" has the meaning set forth in Section
12.2.
"Purchase Right" has the meaning set forth in Section 12.2.
"Put Price" has the meaning set forth in Section 12.2.
"Put Right" has the meaning set forth in Section 12.2.
"Put Right Notice" has the meaning set forth in Section 12.2.
"Quarter" means each of the three month periods ending on
March 31, June 30, September 30 and December 31.
"Regulations" means the final, temporary or proposed Income
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust as defined in
Section 856 of the Code.
"REIT Requirements" has the meaning set forth in Section 6.2.
"Reorganization Cases" means the Debtors' cases under chapter
11 of the Bankruptcy Code, Case Nos. 96B42177(JLG) and 96B42178(JLG), which were
commenced by the Debtors by the filing of voluntary petitions with the
Bankruptcy Court on the Petition Date.
"Restricted Partner" has the meaning set forth in Section 1(b)
of Exhibit A.
"Restructuring Agreement" means that certain Restructuring
Agreement, dated as of October 28, 1999 by and among the Partnership and the
other parties thereto and attached hereto as Exhibit B.
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"Subsidiary" means, with respect to any Person, any
corporation, partnership or other entity of which a majority of (i) the voting
power of the voting equity securities; or (ii) the outstanding equity interests,
is owned, directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 12.5 hereof.
"Tax Items" has the meaning set forth in Exhibit A.
"Transfer" as a noun, means any sale, assignment, conveyance,
pledge, hypothecation, gift, encumbrance or other transfer, and as a verb, means
to sell, assign, convey, pledge, hypothecate, give, encumber or otherwise
transfer.
"237 Partners" means 237 Park Partners, L.P., a Delaware
limited partnership.
Certain additional terms and phrases have the meanings set
forth in Exhibit A.
ARTICLE 3
ORGANIZATIONAL MATTERS
Section 3.1 Formation
The Partners hereby amend and restate the Original Agreement
under and pursuant to the Act. Except as expressly provided herein to the
contrary, the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
Section 3.2 Name
The name of the Partnership is 1290 Partners, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership,""L.P.,""Ltd." or similar
words or letters shall be included in the Partnership's name where necessary for
the purposes of complying with the laws of any jurisdiction that so requires.
The General Partner in its sole and absolute discretion may, upon 5 days prior
written notice to the Limited Partner, change the name of the Partnership.
Section 3.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the
State of Delaware and the name and address of the registered agent for service
of process on the Partnership in the State of Delaware is The Corporation Trust
Company, 1029 Orange Street, Wilmington (New Castle
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County), Delaware 19801. The principal office of the Partnership shall be c/o
Victor Capital Group, L.P., 605 Third Avenue -- 26th Floor, New York, New York
10158, Attn: John Klopp, or such other place as the General Partner may from
time to time designate by notice to the Limited Partner. The Partnership may
maintain offices at such other place or places within or outside the State of
Delaware as the General Partner deems advisable.
Section 3.4 Power of Attorney
A. Each Limited Partner and each Assignee hereby constitutes
and appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver,
file and record in the appropriate public
offices (a) all certificates, documents and
other instruments (including, without
limitation, this Agreement and the
Certificate and all amendments or
restatements thereof) that the General
Partner or the Liquidator deems appropriate
or necessary to form, qualify or continue
the existence or qualification of the
Partnership as a limited partnership (or a
partnership in which the Metropolis and the
Limited Partner have limited liability) in
the State of Delaware and in all other
jurisdictions in which the Partnership may
or plans to conduct business or own
property, including, without limitation,
any documents necessary or advisable to
convey any contributed property to the
Partnership; (b) all instruments that the
General Partner deems appropriate or
necessary to reflect any amendment, change,
modification or restatement of this
Agreement in accordance with its terms; (c)
all conveyances and other instruments or
documents that the General Partner or the
Liquidator deems appropriate or necessary
to reflect the dissolution and liquidation
of the Partnership pursuant to the terms of
this Agreement, including, without
limitation, a certificate of cancellation;
(d) all instruments relating to the
admission, withdrawal, removal or
substitution of any Partner pursuant to, or
other events described in, Article 12, 13
or 14 hereof or the Capital Contribution of
any Partner; and (e) all certificates,
documents and other instruments relating to
the determination of the rights,
preferences and privileges of Partnership
Interest; and
(2) execute, swear to, seal, acknowledge and
file all ballots, consents, approvals,
waivers, certificates and other instruments
appropriate or necessary, in the sole and
absolute discretion of the General Partner
or any Liquidator, to make, evidence, give,
confirm or ratify any
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vote, consent, approval, agreement or other
action which is made or given by the
Partners hereunder or is consistent with
the terms of this agreement or appropriate
or necessary, in the sole discretion of the
General Partner or any Liquidator, to
effectuate the terms or intent of this
Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 15
hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
and any Liquidator to act as contemplated by this Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
Transfer of all or any portion of such Limited Partner's or Assignee's Limited
Partner Interests and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Metropolis and the Limited Partner or any Assignee thereof shall
execute and deliver to the General Partner or the Liquidator, within fifteen
(15) days after receipt of the General Partner's or Liquidator's request
therefor, such further designation, powers of attorney and other instruments as
the General Partner or the Liquidator, as the case may be, deems necessary to
effectuate this Agreement and the purposes of the Partnership.
Section 3.5 Term
The term of the Partnership shall continue until December 31,
2099, unless the Partnership is dissolved sooner pursuant to the provisions of
Article 14 or as otherwise provided by law.
Section 3.6 Foreign Qualifications
If the business of the Partnership is carried on or conducted
in any state other than the State of Delaware, then the parties agree that the
Partnership shall be qualified to conduct business in accordance with the laws
of each such other state in which business is conducted by the Partnership. The
parties agree to execute such other and further documents as may be necessary or
appropriate to permit the General Partner to qualify the Partnership, or
otherwise to comply with requirements for a limited partnership to conduct
business, in each such state. The General Partner shall execute and file in the
proper offices such certificates as may be required
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by the Assumed Name Act or similar law in effect in the counties and other
governmental jurisdictions in which the Partnership may elect to conduct
business.
ARTICLE 4
PURPOSE
Section 4.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is to engage in the following activities: to acquire, hold, own,
develop, construct, improve, maintain, operate, sell, lease, transfer, encumber,
convey, exchange, and otherwise dispose of or deal with the Property; to
acquire, hold, own, develop, construct, improve, maintain, operate, sell, lease,
transfer, encumber, convey, exchange, and otherwise dispose of or deal with real
and personal property of all kinds; to undertake such other activities as may be
necessary, advisable, desirable or convenient to the business of the
Partnership; to engage in such other ancillary activities as shall be necessary
or desirable to effectuate the foregoing purposes; and to engage in such
activities as are consistent with the powers described in the proviso in Section
4.2 hereof. The Partnership shall have all powers necessary or desirable to
accomplish the purposes enumerated. In connection with the foregoing, but
subject to all of the terms, covenants, conditions and limitations contained in
this Agreement and any other agreement entered into by the Partnership, the
Partnership shall have full power and authority to enter into, perform, and
carry out contracts of any kind, to borrow money and to issue evidences of
indebtedness, whether or not secured by mortgage, trust deed, pledge or other
Lien, and, directly or indirectly, to acquire and construct additional
properties necessary or useful in connection with its business.
Section 4.2 Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership; provided, that the
Partnership shall not take, or refrain from taking, any action which, in the
judgment of Metropolis, in its sole and absolute discretion, (i) could adversely
affect the ability of Metropolis to continue to qualify as a REIT; (ii) could
subject Metropolis to any additional taxes under Section 857 or Section 4981 of
the Code; or (iii) could violate any law or regulation of any governmental body
or agency having jurisdiction over Metropolis or its securities, unless such
action (or inaction) shall have been specifically consented to by Metropolis in
writing.
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ARTICLE 5
CAPITAL CONTRIBUTIONS
Section 5.1 Capital Contributions of the Partners
(a) As of the date hereof, the Partners shall be deemed to
have made the Capital Contributions set forth on Exhibit C hereto.
(b) The General Partner may, in its sole discretion, make
additional Capital Contributions to the Partnership.
(c) The Partners shall have an interest in Net Income, Net
Loss and distributions of the Partnership as set forth in Exhibit A, which
interests shall be adjusted in Exhibit A from time to time by the General
Partner to the extent necessary to reflect accurately exchanges, additional
Capital Contributions or similar events having an effect on any Partner's
Partnership Interest. Except as provided in this Section 5.1, the Partners shall
have no obligation to make any additional Capital Contributions or loans to the
Partnership.
Section 5.2 Additional Funds; Restrictions on General Partner
The sums of money required to finance the business and affairs
of the Partnership shall be derived from the initial Capital Contributions made
to the Partnership by the Partners as set forth in Section 5.1 and from funds
generated from the operation and business of the Partnership. If additional
financing is needed from sources other than as set forth in the preceding
sentence for any reason, the General Partner may, in its sole and absolute
discretion but subject to Section 8.1E, in such amounts and at such times as it
solely shall determine to be necessary or appropriate, (i) cause the Partnership
to issue additional Partnership Interests and admit additional limited partners
to the Partnership in accordance with Section 5.3; (ii) make additional Capital
Contributions to the Partnership; (iii) cause the Partnership to borrow money,
enter into loan arrangements, issue debt securities, obtain letters of credit or
otherwise borrow money on a secured or unsecured basis; (iv) make a loan or
loans to the Partnership; or (v) subject to Section 8.1E, sell any assets or
properties of the Partnership.
Section 5.3 Issuance of Additional Partnership Interests;
Admission of Additional Limited Partners
In addition to any Partnership Interests issuable by the
Partnership pursuant to Section 5.2, the General Partner is authorized to cause
the Partnership to issue additional Partnership Interests (or options therefor)
senior or junior to the Partnership Interests issued in respect of the initial
Capital Contributions (as set forth in Section 5.1(a), (b) and (c)) to any
Persons at any time or from time to time, for consideration not less than the
fair market value thereof (or the fair market value as of the date an option is
granted) (as such fair market value is determined in the sole and absolute
discretion of the General Partner's Board of Directors), and
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on such terms and conditions, as the General Partner shall establish in each
case in its sole and absolute discretion, without any approval being required
from any Limited Partner or any other Person; provided, however, that such
issuance does not cause any amounts of the Partnership's indebtedness to be
excluded from the tax basis of the Partnership Interests of the Limited Partner.
Subject to the limitations set forth in the preceding sentence, the General
Partner may take such steps as it, in its reasonable discretion, deems necessary
or appropriate to admit any Person as a limited partner of the Partnership,
including, without limitation, amending the Certificate, Exhibit C or any other
provision of this Agreement.
Section 5.4 No Third Party Beneficiary
No creditor or other third party having dealings with the
Partnership shall have the right to enforce the right or obligation of any
Partner to make Capital Contributions or loans or to pursue any other right or
remedy hereunder or at law or in equity, it being understood and agreed that the
provisions of this Agreement shall be solely for the benefit of, and may be
enforced solely by, the parties hereto and their respective successors and
assigns.
Section 5.5 No Interest; No Return
No Partner shall be entitled to interest on its Capital
Contribution or on such Partner's Capital Account. Except as provided herein or
by law, no Partner shall have any right to demand or receive the return of its
Capital Contribution from the Partnership.
Section 5.6 No Preemptive Rights
No Person shall have any preemptive or other similar right
with respect to (i) additional Capital Contributions or loans to the
Partnership; or (ii) issuance or sale of any Partnership Interests.
ARTICLE 6
DISTRIBUTIONS
Section 6.1 Regular Distributions
Except for distributions pursuant to Section 14.2 in
connection with the dissolution and liquidation of the Partnership, and subject
to the provisions of Sections 6.3, 6.4 and 6.5, the General Partner shall cause
the Partnership to distribute, from time to time as determined by the General
Partner, but in any event not less frequently than quarterly, all Available
Cash, to the Partners, in accordance with the provisions of Exhibit A.
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Section 6.2 Qualification as a REIT
The General Partner shall use its best efforts to cause the
Partnership to distribute sufficient amounts under this Article 6 to enable
Metropolis to pay stockholder dividends that will (i) satisfy the requirements
for qualifying as a REIT under the Code and Regulations ("REIT Requirements"),
and (ii) avoid any federal income or excise tax liability of Metropolis;
provided, however, the General Partner shall not be bound to comply with this
covenant to the extent such distributions would (i) violate applicable Delaware
law or (ii) contravene the terms of any notes, mortgages or other types of debt
obligations which the Partnership may be subject to in conjunction with borrowed
funds.
Section 6.3 Withholding
With respect to any withholding tax or other similar tax
liability or obligation to which the Partnership may be subject as a result of
any act or status of any Partner or to which the Partnership becomes subject
with respect to any Partnership Interest, the Partnership shall have the right
to withhold amounts of Available Cash distributable to such Partner or with
respect to such Partnership Interest, to the extent of the amount of such
withholding tax or other similar tax liability or obligation pursuant to the
provisions contained in Section 11.5.
Section 6.4 Additional Partnership Interests
If the Partnership issues Partnership Interests in accordance
with Section 5.2 or 5.3, the distribution priorities set forth in Exhibit A
shall be amended, as necessary, to reflect the distribution priority of such
Partnership Interests.
Section 6.5 Distributions Upon Liquidation
Proceeds from a Capital Transaction shall be distributed
pursuant to the provisions of Exhibit A and any other cash received or
reductions in reserves made after commencement of the liquidation of the
Partnership shall be distributed to the Partners in accordance with Section
14.2, after allocating Net Income, Net Loss or items thereof in accordance with
Section 1(c) of Exhibit A.
ARTICLE 7
ALLOCATIONS
The Net Income, Net Loss and other Partnership items shall be
allocated pursuant to the provisions of Exhibit A.
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ARTICLE 8
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 8.1 Management
A. Except as otherwise expressly provided in this Agreement,
all management powers over the business and affairs the Partnership are and
shall be exclusively vested in the General Partner, and, except as provided in
Section 8.1E hereof, neither Metropolis nor the Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Metropolis or the Limited Partner with or without cause. In addition to
the powers now or hereafter granted a general partner of a limited partnership
under applicable law or which are granted to the General Partner under any other
provision of this Agreement, the General Partner shall have, subject to Section
8.1E hereof, full power and authority to do all things deemed necessary or
desirable by it to conduct the business of the Partnership, to exercise all
powers set forth in Section 4.2 hereof and to effectuate the purposes set forth
in Section 4.1 hereof, including, without limitation:
(1) (a) the making of any expenditures, the
lending or borrowing of money, including,
without limitation, making prepayments on
loans and borrowing money to permit the
Partnership to make distributions to its
Partners in such amounts as will permit
Metropolis (so long as Metropolis qualifies
as a REIT) to avoid the payment of any
federal income tax (including, for this
purpose, any excise tax pursuant to Section
4981 of the Code) and to make distributions
to its stockholders in amounts sufficient to
permit Metropolis to maintain REIT status,
(b) the assumption or guarantee of, or other
contracting for, indebtedness and other
liabilities, (c) the issuance of evidence of
indebtedness (including the securing of the
same by deed, mortgage, deed of trust or
other lien or encumbrance on the
Partnership's assets) and (d) the incurring
of any obligations it deems necessary for
the conduct of the activities of the
Partnership;
(2) the making of tax, regulatory and other
filings, or rendering of periodic or other
reports to governmental or other agencies
having jurisdiction over the business or
assets of the Partnership;
(3) the acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or
exchange of any assets of the Partnership
(including the exercise or grant of any
conversion, option, privilege, or
subscription right or other right available
in connection
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with any assets at any time held by the
Partnership) or the merger or other
combination of the Partnership with or into
another entity;
(4) the use of the assets of the Partnership
(including, without limitation, cash on
hand) for any purpose consistent with the
terms of this Agreement and on any terms it
sees fit, including, without limitation, the
financing of the conduct of the operations
of the Partnership, the repayment of
obligations of the Partnership and the
Subsidiaries of the Partnership and any
other Person in which the Partnership has an
equity investment, and the making of capital
contributions to the Partnership's
Subsidiaries;
(5) the management, operation, expansion,
development, construction, leasing,
landscaping, repair, alteration, demolition
or improvement of any real property or
improvements owned by the Partnership or any
Subsidiary of the Partnership;
(6) the negotiation, execution, and performance
of any contracts, conveyances or other
instruments that the General Partner
considers useful or necessary to the conduct
of the Partnership's operations or the
implementation of the General Partner's
powers under this Agreement, including (i)
contracting with property managers, leasing
agents, contractors, developers,
consultants, accountants, legal counsel,
other professional advisors and other
agents, and (ii) the payment of such related
expenses and compensation out of the
Partnership's assets;
(7) the distribution of Partnership cash or
other Partnership assets in accordance with
this Agreement;
(8) holding, managing, investing and reinvesting
cash and other assets of the Partnership;
(9) the collection and receipt of revenues and
income of the Partnership;
(10) the establishment of one or more divisions
of the Partnership, the selection and
dismissal of employees of the Partnership
(including, without limitation, employees
having titles such as "president," "vice
president," "secretary" and "treasurer" of
the Partnership), and agents, outside
attorneys, accountants, consultants and
contractors of the Partnership, and the
determination of their compensation and
other terms of employment or engagement;
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(11) the maintenance of such insurance for the
benefit of the Partnership and the Partners
as it deems necessary or appropriate;
(12) the formation of, or acquisition of an
interest in, and the contribution of
property to, any further limited or general
partnerships, joint ventures or other
relationships that it deems desirable
(including, without limitation, the
acquisition of interests in, and the
contributions of property to, its
Subsidiaries and any other Person in which
it has an equity investment from time to
time);
(13) the control of any matters affecting the
rights and obligations of the Partnership,
including the settlement, compromise,
submission to arbitration or any other form
of dispute resolution, or abandonment of,
any claim, cause of action, liability, debt
or damages, due or owing to or from the
Partnership, the commencement or defense of
suits, legal proceedings, administrative
proceedings, arbitration or other forms of
dispute resolution, and the representation
of the Partnership in all suits or legal
proceedings, administrative proceedings,
arbitrations or other forms of dispute
resolution, the incurring of legal expenses,
and the indemnification of any Person
against liabilities and contingencies to the
extent permitted by law;
(14) the undertaking of any action in connection
with the Partnership's direct or indirect
investment in its Subsidiaries or any other
Person (including, without limitation, the
contribution or loan of funds by the
Partnership to such Persons);
(15) the determination of the fair market value
of any Partnership property distributed in
kind using such reasonable method of
valuation as the General Partner may adopt;
(16) the exercise, directly or indirectly,
through any attorney-in-fact acting under a
general or limited power of attorney, of any
right, including the right to vote,
appurtenant to any asset or investment held
by the Partnership;
(17) the exercise of any of the powers of the
General Partner enumerated in this Agreement
on behalf of or in connection with any
Subsidiary of the Partnership or any other
Person in which the Partnership has a direct
or indirect interest, or jointly with any
such Subsidiary or other Person;
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(18) the exercise of any of the powers of the
General Partner enumerated in this Agreement
on behalf of any Person in which the
Partnership does not have an interest
pursuant to contractual or other
arrangements with such Person;
(19) the making, execution and delivery of any
and all deeds, leases, notes, mortgages,
deeds of trust, security agreements,
conveyances, contracts, guarantees,
warranties, indemnities, waivers, releases
or legal instruments or agreements in
writing necessary or appropriate, in the
judgment of the General Partner, for the
accomplishment of any of the foregoing;
(20) the issuance of additional Partnership
Interests, as appropriate, in connection
with Capital Contributions by Partners
pursuant to Article 5 hereof; and
(21) the opening of bank accounts on behalf of,
and in the name of, the Partnership and its
Subsidiaries.
B. Metropolis and the Limited Partner agree that the General
Partner is authorized to execute, deliver and perform the above-mentioned
agreements and transactions on behalf of the Partnership without any further
act, approval or vote of the Partners (except as provided in Section 8.1E),
notwithstanding any other provision of this Agreement, to the fullest extent
permitted under the Act or other applicable law, rule or regulation. The
execution, delivery or performance by the General Partner or the Partnership of
any agreement authorized or permitted under this Agreement shall not constitute
a breach by the General Partner of any duty that the General Partner may owe the
Partnership, Metropolis or the Limited Partner or any other Persons under this
Agreement or of any duty stated or implied by law or equity.
C. At all times from and after the date hereof, the General
Partner may cause the Partnership to establish and maintain at any and all times
working capital accounts and other cash or similar balances in such amount as
the General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
D. Except as provided in Section 8.1E, in exercising its
authority under this Agreement, the General Partner may, but shall be under no
obligation to, take into account the tax consequences to any Partner of any
action taken by it. The General Partner and the Partnership shall not have
liability to the Limited Partner or Metropolis under any circumstances as a
result of an income tax liability incurred by the Limited Partner or its
partners or Metropolis or its shareholders as a result of an action (or
inaction) by the General Partner taken pursuant to its authority under and in
accordance with this Agreement.
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E. Notwithstanding anything to the contrary set forth in this
Agreement, until the Approval Right Termination Date, the General Partner shall
not, without the prior written consent of the Limited Partner (which may be
given or withheld in its sole and absolute discretion) cause or permit (to the
extent within the General Partner's reasonable control) any Adverse Transaction
to occur; provided however that the General Partner shall be under no obligation
to commence litigation or to incur any expense (unless JMB/NYC LP shall fund
such expense) in order to avoid or prevent an Adverse Transaction from
occurring.
F. In connection with such management and subject to any
limitations set forth elsewhere in this Agreement, the General Partner:
1. Shall maintain or cause to be maintained, at
the expense of the Partnership, complete and accurate records
of all correspondence, documents or instruments of any nature
relating to the Partnership business. Such records, together
with such supporting evidence thereof as is in the control and
possession of the Partnership or of the General Partner, shall
be kept in the principal office of the General Partner or of
the Partnership for such periods as the General Partner deems
appropriate. The Partners and/or their authorized
representatives, shall have the right to inspect and/or copy
any or all of the above-described records during normal
business hours.
2. Shall execute any and all documents or
instruments of any kind which the General Partner may
reasonably deem appropriate in carrying out the purposes of
the Partnership.
3. Shall maintain, or cause to have maintained,
at the expense of the Partnership, adequate records and
accounts of all transactions, operations and expenditures and
shall furnish or cause to be furnished the Partners with
annual statements of account as of the end of each calendar
year.
G. The General Partner may employ or retain such counsel,
accountants, appraisers or other experts or advisors as the General Partner may
reasonably deem appropriate for the purpose of discharging its duties hereunder,
and shall be entitled to pay the fees of any such persons from the funds of the
Partnership. The General Partner may act, and shall be protected in acting in
good faith, on the opinion or advice of, or information obtained from, any such
counsel, accountant, appraiser or other expert or advisor, whether retained or
employed by the Partnership, the General Partner, or otherwise, in relation to
any matter connected with the administration or operation of the business and
affairs of the Partnership.
Section 8.2 Certificate of Limited Partnership
The General Partner has filed the Certificate with the
Secretary of State of Delaware as required by the Act. The General Partner shall
use all reasonable efforts to cause to
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be filed such other certificates or documents as may be reasonable and necessary
or appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and any other state, or the District of
Columbia, in which the Partnership may elect to do business or own property. To
the extent that such action is determined by the General Partner to be
reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate and do all of the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and each other state, or the District of Columbia, in which the Partnership may
elect to do business or own property. Subject to the terms of Section 9.5A(3)
hereof, the General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate or any amendment thereto to any
Limited Partner.
Section 8.3 Reimbursement of the General Partner
A. Except as provided in this Section 8.3 and elsewhere in
this Agreement (including the provisions of Articles 6 and 7 regarding
distributions, payments, and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.
B. The General Partner, shall be reimbursed on a monthly
basis, or such other basis as it may determine in its sole and absolute
discretion, for all expenses that it incurs relating to the ownership and
operation of, or for the benefit of, the Partnership; provided, that the amount
of any such reimbursement shall be reduced by any interest earned by the General
Partner with respect to bank accounts or other instruments or accounts of the
Partnership held by it in its name. Such reimbursement shall be in addition to
any reimbursement made as a result of indemnification pursuant to Section 8.6.
Section 8.4 Outside Activities of the General Partner
A. The General Partner shall devote such time and effort to
the business of the Partnership as the General Partner shall reasonably deem
necessary to promote adequately the interests of the Partnership and the
interests of the Partners; however, it is specifically understood and agreed
that the General Partner shall not be required to devote full time to the
business of the Partnership and that the Partners and their respective
stockholders, partners, directors, officers and affiliates may at any time and
from time to time engage in and possess interests in other business ventures of
any and every type and description, including, without limitation, the
ownership, operation, financing and management of real estate, interests in real
estate or real estate-related securities, independently or with others which may
be competitive with the Partnership's business or that are enhanced by the
Partnership's activities or business, and neither the Partnership nor any
Partner shall by virtue of this Agreement or otherwise have any right, title or
interest in or to such independent ventures.
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B. The General Partner and any Affiliates of the General
Partner may acquire Limited Partner Interests and shall be entitled to exercise
all rights of a Limited Partner relating to such Limited Partner Interests.
C. The Partners shall be under no obligation to contribute
additional capital to the Partnership and the General Partner may raise
additional capital without any obligation to contribute it to the Partnership.
Section 8.5 Contracts with Affiliates
A. The Partnership may lend or contribute funds or other
assets to its Subsidiaries or other Persons in which it has an equity investment
and such Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
B. Except as provided in Section 8.1E, the Partnership may
Transfer assets to joint ventures, other partnerships, corporations or other
business entities in which it is or thereby becomes a participant upon such
terms and subject to such conditions consistent with this Agreement and
applicable law as the General Partner, in its sole and absolute discretion,
believes are advisable.
C. The General Partner, in its sole and absolute discretion
and without the approval of Metropolis and the Limited Partner, may propose and
adopt, on behalf of the Partnership, employee benefit plans, stock option plans,
and similar plans funded by the Partnership for the benefit of employees of the
General Partner, the Partnership, Subsidiaries of the Partnership or any
Affiliate of any of them in respect of services performed, directly or
indirectly, for the benefit of the Partnership, the General Partner (but only to
the extent such services are related to the Partnership), or any Subsidiaries of
the Partnership.
D. The General Partner is expressly authorized to enter into,
in the name and on behalf of the Partnership, a "right of first opportunity" or
"right of first offer" arrangement, non-competition agreements and other
conflict avoidance agreements with various Affiliates of the Partnership and the
General Partner, on such terms as the General Partner, in its sole and absolute
discretion, believes are advisable.
Section 8.6 Indemnification
A. To the fullest extent permitted by Delaware law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, reasonable attorneys' fees and other legal fees and expenses),
judgments, fines, settlements, and other amounts arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, that relate
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to the operations of the Partnership or the General Partner as set forth in this
Agreement, in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, except to the extent it is finally determined
by a court of competent jurisdiction, from which no further appeal may be taken,
that such Indemnitee's action constituted intentional acts or omissions
constituting willful misconduct or fraud. Without limitation, the foregoing
indemnity shall extend to any liability of any Indemnitee, pursuant to a loan
guaranty or otherwise for any indebtedness of the Partnership or any Subsidiary
of the Partnership (including, without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken subject
to), and the General Partner is hereby authorized and empowered, on behalf of
the Partnership, to enter into one or more indemnity agreements consistent with
the provisions of this Section 8.6 in favor of any Indemnitee having or
potentially having liability for any such indebtedness. Any indemnification
pursuant to this Section 8.6 shall be made only out of the assets of the
Partnership, and neither the General Partner nor any Limited Partner shall have
any obligation to contribute to the capital of the Partnership, or otherwise
provide funds, to enable the Partnership to fund its obligations under this
Section 8.6.
B. Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding shall be paid or reimbursed by the Partnership in advance
of the final disposition of the proceeding.
C. The indemnification provided by this Section 8.6 shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity unless otherwise provided in a written
agreement pursuant to which such Indemnities are indemnified.
D. The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of the Indemnitees and such other
Persons as the General Partner shall determine, against any liability that may
be asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
E. For purposes of this Section 8.6, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by such Indemnitee of its duties to the
Partnership also imposes duties on, or otherwise involves services by, such
Indemnitee to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
Section 8.6; and actions taken or omitted by the Indemnitee with respect to an
employee benefit plan in the performance of its duties for a purpose reasonably
believed by it to be in the interest of the participant and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the Partnership.
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F. In no event may an Indemnitee subject any of the Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
G. An Indemnitee shall not be denied indemnification in whole
or in part under this Section 8.6 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 8.6 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 8.6 or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this Section 8.6, as in effect immediately
prior to such amendment, modification, or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
Section 8.7 Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner and its officers and directors shall not be
liable for monetary damages to the Partnership, any Partners or any Assignees
for losses sustained or liabilities incurred as a result of errors in judgment
or of any act or omission if the General Partner acted in good faith; provided,
however, the foregoing shall not be deemed to exculpate the General Partner from
any liability the General Partner may have under the GP Contribution Agreement.
B. Metropolis and the Limited Partner expressly acknowledge
that the General Partner is acting on behalf of the Partnership and the
stockholder of the General Partner collectively, that the General Partner,
subject to the provisions of Section 8.1E hereof, is under no obligation to
consider the separate interest of the Limited Partner in deciding whether to
cause the Partnership to take (or decline to take) any actions, and that the
General Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Metropolis or the Limited
Partner in connection with such decisions, provided that the General Partner has
acted in good faith. With respect to any indebtedness of the Partnership which
any Limited Partner may have guaranteed, the General Partner shall have no duty
to keep such indebtedness outstanding.
C. Subject to its obligations and duties as General Partner
set forth in Section 8.1A hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agent. The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by the General Partner in good faith.
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Section 8.8 Other Matters Concerning the General Partner
A. The General Partner may rely and shall be protected in
acting, or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture,
or other paper or document believed by it in good faith to be genuine and to
have been signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers, architects,
engineers, environmental consultants and other consultants and advisers selected
by it, and any act taken or omitted to be taken in reliance upon the advice or
opinion of such Persons as to matters which such General Partner reasonably
believes to be within such Person's professional or expert competence shall be
conclusively presumed to have been done or omitted in good faith and in
accordance with such advice or opinion.
C. The General Partner shall have the right, in respect of any
of its powers or obligations hereunder, to act through any of its duly
authorized officers and duly appointed attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement
(other than Section 8.1E) or the Act, any action of the General Partner on
behalf of the Partnership or any decision of the General Partner to refrain from
acting on behalf of the Partnership, undertaken in the good faith belief that
such action or omission is necessary or advisable in order (i) to protect the
ability of Metropolis to continue to qualify as a REIT; or (ii) to avoid
Metropolis incurring any taxes under Section 857 or Section 4981 of the Code, is
expressly authorized under this Agreement and is deemed approved by Metropolis
and the Limited Partner.
Section 8.9 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed
and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General Partner
may determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership asset for which legal title is
held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
that the General Partner shall use its best efforts to cause beneficial and
record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be
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recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.
Section 8.10 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement,
any Person dealing with the Partnership shall be entitled to assume that the
General Partner has full power and authority, without consent or approval of any
other Partner or Person, to encumber, sell or otherwise use in any manner any
and all assets of the Partnership and to enter into any contracts on behalf of
the Partnership, and take any and all actions on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Metropolis and the Limited Partner hereby waive any and all
defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming thereunder
that (i) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect; (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership; and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
ARTICLE 9
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 9.1 Limitation of Liability
Metropolis and the Limited Partner shall have no liability
under this Agreement except as expressly provided in this Agreement, including
Section 11.5 hereof, or under the Act.
Section 9.2 Management of Business
None of Metropolis, the Limited Partner or any Assignee
thereof (other than the General Partner, any of its Affiliates or any officer,
director, employee, agent or trustee of the General Partner, the Partnership or
any of their Affiliates, in their capacity as such) shall take part in the
operation, management or control (within the meaning of the Act) of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for or otherwise bind the Partnership. The
transaction of any such business by the General Partner,
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any of its Affiliates or any officer, director, employee, partner, agent or
trustee of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such, shall not affect, impair or eliminate the limitations on
the liability of Metropolis, the Limited Partner or any Assignee thereof under
this Agreement.
Section 9.3 Outside Activities of Limited Partners
Subject to any agreements entered into pursuant to Section 8.7
hereof and any other agreements entered into by Metropolis, the Limited Partner
or Affiliate thereof with the Partnership or any of its Subsidiaries, Metropolis
and the Limited Partner and any officer, director, partner, employee, agent,
trustee, Affiliate or shareholder thereof shall be entitled to and may have
business interests and engage in business activities in addition to those
relating to the Partnership, including business interests and activities that
are in direct competition with the Partnership or that are enhanced by the
activities of the Partnership. Neither the Partnership nor any Partners shall
have any rights by virtue of this Agreement in any business ventures of
Metropolis, the Limited Partner or any Assignee thereof. None of Metropolis, the
Limited Partner nor any other Person shall have any rights by virtue of this
Agreement or the Partnership relationship established hereby in any business
ventures of any other Person and such Person shall have no obligation pursuant
to this Agreement to offer any interest in any such business ventures to the
Partnership, Metropolis, the Limited Partner or any such other Person, even if
such opportunity is of a character which, if presented to the Partnership,
Metropolis, the Limited Partner or such other Person, could be taken by such
Person.
Section 9.4 Return of Capital
Neither Metropolis nor the Limited Partner shall be entitled
to the withdrawal or return of its Capital Contribution, except to the extent of
distributions made pursuant to this Agreement or upon termination of the
Partnership as provided herein. Except to the extent provided by Exhibit A, or
as otherwise expressly provided in this Agreement, no Partner or Assignee shall
have priority over any other Partner or Assignee, either as to the return of
Capital Contributions or as to profits, losses or distributions.
Section 9.5 Rights of Limited Partners Relating to the
Partnership
A. In addition to the other rights provided by this Agreement
or by the Act, and except as limited by Section 9.5B hereof, each of Metropolis,
the Limited Partner and JMB/NYC LP shall receive from the Partnership the
following:
(1) copies of all annual and quarterly reports
of the Partnership;
(2) a copy of the Partnership's federal, state
and local income tax returns for each
Partnership Year; and
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(3) a copy of this Agreement and the Certificate
and all amendments and/or restatements
thereto, together with executed copies of
all powers of attorney pursuant to which
this Agreement, the Certificate and all
amendments and/or restatements thereto have
been executed.
B. In addition, each Limited Partner shall have the right, for
a purpose reasonably related to such Limited Partner's interest as a limited
partner in the Partnership, upon written demand with a statement of the purpose
of such demand:
(1) to obtain a current list of the name and
last known business, residence or mailing
address of each Partner; and
(2) to obtain true and full information
regarding the amount of cash and a
description and statement of any other
property or services contributed by each
Partner and which each Partner has agreed to
contribute in the future, and the date on
which each became a Partner.
C. Notwithstanding any other provision of this Section 9.5,
the General Partner may keep confidential from Metropolis and the Limited
Partner, for such period of time as the General Partner determines in its sole
and absolute discretion to be reasonable, any information (other than
information partners of Metropolis and the Limited Partner require in order to
comply with law, including making proper tax filings) that (i) the General
Partner reasonably believes to be in the nature of trade secrets or other
information, the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or its business; or (ii) the Partnership is required by law or by agreements
with an unaffiliated third party to keep confidential.
ARTICLE 10
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 10.1 Records and Accounting
The General Partner shall keep or cause to be kept at the
principal office of the Partnership those records and documents required to be
maintained by the Act and other books and records deemed by the General Partner
to be appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to comply with applicable REIT
Requirements and to provide to Metropolis and the Limited Partner any
information, lists and copies of documents required to be provided pursuant to
Sections 9.5A and 10.3 hereof. Any records maintained by or on behalf of the
Partnership in the regular course of its business may be kept on, or be in the
form of, punch cards, magnetic tape, photographs, micrographics or any
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other information storage device, provided that the records so maintained are
convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial and tax
reporting purposes, on an accrual basis in accordance with generally accepted
accounting principles, or such other basis as the General Partner determines to
be necessary or appropriate.
Section 10.2 Fiscal Year
The fiscal year of the Partnership shall be defined as a
calendar year.
Section 10.3 Reports
A. As soon as practicable, but in no event later than ninety
(90) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each of Metropolis, the Limited Partner and JMB/NYC LP an
annual report containing financial statements of the Partnership as of the close
of the Partnership Year, or of Metropolis if such statements are prepared solely
on a consolidated basis with Metropolis, for such Partnership Year, presented in
accordance with GAAP, such statements to be audited by Deloitte & Touche LLP or
another nationally recognized firm of independent public accountants selected by
Metropolis and, until the Approval Right Termination Date, reasonably acceptable
to JMB/NYC LP; provided that the failure of JMB/NYC LP to approve a public
accountant shall not be deemed to be unreasonable if such accountant fails to
confirm in writing to the Partnership and JMB/NYC LP that it will follow the
allocations of Partnership non-recourse liabilities as provided herein.
B. As soon as practicable, but in no event later than
forty-five (45) days after the close of each calendar quarter (except the last
calendar quarter of each calendar year), the General Partner shall cause to be
mailed to each of Metropolis, the Limited Partner and JMB/NYC LP a report
containing unaudited financial statements in the form regularly prepared by the
Partnership as of the last day of the calendar quarter of the Partnership, or of
Metropolis, if such statements are prepared solely on a consolidated basis with
Metropolis, and such other information as may be required by applicable law or
regulation, or as the General Partner determines to be appropriate.
C. Upon receipt by the Partnership of a confidentiality
agreement in form annexed as Exhibit D hereto from JMB/NYC LP, as soon as
practicable, but in no event later than thirty (30) days prior to the beginning
of each calendar year, the General Partner shall cause to be delivered to each
of Metropolis, the Limited Partner and JMB/NYC LP an operating budget for the
Property, in the form regularly prepared by the Partnership.
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ARTICLE 11
TAX MATTERS
Section 11.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and
timely filing by the Partnership's accountants of all returns of Partnership
income, gains, deductions, losses and other items required of the Partnership
for federal and state income tax purposes and shall use all reasonable efforts
to furnish, within sixty (60) days of the close of each taxable year, the tax
information reasonably required by Metropolis and the Limited Partner for
federal and state income tax reporting purposes. JMB/NYC LP, as a partner in the
Limited Partner shall be entitled to confer with such accountants concerning all
tax matters.
Section 11.2 Tax Elections
Except as otherwise provided herein, the General Partner
shall, in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code. The General Partner shall elect the
"remedial method" of making Section 704(c) allocations pursuant to Regulations
Section 1.704-3 with respect to property contributed to Partnership by the
Limited Partner and shall not make the election under Section 754 of the Code
prior to January 1, 1997, unless otherwise requested by Metropolis or the
Limited Partner and in the event of any such request, the General Partner shall
comply with the request of Metropolis or the Limited Partner as to the making of
Section 704(c) allocations and the making (or revocation) of a Section 754
election. The General Partner shall have the right to seek to revoke any tax
election it makes (other than (i) the election to use the remedial method of
making the Section 704(c) allocations described in this Section 11.2 or another
method of making Section 704(c) allocations requested by the Limited Partner and
(ii) the election under Section 754 of the Code), upon the General Partner's
determination, in its sole and absolute discretion, that such revocation is in
the best interests of the Partners.
Section 11.3 Tax Matters Partner
A. The General Partner shall be the "tax matters partner" of
the Partnership (within the meaning of Section 6231(a)(7) of the Code) and shall
exercise such position on a reasonable basis and in accordance with Sections
8.1D and 8.1E. Pursuant to Section 6230(e) of the Code, upon receipt of notice
from the Internal Revenue Service of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the Internal Revenue Service with the name, address, taxpayer
identification number, and profit interest of each of Metropolis and the Limited
Partner and the Assignees thereof; provided, that such information is provided
to the Partnership by Metropolis, the Limited Partner and the Assignees.
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B. The taking of any action and the incurring of any expense
by the tax matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of the
tax matters partner and the provisions relating to indemnification of the
General Partner set forth in Section 8.6 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
C. The tax matters partner shall receive no compensation for
its services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm to assist
the tax matters partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is reasonable.
Section 11.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any,
incurred by it in organizing the Partnership ratably over a sixty (60) month
period as provided in Section 709 of the Code.
Section 11.5 Withholding
Each of Metropolis and the Limited Partner hereby authorizes
the Partnership to withhold from such Partner any amount of federal, state,
local, or foreign taxes that the General Partner determines that the Partnership
is required to withhold or pay with respect to any amount distributable or
allocable to such Partner pursuant to this Agreement, including, without
limitation, any taxes required to be withheld or paid by the Partnership
pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any amounts withheld
shall be treated as having been distributed to such Partner.
ARTICLE 12
TRANSFERS AND WITHDRAWALS
Section 12.1 Transfer
A. The term "Transfer," when used in this Article 12 with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which the General Partner purports to assign all or any part of its General
Partner Interest to another Person or by which Metropolis or the Limited Partner
purports to assign all or any part of its Limited Partner Interest to another
Person.
B. No Partnership Interest shall be Transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article 12. Any Transfer or purported
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Transfer of a Partnership Interest not made in accordance with this Article 12
shall be null and void.
C. Subject to any provisions of this Agreement relating to
Adverse Transactions, each of Metropolis and the General Partner shall have the
right to Transfer its Partnership Interest in its sole discretion.
Section 12.2 General Partner's Purchase Right; Limited
Partner's Put Rights
A. The General Partner shall have the continuing right (the
"Purchase Right"), exercisable as set forth in the next sentence to acquire or
cause its designee to acquire the Partnership Interest of the Limited Partner,
free and clear of any liens, restrictions and encumbrances (other than those set
forth in this Agreement), for an amount (the "Purchase Price Amount") equal to
the greater of (x) the amount that would be distributed to the Limited Partner
pursuant to Section 14.2 of this Agreement (after repaying all debt encumbering
the Property) if the Property were sold (and all proceeds therefrom were
distributed to the Partners in accordance with such Section) for a cash amount
equal to the quotient of (A) the product of two times the Property's Net
Operating Income for the period of January 1, 2000 through June 30, 2000 and (B)
0.12 (the "Formula Price"), and (y) $1,414,141.00. The General Partner may
exercise the Purchase Right in its discretion at any time following the earliest
of (i) the Default Date (as hereinafter defined), (ii) the date on which JMB/NYC
LP no longer holds any partnership interest in the Limited Partner and (iii)
March 1, 2001; provided, that an exercise of the Purchase Right pursuant to this
clause (iii) may only be made by delivery of a Purchase Right Notice (as
hereinafter defined) by the General Partner to the Limited Partner during March
or April of calendar year 2001 and in any March or April thereafter. The
Purchase Right shall be exercised upon fifteen (15) business days' prior written
notice (the "Purchase Right Notice") from the General Partner to the Limited
Partner (which shall not be delivered before fifteen (15) business days prior to
the date giving rise to such exercise) and shall be consummated, without any
action on the part of the Limited Partner, on the fifteenth business day
following delivery of the Purchase Right Notice. Payment of the Purchase Price
Amount shall be a joint and several obligation of the General Partner and
Metropolis. If the exercise of the Purchase Right is prior to January 1, 2001
pursuant to clause (i) or (ii) above, then the Formula Price shall be calculated
based on the Property's Net Operating Income for the first full calendar year
immediately preceding the date of exercise. The Limited Partner hereby
constitutes and appoints the General Partner and its authorized officers and
attorneys-in-fact, in each case with full power of substitution, as its true and
lawful agent and attorney-in-fact, with full power and authority in its name,
place and stead to execute, swear to, acknowledge, deliver, file and record all
certificates, documents, and other instruments in order to effectuate the
transfer pursuant to the Purchase Right and the Put Right (as hereinafter
defined).
B. JMB/NYC LP has (i) caused the JMB/NYC Indemnitors to
execute and deliver to the General Partner the JMB/NYC Indemnity and (ii)
delivered to the General Partner a marketable security in form and substance
acceptable to the General Partner which is guaranteed
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by the full faith and credit of the United States of America and which will have
a market value as of March 1, 2001 of no less than $5,714,285 (the "JMB/NYC
Collateral"). The General Partner shall hold the JMB/NYC Collateral in
accordance with the terms hereof and JMB/NYC LP hereby reaffirms its grant,
pursuant to the Original Agreement to the General Partner of a first priority
perfected security interest therein and agrees to take such actions as the
General Partner may reasonably request to ratify, confirm and continue such
security interest. JMB/NYC LP shall be charged with all income accrued under the
JMB/NYC Collateral prior to its liquidation and application by the General
Partner in accordance herewith. The General Partner may, at its election,
liquidate the JMB/NYC Collateral and hold or distribute the proceeds thereof
free and clear of any interest of JMB/NYC LP and demand payment under the
JMB/NYC Indemnity if (1) JMB/NYC LP or any of its officers, directors, partners,
stockholders, agents or affiliates (collectively, the "Controlled Entities")
intentionally interferes with, impedes or prevents (including, without
limitation, the filing by JMB/NYC LP of a voluntary petition under the
Bankruptcy Code or any other federal or state bankruptcy or insolvency statute
or any Controlled Entity joining an involuntary petition against JMB/NYC LP
under the Bankruptcy Code or such other statute) (x) the exercise by the General
Partner of the Purchase Right, (y) any disposition, mortgage, pledge,
encumbrance, hypothecation or exchange (whether by or through any intervening
entity or entities) of the Property or of Metropolis' Partnership Interest by
Metropolis or the merger or other combination of the Partnership with or into
another entity, in accordance with the terms of this Agreement; provided that
such disposition, mortgage, pledge, encumbrance, hypothecation, exchange, merger
or other combination does not constitute an Adverse Transaction, or (z) a
Metropolis Sale; provided that such Metropolis Sale does not constitute an
Adverse Transaction (i.e., that in connection with such Metropolis Sale, JMB/NYC
LP receives its proportionate share of the Limited Partner Sale Distribution
Amount) and (2) such action (individually a "Prohibited Action" and,
collectively, the "Prohibited Actions") is not revoked or rescinded within sixty
(60) days after notice by the indemnitee thereunder to the JMB/NYC Indemnitors
so as to permit the consummation of the transaction described in clause (x), (y)
or (z) above unimpeded by any action by JMB/NYC LP or any of the Controlled
Entities. If JMB/NYC LP shall take a Prohibited Action and the Prohibited Action
is not revoked or rescinded by the sixtieth day after notice by the indemnitee
thereunder to the JMB/NYC Indemnitors (the earlier of March 1, 2001 and the
expiration of such 60 day period, the "Default Date") so as to permit the
consummation of the transaction described in clause (x), (y) or (z) above
unimpeded by any action by JMB/NYC LP or any of the Controlled Entities, the
General Partner shall have the continuing right at any time after the Default
Date to exercise the Purchase Right pursuant to Section 12.2A. The General
Partner shall deliver the JMB/NYC Collateral to JMB/NYC LP upon the expiration
of the preference period under Section 547 of the Bankruptcy Code following (A)
the transfer of the interest of the Limited Partner pursuant to the Purchase
Right or the Put Right, (B) a sale or other transfer of the Property by the
Partnership to the extent permitted under the terms of this Agreement, in each
case without JMB/NYC LP or any other Controlled Entity having taken any
Prohibited Action, or (C) receipt by the General Partner of all amounts payable
under the JMB/NYC Indemnity following the occurrence of a Prohibited Action. The
General Partner's right to apply the proceeds of the JMB/NYC Collateral as
provided herein shall be
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reduced on a dollar for dollar basis to the extent the General Partner receives
payments from the JMB/NYC Indemnitors under the JMB/NYC Indemnity in excess of
$8,571,429.
C. The Limited Partner shall have the continuing right (the
"Put Right") exercisable at any time after January 1, 2001 during the month of
September in 2001 and in the month of September in any calendar year thereafter
to require the General Partner and Metropolis, jointly and severally, to
purchase the Partnership Interest of the Limited Partner, free and clear of all
liens, restrictions, and encumbrances (other than those set forth in the
Agreement) for a cash amount (the "Put Price") equal to the greater of (x) the
Formula Price and (y) $1,010,101.00. The Put Right shall be exercised by the
Limited Partner upon fifteen (15) days prior written notice (the "Put Right
Notice") to the General Partner and shall be consummated, without any action on
the part of the Limited Partner, within fifteen (15) days following the delivery
of the Put Right Notice.
D. In connection with the exercise of either the Purchase
Right or the Put Right, the Limited Partner shall pay all transfer taxes, gain
taxes and other similar costs related to the exercise of such rights, including,
in the case of the Put Right, any additional transfer taxes and transfer gains
taxes which would be retroactively assessed with respect to the transfer of the
Property to the Partnership pursuant to the Plan by reason of the exercise of
the Put Right.
E. Notwithstanding anything to the contrary in this Agreement
or otherwise, payments or distributions made by the Partnership pursuant to this
Agreement (including in connection with the transactions contemplated in clause
(G) of the definition of "Adverse Transaction" and clause (i) of the definition
of "Capital Transaction"), or by the General Partner or Metropolis pursuant to
Sections 12.2A and 12.2C, shall be made (i) in the case of payments or
distributions to the Limited Partner, in the ratio of 99.001% to JMB/NYC LP,
pursuant to wire transfer instructions of JMB/NYC LP, and .999% to 237/1290
Upper Tier GP Corp., pursuant to wire transfer instructions of Metropolis and
(ii) in the case of payments or distributions to Metropolis or the General
Partner, 100% pursuant to wire transfer instructions of Metropolis, in each case
without reduction for any fees, expenses or costs.
Section 12.3 Transfer of the General Partner Interest
A. The General Partner may Transfer all or any part of its
General Partner Interest or withdraw as General Partner, in its sole discretion
and without the consent of Metropolis or the Limited Partner; provided that the
General Partner may withdraw as general partner only in connection with a
Transfer of its General Partner Interest and immediately following the admission
of a successor General Partner, as general partner, in accordance with Article
13 hereof.
B. If the General Partner withdraws as general partner in
accordance with clause 12.3A above, its General Partner Interest shall
immediately be converted into a Limited Partner Interest and the successor
General Partner shall be entitled to receive distributions from
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the Partnership and the share of Net Income, Net Losses, any other items, gain,
loss, deduction and credit that are attributable to the General Partner
Interest.
Section 12.4 Limited Partner's Rights to Transfer
A. Metropolis may Transfer all or any part of its Limited
Partner Interest in its sole discretion and without the consent of any other
Partner.
B. The Limited Partner may Transfer all or any part of its
Limited Partner Interest to any person or entity without the prior written
consent of the General Partner. The Limited Partner shall not pledge, encumber
or place a lien on its Limited Partner Interest without the prior written
consent of the General Partner. No successor to any of the Limited Partner's
Limited Partner Interest shall become a substituted limited partner, as that
term is used in the Act, without the prior written consent of the General
Partner. Any consent from the General Partner required under this Section 12.4
may be granted or withheld by the General Partner in its sole discretion.
Section 12.5 Substituted Limited Partners
A. The General Partner shall have the right to consent to the
admission of a transferee who receives Limited Partner Interests pursuant to
Section 12.5, which consent may be given or withheld by the General Partner in
its sole and absolute discretion. The General Partner's failure or refusal to
permit such transferee to become a Substituted Limited Partner shall not give
rise to any cause of action against the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 12 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a limited partner
under this Agreement.
C. No Permitted Transferee will be admitted as a Substituted
Limited Partner unless (i) such transferee has furnished to the General Partner
(a) evidence of acceptance in form satisfactory to the General Partner of all of
the terms and conditions of this Agreement, including, without limitation, the
power of attorney granted in Section 3.4 and 12.2(A) hereof and (b) such other
documents or instruments as may be required in the reasonable discretion of the
General Partner in order to effect such Person's admission as a Substituted
Limited Partner and (ii) the General Partner has consented to such admission in
accordance with Section 12.6A. Upon the admission of a Substituted Limited
Partner, the General Partner shall amend Exhibit C to reflect the name, address
and Limited Partner Interest of such Substituted Limited Partner and to
eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
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Section 12.6 General Provisions
A. No Limited Partner may withdraw from the Partnership other
than as a result of a permitted Transfer of all of such Limited Partner's
Limited Partner Interests in accordance with this Article 12.
B. Any Limited Partner who shall Transfer all of its Limited
Partner Interests in a Transfer permitted pursuant to this Article 12 shall
cease to be a Limited Partner upon the admission of all Assignees of such
Limited Partner Interests as Substituted Limited Partners.
C. Without the consent of the General Partner, transfers
pursuant to this Article 12 may only be made as of the first day of a fiscal
quarter of the Partnership.
D. If any Partnership Interest is transferred or assigned
during the Partnership's fiscal year in compliance with the provisions of this
Article 12 on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items attributable to such
interest for such Partnership Year shall be divided and allocated between the
transferor Partner and the transferee Partner by taking into account their
varying interests during the Partnership Year in accordance with Section 706(d)
of the Code, using the interim closing of the books method. Solely for purposes
of making such allocations, each of such items for the calendar month in which
the Transfer or assignment occurs shall be allocated to the transferee Partner,
and none of such items for the calendar month in which an exchange occurs shall
be allocated to the exchanging Partner, provided, however, that the General
Partner may adopt such other conventions relating to allocations in connection
with transfers, assignments, or exchanges as it determines are necessary or
appropriate. All distributions of Available Cash attributable to such Limited
Partner Interest with respect to which the Partnership Record Date is before the
date of such transfer, assignment, or exchange shall be made to the transferor
Partner or the exchanging Partner, as the case may be, and in the case of a
Transfer or assignment other than an exchange, all distributions of Available
Cash thereafter attributable to such Limited Partner Interest shall be made to
the transferee Partner.
ARTICLE 13
ADMISSION OF PARTNERS
Section 13.1 Admission of Successor General Partner
A successor to all of the General Partner Interest pursuant to
Section 12 hereof who is proposed to be admitted as a successor General Partner
shall be admitted to the Partnership as the General Partner, effective
immediately prior to such transfer. Any such transferee shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may
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be required to effect the admission. In the case of such admission on any day
other than the first day of a Partnership Year, all items attributable to the
General Partner Interest for such Partnership Year shall be allocated between
the transferring General Partner and such successor as provided in Section 12.6
hereof.
Section 13.2 Admission of Additional Limited Partners
A. A Person who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 3.4 and, if applicable,
12.2(A) hereof and (ii) such other documents or instruments as may be required
in the discretion of the General Partner in order to effect such Person's
admission as an Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section
13.2, no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole and absolute discretion. The admission of any Person as
an Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items allocable among
Partners and Assignees for such Partnership Year shall be allocated among such
Additional Limited Partner and all other Partners and Assignees by taking into
account their varying interests during the Partnership Year in accordance with
Section 706(d) of the Code, using the interim closing of the books method.
Solely for purposes of making such allocations, each of such items for the
calendar month in which an admission of any Additional Limited Partner occurs
shall be allocated among all of the Partners and Assignees, including such
Additional Limited Partner. All distributions of Available Cash with respect to
which the Partnership Record Date is before the date of such admission shall be
made solely to Partners and Assignees, other than the Additional Limited
Partner, and all distributions of Available Cash thereafter shall be made to all
of the Partners and Assignees, including such Additional Limited Partner.
Section 13.3 Amendment of Agreement and Certificate of Limited
Partnership
For the admission to the Partnership of any Partner, the
General Partner shall take all steps necessary and appropriate under the Act to
amend the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including, if applicable, amendments
of Exhibits A and B) and, if required by law, shall prepare and file an
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amendment to the Certificate and may for this purpose exercise the power of
attorney granted pursuant to Section 3.4 hereof.
ARTICLE 14
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 14.1 Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
In the event of the withdrawal of the General Partner, any successor General
Partner shall continue the business of the Partnership. Subject to Section 8.1E
hereof, the Partnership shall dissolve, and its affairs shall be wound up, only
upon the first to occur of any of the following ("Liquidating Events"):
A. the expiration of its term as provided in Section 3.5
hereof;
B. an event of withdrawal of the General Partner, as defined
in the Act unless, within ninety (90) days after such event of withdrawal all of
the remaining Partners agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
successor General Partner, provided that a withdrawal of the General Partner in
connection with a Transfer of its General Partner Interest shall be governed by
the provisions of Section 12.3A hereof;
C. until the Approval Right Termination Date, an election to
dissolve the Partnership made by the General Partner, with the consent of the
Limited Partner (which may be given or withheld in its sole and absolute
discretion);
D. from and the after Approval Right Termination Date, an
election to dissolve the Partnership made by the General Partner, in its sole
and absolute discretion;
E. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
F. the sale of all or substantially all of the assets and
properties of the Partnership.
Section 14.2 Winding Up
A. Upon the occurrence of a Liquidating Event, the Partnership
shall continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its creditors and
Partners. No Partner shall take any action that is
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inconsistent with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner, or, if there is no
remaining General Partner, any Person elected by Metropolis (the General Partner
or such other Person being referred to herein as the "Liquidator"), shall be
responsible for overseeing the winding up and dissolution of the Partnership and
shall take full account of the Partnership's liabilities and property and the
Partnership property shall be liquidated as promptly as is consistent with
obtaining the fair value thereof, and the proceeds therefrom (which may, to the
extent determined by the General Partner, include shares of beneficial interest
or other securities of the General Partner) shall be applied and distributed in
the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors
other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General
Partner and Metropolis;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the Limited
Partner; and
(4) The balance, if any, to Metropolis, the General
Partner and Limited Partner to the extent of and in
accordance with the positive balances in their
Capital Accounts after giving effect to all
contributions, distributions, and allocations for all
periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 14.
B. Notwithstanding the provisions of Section 14.2A hereof
which require liquidation of the assets of the Partnership, but subject to the
order of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any asset except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 14.2A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interests of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
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C. In the discretion of the Liquidator, a pro rata portion of
the distributions that would otherwise be made to the General Partner,
Metropolis and Limited Partner pursuant to this Article 14 may be:
(1) distributed to a trust established for the
benefit of the General Partner, Metropolis
and Limited Partner for the purposes of
liquidating Partnership assets, collecting
amounts owed to the Partnership, and paying
any contingent or unforeseen liabilities or
obligations of the Partnership or the
General Partner arising out of or in
connection with the Partnership. The assets
of any such trust shall be distributed to
the General Partner, Metropolis and Limited
Partner from time to time, in the reasonable
discretion of the Liquidator, in the same
proportions as the amount distributed to
such trust by the Partnership would
otherwise have been distributed to the
General Partner, Metropolis and the Limited
Partner pursuant to this Agreement; or
(2) withheld or escrowed to provide a reasonable
reserve for Partnership liabilities
(contingent or otherwise) and to reflect the
unrealized portion of any installment
obligations owed to the Partnership,
provided that such withheld or escrowed
amounts shall be distributed to the General
Partner, Metropolis and Limited Partner in
the manner and order of priority set forth
in Section 14.2A as soon as practicable.
Section 14.3 No Obligation to Contribute Deficit
If any Partner has a deficit balance in his Capital Account
(after giving effect to all contributions, distributions and allocations for all
taxable years, including the year during which such liquidation occurs), such
Partner shall have no obligation to make any contribution to the capital of the
Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever.
Section 14.4 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise provided in this
Agreement, no Partner shall have priority over any other Partner as to the
return of its Capital Contributions, distributions, or allocations.
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Section 14.5 Notice of Dissolution
If a Liquidating Event occurs or an event occurs that would,
but for the provisions of an election or objection by one or more Partners
pursuant to Section 14.1, result in a dissolution of the Partnership, the
General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners.
Section 14.6 Termination of Partnership and Cancellation of
Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership's
assets, as provided in Section 14.2 hereof, the Partnership shall be terminated,
a certificate of cancellation shall be filed, and all qualifications of the
Partnership as a foreign limited partnership in jurisdictions other than the
state of Delaware shall be canceled and such other actions as may be necessary
to terminate the Partnership shall be taken.
Section 14.7 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up
of the business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 14.2 hereof in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
Section 14.8 Waiver of Partition
Each Partner hereby waives any right to partition of the
Partnership property.
ARTICLE 15
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 15.1 Amendments
A. The General Partner shall have the power, without the
consent of Metropolis or the Limited Partner, to amend this Agreement as may be
required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General
Partner or surrender any right or power
granted to the General Partner or any
Affiliate of the General Partner for the
benefit of Metropolis or the Limited
Partner;
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(2) to reflect the admission, substitution,
termination, or withdrawal of Partners in
accordance with this Agreement;
(3) to set forth the designations, rights,
powers, duties, and preferences of the
holders of any additional Partnership
Interests issued pursuant to Section 5.3
hereof;
(4) to reflect a change that (i) is of an
inconsequential nature or to cure any
ambiguity, correct or supplement any
provision in this Agreement not inconsistent
with law or with other provisions, or make
other changes with respect to matters
arising under this Agreement that will not
be inconsistent with law or with the
provisions of this Agreement, and (ii) does
not adversely affect Metropolis or the
Limited Partner in any material respect; and
(5) to satisfy any requirements, conditions, or
guidelines contained in any order,
directive, opinion, ruling or regulation of
a federal or state agency or contained in
federal or state law.
The General Partner shall provide notice to Metropolis, JMB/NYC LP and the
Limited Partner when any action under this Section 15.1A is taken.
B. Notwithstanding Section 15.1A hereof, this Agreement shall
not be amended without the Consent of each Partner adversely affected (which
consent may be given or withheld in its sole and absolute discretion) if such
amendment would (i) convert a Limited Partner Interest into a general partner
interest; (ii) modify the limited liability of Metropolis or the Limited Partner
in a manner adverse to such Partner; (iii) alter rights of the Partner to
receive distributions pursuant to Article 6 or Article 14, or the allocations
specified in Article 7 (except as permitted pursuant to Article 4 and Section
15.1A(3) hereof); (iv) cause the termination of the Partnership prior to the
time set forth in Section 3.5 or 14.1; or (v) amend this Section 15.1B. Further,
no amendment may alter the restrictions on the General Partner's authority set
forth in Section 14.1C without the Consent specified in that section.
C. Notwithstanding Section 15.1A or Section 15.1B hereof, the
General Partner shall not amend at any time prior to the Approval Right
Termination Date, Article II, Article XI, or Sections 4.1, 8.1D, 8.1E, 9.5A,
10.3, 12.2, 14.1, 14.3, or 15.1C, without the consent of the Limited Partner
which consent may be given or withheld in its sole and absolute discretion.
Section 15.2 Meetings of the Partners
A. Meetings of the Partners may be called by the General
Partner. The request shall state the nature of the business to be transacted.
Notice of any such meeting shall be given to all Partners not less than seven
(7) days nor more than thirty (30) days prior to the date of such
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meeting. Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of Metropolis or the Limited Partner is permitted or required
under this Agreement, such vote or Consent may be given at a meeting of the
Partners. Except as otherwise expressly provided in this Agreement, the Consent
of holders of a majority of the Partnership Interests held by Partners shall
control.
B. Any action required or permitted to be taken at a meeting
of the Partners may be taken without a meeting if a written consent setting
forth the action so taken is signed by a majority of the Partnership Interests
of the Partners (or such other percentage as is expressly required by this
Agreement). Such consent may be in one instrument or in several instruments, and
shall have the same force and effect as a vote of a majority of the Partnership
Interests of the Partners (or such other percentage as is expressly required by
this Agreement). Such consent shall be filed with the General Partner. An action
so taken shall be deemed to have been taken at a meeting held on the effective
date so certified.
C. Each of Metropolis and the Limited Partner may authorize
any Person or Persons to act for him by proxy on all matters in which Metropolis
or the Limited Partner is entitled to participate, including waiving notice of
any meeting, or voting or participating at a meeting. Every proxy must be signed
by Metropolis or the Limited Partner, as applicable, or his attorney-in-fact. No
proxy shall be valid after the expiration of eleven (11) months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of Metropolis or the Limited Partner, as applicable, such
revocation to be effective upon the Partnership's receipt of written notice of
such revocation from the Partner executing such proxy.
D. Each meeting of the Partners shall be conducted by the
General Partner or such other Person as the General Partner may appoint pursuant
to such rules for the conduct of the meeting as the General Partner or such
other Person deems appropriate. Meetings of Partners may be conducted in the
same manner as meetings of the stockholders of the General Partner and may be
held at the same time, and as part of, meetings of the stockholders of the
General Partner.
ARTICLE 16
GENERAL PROVISIONS
Section 16.1 Addresses and Notice
Any notice, demand, request or report required or permitted to
be given or made to a Partner or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by first class United States mail or by other means of written communication to
the Partner or Assignee at the address set forth in Exhibit C or such other
address of which the Partner shall notify the General Partner in writing.
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Section 16.2 Titles and Captions
All article or section titles or captions in this Agreement
are for convenience only. They shall not be deemed part of this Agreement and in
no way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 16.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.
Section 16.4 Further Action
The parties shall execute and deliver all documents, provide
all information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 16.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit
of the parties hereto (and with respect to Section 8.1E, 9.5A, Section 10.3 and
Section 12.2E, binding upon and to the benefit of JMB/NYC LP) and their heirs,
executors, administrators, successors, legal representatives and permitted
assigns.
Section 16.6 Creditors
Other than as expressly set forth herein with respect to the
Indemnitees, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
Section 16.7 Waiver
No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
Section 16.8 Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all of the parties hereto,
notwithstanding that all such parties
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are not signatories to the original or the same counterpart. Each party shall
become bound by this Agreement immediately upon affixing its signature hereto.
Section 16.9 Applicable Law
This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of laws thereof.
Section 16.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.
Section 16.11 Insolvency Proceedings
No bankruptcy or insolvency filing or proceeding in respect of
the Partnership shall be made or commenced without the consent of the General
Partner, and the Partnership shall not acquiesce, petition or otherwise invoke
or cause any other person and/or entity to invoke the process of the United
States of America, any state or other political subdivision thereof or any other
jurisdiction, any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government for the purpose of
commencing or sustaining a case against the Partnership under a federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Partnership or all or any part of its property or assets or ordering the
winding-up or liquidation of the affairs of the Partnership, if such action has
not been consented to by the General Partner.
Section 16.12 Entire Agreement
This Agreement contains the entire understanding and agreement
among the Partners with respect to the subject matter hereof and supersedes any
other prior written or oral understandings or agreements among them with respect
thereto.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
METROPOLIS REALTY TRUST, INC.
By: /s/ Andrew S. Cohen
--------------------------------------------
Name: Andrew S. Cohen
Title: Vice President
237/1290 UPPER TIER ASSOCIATES, L.P.
By: 237/1290 Upper GP Corp., general partner
By: /s/ Andrew S. Cohen
-------------------------------------
Name: Andrew S. Cohen
Title: Vice President
1290 GP CORP.
By: /s/ Stuart C. Nathan
------------------------------------------
Name: Stuart C. Nathan
Title: President
Solely with respect to Section 12.2B hereof:
JMB/NYC OFFICE BUILDING ASSOCIATES,
L.P., an Illinois limited partnership
By: Carlyle Managers, Inc., its General Partner
By:________________________________________
Name:
Title:
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Exhibit A
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Allocations
1. Allocation of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided in this Exhibit A, Net
Income (or items thereof) (other than Net Income, or items thereof, arising in
connection with a Capital Transaction) of the Partnership for any fiscal year or
other applicable period shall be allocated to the Partners first in accordance
with any prior allocation of Net Losses, other than Nonrecourse Deductions and
Partner Nonrecourse Deductions, pro rata, until each Partner has been allocated
an amount of Net Income pursuant to this clause equal to the cumulative amount
of Net Losses, other than Nonrecourse Deductions and Partner Nonrecourse
Deductions, that have been allocated to such Partner, and thereafter to the
Partners in accordance with the manner in which Available Cash has been (or
would be, if the Partnership had an amount of Available Cash equal to such Net
Income) distributed to the Partners, other than distributions representing a
return of Capital Contributions.
(b) Net Loss. Except as otherwise provided in this Exhibit A, Net Loss
(or items thereof) (other than Net Loss, or items thereof, arising in connection
with a Capital Transaction) of the Partnership for each fiscal year or other
applicable period shall be allocated to the Partners first in accordance with
the positive Capital Account balances of the Partners, pro rata, until such
Capital Accounts have been reduced to zero, and thereafter 1% to the General
Partner, 94.05% to Metropolis and 4.95% to the Limited Partner. Notwithstanding
the preceding sentence, to the extent any Net Loss (or items thereof) allocated
to a Partner under this subparagraph (b) would cause such Partner (hereinafter,
a "Restricted Partner") to have an Adjusted Capital Account Deficit, or increase
the amount of an existing Adjusted Capital Account Deficit, as of the end of the
fiscal year or other applicable period to which such Net Loss relates, such Net
Loss shall not be allocated to such Restricted Partner and instead shall be
allocated to the other Partner(s) (hereinafter, the "Permitted Partner").
(c) Capital Transaction; Liquidation. Allocations of Net Income or Net
Loss (or items thereof) in connection with a Capital Transaction or Liquidation
of the Partnership shall first be made so that, to the extent possible, the
General Partner's Capital Account balance is $1, Metropolis' Capital Account
balance is $274,375,365 and the Limited Partner's Capital Account is equal to
$100,000, and the remainder of such Net Income or Net Loss (or items thereof)
shall be allocated to the Partners in a manner that results in the Capital
Account of each Partner being equal to the distribution to which each such
Partner is entitled pursuant to paragraph 4 of this Exhibit A. Notwithstanding
the preceding sentence, to the extent any Net Loss (or items thereof) would be
allocated to a Restricted Partner under this subparagraph (c), such Net Loss
shall not be allocated to such Restricted Partner and instead shall be allocated
to the Permitted Partner.
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(d) Rules of Construction.
(1) Capital Account Increases. For purposes of making allocations
pursuant to subparagraph 1(c) of this Exhibit A, a Partner's Capital Account
balance shall be deemed to be increased by such Partner's share of any
Partnership Minimum Gain and Partner Minimum Gain remaining at the close of the
fiscal period in respect of which such allocations are being made.
(2) Change in Partnership Interests. If any Partner's Partnership
Interest changes during a fiscal year for any reason, including without
limitation, the Transfer of any interest in the Partnership, the tax allocations
contained in this Exhibit A shall be applied as necessary to reflect the varying
interests of the Partners during such year.
2. Special Allocations. Notwithstanding any provisions of paragraph 1 of this
Exhibit A, the following special allocations shall be made.
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). Except as
otherwise provided in Section 1.704-2(f) of the Regulations, if there is a net
decrease in Partnership Minimum Gain for any Partnership fiscal year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain to the extent
required by Regulations Section 1.704-2(f). The items to be so allocated shall
be determined in accordance with Sections 1.704-2(f) and (i) of the Regulations.
This subparagraph 2(a) is intended to comply with the minimum gain chargeback
requirement in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this subparagraph 2(a) shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant hereto.
(b) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any fiscal year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of
the Regulations, shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
that Partner's share of the net decrease in the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt to the extent and in the manner
required by Section 1.704-2(i) of the Regulations. The items to be so allocated
shall be determined in accordance with Sections 1.704- 2(i)(4) and (j)(2)(ii) of
the Regulations. This subparagraph 2(b) is intended to comply with the minimum
gain chargeback requirement with respect to Partner Nonrecourse Debt contained
in Section 1.704-2 of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this subparagraph 2(b) shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.
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(c) Qualified Income Offset. If a Partner unexpectedly receives any
adjustments, allocations or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, and such Partner has an
Adjusted Capital Account Deficit, items of Partnership income (including gross
income) and gain shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate the Adjusted Capital Account Deficit as quickly
as possible as required by the Regulations. This subparagraph 2(c) is intended
to constitute a "qualified income offset" under Section 1.704-1(b)(2)(ii)(d) of
the Regulations and shall be interpreted consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year
or other applicable period shall be allocated to the Partners in accordance with
their respective Partnership Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for
any fiscal year or other applicable period with respect to a Partner Nonrecourse
Debt shall be specially allocated to the Partner that bears the economic risk of
loss for such Partner Nonrecourse Debt (as determined under Sections
1.704-2(b)(4) and 1.704-2(i)(1) of the Regulations).
(f) Intent of Allocations. The parties intend that the allocation
provisions of this Exhibit A shall result in final Capital Account balances of
the Partners that equal to the amounts distributable to the Partners in
accordance with paragraph 4(b) of this Exhibit A, so that when liquidating
distributions are made in accordance with such final Capital Account balances
under Section 14.2A(4) hereof, such distributions will be able to return to each
Partner the amounts distributable to the Partner in accordance with paragraph
4(b) of this Exhibit A. To the extent that such final Capital Account balances
do not so reflect the intent of this Exhibit A, income and loss of the
Partnership for the current year and future years, as computed for book
purposes, shall be allocated among the Partners so as to result in final Capital
Account balances reflecting the intent of this Exhibit A. This subparagraph
shall control notwithstanding any reallocation of income, loss, or items
thereof, as computed for book purposes, by the Internal Revenue Service or any
other taxing authority.
(g) Section 754 Adjustment. To the extent an adjustment to the adjusted
tax basis of any asset of the Partnership pursuant to Section 734(b) of the Code
or Section 743(b) of the Code is required, pursuant to Section
1.704-1(b)(2)(iv)(m) of the Regulations, to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis) and such gain or loss shall be
specially allocated among the Partners in a manner consistent with the manner in
which each of their respective Capital Accounts are required to be adjusted
pursuant to such section of the Regulations.
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3. Tax Allocations.
(a) Items of Income or Loss. Except as is otherwise provided in this
Exhibit A, an allocation of Partnership Net Income or Net Loss to a Partner
shall be treated as an allocation to such Partner of the same share of each item
of income, gain, loss, deduction and item of tax- exempt income or Section
705(a)(2)(B) expenditure (or item treated as such expenditure pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i)) ("Tax Items") that is taken into
account in computing Net Income or Net Loss.
(b) Section 1245/1250 Recapture. If any portion of gain from the sale
of Partnership assets is treated as gain which is ordinary income by virtue of
the application of Code Sections 1245 or 1250 ("Affected Gain"), then such
Affected Gain shall be allocated among the Partners in the same proportion that
the depreciation and amortization deductions giving rise to the Affected Gain
were allocated. This subparagraph 3(b) shall not alter the amount of Net Income
(or items thereof) allocated among the Partners, but merely the character of
such Net Income (or items thereof). For purposes hereof, in order to determine
the proportionate allocations of depreciation and amortization deductions for
each fiscal year or other applicable period, such deductions shall be deemed
allocated on the same basis as Net Income and Net Loss for such respective
period.
(c) Precontribution Gain. The Partnership shall use the remedial method
of allocation contained in Section 1.704-3(d) of the Regulations to take into
account any variation between the adjusted basis and the fair market value of
the Property ("Precontribution Gain"). By executing this Agreement, each Partner
hereby agrees to report income, gain, loss and deduction on such Partner's
federal income tax return in a manner that is consistent with the use of the
remedial method of allocation with respect to the Property. With respect to any
contributed property other than the Property, the Partnership shall use any
permissible method contained in the Regulations promulgated under Section 704(c)
of the Code selected by the General Partner, in its sole discretion, to take
into account any variation between the adjusted basis of such asset and the fair
market value of such asset as of the time of the contribution. Each Partner
hereby agrees to report income, gain, loss and deduction on such Partner's
federal income tax return in a manner consistent with the method used by the
Partnership.
(d) Allocations Respecting Section 704(c) and Revaluations. If any
asset has a Gross Asset Value which is different from the Partnership's adjusted
basis for such asset for federal income tax purposes because the Partnership has
revalued such asset pursuant to Regulations Section 1.704-1(b)(2)(iv)(f), the
allocations of Tax Items shall be made in accordance with the principles of
Section 704(c) of the Code and the Regulations and the methods of allocation
promulgated thereunder, provided, however, that with respect to the Property,
income, gain, loss and deduction with respect to such property shall be
allocated using the "remedial method" described in Regulations Section
1.704-3(b). The intent of this subparagraph 3(d) and subparagraph 3(c) above is
that the Limited Partner will bear, through reduced allocations of depreciation,
increased allocations of gain or other items, the tax detriments associated with
any
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Precontribution Gain. This subparagraph 3(d) and subparagraph 3(c) are to be
interpreted consistently with such intent.
(e) Excess Nonrecourse Liability Safe Harbor. Pursuant to Regulations
Section 1.752- 3(a)(3), for purposes of determining each Partner's proportionate
share of the "excess nonrecourse liabilities" of the Partnership (as defined in
Regulations Section 1.752-3(a)(3)), the Partners' respective interests in
Partnership profits shall be determined in accordance with each Partner's
Partnership Interest; provided, however, that each Partner who has contributed
an asset to the Partnership shall be allocated, to the extent possible, a share
of "excess nonrecourse liabilities" of the Partnership which results in such
Partner being allocated nonrecourse liabilities in an amount which is at least
equal to the amount of income pursuant to Section 704(c) of the Code and the
Regulations promulgated thereunder (the "Liability Shortfall"). If there is an
insufficient amount of nonrecourse liabilities to allocate to each Partner an
amount of nonrecourse liabilities equal to the Liability Shortfall, then an
amount of nonrecourse liabilities to the extent of, the Liability Shortfall
shall be allocated to the Limited Partner. The effect of using the "remedial
method" described in Regulation Section 1.704-3(d) shall be that the Limited
Partner shall receive an allocation of Partnership Nonrecourse Liabilities that
on the date hereof is not less than $129,700,000.
(f) References to Regulations. Any reference in this Exhibit A or the
Agreement to a provision of proposed and/or temporary Regulations shall, if such
provision is modified or renumbered, be deemed to refer to the successor
provision as so modified or renumbered, but only to the extent such successor
provision applies to the Partnership under the effective date rules applicable
to such successor provision.
(g) Successor Partners. For purposes of this Exhibit A, a transferee of
a Partnership Interest shall be deemed to have been allocated the Net Income,
Net Loss and other items of Partnership income, gain, loss, deduction and credit
allocable to the transferred Partnership Interest that previously have been
allocated to the transferor Partner pursuant to this Agreement.
4. Distributions.
(a) Available Cash. Except as set forth in subparagraph (b), Available
Cash shall be distributed in the following order of priority:
(i) 100% to Metropolis until it has received aggregate
distributions on or after the Effective Date pursuant to this clause (a)(i)
equal to an amount which, when added to all prior distributions to Metropolis on
or after the Effective Date made pursuant to clause (b)(i) below, equals 12% per
annum cumulative compounded on its Adjusted Contribution, commencing with
respect to each Capital Contribution, on the date such Capital Contribution was
made or deemed to have been made pursuant to Article 5 hereof;
A-5
<PAGE>
(ii) 100% to Metropolis until it has received aggregate
distributions on or after the Effective Date pursuant to this clause (a)(ii)
equal to an amount which, when added to all prior distributions to Metropolis on
or after the Effective Date made pursuant to clauses (b)(ii) and b(v) below,
equals the Adjusted Contribution; and
(iii) 1% to the General Partner, 94.05% to Metropolis and
4.95% to the Limited Partner.
(b) Capital Transactions. The net proceeds of Capital Transactions shall be
distributed in the following order of priority:
(i) 100% to Metropolis until it has received aggregate
distributions on or after the Effective Date pursuant to this clause (b)(i),
which, when added to all prior distributions to Metropolis made pursuant to
clause (a)(i) above, equals the product of (x) .5 and (y) 12% per annum
cumulative compounded on its Adjusted Contribution, commencing with respect to
each Capital Contribution, on the date such Capital Contribution was made or
deemed to have been made pursuant to Article 5 hereof;
(ii) 100% to Metropolis until it has received aggregate
distributions on or after the Effective Date pursuant to this clause (b)(ii)
equal to an amount which when added to all prior distributions to Metropolis on
or after the Effective Date made pursuant to clause (a)(ii), equals
$107,171,971;
(iii) of the next $500,000, 90% to the Limited Partner and 10%
to Metropolis;
(iv) 100% to Metropolis until it has received aggregate
distributions on or after the Effective Date pursuant to this clause (b)(iv)
which, when added to all prior distributions to Metropolis on or after the
Effective Date made pursuant to clauses (a)(i) and (b)(i), equals 12% per annum
cumulative compounded on its Adjusted Contribution, commencing with respect to
each Capital Contribution, on the date such Capital Contribution was made or
deemed to have been made pursuant to Article 5 hereof;
(v) 100% to Metropolis until it has received aggregate
distributions on or after the Effective Date pursuant to this clause (b)(v)
which, when added to all prior distributions to Metropolis on or after the
Effective Date made pursuant to clauses (a)(ii) and (b)(ii), equals the Adjusted
Contribution; and
(vi) 1% to the General Partner, 94.05% to Metropolis and 4.95%
to the Limited Partner.
For purposes of this Section 4, with respect to a Metropolis Sale
(other than a Metropolis Sale in connection with which JMB/NYC LP receives its
proportionate share of the Limited
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Partner Sale Distribution Amount), the net proceeds of such disposition shall be
an amount equal to the net proceeds (or the fair market value of the property)
received by the stockholders of Metropolis participating in such disposition,
divided by the percentage derived by dividing the number of shares of
Metropolis' common stock that are the subject of such disposition, by the
aggregate number of shares of Metropolis common stock outstanding at the time of
such disposition.
For purposes of this Section 4, with respect to any sale, exchange,
transfer, encumbrance or other disposition (other than a sale, exchange,
transfer, encumbrance or other disposition in connection with which JMB/NYC LP
receives its proportionate share of the Limited Partner Sale Distribution
Amount), whether by or through any intervening entity or entities, of all or any
portion of Metropolis' Partnership Interest, the net proceeds of such sale,
exchange, transfer, encumbrance or other disposition shall be an amount equal to
the net proceeds (or the fair market value of the property) received by
Metropolis (or any intervening entity or entities), divided by the percentage
derived by dividing the percentage of the Metropolis' Partnership Interest that
is the subject of such sale, exchange, transfer, encumbrance or other
disposition, by the percentage of the Metropolis' Partnership Interest in the
Partnership.
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Exhibit C
Partners' Contributions and Partnership Interests
Cash Agreed
Value of
Name and Address of Partner Contributions % Interest
Metropolis
Metropolis Realty Trust, Inc. $274,375,365 94.05%
c/o Victor Capital Group, L.P.
605 Third Avenue - 26th Floor
New York, NY 10158
Attn: John Klopp
Limited Partner
237/1290 Upper Tier Associates, L.P. $100,000 4.95%
c/o Victor Capital Group, L.P.
605 Third Avenue - 26th Floor
New York, NY 10158
Attn: John Klopp
General Partner
1290 GP Corp. $1 1.00%
c/o Victor Capital Group, L.P.
605 Third Avenue - 26th Floor
New York, NY 10158
Attn: John Klopp
B-1
THIRD AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
237/1290 UPPER TIER ASSOCIATES, L.P.
by and between
237/1290 UPPER TIER GP CORP.,
as General Partner,
CARLYLE MANAGERS, INC.,
as Special General Partner
AND
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.,
as Limited Partner
Dated: November 19, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<S> <C> <C> <C>
ARTICLE I DEFINITIONS............................................................................2
ARTICLE II ORGANIZATIONAL MATTERS.................................................................7
2.1 Formation..............................................................................7
2.2 Certificates...........................................................................7
2.3 Foreign Qualifications.................................................................7
2.4 Name...................................................................................7
2.5 Registered Office and Agent; Principal Office..........................................7
2.6 Purpose; Powers........................................................................8
2.7 Term...................................................................................8
ARTICLE III CAPITAL CONTRIBUTIONS..................................................................8
3.1 Capital Contributions of the General Partner...........................................8
3.2 Capital Contributions..................................................................8
3.3 Other Matters Relating to Capital Contributions........................................8
3.4 Capital Accounts.......................................................................9
ARTICLE IV DISTRIBUTIONS OF NET CASH FLOW.........................................................9
ARTICLE V ALLOCATIONS OF PROFITS AND LOSSES......................................................9
ARTICLE VI RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER.........................................10
6.1 Management............................................................................10
6.2 Outside Activities of the General Partner.............................................12
6.3 Employment of Experts or Advisors.....................................................12
ARTICLE VII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS............................................13
7.1 Limitation of Liability...............................................................13
7.2 Management of Business................................................................13
7.3 Outside Activities of the Special General Partner and Limited Partners................13
7.4 Covenant of the Special General Partner and the Limited Partners......................13
7.5 This Section Intentionally Omitted....................................................14
7.6 Exercise of Put Right.................................................................14
ARTICLE VIII AMENDMENTS OF LIMITED PARTNERSHIP AGREEMENT...........................................15
ARTICLE IX LIMITATION ON SUBSTITUTION AND
ASSIGNMENT OF A PARTNER'S INTEREST....................................................15
9.1 Transfer..............................................................................15
9.2 Special General Partner and Limited Partners Right to Transfer........................15
</TABLE>
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<TABLE>
Page
<S> <C> <C> <C>
9.3 Transferred Partnership Interests Subject to this Agreement...........................15
9.4 Insolvency, Dissolution or Bankruptcy of a Limited Partner............................16
9.5 Transfers by the General Partner......................................................16
9.6 Admission of Successor General Partner................................................16
ARTICLE X ACCOUNTING PROCEDURE..................................................................16
10.1 Books and Accounts....................................................................16
10.2 Choice of Accountants; Tax Information................................................17
10.3 Delivery of Information...............................................................17
ARTICLE XI DISSOLUTION...........................................................................17
11.1 Dissolution...........................................................................17
11.2 Liquidation...........................................................................18
11.3 Rights of the Special General Partner and of the Limited Partners.....................18
11.4 No Obligation to Contribute Deficit...................................................18
ARTICLE XII INDEMNIFICATION.......................................................................19
ARTICLE XIII MISCELLANEOUS PROVISIONS..............................................................20
13.1 Notices...............................................................................20
13.2 Counterparts..........................................................................21
13.3 Nature of Partnership Interest........................................................21
13.4 Insolvency Proceedings................................................................21
13.5 Titles and Captions...................................................................21
13.6 Pronouns and Plurals..................................................................21
13.7 Further Action........................................................................21
13.8 Binding Effect........................................................................22
13.9 Creditors.............................................................................22
13.10 Waiver................................................................................22
13.11 Applicable Law........................................................................22
13.12 Invalidity of Provisions..............................................................22
13.13 Entire Agreement......................................................................22
Exhibit A
</TABLE>
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THIRD AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
237/1290 UPPER TIER ASSOCIATES, L.P.
(A Delaware Limited Partnership)
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF 237/1290 UPPER TIER ASSOCIATES, L.P. (the "Partnership"), dated
as of November 19, 1999 (this "Agreement") is entered into by and between
237/1290 Upper Tier GP Corp., a Delaware corporation (the "General Partner"),
Carlyle Managers, Inc., a Delaware corporation (the "Special General Partner"),
JMB/NYC Office Building Associates, L.P., an Illinois limited partnership (the
"JMB Limited Partner" and/or the "Limited Partner") and, solely for the purpose
of agreeing to certain obligations set forth in Section 7.6A hereof, Metropolis
Realty Trust, Inc., a Maryland corporation ("Metropolis").
WHEREAS, in accordance with the terms and conditions of the
Joint Plan of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290
Associates L.L.C. (respectively the "237 LLC" and the "1290 LLC" and
collectively the "LLCs"), each a Delaware limited liability company, filed under
title 11 of the United States Code, 11 U.S.C. Sections 101 et seq. (the "Plan"),
(i) O&Y NY Building Corp. (the "Prior General Partner"), the JMB Limited Partner
and the O&Y Equity Company, L.P. ("Equityco") entered into a Limited Partnership
Agreement dated October 10, 1996 ( the "Original Agreement") pursuant to which
they formed the Partnership in accordance with the Revised Uniform Limited
Partnership Act of the State of Delaware, (ii) the LLCs merged into the
Partnership pursuant to an Agreement and Plan of Merger dated October 10, 1996
(the "Merger Agreement"), with the Partnership as the surviving entity (the
"Merger"), (iii) pursuant to a Redemption and Substitution Agreement dated
October 10, 1996, the Prior General Partner and Equityco withdrew from the
Partnership and the General Partner was admitted in its place, and (iv) the
General Partner and the JMB Limited Partner amended and restated the Original LP
Agreement (as so amended and restated, the "Amended and Restated Agreement");
WHEREAS, the Amended and Restated Agreement was amended and
restated in its entirety as of October 14, 1997 to admit Carlyle Managers, Inc.
as a Special General Partner (as amended and restated, the "Second Amended and
Restated Agreement"); and
WHEREAS, the Partnership has entered into an agreement (the
"Restructuring Agreement"), dated as of October 28, 1999 pursuant to which the
Partnership will, among other things, contribute its membership interests in the
entity that owns the real property known as 237 Park Avenue, New York, New York,
in exchange for Class A Partnership Interests in Oak Hill Strategic Partners,
L.P. (the "OHSP Interests").
WHEREAS, the parties hereto desire to amend and restate the
Second Amended and Restated Agreement in its entirety effective as of the
Closing Date (as defined in the Restructuring Agreement) to reflect the
consummation of such transactions.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants and
on the terms and conditions contained herein, and for other good, valid and
binding consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
Certain terms used in this Agreement shall have the meanings
designated below.
(a) "Act" means the Delaware Revised Uniform Limited
Partnership Act, as in effect on the date hereof as it may be amended from time
to time hereafter, or any successor law.
(b) "Adverse Transaction" means (i) any sale, disposition,
transfer or exchange of the Partnership Property, or any property owned by the
Property Owning Partnership, (ii) any release, discharge or reduction of
non-recourse indebtedness of the Property Owning Partnership (other than through
payment of scheduled amortization (so long as the non-recourse indebtedness of
the Property Owning Partnership remains at all times greater than $129,700,000),
actions taken by a secured lender such as application of insurance proceeds or
condemnation awards or the exercise of remedies, or in the case where the
released indebtedness is concurrently being replaced with other non-recourse
indebtedness complying with clause (B) below), (iii) any distribution of
Partnership assets (other than distributions of cash and other distributions by
the Partnership and the Property Owning Partnership, in each case, in the
ordinary course of business), or (iv) any other transaction or agreement to
which any of the Partnership or the Property Owning Partnership is a party, if
as a result of any such transaction or agreement described in (i), (ii), (iii)
or (iv) above, the Limited Partner would be required to recognize a material
amount of taxable income or gain prior to the Approval Right Termination Date.
Adverse Transactions shall specifically exclude (A) Partnership income derived
in the ordinary course of the Partnership's and the Property Owning
Partnership's business, (B) non-recourse refinancing of the property owned by
the Property Owning Partnership on commercially reasonable terms in an aggregate
amount equal to not less than $129,700,000, (C) payment of amortization on
non-recourse financing encumbering the property owned by the Property Owning
Partnership, provided that the outstanding balance of such financing is not
reduced below $129,700,000, in the aggregate and except as otherwise provided in
the parenthetical of clause (ii) above (i.e. actions taken by a secured lender
such as application of insurance proceeds or condemnation awards or the exercise
of remedies, or in the case where released indebtedness is concurrently being
replaced with other non-recourse indebtedness complying with clause (B) above),
(D) the consummation of the transactions expressly provided for in Section 2.01
of the Restructuring Agreement, (E) a transfer of the any property owned by the
Property Owning Partnership pursuant to an involuntary foreclosure or similar
action arising from a default by the Property Owning
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Partnership with respect to its obligations under its indebtedness, (F) a
transfer of the property of the Property Owning Partnership pursuant to a
consensual foreclosure or similar action (including, without limitation, a deed
in lieu of foreclosure) arising from a default by the Property Owning
Partnership with respect to its obligations under its indebtedness; provided
that 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 such
indebtedness and Metropolis or any shareholders or Affiliates of Metropolis or
any of their partners, members or Affiliates attributable to any commonality of
ownership between the beneficial ownership of such indebtedness and any such
Person, (G) any Metropolis Sale or sale, exchange, transfer, encumbrance or
other disposition (whether by or through any intervening entity or entities) of
Metropolis' interest as a limited partner of the Property Owning Partnership or
the property owned by the Property Owning Partnership during the period
commencing on January 1, 2000 and ending on February 28, 2001 if, simultaneous
with any such transaction, the JMB Limited Partner receives its proportionate
share of the Limited Partner Sale Distribution Amount (as defined in the
Property Owning Partnership Agreement) and (H) payment of the Limited Partner
Sale Distribution Amount (as defined in the Property Owning Partnership
Agreement) or the authorized exercise of the Purchase Right (as defined in the
Property Owning Partnership Agreement) or the Put Right (as defined in the
Property Owning Partnership Agreement) and the consummation of the transactions
incidental to the exercise of such rights.
(c) "Affiliate" means, (a) with respect to any individual
Person, any member of the Immediate Family of such Person or a trust established
for the benefit of such member, or (b) with respect to any Entity, any Person
which, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, any such Entity.
(d) "Approval Right Termination Date" means the earliest of
(i) March 1, 2001, and (ii) the date on which the Partnership no longer holds
the Property Owning Partnership Interest as a result of the authorized exercise
of the Purchase Right or the Put Right (as such terms are defined in the
Property Owning Partnership Agreement) pursuant to Section 12.2A or 12.2C of the
Property Owning Partnership Agreement or pursuant to such other transaction
which does not constitute an Adverse Transaction, (iii) the date on which the
JMB Limited Partner no longer holds a Partnership Interest in the Partnership,
and (iv) the Default Date.
(e) "Capital Contribution" means, with respect to any Partner,
any cash, cash equivalents or the gross asset value of the Property, as
determined by the General Partner in its sole and absolute discretion (except as
otherwise provided in this Agreement), which such Partner contributes or is
deemed to contribute to the Partnership pursuant to Article III hereof.
(f) "Certificate" means the Certificate of Limited Partnership
of the Partnership filed in the Office of the Secretary of State of Delaware, as
such certificate may be amended and/or restated from time to time.
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<PAGE>
(g) "Closing Date" shall have the meaning set forth in the
Restructuring Agreement.
(h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time (or any corresponding provisions of succeeding law).
(i) "Default Date" shall have the meaning set forth in the
Property Owning Partnership Agreement.
(j) "Distribution" means any distribution pursuant to Articles
IV or XI hereof.
(k) "Entity" means any general partnership, limited
partnership, corporation, joint venture, trust, business trust, real estate
investment trust, limited liability company, cooperative or association.
(l) "Fiscal Year" means the period commencing on any January 1
and ending on the earlier to occur of (A) the next December 31 and (B) the date
on which all assets of the Partnership are distributed pursuant to Article XI
hereof and the Certificate has been cancelled pursuant to the Act.
(m) "FW Strategic" means FW Strategic Management, L.P., a
Texas limited partnership.
(n) "General Partner" means 237/1290 Upper Tier GP Corp., a
Delaware corporation, in its capacity as General Partner hereunder and all other
Persons hereafter being or acting as General Partner of the Partnership,
individually and collectively.
(o) "Indemnitee" means (i) any Person made a party to a
proceeding by reason of (A) such Person's status as (1) the General Partner, (2)
a stockholder, director, trustee or officer of the Partnership or the General
Partner, or (3) a director, trustee or officer of any other Entity, each Person
(including a Limited Partner) serving in such capacity at the request of the
Partnership or the General Partner, or (B) his or its liabilities, pursuant to a
loan guarantee or otherwise, for any indebtedness of the Partnership (including,
without limitation, any indebtedness which the Partnership has assumed or taken
assets subject to); and (ii) such other Persons (including affiliates of the
General Partner to the Partnership) as the General Partner may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.
(p) "JMB Indemnitors" shall mean Property Partners, L.P.,
Carlyle-XIII Associates, L.P. and Carlyle-XIV Associates, L.P.
(q) "JMB Limited Partner" shall have the meaning set forth in
the Preamble to this Agreement.
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<PAGE>
(r) "JMB Put Right" shall have the meaning set forth in
Section 7.7 of this Agreement.
(s) "Limited Partner" shall have the meaning set forth in the
Preamble to this Agreement and shall refer to any additional Limited Partner
admitted to the Partnership in accordance with the terms hereof.
(t) "LLC(s)" shall have the meanings set forth in the Recitals
to this Agreement.
(u) "Merger" means the merger of the LLCs with and into the
Partnership pursuant to the Merger Agreement.
(v) "Merger Agreement" means the Agreement and Plan of Merger,
dated as of October 10, 1996 between the Partnership and the
LLCs.
(w) "Metropolis" means Metropolis Realty Trust, Inc., a
Maryland corporation.
(x) "Metropolis Sale" has the meaning given thereto in the
Property Owning Partnership Agreement.
(y) "Net Cash Flow" means the excess of all cash receipts of
any kind received by the Partnership over the sum of the amounts of (i)
Operating Expenses, and (ii) any reserves established by the General Partner.
(z) "OHSP" means Oak Hill Strategic Partners, L.P., a Delaware
limited partnership.
(aa) "OHSP Interests" shall have the meaning set forth in the
Recitals to this Agreement.
(bb) "Operating Expenses" means all cash expenses, costs,
debts and disbursements of every kind and nature which the Partnership shall pay
or become obligated to pay in connection with the business of the Partnership or
the performance of the General Partner's duties and obligations under this
Agreement, including, without limitation, debt service, audit and legal expenses
and management fees.
(cc) "Partners" means the General Partner, the Special General
Partner and the Limited Partners, where no distinction is required by the
context in which the terms is used herein. "Partner" means any one of the
Partners.
(dd) "Partnership" means 237/1290 Upper Tier Associates, L.P.
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<PAGE>
(ee) "Partnership Interest(s)" means that ownership interest
of a Partner, expressed as a percentage, in the Partnership's profits and
losses, other items of income, gain, losses, deductions, expenses and credits,
and distributions of net cash receipts at any particular time, including the
right of such Partner to any and all benefits to which a Partner may be entitled
as provided in this Agreement and under the Act, together with the obligation of
such Partner to comply with all the terms and provisions of this Agreement and
the Act. The Partnership Interest of each Partner is set forth on Exhibit A.
(ff) "Partnership Property" means the Property Owning
Partnership Interest, the OHSP Interests and any other property the Partnership
may acquire after the date hereof.
(gg) "Person" means any individual, corporation, company,
partnership, joint venture, trust, association, unincorporated organization,
other entity or group, or any domestic or foreign national, state or municipal
or other local government or multi-national body any subdivision, agency,
commission or authority thereof.
(hh) "Plan" shall have the meaning set forth in the Recitals
to this Agreement.
(ii) "Property Owning General Partner" means 1290 GP Corp., a
Delaware corporation.
(jj) "Property Owning Partnership" means 1290 Partners, L.P.,
a Delaware limited partnership.
(kk) "Property Owning Partnership Agreement" means the Amended
and Restated Agreement of Limited Partnership of the Property Owning
Partnership, dated as of the date hereof.
(ll) "Property Owning Partnership Interest" shall mean the
Partnership's ownership interest, as a limited partner, in the Property Owning
Partnership pursuant to the Property Owning Partnership Agreement.
(mm) "Restructuring Agreement" shall have the meaning set
forth in the recitals.
(nn) "Special General Partner" shall have the meaning set
forth in the Preamble to this Agreement.
(oo) "Tax Matters Partner" shall have the meaning set forth in
Section 10.2 of this Agreement.
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ARTICLE II
ORGANIZATIONAL MATTERS
2.1 Formation. The General Partner, the Special General
Partner and the Limited Partners hereby agree to continue the Partnership as a
limited partnership pursuant and subject to the Act. The Original Agreement was
effective from the date thereof up to, but not including, the effective time of
the Amended and Restated Agreement. The Amended Agreement was effective up to,
but not including, the effective date of the Second Amended and Restated
Agreement. The Second Amended and Restated Agreement was effective from and
including the date thereof up to the Closing Date (as defined in the
Restructuring Agreement). This Agreement shall become effective on the Closing
Date. Except as expressly provided in this Agreement, the rights and obligations
of the Partners and the administration and termination of the Partnership shall
be governed by the Act.
2.2 Certificates The General Partner shall file, record and
publish such certificates and other documents as may be necessary and
appropriate to comply with the requirements for the organization and operation
of a limited partnership under the Act.
2.3 Foreign Qualifications. If the business of the Partnership
is carried on or conducted in any state other than the State of Delaware, then
the parties agree that this Partnership shall be qualified to conduct business
in accordance with the laws of each such other state in which business is
conducted by the Partnership. The parties agree to execute such other and
further documents as may be necessary or appropriate to permit the General
Partner to qualify this Partnership, or otherwise to comply with requirements
for a limited partnership to conduct business, in each such state. The General
Partner shall execute and file in the proper offices such certificates as may be
required by the Assumed Name Act or similar law in effect in the counties and
other governmental jurisdictions in which the Partnership may elect to conduct
business.
2.4 Name. The name of the Partnership is "237/1290 Upper Tier
Associates, L.P." The business of the Partnership shall be conducted under the
name listed above or under such other names as the General Partner deems
appropriate. The General Partner, in its sole discretion may, upon five days'
prior written notice to the Limited Partners, change the name of the
Partnership.
2.5 Registered Office and Agent; Principal Office. The address
of the registered office of the Partnership in the State of Delaware and the
name and address at the registered agent for service of process on the
Partnership in the State of Delaware is The Corporation Trust Company, 1029
Orange Street, Wilmington (New Castle County), Delaware 19801. The principal
office of the Partnership shall be c/o Victor Capital Group, L.P., 605 Third
Avenue, 26th Floor, New York, New York 10016, Attn: John Klopp or such other
place as the General Partner may from time to time designate by notice to the
Limited
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Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems advisable.
2.6 Purpose; Powers. The purpose and nature of the business to
be conducted by the Partnership is to hold the Partnership Property and serve as
a limited partner of the Property Owning Partnership. The Partnership is
empowered to do any and all acts and things necessary, appropriate, proper,
advisable, incidental to or convenient for the furtherance and accomplishment of
the purposes and business described herein.
2.7 Term. The term of the Partnership shall continue until
December 31, 2099, unless the Partnership is dissolved sooner pursuant to any
provision of this Agreement.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Capital Contributions of the General Partner. The General
Partner has made a Capital Contribution of $1 in cash to the Partnership and the
Special General Partner has agreed to provide services to the Partnership as set
forth in Section 10.2 hereof. In consideration therefor, the General Partner and
the Special General Partner have received the Partnership Interests set forth in
Exhibit A hereto.
3.2 Capital Contributions. As provided in the Merger
Agreement, upon the consummation of the Merger, the Partnership succeeded to all
of the LLCs' assets and liabilities (the "LLC Net Assets"). Upon the
consummation of the Merger, the Partnership agreed that the LLC Net Assets were
deemed to be the Capital Contributions of the JMB Limited Partner, and (ii) the
LLC Net Assets had a gross fair market value of $100,000.
3.3 Other Matters Relating to Capital Contributions.
A. Except as otherwise provided by the terms of this
Agreement, no Partner shall be entitled to withdraw, or to a return of,
any part of its Capital Contribution, or to receive property or assets
other than cash in return thereof, and the General Partner shall not be
liable to the Limited Partners for a return of their Capital
Contributions.
B. No Partner shall be entitled to priority over any other
Partner, either with respect to a return of his Capital Contribution,
or to allocations of taxable income, gains, losses or credits, or to
distributions, except as provided in this Agreement.
C. No interest shall be paid on Capital Contributions.
D. No Partner shall be obligated to make any further
Capital Contribution to the Partnership.
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3.4 Capital Accounts. A separate capital account shall be
established for each Partner on the books of the Partnership on the dates on
which such Partner makes its Capital Contributions, as provided herein. Each
such capital account will thereafter be maintained on the books of the
Partnership. Each Partner's capital account will be increased by that Partner's
Capital Contributions, advances and allocation of income and gain and decreased
by that Partner's distributions and allocation of losses.
ARTICLE IV
DISTRIBUTIONS OF NET CASH FLOW
Subject to Article XI, the Partnership shall distribute to the
Partners any Net Cash Flow at such times as the General Partner shall reasonably
determine to be appropriate. Distributions of Net Cash Flow shall be made to the
Partners in accordance with their respective Partnership Interests.
Notwithstanding the foregoing, the Partners acknowledge that the interest of the
JMB Limited Partner is subject to a Second Amended, Restated and Consolidated
Security Agreement, dated as of October 10, 1996, executed and delivered
pursuant to the Plan and the JMB Limited Partner and the Special General Partner
agree that the General Partner shall be authorized to pay any distributions
otherwise payable to the JMB Limited Partner or the Special General Partner
hereunder to or at the direction of the holder of the Second Amended, Restated
and Consolidated Promissory Note secured thereby.
ARTICLE V
ALLOCATIONS OF PROFITS AND LOSSES
5.1 All items of income, gain, loss or deduction for any
Fiscal Year shall be allocated to the Partners in accordance with their
respective Partnership Interests.
5.2 The Partnership shall use the "remedial method" described
in Treasury Regulation Section 1.704-3(b) and allocations of nonrecourse debt
shall be made in accordance therewith. The effect of this Agreement shall be
that the JMB Limited Partner shall receive an allocation of Partnership
nonrecourse debt, as of the date hereof, that is not less than $129,700,000.
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ARTICLE VI
RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER
6.1 Management.
A. Except as otherwise expressly provided in this Agreement,
all management powers over the business and affairs of the Partnership are and
shall be exclusively vested in the General Partner, and, except as provided in
Section 6.1D hereof with respect to the JMB Limited Partner and in Section 10.2
hereof with respect to the Special General Partner, no Limited Partner nor the
Special General Partner shall have any right to participate in or exercise
control or management power over the business and affairs of the Partnership. No
third party shall have any right to rely upon the authority of the Special
General Partner or the Limited Partner to take any action on behalf of the
Partnership, except as expressly set forth in this Agreement. The General
Partner may not be removed by the Limited Partners or the Special General
Partner with or without cause. In addition to the powers now or hereafter
granted a general partner of a limited partnership under applicable law or which
are granted to the General Partner under any other provision of this Agreement,
the General Partner shall have, subject to Section 6.1D hereof, full power and
authority to do all things deemed necessary or desirable by it to conduct the
business of the Partnership, to exercise all powers and to effectuate the
purposes set forth in Section 2.6 hereof, including, without limitation, the
power and authority to:
1. to acquire, sell, transfer, exchange, manage or
otherwise dispose of all or a portion of the Partnership Property upon
such terms and for such consideration as the General Partner may, in
its sole and absolute discretion determine;
2. to take or enter into, perform and carry out
contracts and agreements of every kind necessary or incidental to the
purposes of the Partnership;
3. to take or omit such other or further action in
connection with the Partnership's business as may, in the opinion of
the General Partner, be necessary or desirable to further the purposes
of the Partnership, including, without limitation, actions pursuant to
the Property Owning Partnership Agreement;
4. to invest such funds as are temporarily not required
for Partnership purposes; and
5. to carry on any other activities the General Partner
may reasonably deem necessary, in connection with or incident to any of
the foregoing.
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B. In connection with such management and subject to any
limitations set forth elsewhere in this Agreement, the General Partner:
1. Shall maintain or cause to be maintained, at the
expense of the Partnership, complete and accurate records of all
correspondence, documents or instruments of any nature relating to the
Partnership business. Such records, together with such supporting
evidence thereof as is in the control and possession of the Partnership
or of the General Partner, shall be kept in the principal office of the
General Partner or of the Partnership for such periods as the General
Partner deems appropriate. The Partners and/or their authorized
representatives, shall have the right to inspect and/or copy any or all
of the above-described records during normal business hours.
2. Shall execute any and all documents or instruments
of any kind which the General Partner may reasonably deem appropriate
in carrying out the purposes of the Partnership.
3. Shall maintain, or cause to have maintained, at the
expense of the Partnership, adequate records and accounts of all
transactions, operations and expenditures and shall furnish to or cause
to be furnished to the Partners annual statements of account as of the
end of each calendar year.
C. The Limited Partner and the Special General Partner agree
that the General Partner is authorized to execute, deliver and perform the
above-mentioned agreements and transactions on behalf of the Partnership without
any further act, approval or vote of the Limited Partner or the Special General
Partner (except as provided in Section 6.1D hereof). Notwithstanding any other
provision of this Agreement, to the fullest extent permitted under the Act or
other applicable law, rule or regulation, the execution, delivery or performance
by the General Partner or the Partnership of any agreements authorized or
permitted under this Agreement shall not constitute a breach by the General
Partner of any duty that the General Partner may owe the Partnership, the
Special General Partner or the Limited Partner or any other Persons under this
Agreement or of any duty stated or implied by law or equity.
D. Notwithstanding anything to the contrary set forth in this
Agreement, (x) until the Approval Right Termination Date in the case of items
1-6 of this Section 6.1D and (y) at any time in the case of item 7 of this
Section 6.1D, the General Partner shall not, without the prior written consent
of the JMB Limited Partner (which may be given or withheld in its sole and
absolute discretion), have the power to take, on behalf of the Partnership as a
limited partner of the Property Owning Partnership, the following actions:
1. Consent to any Adverse Transaction pursuant to
Section 8.1E of the Property Owning Partnership Agreement;
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2. Exercise the Partnership's Put Right (as such term
is defined in the Property Owning Partnership Agreement) to require the
Property Owning General Partner or Metropolis to purchase the Property
Owning Partnership Interest pursuant to Section 12.2C of the Property
Owning Partnership Agreement;
3. Effect the sale, disposition, exchange or transfer
of the Property Owning Partnership Interest if such transaction would
constitute an Adverse Transaction;
4. Consent to the amendment of the Property Owning
Partnership Agreement pursuant to Sections 15.1B and 15.1C of such
Partnership Agreement;
5. Consent to the dissolution of the Property Owning
Partnership pursuant to Section 14.1C of the Property Owning
Partnership Agreement;
6. Cause or permit (to the extent within the General
Partner's reasonable control) any Adverse Transaction; provided however
that the General Partner shall be under no obligation to commence
litigation or to incur any expense (unless the JMB Limited Partner
shall fund such expense) in order to avoid or prevent an Adverse
Transaction from occurring; and
7. Cause or permit the sale, disposition, exchange or
transfer of the OHSP Interests, unless FW Strategic properly exercises
its right to purchase the OHSP Interests pursuant to Section 4.02(c) of
the Restructuring Agreement.
6.2 Outside Activities of the General Partner. The General
Partner shall devote such time and effort to the business of the Partnership as
the General Partner shall reasonably deem necessary to promote adequately the
interests of the Partnership and the interests of the Partners; however, it is
specifically understood and agreed that the General Partner shall not be
required to devote full time to the business of the Partnership and that the
Partners and their respective stockholders, partners, directors, officers and
affiliates may at any time and from time to time engage in and possess interests
in other business ventures of any and every type and description including
business interests and activities that are in direct competition with the
Partnership or that are enhanced by the activities of the Partnership, and
neither the Partnership nor any Partner shall by virtue of this Agreement or
otherwise have any right, title or interest in or to such independent ventures.
6.3 Employment of Experts or Advisors. The General Partner may
employ or retain such counsel, accountants, appraisers or other experts or
advisors as the General Partner may reasonably deem appropriate for the purpose
of discharging its duties hereunder, and shall be entitled to pay the fees of
any such persons from the funds of the Partnership. The General Partner may act,
and shall be protected in acting in good faith, on the opinion or advice of, or
information obtained from, any such counsel, accountant, appraiser or other
expert or advisor, whether retained or employed by the Partnership, the General
Partner, or
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otherwise, in relation to any matter connected with the administration or
operation of the business and affairs of the Partnership.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
AND THE SPECIAL GENERAL PARTNER
7.1 Limitation of Liability. The Limited Partners and the
Special General Partner shall have no liability under this Agreement except as
expressly provided in this Agreement, or under the Act.
7.2 Management of Business. Neither the Special General
Partner nor any Limited Partner shall take part in the operation, management or
control (within the meaning of the Act) of the Partnership's business, transact
any business in the Partnership's name or have the power to sign documents for
or otherwise bind the Partnership except as set forth in Section 10.2 hereof. No
third party shall have any right to rely upon the authority of the Special
General Partner on behalf of the Partnership, except as expressly set forth in
this Agreement. The transaction of any such business by the General Partner, any
of its affiliates or any officer, director, employee, partner, agent or trustee
of the General Partner, the Partnership or any of their affiliates, in their
capacity as such, shall not affect, impair or eliminate the limitations on the
liability of the Limited Partners under this Agreement.
7.3 Outside Activities of the Special General Partner and
Limited Partners. The Special General Partner and any Limited Partner and any
officer, director, partner, employee, agent, trustee, affiliate or shareholder
of the Special General Partner or of any Limited Partner shall be entitled to
and may have business interests and engage in business activities in addition to
those relating to the Partnership, including business interests and activities
that are in direct competition with the Partnership or that are enhanced by the
activities of the Partnership. Neither the Partnership nor any Partners shall
have any rights by virtue of this Agreement in any business ventures of the
Special General Partner or any Limited Partner. None of the Special General
Partner or the Limited Partners nor any other Person shall have any rights by
virtue of this Agreement or the Partnership relationship established hereby in
any business ventures of any other Person and such Person shall have no
obligation pursuant to this Agreement to offer any interest in any such business
ventures to the Partnership, the Special General Partner or any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, the Special General Partner or any Limited Partner
or such other Person, could be taken by such Person.
7.4 Covenant of the Special General Partner and the Limited
Partners. The Special General Partner and each Limited Partner hereby warrants
and covenants to the Partnership, provided that any of the following is not an
Adverse Transaction, that neither it nor any of its partners or their respective
officers, directors, partners, stockholders, agents and
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affiliates shall intentionally interfere with (x) the exercise by the Property
Owning General Partner of the Purchase Right (as such term is defined in the
Property Owning Partnership Agreement) pursuant to Section 12.2A of the Property
Owning Partnership Agreement, or (y) any disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of the Property Owning Partnership
Interest by the Partnership or the Property (as defined in the Property Owning
Partnership Agreement) by the Property Owning Partnership or the merger or other
combination of the Property Owning Partnership with or into another entity in
accordance with the terms of this Agreement, or the Property Owning Partnership
Agreement.
7.5 This Section Intentionally Omitted.
7.6 Exercise of Put Right.
A. The General Partner shall, upon the written request of the
JMB Limited Partner, promptly cause the Partnership to exercise its Put Right
(as such term is defined in the Property Owning Partnership Agreement) to
require the Property Owning General Partner and Metropolis, jointly and
severally, to purchase the Property Owning Partnership Interest pursuant to
Section 12.2C of the Property Owning Partnership Agreement.
B. The General Partner shall, upon the written request of the
JMB Limited Partner, promptly cause the Partnership to exercise its right to
sell the OHSP Interests to FW Strategic or OHSP pursuant to the proviso of
Section 4.02(d)(ii) of the Restructuring Agreement.
C. Following (i) the exercise of the Put Right pursuant to
Section 7.6A and (ii) the receipt by the JMB Limited Partner of all amounts to
be received as a result thereof, the General Partner shall, upon receipt of the
written election of the JMB Limited Partner at any time, in the JMB Limited
Partner's sole discretion, cause its Partnership Interest to be converted to a
limited partner interest, and the Special General Partner shall thereupon become
the successor General Partner.
D. Following (i) the exercise of the Purchase Right (as
defined in Property Owning Partnership Agreement) the pursuant to Section 12.2A
of the Property Owning Partnership Agreement and (ii) the receipt by the JMB
Limited Partner of all amounts to be received as a result thereof, the General
Partner shall, upon receipt of the written election of the JMB Limited Partner
at any time, in the JMB Limited Partner's sole discretion, cause its Partnership
Interest to be converted to a limited partner interest, and the Special General
Partner shall thereupon become the successor General Partner.
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ARTICLE VIII
AMENDMENTS OF LIMITED PARTNERSHIP AGREEMENT
This Agreement may be amended only by instrument in writing
signed by the General Partner, the Special General Partner and the Limited
Partner.
ARTICLE IX
LIMITATION ON SUBSTITUTION AND
ASSIGNMENT OF A PARTNER'S INTEREST
9.1 Transfer.
A. The term "Transfer," when used in this Article IX with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which the General Partner purports to assign all or any part of its Partnership
Interest to another Person or by which the Special General Partner or a Limited
Partner purports to assign all or any part of its Partnership Interest to
another Person.
B. No Partnership Interest shall be Transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article IX. Any Transfer or purported Transfer of a Partnership Interest not
made in accordance with this Article IX shall be null and void.
9.2 Special General Partner and Limited Partners Right to
Transfer. Subject to the provisions of Sections 7.6, and this Section 9.2,
neither the Special General Partner nor any Limited Partner shall sell, assign,
transfer or convey all or any portion of its Partnership Interest to any person
or entity without the prior written consent of the General Partner. Except for
the security interest created pursuant to the Second Amended, Restated and
Consolidated Promissory Note in the original principal amount of $88,572,780,
dated October 10, 1996, made by the JMB Limited Partner in favor of Metropolis,
the Second Amended, Restated and Consolidated Security Agreement, dated October
10, 1996, between the JMB Limited Partner and Metropolis, and the documents
related thereto, neither the Special General Partner nor any Limited Partner
shall pledge, encumber, place or suffer to exist a lien on its Partnership
Interest without the prior written consent of the General Partner. No successor
to the Special General Partner's Partnership Interest nor the Limited Partner's
Partnership Interest shall become a substituted limited partner, as that term is
used in the Act, without the prior written consent of the General Partner. Any
consent from the General Partner required under this Section 9.2 may be granted
or withheld by the General Partner in its sole discretion.
9.3 Transferred Partnership Interests Subject to this
Agreement. Sales, assignments, transfers, conveyances and pledges of Partnership
Interests pursuant to this
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Article IX shall be subject to, and the transferee or pledgee shall acquire the
transferred Partnership Interests subject to, all of the terms and provisions of
this Agreement.
9.4 Insolvency, Dissolution or Bankruptcy of a Limited
Partner. The insolvency, dissolution or bankruptcy of the Special General
Partner or of a Limited Partner shall not terminate the Partnership. In such
event, the trustee, representative, or other successor in interest of such
Limited Partner or the Special General Partner shall have only the rights of an
assignee of a Limited Partner which does not become a substituted limited
partner under the Act.
9.5 Transfers by the General Partner.
A. The General Partner may Transfer all or any part of its
Partnership Interest or withdraw as General Partner, in its sole discretion and
without the consent of any Limited Partners or the Special General Partner;
provided that the General Partner may withdraw as general partner only in
connection with a Transfer of its Partnership Interest and immediately following
the admission of a successor General Partner, as general partner, in accordance
with this Article IX.
B. If the General Partner withdraws as general partner in
accordance with clause A. above, its Partnership Interest shall immediately be
converted into a limited partner interest and the General Partner shall be
entitled to receive distributions from the Partnership and the share of income,
gain, loss, deduction and credit that were otherwise attributable to its
Partnership Interest.
9.6 Admission of Successor General Partner. A successor to all
of the General Partner's Partnership Interest pursuant to this Article IX who is
proposed to be admitted as a successor General Partner shall be admitted to the
Partnership as the General Partner, effective immediately prior to such
Transfer. Any such transferee shall carry on the business of the Partnership
without dissolution. In each case, the admission shall be subject to the
successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission.
ARTICLE X
ACCOUNTING PROCEDURE
10.1 Books and Accounts. The General Partner shall keep or
cause to be kept full, accurate, complete and proper books and accounts of all
operations of the Partnership. Such books shall be kept in accordance with sound
accounting practices consistently applied.
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10.2 Choice of Accountants; Tax Information. Notwithstanding
anything to the contrary in this Agreement or any status of the General Partner
as general partner, the Special General Partner is hereby designated as the "tax
matters partner" as such term is defined in Section 6231(a)(7) of the Code. The
Special General Partner shall have full and exclusive authority over all
Partnership tax matters, including, without limitation, with respect to those
matters under Section 11.2 of the Property Owning Partnership Agreement,
reserved to the Limited Partner of such partnership under such Section 11.2 of
the Property Owning Partnership Agreement. The Partnership's tax returns shall
be prepared by a "Big Five" accounting firm selected by the Special General
Partner. The Special General Partner shall sign and file tax returns prepared by
the Partnership's accountant in consultation with the General Partner. The
Special General Partner shall annually deliver or cause to be delivered to the
Limited Partners all information forms reasonably necessary for federal tax
purposes.
10.3 Delivery of Information. The General Partner shall
promptly deliver to the Special General Partner and the JMB Limited Partner
copies of all reports and information received from the Property Owning
Partnership, OHSP and FW Strategic.
ARTICLE XI
DISSOLUTION
11.1 Dissolution. The Partnership shall not be dissolved by
the admission of substituted Limited Partners or additional Limited Partners or
by the admission of a successor General Partner in accordance with the terms of
this Agreement. In the event of the withdrawal of the General Partner, any
successor General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs shall be wound up, only upon the
first to occur of any of the following:
A. the expiration of its term as provided in Section 2.7
hereof;
B. an event of withdrawal of the General Partner, as defined
in the Act, unless, within ninety (90) days after such event of withdrawal all
of the remaining Partners agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
successor General Partner;
C. (i) prior to the Approval Right Termination Date, an
election to dissolve the Partnership made by the General Partner, with the
consent of the JMB Limited Partner (which may be given or withheld in its sole
and absolute discretion), and (ii) after the Approval Right Termination Date, an
election to dissolve the Partnership made by the General Partner, without the
consent of the Limited Partner or the Special General Partner;
D. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
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E. the sale of all or substantially all of the assets and
properties of the Partnership.
11.2 Liquidation. In the event of dissolution of the
Partnership pursuant to Section 11.1 where the business of the Partnership is
not reconstituted, liquidation shall occur. The General Partner shall supervise
the liquidation of the Partnership unless a wrongful act of the General Partner
dissolved the Partnership or the Limited Partners elect another Partner to do
so. In the event of any liquidation of the Partnership under this Agreement or
the Act, except as otherwise provided herein, the proceeds of liquidating the
Partnership shall be applied and distributed in the following order of priority
(each item to be satisfied in full in the order listed below before any of such
proceeds are allocated to the subsequent item):
(a) First, to creditors, including Partners who are creditors
(to the extent not otherwise prohibited by law), in satisfaction of
liabilities of the Partnership (whether by payment or the making of
reasonable provision for payment therefor), other than liabilities for
which reasonable provision for payment has been made and liabilities
for interim distributions to Partners and distributions to Partners on
withdrawal; then
(b) Second, to the setting up of any reserves which the
supervising Partner (or, if applicable, the liquidating trustee)
determines to be reasonably necessary for any contingent liabilities of
the Partnership or of any Partner arising out of, or in connection
with, a Partnership liability; then
(c) Finally, the balance, if any, to the Partners in accordance
with Article IV hereof.
The General Partner shall not receive any compensation for any
services performed pursuant to this Article XI.
11.3 Rights of the Special General Partner and of the Limited
Partners. Except as otherwise provided in this Agreement, the Special General
Partner and each Limited Partner shall look solely to the assets of the
Partnership for the return of its Capital Contributions and shall have no right
or power to demand or receive property other than cash from the Partnership.
Neither any Limited Partner nor the Special General Partner shall have priority
over one another as to the return of its Capital Contributions, distributions,
or allocations.
11.4 No Obligation to Contribute Deficit. If any Partner has a
deficit balance in its capital account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered a debt owed to
the Partnership or to any other Person for any purpose whatsoever.
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ARTICLE XII
INDEMNIFICATION
12.1 To the fullest extent permitted by Delaware law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, reasonable attorneys' fees and other legal fees and expenses),
judgments, fines, settlements, and other amounts arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, that relate to the operations of the Partnership, the Special
General Partner or the General Partner as set forth in this Agreement, in which
such Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, except to the extent it is finally determined by a court of competent
jurisdiction, from which no further appeal may be taken, that such Indemnitee's
action constituted intentional acts or omissions constituting willful misconduct
or fraud. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guaranty or otherwise for any
indebtedness of the Partnership (including, without limitation, any indebtedness
which the Partnership has assumed or taken subject to), and the General Partner
is hereby authorized and empowered, on behalf of the Partnership, to enter into
one or more indemnity agreements consistent with the provisions of this Article
XII in favor of any Indemnitee having or potentially having liability for any
such indebtedness. Any indemnification pursuant to this Article XII shall be
made only out of the assets of the Partnership, and neither the General Partner,
the Special General Partner nor any Limited Partner shall have any obligation to
contribute to the capital of the Partnership, or otherwise provide funds, to
enable the Partnership to fund its obligations under this Article XII.
12.2 Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding shall be paid or reimbursed by the Partnership in advance
of the final disposition of the proceeding.
12.3 The indemnification provided by this Article XII shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity unless otherwise provided in a written
agreement pursuant to which such Indemnities are indemnified.
12.4 The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of the Indemnitees and such other
Persons as the General Partner shall determine, against any liability that may
be asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
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12.5 In no event may an Indemnitee subject any of the Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
12.6 An Indemnitee shall not be denied indemnification in
whole or in part under this Article XII because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
12.7 The provisions of this Article XII are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Article XII or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this Article XII, as in effect immediately
prior to such amendment, modification, or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Notices. Notices hereunder shall be in writing and shall
be deemed to be delivered upon actual receipt or 72 hours following deposit in a
regularly maintained receptacle for the United States mail, registered or
certified mail, return receipt requested, with postage prepaid, and addressed to
the address of the addressee shown below, or to such other address of which any
party shall notify the other parties hereto, in accordance with the terms
hereof.
If to the General Partner:
237/1290 Upper Tier GP Corp.
c/o Victor Capital Group, L.P.
605 Third Avenue - 26th Floor
New York, New York 10016
Attn: John Klopp
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Louis Vitali
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If to the JMB Limited Partner or the Special General Partner:
900 North Michigan Avenue
19th Floor
Chicago, Illinois 60611
Attention: Stuart C. Nathan
Gary Nickele
13.2 Counterparts. This Agreement may be executed in multiple
counterparts, each to constitute an original, but all in the aggregate to
constitute one agreement as executed. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their heirs, legal representatives,
successors and permitted assigns.
13.3 Nature of Partnership Interest. The interest of each
Partner in this Partnership is personal property.
13.4 Insolvency Proceedings. No bankruptcy or insolvency
filing or proceeding in respect of the Partnership shall be made or commenced
without the consent of the General Partner, and the Partnership shall not
acquiesce, petition or otherwise invoke or cause any other person and/or entity
to invoke the process of the United States of America, any state or other
political subdivision thereof or any other jurisdiction, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government for the purpose of commencing or sustaining a case
against the Partnership under a federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Partnership or all or any part of
its property or assets or ordering the winding-up or liquidation of the affairs
of the Partnership, if such action has not been consented to by the General
Partner.
13.5 Titles and Captions. All article or section titles or
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or describe the scope
or intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
13.6 Pronouns and Plurals. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
13.7 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
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13.8 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
13.9 Creditors. Other than as expressly set forth herein with
respect to the Indemnitees, none of the provisions of this Agreement shall be
for the benefit of, or shall be enforceable by, any creditor of the Partnership.
13.10 Waiver. No failure by any party to insist upon the
strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach or any other covenant, duty,
agreement or condition.
13.11 Applicable Law. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware,
without regard to the principles of conflicts of laws thereof.
13.12 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
13.13 Entire Agreement. This Agreement contains the entire
understanding and agreement among the Partners with respect to the subject
matter hereof and supersedes any other prior written or oral understandings or
agreements among them with respect thereto.
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IN WITNESS WHEREOF, this Agreement is executed by the General
Partner, the Special General Partner and the JMB Limited Partner as of the date
first above written.
237/1290 UPPER TIER GP CORP.
By: /s/ Andrew S. Cohen
-------------------------------------
Name: Andrew S. Cohen
Title: Vice President
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P., an
Illinois limited partnership
By: Carlyle Managers, 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
Solely with respect to Section 7.6A:
METROPOLIS REALTY TRUST, INC.
By:/s/ Andrew S. Cohen
-------------------------------------
Name: Andrew S. Cohen
Title: Vice President
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Exhibit A
Entity Partnership Interest
------ --------------------
237/1290 UPPER TIER GP CORP. 0.999%
JMB/NYC OFFICE BUILDING
ASSOCIATES, L.P. 98.901%
CARLYLE MANAGERS, INC. 0.1%
-24-
METROPOLIS REALTY TRUST, INC.
AMENDED AND RESTATED
1996 DIRECTORS' STOCK PLAN
<PAGE>
METROPOLIS REALTY TRUST, INC.
AMENDED AND RESTATED
1996 DIRECTORS' STOCK PLAN
1. Purposes. The purposes of the Metropolis Realty Trust, Inc. Directors' Stock
Plan (the "Plan") are (i) to provide incentives to Directors of Metropolis
Realty Trust, Inc. (the "Company") whose substantial contributions are essential
to the growth and success of the Company's business, (ii) to strengthen the
ability of the Company to attract and retain competent and dedicated individuals
to serve as Directors of the Company, and (iii) to align the interests of the
Directors with the interests of the stockholders of the Company. To accomplish
such purposes, the Plan provides for annual stock awards and provides that the
Company may grant stock options to Directors. The stock options granted by the
Company pursuant to the terms and conditions of the Plan shall be referred to
herein as the "Stock Options."
2. Administration. Except as expressly set forth herein, the Plan shall be
administered by either the Compensation Committee (the "Committee") of the Board
of Directors (the "Board") of the Company or the Board itself. The Board or the
Committee, as applicable, depending on which entity is then administering the
Plan, shall hereinafter be referred to as the "Administrator." Subject to the
provisions hereof, the Administrator shall have the full power and authority to
administer and interpret the Plan and adopt or amend such rules, regulations,
agreements and instruments for implementing the Plan as it may deem appropriate
for the proper administration of the Plan. Any such interpretation,
determination or other action of the Administrator shall be conclusive and
binding on participants, beneficiaries and any other interested parties.
3. Stock Subject to the Plan. The total number of shares of the common stock of
the Company, par value $10 per share (the "Shares"), for which Stock Options may
be granted and awards of Shares may be made under the Plan shall not exceed, in
the aggregate, 100,000 Shares, subject, however, to adjustment in accordance
with the provisions of Section 13 hereof. Any Shares which were the subject of
unexercised portions of any terminated or expired Stock Options may again be
subject to Stock Options under the Plan.
4. Award of Shares. On or about September 30, 1997 each Participant shall
receive 400 Shares. Beginning with the Annual Meeting of the Company's
shareholders in 1998 and on each Annual Meeting thereafter, so long as Shares
remain available for issuance under the Plan, each Director (a "Participant")
shall receive 400 shares, subject, however, to adjustment in accordance with the
provisions of Section 13 hereof. The Shares shall be fully vested and
non-forfeitable.
<PAGE>
5. Award of Stock Options. The Administrator, in its sole discretion, may, at
any time prior to the Expiration Date authorize the granting of Stock Options to
Directors of the Company.
6. Term. A Stock Option may be exercised by the holder at such times as may be
specified in such holder's Stock Option Agreement; provided that no Stock Option
shall be exercised later than ten years from the date such Stock Option was
granted (the "Expiration Date").
7. Initial Option Grants. Pursuant to the provisions of the Plan and the Joint
Plan of Reorganization of 237 Park Avenue Associates, LLC and 1290 Associates,
LLC, filed under title 11 of the United States Code, 11 U.S.C. Sections 101 et
seq. (the "Reorganization Plan"), and subject to the terms and conditions of the
Plan and the Reorganization Plan, effective on the Effective Date (as such term
is defined in the Reorganization Plan), the Company shall grant to each person
serving as a Director of the Company on the Effective Date, Stock Options to
purchase 3,000 Shares (the "Initial Grants") at an exercise price of $25 per
share.
Each Stock Option shall be evidenced by a written agreement
substantially in the form of Exhibit A hereof or in such form and containing
such provisions not inconsistent with the Plan as the Administrator shall from
time to time to approve (the "Stock Option Agreement").
8. Price. The exercise price of a Stock Option shall be (i) the fair market
value per share of the Shares covered by the Stock Option at the time that the
Stock Option is granted, as determined by the Administrator in its sole
discretion, and, in the case of the Initial Grants, $25 per share, in accordance
with the Plan, or (ii) such other price as the Administrator deems appropriate.
The exercise price of a Stock Option, as determined by the Administrator in
accordance with (i) or (ii) above and specified in the holder's Stock Option
Agreement shall hereinafter be referred to as the "Exercise Price."
9. Termination of Service. If a Participant ceases to be a member of the Board
for any reason, the Participant (or the Participant's legal representative or
the person or persons to whom the Stock Options shall have been transferred by
will or by the laws of descent and distribution, as the case may be), shall have
the right to exercise the option until the Expiration Date.
- 3 -
<PAGE>
10. Nontransferability. No Stock Option shall be transferable by a holder other
than by will or the laws of descent and distribution. During the lifetime of a
holder the Stock Option shall be exercisable only by such holder or, in the case
of disability, by such holder's personal representative.
11. Exercise of Options. Unless otherwise provided in any Stock Option
Agreement, Stock Options distributed pursuant to the Plan shall become
exercisable as follows:
(a) one-third of the Shares covered by the Stock Options
issued to a holder shall become purchasable on the date of the original issuance
of such Stock Options;
(b) an additional one-third of the Shares covered by the
Stock Options issued to any holder shall become purchasable on the first
anniversary date of the original issuance date of such Stock Options; and
(c) the remaining one-third of the Shares covered by the
Stock Options issued to a holder shall become purchasable on the second
anniversary date of the original issuance date of such Stock Options.
12. Payment for Stock.
(a) The aggregate purchase price of Shares issued upon
the exercise of any Stock Options granted hereunder shall be paid in full on the
date of exercise. Payment shall be made either in cash or in such other
consideration as the Administrator deems appropriate, including, but not limited
to, Shares already owned by the holder or Shares to be acquired by the holder
upon exercise of a Stock Option having a total fair market value, as determined
by the Administrator, equal to the aggregate purchase price, or a combination of
cash and Shares having a total fair market value, as so determined, equal to the
aggregate purchase price.
(b) Shares shall not be issued upon the exercise of any
Stock Option unless and until the aggregate amount of federal, state or local
taxes of any kind required by law to be withheld with respect to the exercise of
such Stock Options have been paid or satisfied or provision for their payment
and satisfaction has been made upon such terms as the Administrator may
prescribe.
(c) No fractional Shares, or cash in lieu thereof, shall
be issued under any Stock Option.
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<PAGE>
13. Stock Adjustments.
(a) The total number of Shares which may be issued under
the Plan, the number of Shares which may be purchased upon the exercise of Stock
Options granted hereunder and the exercise price of such Stock Options shall be
appropriately adjusted for any change in Shares, exchange of Shares for a
different number or kind of Shares or other securities of the Company, or
increase or decrease in the number of outstanding Shares resulting from a
recapitalization, spin-off, split- up, issuance of warrants, rights or
debentures, payment of a stock dividend, cash dividend or property dividend on
the Shares, a subdivision or combination of Shares, or a reclassification or
exchange of the Shares, and (in accordance with the provisions contained in the
next following paragraph) in the event of a consolidation or a merger in which
the Company shall be the surviving corporation.
(b) After any merger of one or more corporations into
the Company in which the Company shall be the surviving corporation, or after
any consolidation of the Company and one or more other corporations, each holder
shall, at no additional cost, be entitled, upon any exercise of his/her Stock
Options, to receive (subject to any required action by stockholders), in lieu of
the number of Shares as to which such Stock Options shall then be so exercised,
the number and class of Shares or other securities to which such holder would
have been entitled pursuant to the terms of the applicable agreement of merger
or consolidation if at the time of such merger or consolidation such holder had
been a holder of record of a number of Shares equal to the number of Shares to
which such holder's Stock Options may have then be so exercised. Comparable
rights shall accrue to each holder in the event of successive mergers or
consolidations of the character described above.
(c) In its absolute discretion, and on such terms and
conditions as it deems appropriate, the Board may provide by the terms of any
Stock Option that such Stock Option cannot be exercised after the merger or
consolidation of the Company into another entity, the exchange of all or
substantially all of the assets of the Company for the securities of another
entity, the acquisition by another entity of 80% or more of the Company's then
outstanding Shares or the liquidation or dissolution of the Company, and if the
Board so provides, it may, in its absolute discretion and on such terms and
conditions as it deems appropriate, also provide, either by the terms of such
option or by a resolution adopted prior to the occurrence of such merger,
consolidation, exchange, acquisition, liquidation or dissolution, that, for some
period of time prior to such event, such Stock Option shall be exercisable as to
all Shares subject thereto, notwithstanding anything to the contrary in Section
11.
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<PAGE>
14. No Rights as a Stockholder. A holder or a transferee of a Stock Option shall
have no rights as a stockholder with respect to any Shares covered by his Stock
Option until he shall have become the holder of record of such Shares.
15. Amendment and Termination. The Administrator may at any time terminate,
amend or modify the Plan in any respect it deems suitable; provided, however,
that no such action of the Administrator, without the approval of the
stockholders of the Company, may increase the total number of Shares which may
be issued under the Plan; and provided, further, that no amendment, modification
or termination of the Plan may in any manner affect any Stock Option theretofore
granted under the Plan without the consent of the then holder of the Stock
Option.
16. Investment Purpose. No Shares shall be issued hereunder or transferred upon
the exercise of any Stock Option unless and until all legal requirements
applicable to the issuance or transfer of such Shares have been complied with to
the satisfaction of the Administrator. At the time of exercise of any Stock
Option or the issuance of any Shares, the Company may, if it shall deem it
necessary or desirable for any reason, require the Participant to represent in
writing to the Company that it is his/her then intention to acquire the Shares
for investment and not with a view to the distribution thereof.
17. Governing Law. The Plan shall be governed by the laws of the State of
Maryland.
18. Effective Date. The Plan shall be effective on the Effective Date of
Reorganization Plan.
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LOAN AGREEMENT
between
1290 PARTNERS, L.P.
as Borrower
The Lenders Party Hereto
as Lenders
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Administrative Agent
Date: As of December 13, 1999
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE 1 CERTAIN DEFINITIONS.................................................1
Section 1.1. Certain Definitions..........................................1
Section 1.2. Types of Loans..............................................18
ARTICLE 2 LOAN TERMS.........................................................18
Section 2.1. The Commitments, Loans and Notes............................18
Section 2.2. Interest Rate; Late Charges.................................19
Section 2.3. Terms of Payment............................................20
Section 2.4. Security....................................................22
Section 2.5. Reserved....................................................23
Section 2.6. Payments; Pro Rata Treatment; Etc...........................23
Section 2.7. Yield Protection; Etc.......................................26
Section 2.8. Interest Rate Guaranty Reimbursement........................31
Section 2.9. Agency Fee..................................................32
ARTICLE 3 INSURANCE, CONDEMNATION, AND IMPOUNDS..............................32
Section 3.1. Insurance...................................................32
Section 3.2. Use and Application of Insurance Proceeds...................34
Section 3.3. Condemnation Awards.........................................35
Section 3.4. Impounds....................................................35
Section 3.5. Pledge and Grant of Security Interest.......................36
Section 3.6. Lockbox Account.............................................37
Section 3.7. Cash Management Account.....................................38
Section 3.8. Payments Received Under the Cash Management Agreement.......40
Section 3.9. Security Deposit Reserve Account............................41
ARTICLE 4 ENVIRONMENTAL MATTERS..............................................41
Section 4.1. Certain Definitions.........................................41
Section 4.2. Representations and Warranties on Environmental Matters.....42
Section 4.3. Covenants on Environmental Matters..........................42
Section 4.4. Allocation of Risks and Indemnity...........................43
Section 4.5. No Waiver...................................................44
ARTICLE 5 LEASING MATTERS....................................................44
Section 5.1. Representations and Warranties on Leases....................44
Section 5.2. Standard Lease Form; Approval Rights........................44
Section 5.3. Covenants...................................................45
Section 5.4. Tenant Estoppels............................................46
ARTICLE 6 REPRESENTATIONS AND WARRANTIES.....................................46
Section 6.1. Organization and Power......................................46
Section 6.2. Validity of Loan Documents..................................46
Section 6.3. Liabilities; Litigation.....................................47
Section 6.4. Taxes and Assessments.......................................47
Section 6.5. Other Agreements; Defaults..................................47
Section 6.6. Compliance with Law.........................................47
Section 6.7. Location of Borrower........................................48
Section 6.8. ERISA.......................................................48
Section 6.9. Margin Stock................................................48
Section 6.10. Tax Filings.................................................48
Section 6.11. Solvency....................................................48
Section 6.12. Full and Accurate Disclosure................................49
Section 6.13. Single Purpose Entity.......................................49
Section 6.14. Management Agreement........................................49
Section 6.15. Year 2000 Compliance........................................49
Section 6.16. No Conflicts................................................49
Section 6.17. Title.......................................................50
Section 6.18. Use of Project..............................................50
Section 6.19. Flood Zone..................................................50
Section 6.20. Insurance...................................................50
Section 6.21. Certificate of Occupancy; Licenses..........................50
Section 6.22 Physical Condition..........................................50
Section 6.22 Boundaries..................................................51
Section 6.24 Survey......................................................51
Section 6.25 Filing and Recording Taxes..................................51
Section 6.26 Investment Company Act......................................51
Section 6.27 Interest Rate Hedge Agreement...............................51
ARTICLE 7 FINANCIAL REPORTING................................................52
Section 7.1 Financial Statements........................................52
Section 7.3. Other Information...........................................53
Section 7.4. Annual Budget...............................................53
Section 7.5. Audits......................................................54
ARTICLE 8 COVENANTS 54
Section 8.1. Due on Sale and Encumbrance; Transfers of Interests.........54
Section 8.2. Taxes; Charges..............................................57
Section 8.3. Control; Management.........................................57
Section 8.4. Operation; Maintenance; Inspection..........................58
Section 8.5. Taxes on Security...........................................58
Section 8.6. Legal Existence; Name, Etc..................................59
Section 8.7. Affiliate Transactions......................................59
Section 8.8. Limitation on Other Debt....................................59
Section 8.9. Further Assurances..........................................59
Section 8.10. Estoppel Certificates.......................................59
Section 8.11. Notice of Certain Events....................................60
Section 8.12. Indemnification.............................................60
Section 8.13. Payment For Labor and Materials.............................60
Section 8.14. Alterations.................................................61
Section 8.15. Handicapped Access..........................................61
Section 8.16 Interest Rate Protection Agreement..........................61
ARTICLE 9 EVENTS OF DEFAULT..................................................62
Section 9.1. Payments....................................................62
Section 9.2. Insurance...................................................63
Section 9.3. Single Purpose Entity.......................................63
Section 9.4. Taxes.......................................................63
Section 9.5. Sale, Encumbrance, Etc......................................63
Section 9.6. Representations and Warranties..............................63
Section 9.7. Other Encumbrances..........................................63
Section 9.8. Involuntary Bankruptcy or Other Proceeding..................63
Section 9.9. Voluntary Petitions, Etc....................................63
Section 9.10. Covenants...................................................64
ARTICLE 10 REMEDIES 64
Section 10.1. Remedies - Insolvency Events................................64
Section 10.2. Remedies - Other Events.....................................64
Section 10.3. Lender's Right to Perform the Obligations...................64
ARTICLE 11 MISCELLANEOUS.....................................................65
Section 11.1. Notices.....................................................65
Section 11.2. Amendments, Waivers, Etc....................................66
Section 11.3. Limitation on Interest......................................66
Section 11.4. Invalid Provisions..........................................67
Section 11.5. Reimbursement of Expenses...................................67
Section 11.6. Approvals; Third Parties; Conditions........................68
Section 11.7. Lenders and Administrative Agent Not in Control;
No Partnership.......................................... 68
Section 11.8. Brokers.....................................................69
Section 11.9. Time of the Essence.........................................69
Section 11.10. Successors and Assigns; Secondary Market Transactions.......69
Section 11.11. Renewal, Extension or Rearrangement.........................70
Section 11.12. Waivers.....................................................70
Section 11.13. Cumulative Rights...........................................70
Section 11.14. Singular and Plural.........................................71
Section 11.15. Phrases.....................................................71
Section 11.16. Exhibits and Schedules......................................71
Section 11.17. Titles of Articles, Sections and Subsections................71
Section 11.18. Promotional Material........................................71
Section 11.19. Survival....................................................71
Section 11.20. WAIVER OF JURY TRIAL........................................72
Section 11.21. Waiver of Punitive or Consequential Damages.................72
Section 11.22. Governing Law...............................................72
Section 11.23. Entire Agreement............................................73
Section 11.24. Counterparts................................................74
Section 11.25. Assignments and Participations..............................74
ARTICLE 12 LIMITATIONS ON LIABILITY..........................................76
Section 12.1. Limitation on Liability.....................................76
Section 12.2. Limitation on Liability of the Administrative Agent's
and the Lenders' Officers, Employees, etc.......... 77
ARTICLE 13 THE ADMINISTRATIVE AGENT..........................................77
Section 13.1. Appointment, Powers and Immunities..........................77
Section 13.2. Reliance by Administrative Agent............................78
Section 13.3. Defaults....................................................78
Section 13.4. Rights as a Lender..........................................78
Section 13.5. Standard of Care; Indemnification...........................78
Section 13.6. Non-Reliance on Administrative Agent and Other Lenders......79
Section 13.7. Failure to Act..............................................79
Section 13.8. Resignation of Administrative Agent.........................80
<PAGE>
- -v-
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A - LEGAL DESCRIPTION OF PROJECT
EXHIBIT B - FORM OF PAYMENT INSTRUCTION LETTER
EXHIBIT C - FORM OF NOTE
EXHIBIT D - FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT E - FORM OF INTEREST RATE PROTECTION PLEDGE
EXHIBIT F - FORM OF LOCKBOX AGREEMENT
EXHIBIT G - TERMS OF INTERCREDITOR AGREEMENT
EXHIBIT H - FORM OF INTEREST RATE GUARANTY
EXHIBIT I - INTEREST RATE PROTECTION AGREEMENT
SCHEDULE 1 - COMMITMENTS
SCHEDULE 2.1 - ADVANCE CONDITIONS
SCHEDULE 2.3(1) - INTEREST PAYMENT ACCOUNT
SCHEDULE 2.4(1) - CAPITAL IMPROVEMENTS RESERVE
SCHEDULE 2.4(2) - LEASING RESERVE
SCHEDULE 3.4 - FORM OF TAX AND INSURANCE DISBURSEMENT REQUEST
SCHEDULE 3.9 - FORM OF SECURITY DEPOSIT DISBURSEMENT REQUEST
SCHEDULE 5.1 - EXCEPTIONS TO LEASE REPRESENTATIONS
SCHEDULE 6.3 - LIABILITIES
SCHEDULE 8.7 - AFFILIATE TRANSACTIONS
<PAGE>
LOAN AGREEMENT
This Loan Agreement (this "Agreement") is entered into as of December
13, 1999 among 1290 PARTNERS, L.P., a limited partnership duly organized and
validly existing under the laws of the State of Delaware ("Borrower"); each of
the lenders that is a signatory hereto identified under the caption "LENDERS" on
the signature pages hereof and each lender that becomes a "Lender" after the
date hereof pursuant to Section 11.25(2) (individually, a "Lender" and,
collectively, the "Lenders"); and GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation, as administrative agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Administrative Agent").
ARTICLE 1
CERTAIN DEFINITIONS
Section 1.1. Certain Definitions. As used herein, the following terms have
the meanings indicated:
(1) "Access Laws" has the meaning assigned in Section 8.15.
(2) "Acceptable Issuer" shall mean a financial institution having
offices in New York, New York whose long term unsecured debt obligations are
rated at least "AA" or better by Standard & Poor's Rating Services (a division
of The McGraw Hill Companies, Inc.) (or the equivalent rating by any other
nationally recognized statistical rating agency) and otherwise reasonably
satisfactory to the Administrative Agent.
(3) "Account Pledge" means that certain Assignment, Pledge, Security
Agreement and Control, dated the date hereof, between Borrower and
Administrative Agent (on behalf of the Lenders), as the same may be modified or
amended from time to time.
(4) "Accounts" means the Cash Management Account, the Tax and
Insurance Escrow Account, the Capital Improvements Reserve Account, the Leasing
Reserve Account, the Security Deposit Account and the Curtailment Account.
(5) "Actual Debt Service Coverage Ratio" means, for the period of time
for which the calculation is being made (or, if no time period is specified, for
the twelve (12) months preceding the date on which the calculation is being
made), the ratio of (a) Actual Net Operating Income to (b) Debt Service,
assuming for purposes of such calculation that the Contract Rate is equal to the
fixed rate of interest payable to the Counterparty under the Interest Rate
Protection Agreement plus two (2%) percent per annum, unless the Interest Rate
Protection Agreement is not then in effect, in which case the Contract Rate
applicable under Section 2.2 shall apply, and making appropriate normalizing
adjustments to address the payment by certain tenants at the Project of real
estate tax escalations on a semi-annual basis. The Actual Debt Service Coverage
Ratio shall be as determined by the Administrative Agent based upon the most
recent reports required to have been submitted by Borrower under Section 7.1
(or, if no such reports have been
<PAGE>
so submitted, such other information as Administrative Agent shall determine in
its sole discretion), which determination shall be conclusive in the absence of
manifest error.
(6) "Actual Net Operating Income" means the amount by which Operating
Revenues exceeds Operating Expenses.
(7) "Additional Costs" has the meaning assigned in Section 2.7(1)(a).
(8) "Adjusted Debt Service Coverage Ratio" means, for the period of
time for which the calculation is being made (or, if no time period is
specified, for the twelve (12) months preceding the date on which the
calculation is being made), the ratio of (a) Adjusted Net Operating Income to
(b) Debt Service, assuming for purposes of such calculation that the Contract
Rate is equal to the fixed rate of interest payable to the Counterparty under
the Interest Rate Protection Agreement plus two (2%) percent per annum, unless
the Interest Rate Protection Agreement is not then in effect, in which case the
Contract Rate applicable under Section 2.2 shall apply. The Adjusted Debt
Service Coverage Ratio shall be as determined by the Administrative Agent based
upon the most recent reports required to have been submitted by Borrower under
Section 7.1 (or, if no such reports have been so submitted, such other
information as Administrative Agent shall determine in its sole discretion),
which determination shall be conclusive in the absence of manifest error.
(9) "Adjusted Libor Rate" means, for any Interest Period for any
Eurodollar Loan, a rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Administrative Agent to be equal to the Libor
Base Rate for such Interest Period divided by 1 minus the Reserve Requirement
(if any) for such Interest Period.
(10) "Adjusted Net Operating Income" means the amount by which
Adjusted Operating Revenues exceeds Adjusted Operating Expenses.
(11) "Adjusted Operating Expenses" means, as of any given date, all
Operating Expenses for the twelve (12) full calendar months preceding such date,
as determined and adjusted by Administrative Agent in accordance with its audit
policies and procedures consistent with, and similar in substance to, the
policies and procedures used in connection with the original underwriting of the
Loan including, without limitation, adjustments to reflect (a) management fees
equal to the greater of (i) actual management fees (including the fair and
equitable portion of compensation paid to off-site employees of the Manager
working on matters relating to the Project) and (ii) 3% of Operating Revenues,
(b) capital repair expenditures equal to $0.25 per rentable square foot per
annum and (c) other known changes in Operating Expenses.
(12) "Adjusted Operating Revenues" means, as of any given date, all
Operating Revenues for the twelve (12) full calendar months preceding such date
(except in the case of fixed base rent payable under leases, where such amounts
shall be determined based upon the annualized fixed base rent payable during the
immediately preceding calendar month under all leases at the Project which are
not then in default), as determined and adjusted by Administrative Agent in
accordance with its audit policies and procedures consistent with, and similar
in substance to, the policies and procedures used in connection with the
original underwriting of the Loan, including, without limitation, (a)
adjustments to reflect occupancy based on the lesser of
2
<PAGE>
(i) actual occupancy and (ii) 95% occupancy and (b) the inclusion of rental
payments for executed leases then subject to a free rent or other rental
abatement period (if applicable) as if such payments were being made, provided
the lease has been approved by Administrative Agent and the tenant is not in
default hereunder.
(13) "Advance Date" has the meaning assigned in Section 2.6(3).
(14) "Affiliate" means (a) any corporation in which Borrower or any
partner, shareholder, director, officer, member, or manager of Borrower directly
or indirectly owns or controls more than ten percent (10%) of the beneficial
interest, (b) any partnership, joint venture or limited liability company in
which Borrower or any partner, shareholder, director, officer, member, or
manager of Borrower is a partner, joint venturer or member, (c) any trust in
which Borrower or any partner, shareholder, director, officer, member or manager
of Borrower is a trustee or beneficiary, (d) any entity of any type which is
directly or indirectly owned or controlled by Borrower or any partner,
shareholder, director, officer, member or manager of Borrower, (e) any partner,
shareholder, director, officer, member, manager or employee of Borrower, (f) any
Person related by birth, adoption or marriage to any partner, shareholder,
director, officer, member, manager, or employee of Borrower, or (g) any Borrower
Party.
(15) "Agency Fee" means the agency fee agreed to by Borrower and the
Administrative Agent pursuant to the Fee Letter.
(16) "Agreement" means this Loan Agreement, as amended from time to
time.
(17) "Alternate Base Rate" means, for any day, a rate per annum equal
to the Prime Rate in effect for such day plus seventy-five one-hundredths of one
percent (0.75%) per annum.
(18) "Alternate Base Rate Loans" means Loans that bear interest at
rates based upon the Alternate Base Rate.
(19) "Applicable Lending Office" means, for each Lender and for each
Type of Loan, the "Lending Office" of such Lender (or of an affiliate of such
Lender) designated for such Type of Loan on the respective signature pages
hereof or such other office of such Lender (or of an affiliate of such Lender)
as such Lender may from time to time specify to the Administrative Agent and the
Borrower as the office by which its Loans of such Type are to be made and
maintained.
(20) "Approved Expenses" means, during any Trigger Period, such
Operating Expenses as shall have been set forth in the Approved Annual Budget
for the period in question, together with any other reasonable and customary
Operating Expenses and extraordinary Operating Expenses not set forth in such
Approved Annual Budget which Administrative Agent shall have approved of in
writing in its sole but reasonable discretion.
(21) "Appraisal" means an appraisal of the Project prepared by an MAI
appraiser selected by or otherwise satisfactory to the Administrative Agent in
its sole discretion, which appraisal must also (a) satisfy the requirements of
Title 11 of the Financial Institution Reform, Recovery and Enforcement Act of
1989 and the regulations promulgated thereunder
3
<PAGE>
(including the appraiser with respect thereto) and (b) be otherwise in form and
substance satisfactory to the Administrative Agent.
(22) "Asset Management Agreement" means that certain Asset Management
Agreement, dated as of October 10, 1996, between Asset Manager and the REIT with
respect to the asset management of the Project by the Asset Manager, together
with any asset management agreements entered into with future asset managers in
accordance with the terms of this Agreement.
(23) "Asset Manager" means 970 Management, LLC, a New York limited
liability company, which is initially the asset manager of the Project under the
Asset Management Agreement, together with any successor asset managers appointed
for the Project in accordance with the terms of this Agreement.
(24) "Asset Manager Comfort Letter" means that certain letter
agreement, dated the date hereof, among the Administrative Agent (on behalf of
the Lenders), the REIT and the Asset Manager, as the same may be modified or
amended from time to time.
(25) "Assignment and Acceptance" means an Assignment and Acceptance,
duly executed by the parties thereto, in substantially the form of Exhibit D
hereto and consented to by the Administrative Agent in accordance with Section
11.25(2).
(26) "Assignment of Rents and Leases" means the Assignment of Rents
and Leases, executed by Borrower for the benefit of the Administrative Agent (on
behalf of the Lenders), and pertaining to leases of space in the Project, as the
same may be modified or amended from time to time.
(27) "Basle Accord" means the proposals for risk-based capital
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended, modified
and supplemented and in effect from time to time or any replacement thereof.
(28) "Borrower Account" has the meaning assigned in Section 3.6.
(29) "Borrower Party" means any general partner in Borrower, and any
general partner in any partnership that is a general partner in Borrower, at any
level.
(30) "Business Day" means (a) any day other than a Saturday, a Sunday,
or other day on which commercial banks located in the New York City , Frankfurt,
Germany and London, England are authorized or required by law to remain closed
and (b) in connection with a borrowing of, a payment or prepayment of principal
of or interest on, a Conversion of or into, or an Interest Period for, a
Eurodollar Loan or a notice by the Borrower with respect to any such borrowing,
payment, prepayment or Conversion, the term "Business Day" shall also exclude a
day on which banks are not open for dealings in Dollar deposits in the London
interbank market.
(31) "Capital Improvements Reserve Account" has the meaning assigned
in Schedule 2.4(1).
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(32) "Cash Management Account" has the meaning assigned in Section
3.7.
(33) "Cash on Cash Return" means the ratio, expressed as a percentage,
of (a) annualized Adjusted Net Operating Income to (b) the outstanding principal
balance of the Loans.
(34) "Code" means the Internal Revenue Code of 1986, as amended.
(35) "Commitment" means, as to each Lender, the obligation of such
Lender to make a Loan in a principal amount up to but not exceeding the amount
set opposite the name of such Lender on Schedule 1 under the caption
"Commitment" or, in the case of a Person that becomes a Lender pursuant to an
assignment permitted under Section 11.25(2), as specified in the respective
instrument of assignment pursuant to which such assignment is effected. The
original aggregate principal amount of the Commitments is $425,000,000.
(36) "Consumer Price Index" means the "Consumer Price Index -- For all
Items for the New York-Northern New Jersey Area (1982-1984=100)", published
monthly in the "Monthly Labor Review" of the Bureau of Labor Statistics of the
United States Department of Labor. If at any time the Consumer Price Index is no
longer available, then the term "Consumer Price Index" shall be an index
selected by Administrative Agent which, in the opinion of Administrative Agent,
is comparable to the Consumer Price Index.
(37) "Continue" "Continuation" and "Continued" refer to the
continuation pursuant to Section 2.2 of a Eurodollar Loan from one Interest
Period to the next Interest Period for such Loan.
(38) "Contract Rate" has the meaning assigned in Article 2.
(39) "Counterparty" shall mean Morgan Stanley Derivative Products,
Inc. and any substitute or successor counterparty having a credit rating
satisfactory to, and otherwise approved by, the Administrative Agent in its sole
discretion.
(40) "Convert" "Conversion" and "Converted" refer to a conversion
pursuant to the terms of this Agreement of one Type of Loans into another Type
of Loans, which may be accompanied by the transfer by a Lender (at its sole
discretion) of a Loan from one Applicable Lending Office to another.
(41) "Curtailment Account" has the meaning assigned in Schedule 3.7.
(42) "Debt" means, for any Person, without duplication: (a) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (b) all unfunded amounts under a loan agreement, letter
of credit, or other credit facility for which such Person would be liable, if
such amounts were advanced under the credit facility, (c) all amounts required
to be paid by such Person as a guaranteed payment to partners, members (or other
equity holders) or a preferred or special dividend, including any mandatory
redemption of shares or interests, (d) all indebtedness guaranteed by such
Person, directly or indirectly, (e) all obligations under leases that constitute
capital leases for which such Person is liable, and (f) all obligations of such
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Person under interest rate swaps, caps, floors, collars and other interest hedge
agreements, in each case whether such Person is liable contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations such Person otherwise assures a creditor against loss.
(43) "Debt Service" means the aggregate interest and other payments
due under the Loans for the period of time for which calculated, but excluding
(a) payment of Net Cash Flow applied to reduction of principal and (b) escrows
or reserves required by the Administrative Agent. In addition to the foregoing,
for purposes of determining whether a Mezzanine Loan will be permitted (as more
particularly provided in Section 8.1(2)), Debt Service shall include the
aggregate interest, principal and other payments due under any other outstanding
permitted Debt relating to the Project approved by the Administrative Agent for
the period of time for which calculated (including actual or pro-forma payments
due under the Mezzanine Loan).
(44) "Default Rate" means the lesser of (a) the maximum rate of
interest allowed by applicable law, and (b) five percent (5%) per annum in
excess of (i) with respect to Alternate Base Rate Loans, the Alternate Base Rate
as in effect from time to time or (ii) with respect to Eurodollar Loans, the
respective Contract Rate for such Eurodollar Loan.
(45) "Depository Bank" means The Chase Manhattan Bank and any other
financial institution approved by the Administrative Agent in writing in its
discretion.
(46) "Dollars" and "$" means lawful money of the United States of
America.
(47) "Environmental Laws" has the meaning assigned in Article 4.
(48) "Eurodollar Loans" means Loans that bear interest at rates based on rates
referred to in the definition of "Libor Base Rate".
(49) "Event of Default" has the meaning assigned in Article 9.
(50) "Extension Option" has the meaning assigned in Section 2.3(4).
(51) "Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to Bankers Trust Company on such Business Day
on such transactions as determined by the Administrative Agent, or such other
commercial bank with deposits exceeding $1,000,000,000 as selected by the
Administrative Agent.
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(52) "Fee Letter" means the letter agreement, dated the date hereof,
between the Borrower and the Administrative Agent with respect to certain fees
payable by Borrower in connection with the Loans, as the same may be modified or
amended from time to time.
(53) "GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the American Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the United States accounting profession, to the
extent such principles are applicable to the facts and circumstances on the date
of determination, in all cases consistently applied.
(54) "GECC" means General Electric Capital Corporation.
(55) "Hazardous Materials" has the meaning assigned in Article 4.
(56) "Impound Account" has the meaning assigned in Schedule 3.4.
(57) "Intercreditor Agreement" means an intercreditor agreement
between Administrative Agent (on behalf of the Lenders) and the Mezzanine Lender
incorporating the terms and conditions set forth in Exhibit G attached hereto
and otherwise reasonably acceptable to the Administrative Agent.
(58) "Interest Period" means, for any Eurodollar Loan, each period
commencing on the date such Eurodollar Loan is made or Converted from a Loan of
another Type or (in the event of a Continuation) the last day of the next
preceding Interest Period for such Loan, and ending on the first Business Day of
the next calendar month; provided that, if any Interest Period would otherwise
end after the Maturity Date, such Loan shall not be Continued as, or Converted
into, a Eurodollar Loan and shall bear interest at the Alternate Base Rate. In
no event may Borrower have more than one Interest Period in respect of
Eurodollar Loans from all Lenders outstanding at any one time and to the extent
any Loan does not qualify for such Interest Period, such loan shall bear
interest at the Alternative Base Rate.
(59) "Interest Rate Guaranty" means a guaranty agreement or agreements
in the form of Exhibit H attached hereto made by GECC with respect to Borrower's
obligations under the Interest Rate Protection Agreement, together with all
amendments, modifications or supplements thereto.
(60) "Interest Rate Protection Agreement" shall mean (a) during the
initial term of the Loans, that certain ISDA Master Agreement, dated as of
December 13, 1999, between Borrower and the Counterparty, together with the
Schedule thereto and a trade confirmation thereunder, each dated as of the date
of the aforementioned ISDA Master Agreement, with respect to an interest rate
swap transaction in the notional amount of $425,000,000, and (b) during any
extension period, if Borrower duly exercises the Extension Option, such interest
rate swap, cap or collar agreement or similar arrangement between Borrower and
one or more financial institutions acceptable to the Administrative Agent
providing for the transfer or mitigation of interest risks either generally or
under specific conditions in a manner satisfactory
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to the Administrative Agent, the obligations of Borrower under the agreement
specified in the foregoing clause (a) being guaranteed by GECC pursuant to the
Interest Rate Guaranty.
(61) "Interest Rate Protection Pledge" shall mean an Assignment,
Pledge and Security Agreement in the form of Exhibit E attached hereto, to be
executed, dated and delivered by Borrower to the Administrative Agent (on behalf
of the Lenders) at any time Borrower elects to enter into an Interest Rate
Protection Agreement, covering Borrower's right, title and interest in and to
any such Interest Rate Protection Agreement, as the same may from time to time
hereafter be modified, supplemented or amended.
(62) "Leasing Reserve" has the meaning assigned in Schedule 2.4(2).
(63) "Leasing Reserve Account" has the meaning assigned in Schedule
2.4(2).
(64) "Letter of Credit" has the meaning assigned in Section 3.7(3).
(65) "Libor Base Rate" means, for any Interest Period for any
Eurodollar Loan, the rate per annum appearing on Page 3750 of the Dow Jones
Markets (Telerate) Service (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to Dollar deposits in the
London interbank market) at approximately 11:00 a.m. London time on the date two
Business Days prior to the first day of such Interest Period as the rate for the
offering of Dollar deposits having a term comparable to such Interest Period,
provided that if such rate does not appear on such page, or if such page shall
cease to be publicly available, or if the information contained on such page, in
the reasonable judgment of the Administrative Agent shall cease accurately to
reflect the rate offered by leading banks in the London interbank market as
reported by any publicly available source of similar market data selected by the
Administrative Agent, the Libor Base Rate for such Interest Period shall be
determined from such substitute financial reporting service as the
Administrative Agent in its discretion shall determine.
(66) "Lien" means any lien, mortgage, encumbrance or other similar
interest, or claim thereof, in the Project securing an obligation owed to, or a
claim by, any Person other than the owner of the Project, whether such interest
is based on common law, statute or contract, including the lien or security
interest arising from a deed of trust, mortgage, assignment, encumbrance,
pledge, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting the Project.
(67) "Limiting Regulation" means any law or regulation of the Federal
Republic of Germany, or any interpretation, directive or request under any such
law or regulation (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) by any court or governmental or
monetary authority charged with the interpretation or administration thereof, or
any internal bank policy resulting therefrom (applicable to loans made
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in the United States of America) which would or could in any way require a
Lender to have the approval right contained in Section 8.1(4).
(68) "Loans" means the loans to be made by the Lenders to Borrower
under this Agreement and all other amounts evidenced or secured by the Loan
Documents.
(69) "Loan Documents" means: (a) this Agreement, (b) the Notes, (c)
the Fee Letter, (d) any letter of credit provided to the Administrative Agent in
connection with the Loan, (e) the Mortgage, (f) the Assignment of Rents and
Leases, (f) the Subordination of Management Agreement, (h) the Lockbox
Agreement, (i) the Interest Rate Protection Agreement, (j) the Interest Rate
Protection Pledge, (k) Uniform Commercial Code financing statements, (l) the
Account Pledge, (m) such assignments of management agreements, contracts and
other rights as may be required under the Commitment or otherwise requested by
the Administrative Agent, (n) any Intercreditor Agreement, (o) the Asset Manager
Comfort Letter, (p) all other documents evidencing, securing, governing or
otherwise pertaining to the Loans, and (q) all amendments, modifications,
renewals, substitutions and replacements of any of the foregoing.
(70) "Loan Year" means the period between the date hereof and December
31, 2000 for the first Loan Year and the period between each succeeding January
1st and December 31st until the Maturity Date.
(71) "Loan-to-Value Ratio" means, as of the date such calculation is
being made, the ratio, expressed as a percentage, of (a) the then outstanding
principal balance of the Loans to (b) the "as is" appraised value of the
Property as set forth in a current Appraisal of the Project.
(72) "Lockbox Account" has the meaning set forth in Section 3.6.
(73) "Lockbox Agreement" has the meaning set forth in Section 3.6.
(74) "Lockbox Bank" has the meaning set forth in Section 3.6.
(75) "Majority Lenders" means Lenders holding more than 66 2/3% of the
aggregate outstanding principal amount of the Loans or, if the Loans shall not
have been made, more than 66 2/3% of the Commitments.
(76) "Major Lease" means any single lease at the Project demising
25,000 or more square feet or any single lease at the Project (regardless of the
amount of square feet covered thereby) which, in the aggregate with all other
space in the Project leased to the same tenant or any affiliate thereof during
the preceding six (6) month period, covers 40,000 or more square feet.
(77) "Management Agreement" means that certain Management and Leasing
Agreement, dated as of October 10, 1996 and modified by certain handwritten
changes to such agreement made on or about December 2, 1999 in order to correct
a number of erroneous references to 237 Park Avenue, New York, New York as the
subject of such agreement, between Manager and Borrower with respect to the
management of the Project by the Manager, together
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with any management agreements entered into with future Managers in accordance
with the terms of this Agreement.
(78) "Manager" means Tishman Speyer Properties, L.P., a New York
limited partnership, which is initially the property manager of the Project
under the Management Agreement, together with any successor property managers
appointed for the Project in accordance with the terms of this Agreement.
(79) "Maturity Date" means the earlier of (a)(i) January 2, 2003 or
(ii) if the Extension Option is duly exercised, January 2, 2004 or (b) any
earlier date on which all of the Loans are required to be paid in full, by
acceleration or otherwise, under this Agreement or any of the other Loan
Documents.
(80) "Mezzanine Lender" shall mean an institutional mezzanine lender
(including, without limitation, mezzanine funds, real estate funds, commercial
banks, savings and loan associations, pension plans and pension funds) with
assets of not less than $1,000,000,000 and net worth of not less than
$200,000,000 or otherwise approved by the Administrative Agent on behalf of the
Lenders.
(81) "Mezzanine Loan" shall have the meaning set forth in Section 8.1.
(82) "Mortgage" means the Amended, Restated and Consolidated Mortgage
and Security Agreement executed by Borrower in favor of the Administrative Agent
(on behalf of the Lenders), covering the Project and any amendments,
modifications, renewals, substitutions, consolidations, severances and
replacements thereof.
(83) "Net Cash Flow" means, for any period, the amount by which
Operating Revenues exceed the sum (without duplication) of (a) Operating
Expenses, (b) Debt Service, (c) any actual payment into impounds, escrows, or
reserves required by the Administrative Agent (including, without limitation,
payments into the Tax and Insurance Escrow Account, the Capital Improvements
Reserve Account and the Leasing Reserve Account), except to the extent included
within the definition of Operating Expenses, and (d) tenant improvement costs,
leasing commissions and capital improvement costs actually paid by Borrower
during such period under leases approved (if necessary) by Administrative Agent.
(84) "Notes" means the promissory notes of even date herewith as
provided for in Section 2.1(4) and all promissory notes delivered in
substitution or exchange therefor, in each case as the same may be consolidated,
replaced, severed, modified, amended or extended from time to time.
(85) "Operating Expenses" means all reasonable and necessary expenses
of operating the Project in the ordinary course of business which are actually
paid by Borrower and which are directly associated with and fairly allocable to
the Project for the applicable period, including ad valorem real estate taxes
and assessments, insurance premiums, regularly scheduled tax impounds paid to
the Administrative Agent, maintenance costs, management fees and costs,
accounting, legal, and other professional fees, fees relating to environmental
and Net Cash Flow, Actual Net Operating Income and Adjusted Net Operating Income
audits, and other expenses incurred by the Administrative Agent and reimbursed
by Borrower under this Agreement and the
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other Loan Documents, deposits to the Tax and Insurance Escrow Account, the
Capital Improvement Reserve Account, wages, salaries, and personnel expenses,
but excluding Debt Service, capital expenditures, any of the foregoing expenses
which are paid from deposits to cash reserves previously included as Operating
Expenses, any payment or expense for which Borrower was or is to be reimbursed
from proceeds of the Loans or insurance or by any third party, and any non-cash
charges such as depreciation and amortization. Any management fee or other
expense payable to Borrower or to an Affiliate of Borrower shall be included as
an Operating Expense only with the Administrative Agent's prior approval, such
approval not to be unreasonably withheld. Operating Expenses shall not include
federal, state or local income taxes or legal and other professional fees
unrelated to the operation of the Project.
(86) "Operating Revenues" means all cash receipts of Borrower from
operation of the Project or otherwise arising in respect of the Project after
the date hereof which are properly allocable to the Project for the applicable
period, including receipts from leases and parking agreements, concession fees
and charges and other miscellaneous operating revenues, proceeds from rental or
business interruption insurance, proceeds of any loans (other than the Loans and
any refinancing of the Loans) obtained by Borrower after the date hereof which
are secured by the Project (less only reasonable and customary expenses incurred
in procuring and closing such loan and actually paid to individuals or entities
other than Borrower or any Affiliate of Borrower and without implying any
consent of the Administrative Agent or any Lender to the granting of any
security for any such loans), withdrawals from cash reserves (except to the
extent any operating expenses paid therewith are excluded from Operating
Expenses), but excluding security deposits and earnest money deposits until they
are forfeited by the depositor, advance rentals until they are earned, lease
buy-out payments made by tenants in connection with any surrender, cancellation
or termination of their lease and proceeds from a sale or other disposition.
(87) "Participant" has the meaning assigned in Section 11.25(3).
(88) "Payment Date" has the meaning assigned in Section 2.3(1).
(89) "Payor" has the meaning assigned in Section 2.6(3).
(90) "Permitted Encumbrances" has the meaning set forth in the
Mortgage.
(91) "Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, trustee, estate, limited
liability company, unincorporated organization, real estate investment trust,
government or any agency or political subdivision thereof, or any other form of
entity.
(92) "Potential Default" means the occurrence of any event or
condition which, with the giving of notice, the passage of time, or both, would
constitute an Event of Default.
(93) "Prime Rate" means the highest prime rate (or base rate) reported
in the Money Rates column or section of The Wall Street Journal as the rate in
effect for corporate loans at large U.S. money center commercial banks (whether
or not such rate has actually been charged by any such bank) from time to time.
If The Wall Street Journal ceases publication of the Prime Rate, the "Prime
Rate" shall mean the prime rate (or base rate) announced by Bankers Trust
Company, New York, New York (whether or not such rate has actually been charged
by
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such bank). If such bank discontinues the practice of announcing the Prime Rate,
the "Prime Rate" shall mean the prime or base rate charged by a United States
commercial bank with deposits exceeding $1,000,000,000 selected by the
Administrative Agent to its most creditworthy large corporate borrowers.
(94) "Project" means that certain 43 story office building located at
1290 Avenue of the Americas, New York, New York, and all related facilities,
amenities, fixtures, and personal property owned by Borrower and any
improvements now or hereafter located on the real property described in Exhibit
A.
(95) "Proposed Lender" has the meaning assigned in Section 2.7(7).
(96) "Quarter" means any one of the periods of time from January 1 to
March 31, from April 1 to June 30, from July 1 to September 30, or from October
1 to December 31.
(97) "Refinancing" has the meaning assigned in Section 2.1(4)(e).
(98) "Refinancing Lender" has the meaning assigned in Section
2.1(4)(e).
(99) "Refinancing Note" has the meaning assigned in Section 2.1(4)(e).
(100) "Regulation A" means Regulation A of the Board of Governors of
the Federal Reserve System of the United States of America (or any successor),
as the same may be modified and supplemented and in effect from time to time.
(101) "Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System of the United States of America (or any successor),
as the same may be modified and supplemented and in effect from time to time.
(102) "Regulatory Change" means, with respect to any Lender, any
change after the date hereof in Federal, state or foreign law or regulations
(including, without limitation, Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including such Lender of or under any Federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
(103) "REIT" means Metropolis Realty Trust, Inc.
(104) "Requesting Lender" has the meaning assigned in Section 2.7(7).
(105) "Required Payment" has the meaning assigned in Section 2.6(3).
(106) "Reserve Requirement" means, for any Interest Period for any
Eurodollar Loan, the average maximum rate at which reserves (including, without
limitation, any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of the
Federal Reserve System in New York City with deposits exceeding $1,000,000,000
against "Eurocurrency liabilities" (as such term is used in
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Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall include any other reserves required to be maintained by such
member banks by reason of any Regulatory Change with respect to (i) any category
of liabilities that includes deposits by reference to which the Eurodollar Base
Rate for any Interest Period for any Eurodollar Loans is to be determined as
provided in the definition of "Libor Base Rate" or (ii) any category of
extensions of credit or other assets that includes Eurodollar Loans.
(107) "Secondary Market Transaction" has the meaning assigned in
Section 11.10(2).
(108) "Security Deposit Account" means a segregated account maintained
by Borrower (in the name of Administrative Agent as secured party) at the
Depository Bank for the retention of cash security deposits provided by tenants
under leases at the Project.
(109) "Single Purpose Entity" shall mean a corporation, limited
partnership or limited liability company which at all times on and after the
date hereof, unless otherwise approved in writing by the Administrative Agent:
(a) is organized solely for the purpose of one of the following:
(a) acquiring, developing, owning, holding, selling, leasing, transferring,
exchanging, managing and operating the Project, entering into this
Agreement, refinancing the Project in connection with a permitted repayment
of the Loans, and transacting any and all lawful business that is incident,
necessary and appropriate to accomplish the foregoing; or (b) acting as the
sole general partner of Borrower;
(b) is not engaged and will not engage in any business unrelated
to (a) the acquisition, development, ownership, management or operation of
the Project or (b) acting as the sole general partner of the Borrower;
(c) does not have and will not have any assets other than those
related to (a) the Project or (b) its partnership interest in the Borrower;
(d) except in connection with the dissolution of 237/1290 Lower
Tier Associates, L.P., has not engaged, sought or consented to and will not
engage in, seek or consent to any dissolution, winding up, liquidation,
consolidation, merger, sale of all or substantially all of its assets,
transfer of partnership interests (if such entity is a general partner in a
limited partnership (other than as expressly permitted in Section 8.1)), or
any amendment of its articles of incorporation, partnership certificate or
partnership agreement (as applicable) with respect to the matters set forth
in this Section;
(e) if such entity is (i) a limited liability company, has
articles of organization, a certificate of formation and/or an operating
agreement, as applicable, (ii) a limited partnership, has a partnership
certificate and partnership agreement, or (iii) a corporation, has a
certificate of incorporation or articles of incorporation, that in each
case provide that such entity (a) will not dissolve, merge, liquidate or
consolidate; (b) sell all or substantially all of its assets or the assets
of any other entity in which it has a direct or indirect legal or
beneficial ownership interest; and (c) engage in any other business
activity, other than as permitted pursuant to the Loan Documents, or amend
its
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organizational documents with respect to the matters set forth in this
Section without the consent of the Administrative Agent in each case;
(f) if such entity is a limited partnership, has as its only
general partner a Single Purpose Entity;
(g) is and will remain solvent and pay its debts and liabilities
(including, as applicable, shared personnel and overhead expenses) from its
assets as the same shall become due, and is maintaining and will maintain
adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated
business operations;
(h) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;
(i) has maintained and will maintain its accounts, books and
records separate from any other Person and will file its own tax returns,
except to the extent that it is required to file consolidated tax returns
by law;
(j) has not commingled and will not commingle its funds or assets
with those of any other Person (except as provided in the Loan Documents);
(k) has held and will hold its assets in its own name;
(l) has maintained and will maintain financial statements, that
properly and accurately show its separate assets and liabilities and do not
show the assets or liabilities of any other Person, and has not permitted
and will not permit its assets to be listed as assets on the financial
statement of any other entity;
(m) has paid and will pay its own liabilities and expenses,
including, but not limited to, the salaries of its own employees (if any),
out of its own funds and assets, and has maintained and will maintain a
sufficient number of employees in light of its contemplated business
operations;
(n) has observed and will observe all corporate, limited
partnership or limited liability company formalities, as applicable;
(o) in the case of Borrower, has not incurred and will not incur
any debt other than (a) the Loans, and (b) trade and operational debt which
is (i) incurred in the ordinary course of business, (ii) not more than
sixty (60) days past due, (iii) with trade creditors, (iv) in the
aggregate, in an outstanding amount less than $250,000 at any given time,
and (v) not evidenced by a note, except as permitted pursuant in this
Agreement. No debt other than the Loans may be secured (subordinate or pari
passu) by the Project;
(p) has not and will not assume or guarantee or become obligated
for the debts of any other Person or hold out its credit as being available
to satisfy the obligations of any other Person, except as permitted
pursuant to this Agreement;
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(q) except as set forth in Schedule 6.3, has not and will not
acquire obligations or securities of its partners, members or ------------
shareholders or any other affiliate;
(r) has allocated and will allocate fairly and reasonably any
overhead expenses that are shared with an affiliate, including, but not
limited to, paying for shared office space and services performed by any
officer or employee of an affiliate;
(s) maintains and uses and will maintain and use separate
invoices and checks bearing its name. The stationary, invoices, and checks
utilized by the Single Purpose Entity or utilized to collect its funds or
pay its expenses shall bear its own name and shall not bear the name of any
other entity unless such entity is clearly designated as being the Single
Purpose Entity's agent;
(t) except in connection with the Loans and the indebtedness
being refinanced by the Loans, has not pledged and, except as permitted
pursuant to the Loan Documents, will not pledge its assets for the benefit
of any other Person;
(u) has conducted business, held itself out and identified itself
and will conduct business, hold itself out and identify itself as a
separate and distinct entity under its own name or in a name franchised or
licensed to it by an entity other than an affiliate of Borrower and not as
a division or part of any other Person;
(v) has maintained and will maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify
its individual assets from those of any other Person;
(w) has not made and will not make loans to any Person or hold
evidence of indebtedness issued by any other Person (other than cash and
securities issued by a Person that is not an Affiliate);
(x) has not identified and will not identify its partners,
members or shareholders, or any affiliate of any of them, as a division or
part of it, and has not identified itself and shall not identify itself as
a division of any other Person;
(y) has not entered into or been a party to, and will not enter
into or be a party to, any transaction with its partners, members,
shareholders or affiliates except in the ordinary course of its business
and on terms which are intrinsically fair, commercially reasonable and are
no less favorable to it than would be obtained in a comparable arm's-length
transaction with an unrelated third party;
(z) has not and will not have any obligation to indemnify its
partners, officers, directors or members, as the case may be, unless such
obligation is fully subordinated to the Loans and will not constitute a
claim against it in the event that after payment of the Loans, cash flow is
insufficient to pay such obligation;
(aa) if such entity is a corporation, it is required to consider
the interests of its creditors in connection with all corporate actions;
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(bb) does not and will not have any of its obligations guaranteed
by any affiliate, except in connection with the Loans.
(110) "Site Assessment" means an environmental engineering report for
the Project prepared by an engineer engaged by the Administrative Agent at
Borrower's expense, and in a manner satisfactory to the Administrative Agent,
based upon an investigation relating to and making appropriate inquiries
concerning the existence of Hazardous Materials on or about the Project, and the
past or present discharge, disposal, release or escape of any such substances,
all consistent with good customary and commercial practice.
(111) "State" means the State of New York.
(112) "Subordination of Management Agreement" means that certain
Manager's Consent and Subordination of Management Agreement, dated the date
hereof, by the Manager in favor of the Administrative Agent (on behalf of the
Lenders).
(113) "Swap Guaranty Fee" has the meaning assigned in Section 2.8.
(114) "Swap Obligations" has the meaning assigned in Section 2.8.
(115) "Swap Reimbursement Obligation" has the meaning assigned in
Section 2.8.
(116) "Taxes" has the meaning assigned in Section 8.2.
(117) "Tax and Insurance Escrow Account" has the meaning assigned in
Section 3.4.
(118) "Tax and Insurance Escrow Reserve has the meaning assigned in
Section 3.4.
(119) "Threshold Amount" has the meaning assigned in Section 3.2(1).
(120) "Trigger Period" means the period occurring from and after such
time as the Actual Debt Service Coverage Ratio for any Quarter shall be less
than 1.20 to 1.00 through and until such time as the Actual Debt Service
Coverage Ratio equals or exceeds 1.25 to 1.0 for two (2) consecutive Quarterly
determinations and any period during which an Event of Default exists, with the
initial determination of the Debt Service Coverage Ratio to be made hereunder
for the period January 1, 2000 through March 31, 2000.
(121) "Type" has the meaning assigned in Section 1.2.
(122) "Year 2000" has the meaning assigned in Section 6.15.
Section 1.2. Types of Loans. Loans hereunder are distinguished by "Type".
The "Type" of a Loan refers to whether such Loan is an Alternate Base Rate Loan
or a Eurodollar Loan, each of which constitutes a Type.
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ARTICLE 2
LOAN TERMS
Section 2.1. The Commitments, Loans and Notes
(1) Loans. Each Lender severally agrees, on the terms and conditions
of this Agreement, to make a term loan to Borrower in Dollars in a principal
amount up to but not exceeding the amount of the Commitment of such Lender. The
Loans shall be funded in a single advance and repaid in accordance with this
Agreement. The initial advance of the Loans, in the aggregate amount of up to
$425,000,000, shall be made upon Borrower's satisfaction of the conditions
described in Schedule 2.1.
(2) Lending Offices. The Loans of each Lender shall be made and
maintained at such Lender's Applicable Lending Office for
Loans of such Type.
(3) Several Obligations. The failure of any Lender to make any Loan to
be made by it on the date specified therefor shall not relieve any other Lender
of its obligation to make its Loan, but neither any Lender nor the
Administrative Agent shall be responsible for the failure of any other Lender to
make a Loan to be made by such other Lender.
(4) Notes.
(a) Loan Notes. Except as provided in subsection (e) below with
respect to a Refinancing Note, the Loans made by each Lender shall be
evidenced by a single promissory note of Borrower substantially in the form
of Exhibit C, payable to such Lender in a principal amount equal to the
amount of its Commitment as originally in effect and otherwise duly
completed.
(b) Endorsements on Notes. The date, amount, Type, interest rate
and duration of Interest Period (if applicable) of each Loan made by each
Lender to Borrower, and each payment made on account of the principal
thereof, shall be recorded by such Lender on its books and, prior to any
transfer of the Note held by it, endorsed by such Lender on the schedule
attached to such Note or any continuation thereof; provided that the
failure of such Lender to make any such recordation or endorsement shall
not affect the obligations of Borrower to make a payment when due of any
amount owing hereunder or under such Note in respect of such Loans.
(c) Substitution, Exchange and Subdivision of Notes. No Lender
shall be entitled to have its Note substituted or exchanged for any reason,
or subdivided for promissory notes of lesser denominations, except in
connection with a permitted assignment of all or any portion of such
Lender's Commitment, Loans and Note pursuant to Sections 11.10(3) and 11.25
(and, if requested by any Lender, Borrower agrees to so substitute or
exchange any Note and enter into note splitter agreements in connection
therewith).
(d) Loss, Theft, Destruction or Mutilation of Notes. In the event
of the loss, theft or destruction of any Note, upon Borrower's receipt of a
reasonably
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satisfactory indemnification agreement executed in favor of Borrower by the
holder of such Note, or in the event of the mutilation of any Note, upon
the surrender of such mutilated Note by the holder thereof to Borrower,
Borrower shall execute and deliver to such holder a new replacement Note in
lieu of the lost, stolen, destroyed or mutilated Note.
(e) Refinancing Note. In connection and concurrently with any
payment or permitted prepayment of the Loans by or on behalf of Borrower
which has been structured as a refinancing of the Loans where the
Administrative Agent has been requested to assign the Mortgage to a new
lender of the Borrower (a "Refinancing Lender") in accordance with Section
8.8 of the Mortgage (a "Refinancing"), the Lenders shall deliver the Notes
to the Administrative Agent for retention by the Administrative Agent in
accordance with this subsection (e) and the Administrative Agent shall be
(and hereby is) authorized by the Lenders to consolidate the indebtedness
evidenced by such Notes into a single replacement promissory note made
payable by the Borrower to the order of the Administrative Agent, acting in
its capacity as such on behalf and for the ratable benefit of the Lenders
in accordance with their respective pro-rata share of the Loans, and
otherwise substantially in the form of Exhibit C hereto (a "Refinancing
Note"). Upon the closing of the Refinancing and the satisfaction of all
conditions set forth herein for a release or satisfaction of the Mortgage,
the Administrative Agent shall (and is hereby authorized by the Lenders
to), subject to any then applicable legal requirements, endorse (without
any representation, warranty and/or recourse, express or implied) the
Refinancing Note to the order of the Refinancing Lender and the Notes shall
thereupon be returned by the Administrative Agent to the Borrower. In the
event that the Refinancing shall fail to close, then, at the request of any
of the Lenders, the Administrative Agent shall return all of the Notes to
the applicable Lenders and the Refinancing Note shall thereupon be returned
to the Borrower. Borrower shall pay all costs and expenses (including
attorneys' fees and reimbursements) incurred by the Administrative Agent
and/or the Lenders in connection with any actual or proposed Refinancing.
Section 2.2. Interest Rate; Late Charges. The outstanding principal balance
of the Loans (including any amounts added to principal under the Loan Documents)
shall bear interest at a rate of interest equal to two percent (2.00%) per annum
in excess of the Adjusted Libor Rate (the "Contract Rate"). Subject to the
provisions of this Agreement which, in certain instances, require payment of
interest at the Alternate Base Rate, such Eurodollar Loans shall Continue from
one Interest Period to the next Interest Period. Interest shall be computed on
the basis of a fraction, the denominator of which is three hundred sixty (360)
and the numerator of which is the actual number of days elapsed from the date of
the initial advance or the date on which the immediately preceding payment was
due. If Borrower fails to pay any installment of interest or principal within
five (5) days after the date on which the same is due (other than the final
payment of principal due on the Maturity Date), Borrower shall pay to the
Administrative Agent (on behalf of the Lenders) a late charge on such past-due
amount, as liquidated damages and not as a penalty, equal to the greater of (a)
interest at the Default Rate on such amount from the date when due until paid,
or (b) five percent (5%) of such amount, but not in excess of the maximum amount
of interest allowed by applicable law. While any Event of Default exists, the
Loans shall bear interest at the Default Rate; provided, that during the
continuance of an Event of Default the
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Administrative Agent may suspend the right of Borrower to Continue any Loan as a
Eurodollar Loan, in which event all Loans shall be Converted (on the last day(s)
of the respective Interest Periods therefor) into Alternate Base Rate Loans and,
thereafter, the Default Rate shall be computed using the Alternate Base Rate.
Section 2.3. Terms of Payment. The Loans shall be payable as follows:
(1) Interest. On the date hereof, Borrower shall make a payment of
interest only (covering the period from the date hereof through and including
December 31, 1999), and beginning with the Interest Period commencing January 1,
2000, and thereafter, Borrower shall pay interest in arrears on the last day of
each Interest Period, or if the Alternate Base Rate is applicable, the first
Business Day (assuming clause (b) of such definition applies) of each month (the
"Payment Date") in accordance with the wire transfer instructions set forth in
Schedule 2.3(1) hereto (or such other instructions as Administrative Agent may
from time to time provide) until all amounts due under the Loan Documents are
paid in full. Borrower shall pay additional interest as provided in Section 2.8.
(2) Cash Flow Sweep. If and for so long as a Trigger Period shall
exist and be continuing, then one hundred percent (100%) of the Net Cash Flow
for each calendar month shall be deposited into the Curtailment Account in
accordance with Section 3.7 hereof.
(3) Maturity. On the Maturity Date, Borrower shall pay to the
Administrative Agent (on behalf of the Lenders) all outstanding principal,
accrued and unpaid interest, and any other amounts due under the Loan Documents,
including, without limitation, all costs, expenses and fees and other amounts
due under the Interest Rate Protection Agreement. In addition, Borrower shall
(i) cause the Interest Rate Guaranty to be terminated and GECC to be released
from any and all obligations thereunder, as determined by GECC in its sole
discretion, or (ii) provide such other evidence of such termination or release
as GECC shall in its reasonable discretion find satisfactory. Borrower
acknowledges and agrees that the Mortgage secures, among other things, the Swap
Reimbursement Obligations and the Swap Guaranty Fee and, accordingly, agrees
that in the event that it fails to satisfy either of clauses (i) or (ii) above,
Administrative Agent on behalf of Lenders shall not release or assign the
Mortgage.
(4) Extension Option. The Borrower shall have a one time right, at its
option (the "Extension Option"), to extend the Maturity Date for a period of
twelve (12) months from January 2, 2003 to January 2, 2004, subject to the
satisfaction of the following conditions:
(a) Borrower shall notify the Administrative Agent in writing of
Borrower's exercise of such Extension Option at least (60), but not more
than one hundred twenty (120), days prior to the original Maturity Date;
(b) No Event of Default or Potential Default shall have occurred
and be continuing as of (i) the date Borrower so notifies the
Administrative Agent pursuant to paragraph (a) above and (ii) the original
Maturity Date;
(c) Borrower pays an extension fee to the Lenders in an amount
equal to 0.25% of the then outstanding principal balance of the Loans;
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(d) On the dates set forth in paragraph (b) above, (i) the
Loan-to-Value Ratio is no greater than 65%, (ii) the Cash on Cash Return is
at least 12.5%, and (iii) the Adjusted Debt Service Coverage Ratio is at
least 1.5:1;
(e) Borrower executes and delivers to the Administrative Agent
prior to the original Maturity Date, in form reasonably acceptable to the
Administrative Agent, an amendment to the Loan Documents evidencing such
extension, together with an updated Site Assessment, an updated engineering
report for the Project and an updated Appraisal (each dated as of a date
not more than ninety (90) days prior to the original Maturity Date), and
other documentation reasonably required by the Administrative Agent;
(f) Borrower shall, prior to the original Maturity Date, provide
the Administrative Agent with evidence as to (i) the Borrower's compliance
with the interest rate hedging requirements of Section 8.16 and (ii) the
Mezzanine Borrower's extension of the maturity date for Mezzanine Loan to a
date which is co-terminus with the extended Maturity Date and that no
default exists on the part of the Mezzanine Borrower under the Mezzanine
Loan, if the Mezzanine Loan is outstanding; and
(g) Borrower pays to the Administrative Agent, on demand, all
reasonable costs and expenses incurred by the Administrative Agent in
connection with such extension.
(5) Prepayment. The Loans are closed to prepayment, in whole or in
part, during the period up to (and including) June 30, 2000. During the period
from (and including) July 1, 2000 to (and including) December 31, 2000, upon not
less than fifteen (15) days' prior written notice to the Administrative Agent,
Borrower may prepay the Loans, in whole but not in part, upon payment of a
prepayment premium equal to one-half of one percent (0.5%) of the outstanding
principal balance of the Loans. Thereafter, upon not less than fifteen (15)
days' prior written notice to the Administrative Agent, Borrower may prepay the
Loans, in whole but not in part, without prepayment premium. Subject to the
limitations set forth above, if the Loans are prepaid, in whole or in part,
including, without limitation, pursuant to a casualty or condemnation, each such
prepayment shall be made to the Administrative Agent on the prepayment date
specified in the applicable notice to the Administrative Agent pursuant hereto,
and (in every case) together with (a) the accrued and unpaid interest on the
principal amount prepaid, (b) any amounts payable to a Lender pursuant to
Section 2.7(5) as a result of such prepayment while a Eurodollar Loan is in
effect and (c) all costs, expenses and fees required under the Interest Rate
Protection Agreement, including, without limitation, all termination premiums,
penalties, fees, costs and expenses (it being understood and agreed that if
Borrower has paid to and/or deposited with the Administrative Agent all amounts
then due and payable under the Loan Documents, Borrower shall be entitled to
receive and retain any amounts which the Counterparty may be required to pay to
the Borrower solely as a result of any earlier termination of the Interest Rate
Protection Agreement). Additionally, Borrower shall, in connection with any
prepayment of the Loan made by Borrower pursuant to this Section 2.3(5) on any
date, regardless of whether such prepayment is made on a Payment Date, (i) cause
the Interest Rate Guaranty to be terminated and GECC to be released from any and
all obligations thereunder, as determined by GECC in its sole discretion, and
all costs, expenses and fees and
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other amounts due under the Interest Rate Protection Agreement to be paid, or
(ii) provide such other evidence of such termination or release as GECC shall in
its sole discretion find satisfactory. Borrower acknowledges that the Mortgage
secures, among other things, the Swap Reimbursement Obligations (to the extent
provided in Section 2.8(1)(c)) and the Swap Guaranty Fee and, accordingly,
agrees that in the event that it fails to satisfy either of clauses (i) or (ii)
above, Administrative Agent on behalf of Lenders shall not release or assign the
Mortgage. If the Loans are accelerated for any reason other than casualty or
condemnation, Borrower shall pay to the Administrative Agent (on behalf of the
Lenders) the prepayment premium described above, or if the Loans are closed to
prepayment, Borrower shall pay, in addition to all other amounts outstanding
under the Loan Documents, a prepayment premium equal to five percent (5%) of the
outstanding balance of the Loans.
(6) Application of Payments. All payments received by the
Administrative Agent under the Loan Documents shall be applied: first, to any
fees and expenses due to the Administrative Agent and the Lenders under the Loan
Documents; second, to any Default Rate interest or late charges; third, to
accrued and unpaid interest; and fourth, to the principal sum and other amounts
due under the Loan Documents; provided, however, that, if an Event of Default
exists the Administrative Agent shall apply such payments in any order or manner
as the Administrative Agent shall determine.
Section 2.4. Security. The Loans shall be secured by the Mortgage creating
a first lien on the Project, the Assignment of Rents and Leases and the other
Loan Documents. As further security for the Loan, Borrower agrees:
(1) to fund the Capital Improvements Reserve Account in accordance
with Schedule 2.4(1);
(2) to fund the Leasing Reserve Account in accordance with Schedule
2.4(2);
(3) to fund the Tax and Insurance Escrow Account in accordance with
Section 3.4; and
(4) to fund the Security Deposit Account in accordance with Section
3.9.
Section 2.5. Reserved
Section 2.6. Payments; Pro Rata Treatment; Etc.
(1) Payments Generally.
(a) Payments by Borrower. Except to the extent otherwise provided
herein, all payments of principal, interest and other amounts to be made by
Borrower under this Agreement and the Notes, and, except to the extent
otherwise provided therein, all payments to be made by Borrower under any
other Loan Document, shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Administrative
Agent at the account specified in Schedule 2.3(1) or any other account
designated by the Administrative Agent by notice to Borrower, not later
than 1:00 p.m., New York City time, on the date on which such payment shall
become due (each such
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payment made after such time on such due date to be deemed to have been
made on the next succeeding Business Day).
(b) Application of Payments. Subject to the provisions of Section
2.3(6), Borrower shall, at the time of making any payment under this
Agreement or any Note for the account of any Lender which is not in the
ordinary course, specify to the Administrative Agent (which shall so notify
the intended recipient(s) thereof) the Loans or other amounts payable by
Borrower hereunder to which such payment is to be applied (and in the event
that Borrower fails to so specify, or if an Event of Default has occurred
and is continuing, the Administrative Agent may distribute such payment to
the Lenders for application in such manner as it may determine to be
appropriate, subject to Section 2.6(2) and any other agreement among the
Administrative Agent and the Lenders with respect to such application).
(c) Forwarding of Payments by Administrative Agent. Except as
otherwise agreed by the Administrative Agent and the Lenders, each payment
received by the Administrative Agent under this Agreement or any Note for
account of any Lender shall be paid by the Administrative Agent promptly to
such Lender, in immediately available funds, for account of such Lender's
Applicable Lending Office for the Loan or other obligation in respect of
which such payment is made.
(d) Extensions to Next Business Day. If the due date of any
payment under this Agreement or any Note would otherwise fall on a day that
is not a Business Day, such date shall be extended to the next succeeding
Business Day, and interest shall be payable for any principal so extended
for the period of such extension.
(2) Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each advance of a Loan from the Lenders under Section 2.1(1) shall
be made from the Lenders, and any termination of the obligation to make an
advance of the Loans shall be applied to the respective Commitments of the
Lenders, pro rata according to the amounts of their respective Commitments; (b)
except as otherwise provided in Section 2.7(4), Loans shall be allocated pro
rata among the Lenders according to the amounts of their respective Commitments
(in the case of the making of Loans) or their respective Loans (in the case of
Conversions or Continuations of Loans); (c) each payment or prepayment of
principal of Loans by Borrower shall be made for account of the Lenders pro rata
in accordance with the respective unpaid principal amounts of the Loans held by
them; and (d) each payment of interest on Loans by Borrower shall be made for
account of the Lenders pro rata in accordance with the amounts of interest on
such Loans then due and payable to the respective Lenders.
(3) Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Lender or Borrower (in either
case, the "Payor") prior to the date on which the Payor is to make payment to
the Administrative Agent of (in the case of a Lender) the proceeds of a Loan to
be made by such Lender hereunder or (in the case of Borrower) a payment to the
Administrative Agent for account of any Lender hereunder (in either case, such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has
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been made and may, in reliance upon such assumption (but shall not be required
to), make the amount thereof available to the intended recipient(s) on such
date; and, if the Payor has not in fact made the Required Payment to the
Administrative Agent, the recipient(s) of such payment shall, on demand, repay
to the Administrative Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date (the
"Advance Date") such amount was so made available by the Administrative Agent
until the date the Administrative Agent recovers such amount at a rate per annum
equal to (a) the Federal Funds Rate for such day in the case of payments
returned to the Administrative Agent by any of the Lenders or (b) the applicable
interest rate due hereunder with respect to payments returned by Borrower to the
Administrative Agent and, if such recipient(s) shall fail promptly to make such
payment, the Administrative Agent shall be entitled to recover such amount, on
demand, from the Payor, together with interest as aforesaid, provided that if
neither the recipient(s) nor the Payor shall return the Required Payment to the
Administrative Agent within three (3) Business Days of the Advance Date, then,
retroactively to the Advance Date, the Payor and the recipient(s) shall each be
obligated to pay interest on the Required Payment as follows:
(a) if the Required Payment shall represent a payment to be made
by Borrower to the Lenders, Borrower and the recipient(s) shall each be
obligated retroactively to the Advance Date to pay interest in respect of
the Required Payment at the Default Rate (without duplication of the
obligation of Borrower under Section 2.2 to pay interest on the Required
Payment at the Default Rate), it being understood that the return by the
recipient(s) of the Required Payment to the Administrative Agent shall not
limit such obligation of Borrower under Section 2.2 to pay interest at the
Default Rate in respect of the Required Payment, and
(b) if the Required Payment shall represent proceeds of a Loan to
be made by the Lenders to Borrower, the Payor and Borrower shall each be
obligated retroactively to the Advance Date to pay interest in respect of
the Required Payment pursuant to whichever of the rates specified in
Section 2.2 is applicable to the Type of such Loan, it being understood
that the return by Borrower of the Required Payment to the Administrative
Agent shall not limit any claim Borrower may have against the Payor in
respect of such Required Payment.
(4) Sharing of Payments, Etc
(a) Right of Set-off. Borrower agrees that, in addition to (and
without limitation of) any right of set-off, banker's lien or counterclaim
a Lender may otherwise have, each Lender shall be entitled, at its option
(to the fullest extent permitted by law), to set off and apply any deposit
(general or special, time or demand, provisional or final), or other
indebtedness, held by it for the credit or account of Borrower at any of
its offices, in Dollars or in any other currency, against any principal of
or interest on any of such Lender's Loans or any other amount payable to
such Lender hereunder, that is not paid when due (regardless of whether
such deposit or other indebtedness is then due to Borrower), in which case
it shall promptly notify Borrower and the Administrative Agent thereof,
provided that such Lender's failure to give such notice shall not affect
the validity thereof.
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(b) Sharing. If any Lender shall obtain from Borrower payment of
any principal of or interest on any Loan owing to it or payment of any
other amount under this Agreement or any other Loan Document through the
exercise of any right of set-off, banker's lien or counterclaim or similar
right or otherwise (other than from the Administrative Agent as provided
herein), and, as a result of such payment, such Lender shall have received
a greater percentage of the principal of or interest on the Loans or such
other amounts then due hereunder or thereunder by Borrower to such Lender
than the percentage received by any other Lender, it shall promptly
purchase from such other Lenders participations in (or, if and to the
extent specified by such Lender, direct interests in) the Loans or such
other amounts, respectively, owing to such other Lenders (or in interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all
the Lenders shall share the benefit of such excess payment (net of any
expenses that may be incurred by such Lender in obtaining or preserving
such excess payment) pro rata in accordance with the unpaid principal of
and/or interest on the Loans or such other amounts, respectively, owing to
each of the Lenders. To such end all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or
otherwise) if such payment is rescinded or must otherwise be restored.
(c) Consent by Borrower. Borrower agrees that any Lender so
purchasing such a participation (or direct interest) may exercise all
rights of set-off, banker's lien, counterclaim or similar rights with
respect to such participation as fully as if such Lender were a direct
holder of Loans or other amounts (as the case may be) owing to such Lender
in the amount of such participation.
(d) Rights of Lenders; Bankruptcy. Nothing contained herein shall
require any Lender to exercise any such right or shall affect the right of
any Lender to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness or obligation of Borrower. If,
under any applicable bankruptcy, insolvency or other similar law, any
Lender receives a secured claim in lieu of a set-off to which this Section
2.6(4) applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the
rights of the Lenders entitled under this Section 2.6(4) to share in the
benefits of any recovery on such secured claim.
Section 2.7. Yield Protection; Etc.
(1) Additional Costs.
(a) Costs of Making or Maintaining Eurodollar Loans. Borrower
shall pay directly to each Lender from time to time such amounts as such
Lender may determine to be necessary to compensate such Lender for any
costs that such Lender determines are attributable to its making or
maintaining of any Eurodollar Loans or its obligation to make any
Eurodollar Loans hereunder, or any reduction in any amount receivable by
such Lender hereunder in respect of any of such Loans or such obligation
(such increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any Regulatory Change that:
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(i) shall subject any Lender (or its Applicable Lending
Office for any of such Loans) to any tax, duty or other charge in
respect of such Loans or its Note or changes the basis of taxation of
any amounts payable to such Lender under this Agreement or its Note in
respect of any of such Loans (excluding changes in the rate of tax on
the overall net income of such Lender or of such Applicable Lending
Office by the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or
similar requirements (other than the Reserve Requirement used in the
determination of the Adjusted Libor Rate for any Interest Period for
such Loan) relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of, such Lender (including,
without limitation, any of such Loans or any deposits referred to in
the definition of "Libor Base Rate"), or any commitment of such Lender
(including, without limitation, the Commitment of such Lender
hereunder); or
(iii) imposes any other condition affecting this Agreement
or its Note (or any of such extensions of credit or liabilities) or
its Commitment.
If any Lender requests compensation from Borrower under this paragraph
(a), Borrower may, by notice to such Lender (with a copy to the Administrative
Agent), suspend the obligation of such Lender thereafter to make or Continue
Eurodollar Loans, or to Convert Loans into Eurodollar Loans, until the
Regulatory Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 2.7(4) shall be applicable), provided that such
suspension shall not affect the right of such Lender to receive the compensation
so requested.
(b) Costs Attributable to Regulatory Change or Risk-Based Capital
Guidelines. Without limiting the effect of the foregoing provisions of this
Section 2.7(1) (but without duplication), Borrower shall pay directly to
each Lender from time to time on request such amounts as such Lender may
determine to be necessary to compensate such Lender (or, without
duplication, the bank holding company of which such Lender is a subsidiary)
for any costs that it determines are attributable to the maintenance by
such Lender (or any Applicable Lending Office or such bank holding
company), pursuant to any law or regulation or any interpretation,
directive or request (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful) of any court or
governmental or monetary authority (i) following any Regulatory Change or
(ii) implementing any mandatory risk-based capital guideline or other
requirement (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) hereafter issued by any
government or governmental or supervisory authority implementing at the
national level the Basle Accord, of capital in respect of its Commitment or
Loans (such compensation to include, without limitation, an amount equal to
any reduction of the rate of return on assets or equity of such Lender (or
any Applicable Lending Office or such bank holding company) to a level
below that which such Lender (or any Applicable Lending Office or such bank
holding company) could have achieved but for such law, regulation,
interpretation, directive or request.
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(c) Notification and Certification. Each Lender shall notify
Borrower of any event occurring after the date hereof entitling such Lender
to compensation under paragraph (a) or (b) of this Section 2.7(1) as
promptly as practicable, but in any event within 45 days, after such Lender
obtains actual knowledge thereof; provided that (i) if any Lender fails to
give such notice within 45 days after it obtains actual knowledge of such
an event, such Lender shall, with respect to compensation payable pursuant
to this Section 2.7(1) in respect of any costs resulting from such event,
only be entitled to payment under this Section 2.7(1) for costs incurred
from and after the date 45 days prior to the date that such Lender does
give such notice and (ii) each Lender will designate a different Applicable
Lending Office for the Loans of such Lender affected by such event if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender, except that such Lender shall have no
obligation to designate an Applicable Lending Office located in the United
States of America. Each Lender will furnish to Borrower a certificate
setting forth the basis and amount of each request by such Lender for
compensation under paragraph (a) or (b) of this Section 2.7(1).
Determinations and allocations by any Lender for purposes of this Section
2.7(1) of the effect of any Regulatory Change pursuant to paragraph (a) of
this Section 2.7(1), or of the effect of capital maintained pursuant to
paragraph (b) of this Section 2.7(1), on its costs or rate of return of
maintaining Loans or its obligation to make Loans, or on amounts receivable
by it in respect of Loans, and of the amounts required to compensate such
Lender under this Section 2.7(1), shall be conclusive, provided that such
determinations and allocations are made on a reasonable basis.
(2) Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of the Libor Base Rate for
any Interest Period for any Eurodollar Loan:
(a) the Administrative Agent determines, which determination
shall be conclusive absent manifest error, that quotations of interest
rates for the relevant deposits referred to in the definition of Libor Base
Rate are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for Eurodollar
Loans as provided herein; or
(b) the Majority Lenders determine, which determination shall be
conclusive absent manifest error, and notify the Administrative Agent that
the relevant rates of interest referred to in the definition of Libor Base
Rate upon the basis of which the rate of interest for Eurodollar Loans for
such Interest Period is to be determined are not likely adequately to cover
the cost to such Lenders of making or maintaining Eurodollar Loans for such
Interest Period;
then the Administrative Agent shall give Borrower and each Lender prompt notice
thereof and, so long as such condition remains in effect, the Lenders shall be
under no obligation to make additional Eurodollar Loans, to Continue Eurodollar
Loans or to Convert Loans of any other Type into Eurodollar Loans, and Borrower
shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Eurodollar Loans, either prepay such Loans or such Loans shall be
automatically Converted into Alternate Base Rate Loans.
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(3) Illegality. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender or its Applicable Lending
Office to honor its obligation to make or maintain Eurodollar Loans hereunder
(and, in the sole opinion of such Lender, the designation of a different
Applicable Lending Office would either not avoid such unlawfulness or would be
disadvantageous to such Lender), then such Lender shall promptly notify Borrower
thereof (with a copy to the Administrative Agent) and such Lender's obligation
to make or Continue, or to Convert Loans of any other Type into, Eurodollar
Loans shall be suspended until such time as such Lender may again make and
maintain Eurodollar Loans (in which case the provisions of Section 2.7(4) shall
be applicable).
(4) Treatment of Affected Loans. If the obligation of any Lender to
make Eurodollar Loans or to Continue, or to Convert Alternate Base Rate Loans
into, Eurodollar Loans shall be suspended pursuant to Section 2.7(1) or 2.7(3),
such Lender's Loans shall be automatically Converted into Alternate Base Rate
Loans on the last day(s) of the then current Interest Period(s) for Loans (or,
in the case of a Conversion resulting from a circumstance described in Section
2.7(3), on such earlier date as such Lender may specify to Borrower with a copy
to the Administrative Agent) and, unless and until such Lender gives notice as
provided below that the circumstances specified in Section 2.7(1) or 2.7(3) that
gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Loans shall be applied instead to its Alternate
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Eurodollar Loans shall be made or Continued instead as Alternate
Base Rate Loans, and all Loans of such Lender that would otherwise be
Converted into Eurodollar Loans shall remain as Alternate Base Rate Loans.
If such Lender gives notice to Borrower with a copy to the
Administrative Agent that the circumstances specified in Section 2.7(1) or
2.7(3) that gave rise to the Conversion of such Lender's Loans pursuant to this
Section 2.7(4) no longer exist (which such Lender agrees to do promptly upon
such circumstances ceasing to exist) at a time when Eurodollar Loans made by
other Lenders are outstanding, such Lender's Alternate Base Rate Loans shall be
automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Loans, to the extent necessary so
that, after giving effect thereto, all Alternate Base Rate Loans and Eurodollar
Loans are allocated among the Lenders ratably (as to principal amounts, Types
and Interest Periods) in accordance with their respective Commitments.
(5) Compensation. Borrower shall pay to the Administrative Agent for
the account of each Lender, upon the request of such Lender through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense that such Lender determines is attributable to:
(a) any payment, prepayment or Conversion of a Eurodollar Loan
made by such Lender for any reason (including, without limitation, the
acceleration of the
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Loans pursuant to the Administrative Agent's or the Lenders' rights
referred to in Article 10) on a date other than the last day of the
Interest Period for such Loan; or
(b) any failure by Borrower for any reason to borrow a Eurodollar
Loan from such Lender on the date for such borrowing specified in the
relevant notice of borrowing given to the Administrative Agent in
accordance with the terms of this Agreement.
Without limiting the effect of the preceding sentence, such
compensation shall include an amount equal to the excess, if any, of (i) the
amount of interest that otherwise would have accrued on the principal amount so
paid, prepaid, Converted or not borrowed for the period from the date of such
payment, prepayment, Conversion or failure to borrow to the last day of the then
current Interest Period for such Loan (or, in the case of a failure to borrow,
the Interest Period for such Loan that would have commenced on the date
specified for such borrowing) at the applicable rate of interest for such Loan
provided for herein over (ii) the amount of interest that otherwise would have
accrued on such principal amount at a rate per annum equal to the interest
component of the amount such Lender would have bid in the London interbank
market for Dollar deposits of leading banks in amounts comparable to such
principal amount and with maturities comparable to such period (as reasonably
determined by such Lender), or if such Lender shall cease to make such bids, the
equivalent rate, as reasonably determined by such Lender, derived from Page 3750
of the Dow Jones Markets (Telerate) Service or other publicly available source
as described in the definition of Libor Base Rate.
(6) U.S. Taxes.
(a) Gross-up for Deduction or Withholding of U.S. Taxes. Borrower
agrees to pay to each Lender that is not a U.S. Person such additional
amounts as are necessary in order that the net payment of any amount due to
such non-U.S. Person hereunder after deduction for or withholding in
respect of any U.S. Taxes imposed with respect to such payment (or in lieu
thereof, payment of such U.S. Taxes by such non-U.S. Person), will not be
less than the amount stated herein to be then due and payable, provided
that the foregoing obligation to pay such additional amounts shall not
apply:
(i) to any payment to any Lender hereunder if such Lender
is, on the date hereof (or on the date it becomes a Lender hereunder
as provided in Section 11.25(2)) and on the date of any change in the
Applicable Lending Office of such Lender, entitled to submit either a
Form 1001 (relating to such Lender and entitling it to a complete
exemption from withholding on all interest to be received by it
hereunder in respect of the Loans) or Form 4224 (relating to all
interest to be received by such Lender hereunder in respect of the
Loans), or
(ii) to any U.S. Taxes imposed solely by reason of the
failure by such non-U.S. Person to comply with applicable
certification, information, documentation or other reporting
requirements concerning the nationality, residence, identity or
connections with the United States of America of such non-U.S. Person
if such compliance is required by statute or regulation of the United
States of America as a precondition to relief or exemption from such
U.S. Taxes.
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For the purposes hereof, (A) "U.S. Person" means a citizen, national
or resident of the United States of America, a corporation, limited liability
company, partnership or other entity created or organized in or under any laws
of the United States of America or any State thereof, or any estate or trust
that is subject to Federal income taxation regardless of the source of its
income, (B) "U.S. Taxes" means any present or future tax, assessment or other
charge or levy imposed by or on behalf of the United States of America or any
taxing authority thereof or therein, (C) "Form 1001" means Form 1001 (Ownership,
Exemption, or Reduced Rate Certificate) of the Department of the Treasury of the
United States of America and (D) "Form 4224" means Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States) of the Department of the Treasury of the
United States of America. Each of the Forms referred to in the foregoing clauses
(C) and (D) shall include such successor and related forms as may from time to
time be adopted by the relevant taxing authorities of the United States of
America to document a claim to which such Form relates.
(b) Evidence of Deduction, Etc. Within 30 days after paying any
amount to the Administrative Agent or any Lender from which it is required
by law to make any deduction or withholding, and within 30 days after it is
required by law to remit such deduction or withholding to any relevant
taxing or other authority, Borrower shall deliver to the Administrative
Agent for delivery to such non-U.S. Person evidence satisfactory to such
Person of such deduction, withholding or payment (as the case may be).
(7) Replacement of Lenders. If any Lender requests compensation
pursuant to Section 2.7(1) or 2.7(6), or any Lender's obligation to Continue
Loans of any Type, or to Convert Loans of any Type into the other Type of Loan,
shall be suspended pursuant to Section 2.7(2) or 2.7(3) (any such Lender
requesting such compensation, or whose obligations are so suspended, being
herein called a "Requesting Lender"), Borrower, upon three Business Days notice,
may require that such Requesting Lender transfer all of its right, title and
interest under this Agreement and such Requesting Lender's Note to any bank or
other financial institution (a "Proposed Lender") identified by Borrower that is
satisfactory to the Administrative Agent (i) if such Proposed Lender agrees to
assume all of the obligations of such Requesting Lender hereunder, and to
purchase all of such Requesting Lender's Loans hereunder for consideration equal
to the aggregate outstanding principal amount of such Requesting Lender's Loans,
together with interest thereon to the date of such purchase (to the extent not
paid by Borrower), and satisfactory arrangements are made for payment to such
Requesting Lender of all other amounts accrued and payable hereunder to such
Requesting Lender as of the date of such transfer (including any fees accrued
hereunder and any amounts that would be payable under Section 2.7(5) as if all
of such Requesting Lender's Loans were being prepaid in full on such date, but
not any amounts which would be due under Section 2.3(5) as a result of such
deemed prepayment) and (ii) if such Requesting Lender has requested compensation
pursuant to Section 2.7(1) or 2.7(6), such Proposed Lender's aggregate requested
compensation, if any, pursuant to Section 2.7(1) or 2.7(6) with respect to such
Requesting Lender's Loans is lower than that of the Requesting Lender. Subject
to the provisions of Section 11.25(2), such Proposed Lender shall be a "Lender"
for all purposes hereunder. Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements of Borrower contained in
Sections 2.7(1), 2.7(6) and 11.5 (without duplication of any payments made to
such Requesting
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Lender by Borrower or the Proposed Lender) shall survive for the benefit of such
Requesting Lender under this Section 2.7(7) with respect to the time prior to
such replacement.
Section 2.8. Interest Rate Guaranty Reimbursement.
(1) Borrower acknowledges that GECC has executed and delivered the
Interest Rate Guaranty pursuant to which GECC has agreed to reimburse the
Counterparty under the Interest Rate Protection Agreement for any payments that
Borrower fails to make under the Interest Rate Protection Agreement for so long
as the Interest Rate Protection Agreement is outstanding. In consideration for
GECC entering into the Interest Rate Guaranty, Borrower hereby covenants and
agrees as follows:
(a) Borrower shall reimburse the Administrative Agent (on behalf
of GECC, the Lenders and the Administrative Agent, as applicable), as
additional interest, for (i) all payments made by GECC including, without
limitation, breakage costs, under or in connection with the Interest Rate
Guaranty (collectively, the "Swap Obligations") and (ii) without
duplication of payments under clause (i) above, all payments made by (x)
the other Lenders to the Administrative Agent pursuant to Section 2.8(2)
with respect to the Swap Obligations or (y) the Administrative Agent with
respect to the Swap Obligations pursuant to Section 10.3 (Borrower's
obligations under this clause (a) being, collectively, the "Swap
Reimbursement Obligations"). Such Swap Reimbursement Obligations shall be
immediately due on the dates GECC incurs any corresponding Swap Obligation
and shall not be subject to the limitations on liability set forth in
Section 12.1;
(b) Commencing on January 1, 2000, Borrower shall pay the
Administrative Agent (on behalf of GECC and the Lenders, as agreed among
the Lenders pursuant to a separate agreement), as additional interest, a
swap guaranty fee (the "Swap Guaranty Fee") in an amount equal to four
basis points (0.04%) per annum multiplied by the notional amount of the
Interest Rate Protection Agreement. The Swap Guaranty Fee shall be payable
annually in Dollars in arrears on the last business day of each calendar
year that the Interest Rate Protection Agreement is outstanding and on the
day that the Interest Rate Protection Agreement expires or is otherwise
terminated and shall be calculated based upon the actual number of days
elapsed on the basis of a 365-day year; and
(c) The maximum amount of $50,000,000 shall be secured as
additional interest under the Mortgage.
(2) Unless recovered by the Administrative Agent or GECC from or for
the account of Borrower promptly after demand therefor, each Lender shall, in
addition to any other amounts due from such Lender under the Loan Documents, pay
to the Administrative Agent (on behalf of GECC) such Lender's pro rata share (in
accordance with the respective unpaid principal amounts of the Loans held by
them) of all Swap Obligations incurred by GECC and not paid by Borrower.
Anything contained in this Section 2.8(2) to the contrary notwithstanding, each
Lender confirms that if it at any time receives written demand from the
Administrative Agent to pay such Lender's pro rata share of any Swap
Obligations, such Lender shall, promptly upon receipt of such demand (and in no
event later than the next succeeding Business Day), pay
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such pro rata share to the Administrative Agent as directed in such demand
without counterclaim, offset or defense (it being understood and agreed that
each Lender's obligation to make such payment to the Administrative Agent is
absolute and unconditional.
Section 2.9. Agency Fee. Until payment in full of all obligations under
this Agreement and the other Loan Documents, Borrower shall pay to the
Administrative Agent, for its sole account, the Agency Fee in accordance with
the Fee Letter.
ARTICLE 3
INSURANCE, CONDEMNATION, AND IMPOUNDS
Section 3.1. Insurance. Borrower shall maintain insurance as follows:
(1) Casualty; Business Interruption. Borrower shall keep the Project
insured against damage by fire and the other hazards covered by a standard
extended coverage and all-risk insurance policy for the full insurable value
thereof (without reduction for depreciation or co-insurance), and shall maintain
such other casualty insurance as reasonably required by the Administrative
Agent. Borrower shall keep the Project insured against loss by flood if the
Project is located in an area identified by the Federal Emergency Management
Agency as an area having special flood hazards and in which flood insurance has
been made available under the National Flood Insurance Act of 1968 (and any
successor act thereto) in an amount at least equal to the lesser of (i) the
maximum amount of the Loans or (ii) the maximum limit of coverage available
under said act. Borrower shall maintain use and occupancy insurance covering, as
applicable, rental income or business interruption, with coverage in an amount
not less than twelve (12)-months anticipated gross rental income or gross
business earnings, as applicable in each case, attributable to the Project.
Borrower shall not maintain any separate or additional insurance which is
contributing in the event of loss unless it is properly endorsed and otherwise
satisfactory to the Administrative Agent in all respects. The proceeds of
insurance paid on account of any damage or destruction to the Project shall be
paid to the Administrative Agent to be applied as provided in Section 3.2.
(2) Liability. Borrower shall maintain (a) commercial general
liability insurance with respect to the Project providing for limits of
liability of not less than $5,000,000 for both injury to or death of a person
and for property damage per occurrence, and (b) other liability insurance as
reasonably required by the Administrative Agent.
(3) Form and Quality. All insurance policies shall be endorsed in form
and substance acceptable to the Administrative Agent to name the Administrative
Agent (on behalf of the Lenders) as an additional insured, loss payee or
mortgagee thereunder, as its interest may appear, with loss payable to the
Administrative Agent, without contribution, under a standard New York (or local
equivalent) mortgagee clause. All such insurance policies and endorsements shall
be fully paid for and contain such provisions and expiration dates and be in
such form and issued by such insurance companies licensed to do business in the
State, with a rating of "A-IX" or better as established by Best's Rating Guide
(or an equivalent rating approved in writing by the Administrative Agent). Each
policy shall provide that such policy may not be cancelled or
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materially changed except upon thirty (30) days' prior written notice of
intention of non-renewal, cancellation or material change to the Administrative
Agent and that no act or thing done by Borrower shall invalidate any policy as
against the Administrative Agent or any Lender. Borrower may satisfy its
obligations to maintain insurance under this Article 3 through the use of
blanket insurance policies so long as Administrative Agent receives appropriate
endorsements and/or duplicate policies confirming to Administrative Agent's
satisfaction, Administrative Agent's right on behalf of Lenders to continue
coverage on a pro rata pass-through basis and that coverage under any such
blanket insurance policy shall not be limited or affected in any way by any
losses or casualties on any other properties. Any blanket insurance policy shall
specifically allocate to the Project the amount of coverage from time to time
required hereunder and shall otherwise provide the same protection as would a
separate policy insuring only the Project in compliance with the provisions of
Section 3.1(1), including an acknowledgement that the payment of the premium
allocated to the Project shall continue such policy as to the Project
notwithstanding any other non-payment of premiums. If Borrower fails to maintain
insurance in compliance with this Section 3.1, the Administrative Agent may
obtain such insurance and pay the premium therefor and Borrower shall, on
demand, reimburse the Administrative Agent for all expenses incurred in
connection therewith. Borrower shall assign the policies or proofs of insurance
to the Administrative Agent (on behalf of the Lenders), in such manner and form
that the Administrative Agent and its successors and assigns shall at all times
have and hold the same as security for the payment of the Loans. Borrower shall
deliver copies of all original policies certified to the Administrative Agent by
the insurance company or authorized agent as being true copies, together with
the endorsements required hereunder. The proceeds of insurance policies coming
into the possession of the Administrative Agent shall not be deemed trust funds,
and the Administrative Agent shall be entitled to apply such proceeds as herein
provided.
(4) Adjustments. Borrower shall give immediate written notice of any
loss to the insurance carrier and to the Administrative Agent. During the
existence of an Event of Default or if the proceeds are reasonably expected to
exceed the Threshold Amount, Borrower hereby irrevocably authorizes and empowers
the Administrative Agent, as attorney-in-fact for Borrower coupled with an
interest, to make proof of loss, to adjust and compromise any claim under
insurance policies, to appear in and prosecute any action arising from such
insurance policies, to collect and receive insurance proceeds, and to deduct
therefrom the Administrative Agent's expenses incurred in the collection of such
proceeds. Nothing contained in this Section 3.1(4), however, shall require the
Administrative Agent or any Lender to incur any expense or take any action
hereunder.
Section 3.2. Use and Application of Insurance Proceeds. The Administrative
Agent shall apply insurance proceeds to costs of restoring the Project or the
Loans as follows:
(1) if the loss is less than or equal to $500,000 (the "Threshold
Amount"), the Administrative Agent shall make the insurance proceeds available
to the Borrower for restoration provided (a) no Event of Default or Potential
Default exists, and (b) Borrower promptly commences and is diligently pursuing
restoration of the Project;
(2) if the loss exceeds Threshold Amount but is not more than 10% of
the replacement value of the improvements (for projects containing multiple
phases or stand alone structures, such calculation to be based on the damaged
phase or structure, not the project as a
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whole), the Administrative Agent shall apply the insurance proceeds to
restoration provided that at all times during such restoration (a) no Event of
Default or Potential Default exists; (b) the Administrative Agent determines
that there are sufficient funds available to restore and repair the Project to a
condition approved by the Administrative Agent; (c) the Administrative Agent
determines that the Actual Net Operating Income of the Project during
restoration will be sufficient to pay Debt Service or Borrower provides such
additional security for the Loans as may be satisfactory to the Administrative
Agent; (d) the Administrative Agent determines (based on leases which will be in
effect after restoration is complete) that after restoration the pro-forma
Adjusted Debt Service Coverage Ratio for the twelve (12) months following the
completion of such restoration will be at least 1.4:1 and the Cash on Cash
Return will be at least ten and eight tenths percent (10.8%); (e) the
Administrative Agent determines that restoration and repair of the Project to a
condition approved by the Administrative Agent will be completed within six
months after the date of loss or casualty and in any event ninety (90) days
prior to the Maturity Date; and (f) Borrower promptly commences and is
diligently pursuing restoration of the Project;
(3) if the conditions set forth above are not satisfied or the loss
exceeds the maximum amount specified in Section 3.2(2) above, in the
Administrative Agent's sole discretion, the Administrative Agent may (subject to
the approval of the Majority Lenders) apply any insurance proceeds it may
receive to the payment of the Loans or allow all or a portion of such proceeds
to be used for the restoration of the Project; and
(4) insurance proceeds applied to restoration will be disbursed on
receipt of satisfactory plans and specifications, contracts and subcontracts,
schedules, budgets, lien waivers and architects' certificates, and otherwise in
accordance with prudent commercial construction lending practices for
construction loan advances, including, as applicable, the advance conditions
under Schedule 2.1.
Section 3.3. Condemnation Awards. Borrower shall immediately notify the
Administrative Agent of the institution of any proceeding for the condemnation
or other taking of the Project or any portion thereof. The Administrative Agent
may participate in any such proceeding and Borrower will deliver to the
Administrative Agent all instruments necessary or required by the Administrative
Agent to permit such participation. Without the Administrative Agent's prior
consent (subject to the approval of the Majority Lenders), Borrower (1) shall
not agree to any compensation or award, and (2) shall not take any action or
fail to take any action which would cause the compensation to be determined. All
awards and compensation for the taking or purchase in lieu of condemnation of
the Project or any part thereof are hereby assigned to and shall be paid to the
Administrative Agent. Borrower authorizes the Administrative Agent to collect
and receive such awards and compensation, to give proper receipts and
acquittances therefor, and in the Administrative Agent's sole discretion (which
the Administrative Agent shall exercise at the direction of the Majority
Lenders) to apply the same toward the payment of the Loans, notwithstanding that
the Loans may not then be due and payable, or to the restoration of the Project;
however, if the award is less than or equal to the Threshold Amount and Borrower
requests that such proceeds be used for non-structural site improvements (such
as landscape, driveway, walkway and parking area repairs) required to be made as
a result of such condemnation, the Administrative Agent will apply the award to
such restoration in accordance with disbursement procedures applicable to
insurance proceeds provided there exists no Potential Default or Event of
Default. Borrower, upon request by the Administrative Agent, shall execute
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all instruments requested to confirm the assignment of the awards and
compensation to the Administrative Agent, free and clear of all liens, charges
or encumbrances.
Section 3.4. Impounds. Borrower shall deposit or cause to be deposited into
a separate segregated account (the "Tax and Insurance Escrow Account") to be
maintained by the Borrower at the Depository Bank in the name of the
Administrative Agent for the benefit of the Lenders, monthly on each Payment
Date, (a) one-twelfth (1/12th) of the Taxes that the Administrative Agent
estimates will be payable with respect to the Project during the next ensuing
twelve (12) months in order to accumulate in the Tax and Insurance Escrow
Account sufficient funds to pay all such Taxes at least thirty (30) days prior
to any delinquency thereof or penalty thereon, and (b) one-twelfth of the
insurance premiums that the Administrative Agent estimates will be payable
during the next ensuing twelve (12) months for the renewal of the coverage
afforded by the insurance policies required by the Administrative Agent with
respect to the Project upon the expiration thereof in order to accumulate in the
Tax and Insurance Escrow Account sufficient funds to pay all such insurance
premiums at least thirty (30) days prior to expiration (the aggregate of the
amounts in (a) and (b) above being hereinafter referred to as the "Tax and
Insurance Escrow Reserve"). At or before the initial advance of the Loans,
Borrower shall deposit in the Tax and Insurance Escrow Account a sum of money
which together with the monthly installments will be sufficient to make each of
such payments thirty (30) days prior to the date any delinquency or penalty
becomes due with respect to such payments. Deposits shall be made on the basis
of the Administrative Agent's estimate from time to time of the charges for the
current year (after giving effect to any reassessment or, at the Administrative
Agent's election, on the basis of the charges for the prior year, with
adjustments when the charges are fixed for the then current year). Borrower
hereby grants to the Administrative Agent (on behalf of the Lenders) a first
priority security interest in all funds so deposited in the Tax and Insurance
Escrow Account for the purpose of securing the Loans. While an Event of Default
exists, the funds deposited in the Tax and Insurance Escrow Account may be
applied in payment of the charges for which such funds have been deposited, or
to the payment of the Loans or any other charges affecting the security of the
Administrative Agent and the Lenders, as the Administrative Agent may elect, but
no such application shall be deemed to have been made by operation of law or
otherwise until actually made by the Administrative Agent. Borrower shall
furnish the Administrative Agent with (i) bills for the charges for which such
deposits are required and (ii) a disbursement request in the form of Schedule
3.4 hereto executed by an officer of the Borrower's general partner at least
thirty (30) days prior to the date on which the charges first become payable.
Within ten (10) days after Administration Agent's receipt of the aforementioned
bills and disbursement request, the Administrative Agent shall direct the
Depository Bank to pay such charges in accordance with such disbursement
request, provided that the Administrative Agent approves of the disbursement
request within such ten (10) day period and the amount on deposit in the Tax and
Insurance Escrow Account is sufficient to pay such charges, it being understood
and agreed that the Depository Bank shall be responsible for the timing of the
payment of such charges and that Borrower shall be solely responsible for any
late charges, interest and penalties imposed as a result of any delinquency in
such payments arising from any efforts on behalf of the Borrower to avoid making
such payments significantly in advance of the due date therefor. If at any time
the amount on deposit in the Tax and Insurance Escrow Account, together with
amounts to be deposited by Borrower before such charges are payable, is
insufficient to pay such charges, Borrower shall deposit any deficiency in the
Tax and Insurance Escrow Account immediately upon demand.
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Section 3.5. Pledge and Grant of Security Interest. Borrower hereby pledges
to the Administrative Agent (on behalf of the Lenders), and grants a security
interest in, any and all monies now or hereafter deposited in the Accounts as
additional security for the payment of the Loans. Borrower shall not further
pledge, assign or grant any security interest in the Accounts or permit any lien
or encumbrance to attached thereto, or any levy to be made thereon, or any UCC-1
financing statements (except those naming the Administrative Agent as the
secured party) to be filed with respect thereto. All reasonable out-of-pocket
costs and expenses reasonably incurred in connection with disbursing funds from
the Accounts shall be paid by Borrower. Upon the occurrence of an Event of
Default and prior to the acceptance of a cure thereof by the Administrative
Agent, the Administrative Agent may apply any sums then present in the Accounts
to the payment of the Loans in any order in its sole discretion. Until expended
or applied as above provided, the Accounts shall constitute additional security
for the Loans.
Section 3.6. Lockbox Account.
(1) Borrower has established and will maintain with The Chase
Manhattan Bank (in such capacity, the "Lockbox Bank"), a separate segregated
account (number 230-110789) for the Project (the "Lockbox Account"). The Lockbox
Account will be owned by the Borrower but shall be in the name of and under the
sole dominion and control of the Administrative Agent pursuant to a lockbox
account agreement, an agreement for notification and acknowledgment of pledge of
accounts or similar agreement (a "Lockbox Agreement"). The Lockbox Account shall
be entitled "General Electric Capital Corporation, as the Administrative Agent,
pursuant to Loan Agreement dated as of December 13, 1999-1290 6th Avenue Rent
Payment Account", provided that the Administrative Agent shall have the option
to cause the Lockbox Bank to change the name of the Lockbox Account by giving
notice to the Borrower, the Lenders and such Lockbox Bank. Borrower hereby
grants to the Administrative Agent a first priority security interest in the
Lockbox Account and all deposits at any time contained therein and the proceeds
thereof and will take all actions necessary to maintain in favor of the
Administrative Agent a perfected first priority security interest in such
Lockbox Account, including, without limitation, executing and filing UCC-1
financing statements and continuations thereof and entering into agreements to
confirm the Administrative Agent's dominion and control over the Lockbox
Account. The Administrative Agent shall have the sole right to make withdrawals
from the Lockbox Account and all reasonable out-of-pocket costs and expenses for
establishing and maintaining the Lockbox Account shall be paid by Borrower.
(2) At the Administrative Agent's request, Borrower shall, or shall
cause Manager to, deliver written instructions in substantially the form of
Exhibit B hereto to all tenants under leases to deliver all rents payable
thereunder directly to the Lockbox Account. Borrower shall, and shall cause
Manager to, deposit all amounts received by Borrower or Manager constituting
rents or otherwise relating to the Project into the Lockbox Account promptly
upon receipt.
(3) During any period other than a Trigger Period and except as
provided in Section 5.3 with respect to pre-paid rents, the Administrative Agent
shall direct the Lockbox Bank to sweep on a daily basis all funds in the Lockbox
Account to an account maintained by the Borrower (such account being referred to
as the "Borrower Account") at such financial institution or, at the joint
written direction of the Borrower and the Mezzanine Lender, to such other
account (the "Mezzanine Loan Lockbox Account") as shall be designated in writing
by
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Borrower and Mezzanine Lender. Borrower shall be entitled to use and apply all
funds deposited into the Borrower Account. During a Trigger Period, the
Administrative Agent shall cease sweeping funds into the Borrower Account (or
the Mezzanine Lockbox Account, as applicable) and all funds will be swept daily
from the Lockbox Account to the Cash Management Account.
(4) In its sole discretion, Borrower may, from time to time, deposit
amounts into the Cash Management Account from funds disbursed to Borrower in
accordance with this Agreement or from any other sources of Borrower other than
rent; provided that if Borrower deposits such amounts, the amounts deposited
shall be subject to all of the terms hereof as if not separately deposited by
Borrower, and may not be withdrawn by Borrower.
(5) If Borrower receives any rents or other income from the Project,
then (i) such amounts shall be held in trust for the benefit, and as the
property, of Administrative Agent, subject to the terms of this Agreement and
the other Loan Documents, (ii) such amounts shall not be commingled with any
other funds or property of Borrower and (iii) Borrower shall deposit such
amounts into the Lockbox Account within two (2) Business Days of receipt.
Section 3.7. Cash Management Account.
(1) The Borrower shall establish and maintain a separate segregated
account (the "Cash Management Account") at the Depository Bank in the name of
the Administrative Agent for the benefit of Lenders, which Cash Management
Account shall be under the sole dominion and control of the Administrative
Agent. The Cash Management Account shall be entitled "General Electric Capital
Corporation, as the Administrative Agent, pursuant to Loan Agreement dated as of
December 13, 1999 - 1290 6th Avenue Cash Management Account", provided that the
Administrative Agent shall have the option to cause the Depository Bank to
change the name of the Cash Management Account by giving notice to Borrower, the
Lenders and the Depository Bank. Borrower hereby grants to the Administrative
Agent a first priority security interest in the Cash Management Account and all
deposits at any time contained therein and the proceeds thereof and will take
all actions necessary to maintain in favor of the Administrative Agent a
perfected first priority security interest in the Cash Management Account,
including, without limitation, executing and filing UCC-1 Financing Statements
and continuations thereof and entering into agreements to confirm the
Administrative Agent's dominion and control over the Cash Management Account
and/or any other Accounts. Subject to the terms of the Loan Documents, the
Administrative Agent shall have the sole right to make withdrawals from the Cash
Management Account and all reasonable out-of-pocket costs and expenses for
establishing and maintaining the Cash Management Account shall be paid by
Borrower.
(2) During a Trigger Period, provided no Event of Default shall have
occurred and be continuing, all funds on deposit in the Cash Management Account
from time to time shall be applied by the Administrative Agent to the payment of
the following items in the following order:
(a) First, payment of all Tax and Insurance Escrow Reserve
amounts required to be deposited into the Tax and Insurance Escrow Account
in accordance with the terms and conditions of Section 3.4 hereof;
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(b) Second, payment to the Administrative Agent (on behalf of the
Lenders) of Debt Service;
(c) Third, payments to the Capital Improvements Reserve Account
and Leasing Reserve Account in accordance with the terms and conditions
hereof;
(d) Fourth, payment to the Administrative Agent of any other
amounts (other than the principal amount of the Loans) then due and payable
under the Loan Documents;
(e) Fifth, a disbursement to Borrower (or, at the Administrative
Agent's election, to the contractor, vendor, service provider or other
party entitled thereto) in an amount sufficient to enable Borrower (or, at
the Administrative Agent's election, the Administrative Agent) to pay all
Approved Expenses (including capital expenditures, tenant improvement costs
and leasing commissions, but excluding any of such Approved Expenses which
are paid from amounts deposited into the Tax and Insurance Escrow Account,
the Capital Improvements Reserve Account or the Leasing Reserve Account)
which are due and payable during the period between the date on which such
disbursement is being made and the immediately following Payment Date.
Borrower hereby covenants and agrees that all such amounts so disbursed to
Borrower shall be used for the payment of Approved Expenses and for no
other purpose. Upon request, Borrower shall furnish Administrative Agent
with copies of cancelled checks, paid invoices and other documents
reasonably requested by Administrative Agent in order to verify the
Borrower's payment of Approved Expenses; and
(f) Lastly, on the twentieth (20th) day of each calendar month,
payment of all Net Cash Flow for the immediately preceding calendar month
to Administrative Agent (on behalf of the Lenders) for deposit into the
Curtailment Account.
(3) All amounts deposited into the Curtailment Account shall be held
by the Depository Bank for the benefit of the Administrative Agent (on behalf of
the Lenders) in accordance with the terms and conditions of this Section 3.7(3).
Provided no Event of Default exists, at the Borrower's request, amounts
deposited in the Curtailment Account (or such lesser amount thereof as may be
specified by Borrower) shall be applied in reduction of the principal amount of
the Loans. Upon the occurrence of an Event of Default and prior to the
acceptance of a cure thereof by the Administrative Agent, the Administrative
Agent may apply any sums then present in the Curtailment Account to the payment
of the Loans in any order in its sole discretion. Until expended or applied as
above provided, amounts deposited in the Curtailment Account shall constitute
additional security for the Loans. The Borrower shall be permitted on any one or
more occasions to deliver to the Administrative Agent an unconditional,
irrevocable letter of credit issued for the benefit of Administrative Agent by
an Acceptable Issuer, in form and substance satisfactory to the Administrative
Agent, and having an expiration date not earlier than one year following its
issuance date (as such letter of credit, may be renewed, extended, or replaced,
the "Letter of Credit") in substitution for amounts deposited in the Curtailment
Account. Upon the Administrative Agent's receipt and acceptance of such Letter
of Credit, Borrower shall be entitled to receive a disbursement from the
Curtailment Account (but not any
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other Account) in an amount equal to the face amount of the Letter of Credit so
received and accepted by the Administrative Agent. Borrower agrees that no less
than thirty (30) days prior to the expiration date of the Letter of Credit and
each renewal or extension thereof (until the Letter of Credit has been released
as provided below), Borrower shall deliver to the Administrative Agent a renewal
or extension of the Letter of Credit for a term of not less than one year, in
form, content satisfactory to the Administrative Agent and issued by an
Acceptable Issuer. The Administrative Agent shall be entitled to draw upon the
Letter of Credit when any Event of Default exists (including, Borrower's failure
to deliver a renewal or extension of the Letter of Credit as required above) or
if the Administrative Agent believes that its rights to draw on the Letter of
Credit could be in jeopardy. Without limiting the foregoing, the Administrative
Agent shall also be entitled to draw on the Letter of Credit and apply such
proceeds to the Loans if the credit rating or financial condition of the issuing
bank is no longer acceptable to the Administrative Agent. Following a draw by
the Administrative Agent on the Letter of Credit solely because of the
deterioration of the creditworthiness of the issuing bank, the Administrative
Agent will direct the Depository Bank to disburse such proceeds to Borrower
provided (1) Borrower deliver to the Administrative Agent a replacement Letter
of Credit within ten (10) days of the Administrative Agent's draw, (2) there
exists no Event of Default or Potential Default, and (3) Borrower pays all of
the Administrative Agent's fees and expenses in connection with such draw and
disbursement. No draw by the Administrative Agent on the Letter of Credit shall
cure or be deemed to cure any Event of Default or limit in any respect any of
the Administrative Agent's or the Lenders' remedies under the Loan Documents, it
being understood that the Administrative Agent's and the Lenders' rights and
remedies hereunder shall be cumulative and the Administrative Agent and the
Lenders shall have no obligations to apply the proceeds of any draw to missed
installments or other amounts then due and unpaid under the Loans. Proceeds of
any draw upon the Letter of Credit (after reimbursement of any costs and
expenses, including attorneys' fees and reimbursements, incurred by the
Administrative Agent in connection with such draw) shall be applied by the
Administrative Agent to the payment of the amounts owing under the Loan
Documents, in such manner as the Administrative Agent determine, or retained in
the Curtailment Account in accordance with this Section. No delay or omission of
the Administrative Agent or the Lenders in exercising any right to draw on the
Letter of Credit shall impair any such right, or shall be construed as a waiver
of, or acquiescence in, any Event of Default. Provided no Event of Default or
Potential Default exists, the Administrative Agent and the Lenders shall, upon
request, release its rights in the Letter of Credit and surrender the Letter of
Credit to the issuing bank after the earlier of: (i) payment in full of all sums
due, and performance of all obligations, under the Loan Documents or (ii) the
depositing by the Borrower into the Curtailment Account of all amounts which, as
of such date, would have been required to have been deposited by Borrower into
the Curtailment Account.
(4) The insufficiency of funds on deposit in the Cash Management
Account shall not absolve Borrower of the obligation to make any payments as and
when due pursuant to this Agreement and the other Loan Documents, and such
obligations shall be separate and independent, and not conditioned on any event
or circumstance whatsoever.
(5) All funds on deposit in any of the Accounts following the
occurrence and during the continuance of an Event of Default may be applied by
the Administrative Agent in such order and priority as the Administrative Agent
shall determine.
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Section 3.8. Payments Received Under the Cash Management Agreement.
Notwithstanding anything to the contrary contained in this Agreement or the
other Loan Documents, and provided no Event of Default has occurred and is
continuing, Borrower's obligations with respect to the monthly payment of
interest and principal (if any) and amounts due for the Taxes and insurance
premiums, the Capital Improvement Reserve and the Leasing Reserve and any other
payment due pursuant to this Agreement or any other Loan Document shall be
deemed satisfied to the extent sufficient amounts are deposited in the Cash
Management Account and are available to the Administrative Agent (on behalf of
the Lenders) to satisfy such obligations on the dates each such payment is
required, regardless of whether any of such amounts are so applied by the
Administrative Agent.
Section 3.9. Security Deposit Account. Subject to the requirements of any
existing leases at the Project and/or any applicable legal requirements, on the
date hereof, Borrower is depositing $225,943.03 (with interest thereon since
October 1, 1999) into the Security Deposit Account, which amount represents an
amount not less than the aggregate amount of all cash security deposits required
to held by Borrower under the terms of the then existing leases at the Project.
Subject to any applicable legal requirements, from and after the date hereof,
Borrower shall deposit or cause to be deposited into the Security Deposit
Account (or otherwise remit to Administrative Agent for its deposit into the
Security Deposit Account) all cash security deposits provided by any tenants of
the Project in accordance with their leases (including the cash proceeds of any
non-cash security deposits and any amounts required to be provided by any tenant
as a result of the Borrower's utilization of such tenant's cash security) as and
when received by Borrower. Subject to the requirements of any applicable legal
requirements, whenever the Borrower shall certify to the Administrative Agent,
pursuant to a certification in the form of Schedule 3.9 hereto (a) either (i)
that the Borrower is entitled to receive and apply any tenant security deposits
or (ii) that the Borrower is obligated to refund a tenant security deposit to a
tenant and (b) that the amounts remaining in the Security Deposit Account after
such receipt and application or refund by Borrower, as applicable, are not less
than the aggregate amount of all cash security deposits required to held by
Borrower under the terms of the existing leases at the Project, Administrative
Agent shall direct the Depository Bank to transfer to the Borrower Account (or,
if so directed in writing by Borrower and the Mezzanine Lender, to the Mezzanine
Loan Lockbox Account, except that, during a Trigger Period, all such amounts
shall be transferred to the Curtailment Account), within ten (10) Business Days
after the Administrative Agent's receipt of such certification, from the amounts
credited to the Security Deposit Account, the amount specified by Borrower in
such certification as the amount to which Borrower is entitled to receive and
apply in accordance with the applicable lease.
ARTICLE 4
ENVIRONMENTAL MATTERS
Section 4.1. Certain Definitions. As used herein, the following terms have
the meanings indicated:
(1) "Environmental Laws" means any federal, state or local law
(whether imposed by statute, or administrative or judicial order, or common
law), now or hereafter
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enacted, governing health, safety, industrial hygiene, the environment or
natural resources, or Hazardous Materials, including, such laws governing or
regulating the use, generation, storage, removal, recovery, treatment, handling,
transport, disposal, control, discharge of, or exposure to, Hazardous Materials.
(2) "Hazardous Materials" means (a) petroleum or chemical products,
whether in liquid, solid, or gaseous form, or any fraction or by-product
thereof, (b) asbestos or asbestos-containing materials, (c) polychlorinated
biphenyls (pcbs), (d) radon gas, (e) underground storage tanks, (i) any
explosive or radioactive substances, (g) lead or lead-based paint, or (h) any
other substance, material, waste or mixture which is or shall be listed,
defined, or otherwise determined by any governmental authority to be hazardous,
toxic, dangerous or otherwise regulated, controlled or giving rise to liability
under any Environmental Laws.
Section 4.2. Representations and Warranties on Environmental Matters.
Borrower represents and warrants to the Administrative Agent and the Lenders
that, to Borrower's knowledge, except as set forth in the Site Assessment, (1)
no Hazardous Material is now or was formerly used, stored, generated,
manufactured, installed, treated, discharged, disposed of or otherwise present
at or about the Project or any property adjacent to the Project (except for
cleaning and other products currently used in connection with the routine
maintenance or repair of the Project in full compliance with Environmental
Laws), (2) all permits, licenses, approvals and filings required by
Environmental Laws have been obtained, and the use, operation and condition of
the Project do not, and did not previously, violate any Environmental Laws, (3)
no civil, criminal or administrative action, suit, claim, hearing, investigation
or proceeding has been brought or been threatened, nor have any settlements been
reached by or with any parties or any liens imposed in connection with the
Project concerning Hazardous Materials or Environmental Laws and (4) no
underground storage tanks exist at the Project.
Section 4.3. Covenants on Environmental Matters.
(1) Borrower shall (a) comply strictly and in all respects with
applicable Environmental Laws; (b) notify the Administrative Agent immediately
upon Borrower's discovery of any spill, discharge, release or presence of any
Hazardous Material at, upon, under, within or otherwise affecting the Project
(other than de minimis amounts not violating any Environmental Law); (c)
promptly remove such Hazardous Materials and remediate the Project in full
compliance with Environmental Laws and in accordance with the recommendations
and specifications of an independent environmental consultant approved by the
Administrative Agent; and (d) promptly forward to the Administrative Agent
copies of all orders, notices, permits, applications or other communications and
reports in connection with any spill, discharge, release or the presence of any
Hazardous Material or any other matters relating to the Environmental Laws or
any similar laws or regulations, as they may affect the Project or Borrower.
(2) Borrower shall not cause, shall prohibit any other Person within
the control of Borrower from causing, and shall use prudent, commercially
reasonable efforts to prohibit other Persons (including tenants) from causing
(a) any spill, discharge or release, or the use, storage, generation,
manufacture, installation, or disposal, of any Hazardous Materials at, upon,
under, within or about the Project or the transportation of any Hazardous
Materials to or from the
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Project (except for cleaning and other products used in connection with the
routine maintenance or repair of the Project and products customarily used by
office tenants, in each case in full compliance with Environmental Laws), (b)
any underground storage tanks to be installed at the Project, or (c) any
activity that requires a permit or other authorization under Environmental Laws
to be conducted at the Project.
(3) Borrower shall provide to the Administrative Agent, at Borrower's
expense promptly upon the written request of the Administrative Agent from time
to time, a Site Assessment or, if required by the Administrative Agent, an
update to any existing Site Assessment, to assess the presence or absence of any
Hazardous Materials and the potential costs in connection with abatement,
cleanup or removal of any Hazardous Materials found on, under, at or within the
Project. Borrower shall pay the cost of no more than one such Site Assessment or
update requested by Administrative Agent during the term of the Loan, unless the
Administrative Agent's request for a Site Assessment or update is based on
information provided under Section 4.3(1), a reasonable suspicion of Hazardous
Materials at or near the Project, a breach of representations under Section 4.2,
or an Event of Default.
(4) Borrower shall, at its sole cost and expense, diligently and
continuously carry out (or cause to be diligently and continuously carried out),
the operations, abatement and maintenance plan for asbestos at the Project dated
December 2, 1999 and prepared by Hillman Environmental Company, Inc.
Section 4.4. Allocation of Risks and Indemnity. As between Borrower, the
Administrative Agent and the Lenders, all risk of loss associated with
non-compliance with Environmental Laws, or with the presence of any Hazardous
Material at, upon, within, contiguous to or otherwise affecting the Project,
shall lie solely with Borrower. Accordingly, Borrower shall bear all risks and
costs associated with any loss, damage or liability therefrom, including all
costs of removal of Hazardous Materials or other remediation required by the
Administrative Agent or by law. Borrower shall indemnify, defend and hold the
Administrative Agent and the Lenders harmless from and against all loss,
liabilities, damages, claims, costs and expenses (including reasonable costs of
defense) arising out of or associated, in any way, with the non-compliance with
Environmental Laws, or the existence of Hazardous Materials in, on, or about the
Project, or a breach of any representation, warranty or covenant contained in
this Article 4, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute or common law, including those
arising from the joint, concurrent, or comparative negligence of the
Administrative Agent and the Lenders; however, Borrower shall not be liable
under such indemnification to the extent such loss, liability, damage, claim,
cost or expense results solely from the Administrative Agent's or any Lender's
gross negligence or willful misconduct. Borrower's obligations under this
Section 4.4 shall arise upon the discovery of the presence of any Hazardous
Material, whether or not any governmental authority has taken or threatened any
action in connection with the presence of any Hazardous Material, and whether or
not the existence of any such Hazardous Material or potential liability on
account thereof is disclosed in the Site Assessment. The Borrower's
indemnification obligations in this Section 4.4 shall continue notwithstanding
the repayment of the Loans or any transfer or sale of any right, title and
interest in the Project (by foreclosure, deed in lieu of foreclosure or
otherwise), except that, if, in the case of a repayment of the Loans in full or
a transfer or sale of the Project with the Administrative Agent's prior written
approval (and without implying that any such approval will
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be granted), Borrower furnishes to the Administrative Agent a then current Site
Assessment (or an update to a prior Site Assessment) which neither recommends
any further assessment or monitoring of the Project nor discloses any material
non-compliance with Environmental Laws at the Project (as determined by
Administrative Agent in its sole discretion), then Borrower's indemnification
obligations under this Section 4.4 shall cease (except with respect to any
matters which Administrative Agent shall have given notice to the Borrower on or
prior to such repayment or transfer).
Section 4.5. No Waiver. Notwithstanding any provision in this Article 4 or
elsewhere in the Loan Documents, or any rights or remedies granted by the Loan
Documents, the Administrative Agent and the Lenders do not waive and expressly
reserves all rights and benefits now or hereafter accruing to the Administrative
Agent and/or any Lenders under the "security interest" or "secured creditor"
exception under applicable Environmental Laws, as the same may be amended. No
action taken by the Administrative Agent and/or any Lender pursuant to the Loan
Documents shall be deemed or construed to be a waiver or relinquishment of any
such rights or benefits under the "security interest exception."
ARTICLE 5
LEASING MATTERS
Section 5.1. Representations and Warranties on Leases. Borrower represents
and warrants to the Administrative Agent and the Lenders with respect to leases
of the Project that except as disclosed in Schedule 5.1: (1) to Borrower's
knowledge, the rent roll delivered to the Administrative Agent is true and
correct in all material respects, and the leases are valid and in and full force
and effect; (2) the leases (including amendments) are in writing, and there are
no oral agreements with respect thereto; (3) the copies of the leases delivered
to the Administrative Agent are true and complete; (4) to Borrower's knowledge,
neither the landlord nor any tenant is in default under any of the leases; (5)
Borrower has no knowledge of any notice of termination or default with respect
to any lease; (6) Borrower has not assigned or pledged any of the leases, the
rents or any interests therein except to the Administrative Agent (on behalf of
the Lenders); (7) no tenant or other party has an option to purchase all or any
portion of the Project; (8) no tenant has the right to terminate its lease prior
to expiration of the stated term of such lease, except in the case of a casualty
or condemnation of the Project; (9) as of the date hereof, no tenant has prepaid
more than one month's rent in advance (except for bona fide security deposits);
and (10) all tenant security deposits paid in cash by tenants under leases at
the Project (and the cash proceeds of any non-cash security deposits drawn or
otherwise realized upon by Borrower) shall be deposited into the Security
Deposit Account as and when received by the Borrower.
Section 5.2. Lease; Approval Rights. Borrower shall not enter into, renew
(except pursuant to renewal rights contained in existing Major Leases),
terminate or amend (other than as required by a Major Lease, e.g., confirming
delivery or commencement dates, etc.) in any material respect any Major Lease
after the date hereof without first obtaining the prior written consent of the
Administrative Agent, which consent shall not be unreasonably withheld or
delayed, provided that (a) there exists no Potential Default or Event of Default
and (b) the Major
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Lease is on terms and conditions (including rental rates and landlord
concessions) which are commercially reasonable at the time the lease is
executed. Prior to entering into any Major Lease (or a renewal (except pursuant
to renewal rights contained in then existing Major Leases), amendment or
termination thereof), the Borrower shall deliver to the Administrative Agent the
following (collectively, the "Major Lease Term Sheet Package"): (i) a final term
sheet in a form reasonably acceptable to Administrative Agent (the "Major Lease
Term Sheet") containing all the material terms of the proposed Major Lease,
including, without limitation, the identity of the proposed tenant and (ii) such
information with respect to the prospective tenant as shall permit the
Administrative Agent to assess such proposed tenant's business, character and
creditworthiness. Within fifteen (15) Business Days after the Administrative
Agent shall have received a Major Lease Term Sheet Package, the Administrative
Agent shall either consent or refuse to consent to such Major Lease Term Sheet.
If the Administrative Agent shall refuse to consent to any proposed Major Lease
Term Sheet, the Administrative Agent shall promptly forward to the Borrower in
reasonable detail the reasons for such refusal. If the Administrative Agent
shall fail to respond within such fifteen (15) Business Day period, Borrower may
notify the Administrative Agent of such failure and if the Administrative Agent
shall fail to respond within three (3) Business Days after receipt of such
second notice, the Administrative Agent shall be deemed to have consented to
such proposed Major Lease Term Sheet. If the Administrative Agent shall approve
(or be deemed to have approved) the Major Lease Term Sheet, Borrower shall
deliver to Administrative Agent the first draft of the proposed Major Lease and
all subsequent drafts of such proposed Major Lease. Within ten (10) Business
Days after the Administrative Agent shall have received the final draft of the
proposed Major Lease, provided such final draft is on substantially the same
terms as the approved Major Lease Term Sheet, Administrative Agent shall consent
to such Major Lease. All leases (regardless of whether it is a Major Lease)
shall (i) be on commercially reasonable terms, (ii) provide for market rents
(which shall be determined taking into account the applicable operating expense
and real estate tax provisions, tenant work allowance, tenant expenses and free
rent), and contain normal and customary subordination and attornment provisions.
Borrower shall deposit all cash tenant security deposits (and the cash proceeds
of all non-cash security deposits) in the Security Deposit Account. Within ten
(10) days after the Administrative Agent's request, Borrower shall furnish to
the Administrative Agent a statement of all tenant security deposits, and copies
of all leases not previously delivered to the Administrative Agent, certified by
Borrower as being true and correct. In addition to the foregoing, it is
understood and agreed that any future lease, lease modification or lease
extension (except for lease extensions expressly permitted under or lease
modifications expressly required under the terms of existing Leases) for
premises consisting of 100,000 or more rentable square feet may be subject to
the approval of the Majority Lenders.
Section 5.3. Covenants. Borrower shall (1) perform the obligations which
Borrower is required to perform under the leases; (2) enforce, in a commercially
reasonable manner, the obligations to be performed by the tenants; (3) promptly
furnish to the Administrative Agent any notice of default or termination
received by Borrower from any tenant, and any notice of default or termination
given by Borrower to any tenant; (4) not collect any rents for more than thirty
(30) days in advance of the time when the same shall become due, except for (x)
bona fide security deposits which are deposited into the Security Deposit
Account and (y) pre-paid rents which shall be retained in the Cash Management
Account until due and payable under the applicable lease, with Borrower hereby
agreeing to advise Administrative Agent and the Depository Bank as to any
prepayment of rent more than thirty (30) days in advance of the time when due as
and
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when Borrower becomes aware of the same and to deposit into the Cash Management
Account or otherwise promptly remit to Administrative Agent the full amount of
any such prepayment promptly following Borrower's receipt of the same; (5) not
enter into any ground lease or master lease of any part of the Project; and (6)
not further assign or encumber any lease, and any action in violation of clauses
(5), and (6) of this Section 5.3 shall be void at the election of the
Administrative Agent.
Section 5.4. Tenant Estoppels. At the Administrative Agent's request,
Borrower shall obtain and furnish to the Administrative Agent, to the extent
required to be delivered by tenants under existing leases, (1) written Estoppels
in form and substance satisfactory to the Administrative Agent, executed by
tenants under leases in the Project and confirming the term, rent, and other
provisions and matters relating to the leases and (2) written subordination and
attornment agreements, in form and substance satisfactory to the Administrative
Agent, executed by tenants under leases in the Project, whereby, among other
things, such tenants subordinate their interest in the Project to the Loan
Documents and agree to attorn to the Administrative Agent (on behalf of the
Lenders) and its successors and assigns upon foreclosure or other transfer of
the Project after an Event of Default.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Administrative Agent and the
Lenders that:
Section 6.1. Organization and Power.
(1) Borrower and each Borrower Party is duly organized, validly
existing and in good standing under the laws of the state of its formation or
existence, and is in compliance with legal requirements applicable to doing
business in the State. Borrower is not a "foreign person" within the meaning of
ss. 1445(f)(3) of the Code.
(2) As of the date hereof, (a) Apollo Real Estate Advisors, L.P. (or
any one or more investment funds managed by or other entities owned and
controlled by Apollo Real Estate Advisors, L.P.) owns (on a fully undiluted and
unencumbered basis) 38.1% of the issued and outstanding shares of voting common
stock of the REIT, thereby entitling Apollo Real Estate Advisors, L.P. (or any
one or more investment funds managed by or other entities owned and controlled
by Apollo Real Estate Advisors, L.P.) to appoint four (4) of the nine (9)
members of the board of directors of the REIT, and (b) the REIT owns, in the
aggregate, either directly or indirectly, 95% of the beneficial interests in the
Borrower and the Project.
Section 6.2. Validity of Loan Documents. The execution, delivery and
performance by Borrower and each Borrower Party of the Loan Documents: (1) are
duly authorized and do not require the consent or approval of any other party or
governmental authority which has not been obtained; and (2) will not violate any
law or result in the imposition of any lien, charge or encumbrance upon the
assets of any such party, except as contemplated by the Loan Documents. The Loan
Documents constitute the legal, valid and binding obligations of Borrower and
each
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Borrower Party, enforceable in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, or similar laws generally affecting the
enforcement of creditors' rights.
Section 6.3. Liabilities; Litigation.
(1) The financial statements (or tax returns, as applicable) delivered
by Borrower and each Borrower Party are true and correct with no significant
change since the date of preparation. Except as disclosed in Schedule 6.3 and in
such financial statements, there are no liabilities (fixed or contingent)
affecting the Project, Borrower or any Borrower Party. Except as disclosed in
such financial statements, there is no litigation, administrative proceeding,
investigation or other legal action (including any proceeding under any state or
federal bankruptcy or insolvency law) pending or, to the knowledge of Borrower,
threatened, against the Project, Borrower or any Borrower Party which if
adversely determined could have a material adverse effect on such party, the
Project or the Loans.
(2) Neither Borrower nor any Borrower Party is contemplating either
the filing of a petition by it under state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of its assets or property, and
neither Borrower nor any Borrower Party has knowledge of any Person
contemplating the filing of any such petition against it.
Section 6.4. Taxes and Assessments. The Project is comprised of one or more
parcels, each of which constitutes a separate tax lot and none of which
constitutes a portion of any other tax lot. There are no pending or, to
Borrower's best knowledge, proposed, special or other assessments for public
improvements or otherwise affecting the Project, nor are there any contemplated
improvements to the Project that may result in such special or other
assessments.
Section 6.5. Other Agreements; Defaults. Neither Borrower nor any Borrower
Party is a party to any agreement or instrument or subject to any court order,
injunction, permit, or restriction which might adversely affect the Project or
the business, operations, or condition (financial or otherwise) of Borrower or
any Borrower Party. Neither Borrower nor any Borrower Party is in violation of
any agreement which violation would have an adverse effect on the Project,
Borrower, or any Borrower Party or Borrower's or any Borrower Party's business,
properties, or assets, operations or condition, financial or otherwise.
Section 6.6. Compliance with Law.
(1) Borrower and each Borrower Party have all requisite licenses,
permits, franchises, qualifications, certificates of occupancy or other
governmental authorizations to own, lease and operate the Project and carry on
its business, and the Project is in compliance with all applicable legal
requirements and is free of structural defects, and all building systems
contained therein are in good working order, subject to ordinary wear and tear.
The Project does not constitute, in whole or in part, a legally non-conforming
use under applicable legal requirements;
(2) No condemnation has been commenced or, to Borrower's knowledge, is
contemplated with respect to all or any portion of the Project or for the
relocation of roadways providing access to the Project; and
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(3) The Project has adequate rights of access to public ways and is
served by adequate water, sewer, sanitary sewer and storm drain facilities. All
public utilities necessary or convenient to the full use and enjoyment of the
Project are located in the public right-of-way abutting the Project, and all
such utilities are connected so as to serve the Project without passing over
other property, except to the extent such other property is subject to a
perpetual easement for such utility benefiting the Project. All roads necessary
for the full utilization of the Project for its current purpose have been
completed and dedicated to public use and accepted by all governmental
authorities.
Section 6.7. Location of Borrower. Borrower's principal place of business
and chief executive offices are located at the address stated in Section 11.1.
Section 6.8. ERISA. Borrower has not established any pension plan for
employees which would cause Borrower to be subject to the Employee Retirement
Income Security Act of 1974, as amended.
Section 6.9. Margin Stock. No part of proceeds of the Loans will be used
for purchasing or acquiring any "margin stock" within the meaning of Regulations
T, U or X of the Board of Governors of the Federal Reserve System.
Section 6.10. Tax Filings. Borrower and each Borrower Party have filed (or
have obtained effective extensions for filing) all federal, state and local tax
returns required to be filed and have paid or made adequate provision for the
payment of all federal, state and local taxes, charges and assessments payable
by Borrower and each Borrower Party, respectively.
Section 6.11. Solvency. Giving effect to the Loans, the fair saleable value
of Borrower's assets exceeds and will, immediately following the making of the
Loans, exceed Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower's assets is and will, immediately following the
making of the Loans, be greater than Borrower's probable liabilities, including
the maximum amount of its contingent liabilities on its Debts as such Debts
become absolute and matured. Borrower's assets do not and, immediately following
the making of the Loans will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur Debts and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such Debts as they mature (taking into account the timing and amounts of
cash to be received by Borrower and the amounts to be payable on or in respect
of obligations of Borrower).
Section 6.12. Full and Accurate Disclosure. No statement of fact made by or
on behalf of Borrower or any Borrower Party in this Agreement or in any of the
other Loan Documents or in any certificate, statement or questionnaire delivered
by Borrower or any Borrower Party in connection with the Loans contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no fact presently known to Borrower or any Borrower Party which has not been
disclosed to the Administrative Agent which adversely affects, nor as far as
Borrower can foresee, might adversely affect, the Project or the business,
operations or condition (financial or otherwise) of Borrower or any Borrower
Party.
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Section 6.13. Single Purpose Entity. Borrower is a Single Purpose Entity.
Section 6.14. Management Agreement. The Management Agreement and the Asset
Management Agreement are the only agreements in existence with respect to the
overall operation or management of the Project. The copies of the Management
Agreement and Asset Management Agreement delivered to the Administrative Agent
are true and correct copies, and such agreements have not been amended or
modified. None of the parties to such agreements is in default under such
agreements and neither the Manager nor the Asset Manager has any defense, offset
right or other right to withhold performance under or terminate such agreements
other than in accordance with the terms thereof.
Section 6.15. Year 2000 Compliance. Borrower is aware of the potential
effect of the problem generally known as "Year 2000 computer-related
dysfunction" ("Year 2000"). All computers and computer-dependent systems of
Borrower, its suppliers and vendors, and such systems used in or in connection
with the Project, are able to function notwithstanding Year 2000. Borrower will
promptly notify the Administrative Agent in the event Borrower discovers or
determines that any of the above-referenced computers or systems will not be
Year 2000 compliant and will implement and carry out to completion such actions
as may be required to correct such non-compliance as soon as commercially
practicable.
Section 6.16. No Conflicts. The execution, delivery and performance of this
Agreement and the other Loan Documents by Borrower will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, operating agreement or other agreement or instrument to
which Borrower is a party or by which any of Borrower's property or assets is
subject, nor will such action result in any violation of the provisions of any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over Borrower or any of Borrower's properties or
assets, and any consent, approval, authorization, order, registration or
qualification of or with any court or any such regulatory authority or other
governmental agency or body required for the execution, delivery and performance
by Borrower of this Agreement or any other Loan Documents has been obtained and
is in full force and effect.
Section 6.17. Title. Borrower has good, marketable and insurable title to
the Project, free and clear of all Liens whatsoever, except for the Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents. The Mortgage creates (and upon the recordation thereof and of any
related financing statements there will be perfected) (1) a valid Lien on the
Project, subject only to Permitted Encumbrances and (2) security interests in
and to, and collateral assignments of, all personality (including the leases),
all in accordance with the terms thereof, in each case subject only to any
applicable Permitted Encumbrances and such other Liens as are permitted pursuant
to the Loan Documents. There are no claims for payment for work, labor or
materials affecting the Project which are or may become a Lien prior to, or of
equal priority with, the Liens created by the Loan Documents. None of the
Permitted Encumbrances, individually or in the aggregate, materially interfere
with the benefits of the security intended to be provided by the Mortgage and
this Agreement, materially and adversely
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affect the value of the Project, impair the use or operations of the Project or
impair Borrower's ability to pay its obligations in a timely manner.
Section 6.18. Use of Project. The Project is being, and will continue to
be, used exclusively for general office and other appurtenant and related uses
and, in the case of the ground and concourse floors of the Project, retail uses.
Section 6.19. Flood Zone. No portion of the improvements comprising the
Project is located in an area identified by the Secretary of Housing and Urban
Development or any successor thereto as an area having special flood hazards
pursuant to the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Act of 1994, as amended,
or any successor law.
Section 6.20. Insurance. Borrower has obtained and has delivered to the
Administrative Agent certified copies of all of the insurance policies for the
Project reflecting the insurance coverages, amounts and other insurance
requirements set forth in this Agreement. No claims have been made under any
such policy, and no Person, including the Borrower, has done, by act or
omission, anything which would impair the coverage of any such policy.
Section 6.21. Certificate of Occupancy; Licenses. All certifications,
permits, licenses and approvals, including without limitation, certificates of
completion and occupancy permits, required for the legal use, occupancy and
operation of the Project as an office building (with ground floor retail uses)
(collectively, the "Licenses") have been obtained and are in full force and
effect. Borrower shall keep and maintain all Licenses in full force and effect.
The use being made of the Project is in conformity with any applicable
certificate of occupancy issued for the Property.
Section 6.22. Physical Condition. Except as disclosed in the building
condition reports certified to the Administrative Agent and delivered in
connection with the initial advance of the Loans, the Project, including,
without limitation, all buildings, improvements, parking facilities, sidewalks,
storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects; to Borrower's knowledge,
there exists no structural or other material defects or damages in the Project,
whether latent or otherwise, and Borrower has not received written notice from
any insurance company or bonding company of any defects or inadequacies in the
Project, or any part thereof, which would adversely affect the insurability of
the same or cause the imposition of extraordinary premiums or charges thereon or
of any termination or threatened termination of any policy of insurance or bond.
Section 6.23. Boundaries. All of the Improvements (as defined in the
Mortgage) lie wholly within the boundaries and building restriction lines of the
Project, and no improvements on adjoining properties encroach upon the Project,
and no Improvements encroach upon or violate any easements or other encumbrances
upon the Project, so as to materially adversely affect the value or
marketability of the Project, except those which are insured against by title
insurance.
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Section 6.24. Survey. The survey for the Project delivered to the
Administrative Agent in connection with this Agreement does not fail to reflect
any material matter affecting the Project or the title thereto.
Section 6.25. Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable legal requirements currently in effect in
connection with the transfer of the Project to Borrower or any transfer of a
controlling interest in Borrower have been paid. All mortgage, mortgage
recording, stamp, intangible or other similar tax required to be paid by any
Person under applicable legal requirements currently in effect in connection
with the execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgage, have been paid and, under current legal requirements, the Mortgage is
enforceable in accordance with its terms by the Administrative Agent or any
subsequent holder thereof (on behalf of the Lenders), subject to applicable
bankruptcy, insolvency, or similar laws generally affecting the enforcement of
creditors' rights.
Section 6.26. Investment Company Act. Borrower is not (1) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (2) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (3) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
Section 6.27. Interest Rate Protection Agreement. A complete and correct
copy of the Interest Rate Protection Agreement is attached hereto as Exhibit I.
The Interest Rate Protection Agreement is in full force and effect and
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws generally affecting the enforcement of creditors'
rights.
ARTICLE 7
FINANCIAL REPORTING
Section 7.1. Financial Statements.
(1) Monthly Reports. Within thirty (30) days after the end of each
calendar month, Borrower shall furnish to the Administrative Agent (or, in the
case of item (f) below, shall cause the transfer agent for the REIT to furnish
to the Administrative Agent) (a) a detailed operating statement (showing monthly
activity for the calendar month just ended and year-to-date) stating Operating
Revenues, Operating Expenses, operating income and Net Cash Flow for the
calendar month just ended, (b) an updated rent roll, (c) a current stacking
plan, (d) copies of all new leases (or amendments to any existing leases) at the
Project entered into during the calendar month just ended, (e) a leasing status
report, (f) a list of the then current shareholders of the REIT indicating, with
respect to each shareholder, the number of outstanding shares owned by it and,
(g) as requested by the Administrative Agent, copies of bank statements
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and bank reconciliations, a general ledger, and other documentation supporting
the information disclosed in the most recent financial statements.
(2) Quarterly Reports. Within forty-five (45) days after the end of
each calendar quarter, Borrower shall furnish to the Administrative Agent a
current (as of the end of such Quarter) balance sheet and a detailed operating
statement (showing quarterly activity and year-to-date) prepared in accordance
with GAAP and stating Operating Revenues, Operating Expenses, operating income
and Net Cash Flow for the calendar quarter just ended and a written statement
for each Quarter (other than the fourth (4th) Quarter of each year) setting
forth any variances during such Quarter of more than $25,000 in the aggregate
for any line item from the Approved Annual Budget for such Quarter.
(3) Annual Reports. Within ninety (90) days after the end of each
fiscal year of Borrower's operation of the Project, Borrower shall furnish to
the Administrative Agent a current (as of the end of such fiscal year) balance
sheet and a detailed operating statement stating Operating Revenues, Operating
Expenses, operating income and Net Cash Flow for each of Borrower and the
Project, all prepared in accordance with GAAP and audited by an independent
certified public accountant satisfactory to the Administrative Agent. In
addition to the foregoing, Borrower shall also deliver to the Administrative
Agent copies of all United States federal income tax returns for the Borrower's
general partner promptly (and in any event within twenty (20) days) after the
general partner's filing of such income tax returns. Administrative Agent hereby
acknowledges and agrees that Deloitte & Touche LLP and any other so-called "Big
5" accounting firm is satisfactory to the Administrative Agent.
(4) Certification; Supporting Documentation. Each such financial
statement shall be in scope and detail satisfactory to the Administrative Agent
and certified by (a) the chief financial representative of Borrower, in the case
of quarterly statements, and (b) an independent certified accountant
satisfactory to the Administrative Agent, in the case of annual statements.
Administrative Agent hereby acknowledges and agrees that Deloitte & Touche LLP
and any other so-called "Big 5" accounting firm is satisfactory to the
Administrative Agent.
Section 7.2. Other Information. Borrower shall deliver to the
Administrative Agent such additional information regarding Borrower, its
subsidiaries, its business, any Borrower Party, and the Project within 30 days
after the Administrative Agent's request therefor.
Section 7.3. Annual Budget. Commencing with the budget for the calendar
year 2000 and for each calendar year thereafter, Borrower shall submit to
Administrative Agent for Administrative Agent's written approval an annual
budget (an "Annual Budget") not later than December 20th of the previous
calendar year, in form reasonably satisfactory to Administrative Agent setting
forth in reasonable detail budgeted monthly Operating Revenues and monthly
Operating Expenses for the Project. Administrative Agent shall have the right to
approve such Annual Budget (such approval not to be unreasonably withheld or
conditioned except during any period where Administrative Agent is taking action
to remove the Manager, in which event Administrative Agent shall have the right
to exercise such approval right in its sole discretion) and in the event that
Administrative Agent objects to the proposed Annual Budget submitted by
Borrower, Administrative Agent shall advise Borrower of such objections within
fifteen (15) days after receipt thereof (and deliver to Borrower a reasonably
detailed description of such
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objections) and Borrower shall within five (5) days after receipt of notice of
any such objections revise such Annual Budget and resubmit the same to
Administrative Agent. Administrative Agent shall advise Borrower of any
objections to such revised Annual Budget (and deliver to Borrower a reasonably
detailed description of such objections) within five (5) days after receipt
thereof and Borrower shall promptly revise the same in accordance with the
foregoing procedures until the Administrative Agent approves (such approval not
to be unreasonably withheld or conditioned except during any period where
Administrative Agent is taking action to remove the Manager, in which event
Administrative Agent shall have the right to exercise such approval right in its
sole discretion) an Annual Budget; provided, however, that if Administrative
Agent shall not advise Borrower of its objections to any proposed Annual Budget
within the applicable time period set forth in this subsection, then such
proposed Annual Budget shall be deemed approved by Administrative Agent (unless
a Trigger Period exists, in which case the proposed Annual Budget shall be
deemed disapproved). Each such Annual Budget approved by Administrative Agent in
accordance with terms hereof shall hereinafter be referred to as an "Approved
Annual Budget". Until such time that Administrative Agent has approved a
proposed Annual Budget, the most recently Approved Annual Budget shall apply,
provided that such Approved Annual Budget shall be adjusted to reflect actual
increases in real estate taxes, insurance premiums and utilities expenses and
shall otherwise be adjusted to reflect any change during the preceding year in
the Consumer Price Index.
Section 7.4. Audits. Borrower shall permit the Administrative Agent to
examine such records, books and papers of Borrower which reflect upon its
financial condition and the income and expense relative to the Project.
ARTICLE 8
COVENANTS
Borrower covenants and agrees with the Administrative Agent and the Lenders
as follows:
Section 8.1. Due on Sale and Encumbrance; Transfers of Interests.
(1) Without the prior written consent of the Administrative Agent and
the Lenders (to the extent required under Section 11.2),
(a) neither Borrower nor any other Person having an indirect or
direct ownership or beneficial interest in Borrower shall (a) directly or
indirectly sell, transfer, convey, mortgage, pledge, or assign any interest
in the Project or any part thereof (including any partnership, membership
or any other ownership interest in Borrower); (b) further encumber,
alienate, grant a Lien or grant any other interest in the Project or any
part thereof (including any partnership, membership or other ownership
interest in Borrower), whether voluntarily or involuntarily; or (c) enter
into any easement or other agreement granting rights in or restricting the
use or development of the Project;
(b) no new general partner, member, or limited partner having the
ability to control the affairs of Borrower shall be admitted to or created
in Borrower (nor
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shall any existing general partner or member or controlling limited partner
withdraw from Borrower), and no change in Borrower's organizational
documents relating to control over Borrower and/or the Project shall be
effected;
(c) no transfer shall be permitted which would cause the REIT to
own less than ninety-five percent (95%) of the beneficial interest in
Borrower and the Project and less than one hundred percent (100%) of the
voting stock in the corporate general partner of Borrower; and
(d) no transfer shall be permitted which would cause Apollo Real
Estate Advisors, L.P. (or (i) any investment fund managed by or other
entity controlled by Apollo Real Estate Advisors, L.P. or (ii) its
principals on the date hereof) to directly or indirectly own (on a fully
diluted and unencumbered basis) less than thirty percent (30%) of the
beneficial and economic interests in Borrower and the Project.
(2) Notwithstanding anything to the contrary contained herein
(including Section 8.8) or the other Loan Documents, but subject to the
provisions of this subsection (2), any Single Purpose Entity (other than
Borrower) which directly or indirectly owns equity interests in Borrower and
which is acceptable to the Administrative Agent (the "Mezzanine Borrower"), such
approval not to be unreasonably withheld, shall be permitted to obtain
additional financing (a "Mezzanine Loan") from a Mezzanine Lender provided that
each of the following conditions is satisfied:
(a) the principal amount of the Mezzanine Loan does not exceed
$25,000,000;
(b) the Mezzanine Loan (a) is secured primarily by a lien on the
REIT's (i) 100% ownership interest in the capital stock of 1290 GP Corp.,
the current general partner of Borrower, (ii) 94.05% limited partnership
interest in the Borrower and (iii) 100% ownership interest in the capital
stock of 237/1290 GP Corp., and not by the Project, and (b) does not
constitute an obligation of, or any lien upon any assets of, Borrower;
(c) the Loan-to-Value Ratio immediately after the making of the
Mezzanine Loan, assuming that the Mezzanine Loan is part of the Loan and
utilizing an Appraisal dated (or updated) to a date not more than ninety
(90) days prior to the making of the Mezzanine Loan, does not exceed 75%;
(d) the Adjusted Debt Service Coverage Ratio after the making of
the Mezzanine Loan is at least (i) 1.2 to 1, assuming that the debt service
payable on the Mezzanine Loan is not part of Debt Service, and (ii) 1.1 to
1, assuming that the debt service payable on the Mezzanine Loan (at the
contract rate specified in the Mezzanine Loan documents) is part of the
Debt Service;
(e) the Mezzanine Loan shall have a scheduled maturity date no
earlier than the Maturity Date;
(f) the Mezzanine Lender enters into an Intercreditor Agreement;
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(g) Administrative Agent shall have received an opinion of
counsel to the Mezzanine Lender covering certain organizational matters and
the enforceability of the Intercreditor Agreement against the Mezzanine
Lender, it being understood that the Mezzanine Loan documents may provide
that such opinion shall be at the sole cost and expense of Mezzanine
Borrower;
(h) No Event of Default or Potential Default exists and is
continuing;
(i) Borrower and its general partner shall each remain a Single
Purpose Entity;
(j) Borrower shall reimburse Administrative Agent, not later than
the date of the closing of the Mezzanine Loan, for all costs and expenses,
including attorneys' fees and disbursements and all appraisal costs,
incurred or to be incurred by Administrative Agent in connection with the
Mezzanine Loan; and
(k) the terms, conditions and structure of the Mezzanine Loan and
the Mezzanine Loan documents (including, without limitation, the payment
terms) are otherwise acceptable to the Administrative Agent.
The determination as to whether the conditions set forth in this subsection (2)
have been satisfied shall be made by Administrative Agent in its sole
discretion. At the time of the closing of the Mezzanine Loan, at the request of
the Borrower, the Administrative Agent shall certify to the Administrative Agent
as to the principal amount due on the Loans and whether or not, to the actual
knowledge of the Administrative Agent, any Event of Default exists.
(3) Notwithstanding the foregoing, however, no consent shall be
required for a transfer or any subsequent transfer of any shareholder interests
in the REIT, subject to Section 8.1(1)(d).
(4) Notwithstanding the provisions of Section 8.1, any transfer of a
direct ownership interest in Borrower or its general partner shall be further
subject to (x) no Potential Default or Event of Default then existing, (y) the
proposed transferee being a corporation, partnership, joint venture, joint-stock
company, trust or individual approved in writing by each Lender subject to a
Limiting Regulation in its discretion, and (z) payment to Administrative Agent
on behalf of Lenders of all costs and expenses incurred by Administrative Agent
or any Lenders in connection with such transfer. Each Lender at the time subject
to a Limiting Regulation shall, within ten (10) days after receiving Borrower's
notice of a proposed transfer subject to this Section 8.1(4), furnish to
Borrower a certificate (which shall be conclusive absent manifest error) stating
that it is subject to a Limiting Regulation, whereupon such Lender shall have
the approval right contained in clause (y) above. Each Lender which fails to
furnish such a certificate to Borrower during such ten (10) day period shall be
automatically and conclusively deemed not to be subject to a Limiting
Regulation. If any Lender subject to a Limiting Regulation fails to approve a
proposed transferee under clause (y) above (any such Lender being herein called
a "Rejecting Lender"), Borrower, upon three (3) Business Days notice, may (A)
notwithstanding the terms of Sections 2.3(5), prepay such Rejecting Lender's
outstanding Loans or (B) require that such Rejecting Lender transfer all of its
right, title and interest under this
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Agreement and such Rejecting Lender's Note to any bank or other financial
institution or any Eligible Assignee (a "Proposed Lender") selected by Borrower
that is reasonably satisfactory to the Administrative Agent if such Proposed
Lender (x) agrees to assume all of the obligations of such Rejecting Lender
hereunder, and to purchase all of such Rejecting Lender's Loans hereunder for
consideration equal to the aggregate outstanding principal amount of such
Rejecting Lender's Loans, together with interest thereon to the date of such
purchase (to the extent not paid by Borrower), and satisfactory arrangements are
made for payment to such Rejecting Lender of all other amounts accrued and
payable hereunder to such Rejecting Lender as of the date of such transfer
(including any fees accrued hereunder and any amounts that would be payable
under Section 2.7(5) as if all such Rejecting Lender's Loans were prepaid in
full on such date) and (y) approves the proposed transferee. Subject to the
provisions of Section 11.25(2), such Proposed Lender shall be a "Lender" for all
purposes hereunder. Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements of Borrower contained in Section 11.5 shall
survive for the benefit of such Rejecting Lender under this Section 8.1(4) with
respect to the time period prior to such replacement.
(5) As used in this Section 8.1, "transfer" shall include the sale,
transfer, conveyance, mortgage, pledge, or assignment of the legal or beneficial
ownership of (a) the Project, (b) any partnership interest in any general
partner in Borrower that is a partnership, (c) any membership interest in any
member in Borrower that is a limited liability company and (d) any voting stock
in any general partner in Borrower that is a corporation; and "transfer" shall
not include (i) the leasing of any space within the Project so long as Borrower
complies with the provisions of the Loan Documents relating to such leasing
activity, (ii) the transfers of limited partner interests in Borrower so long as
the provisions of Sections 8.1(2) and 8.1(3) are satisfied or (iii) transfers to
the Mezzanine Lender pursuant to the exercise of its remedies under the
documentation evidencing and/or securing the Mezzanine Loan, subject to the
requirements of the Intercreditor Agreement.
Section 8.2. Taxes; Charges.
(1) Borrower shall pay before any fine, penalty, interest or cost may
be added thereto, and shall not enter into any agreement to defer, any real
estate taxes and assessments, franchise taxes and charges, and other
governmental charges that may become a Lien upon the Project or become payable
during the term of the Loans (collectively, "Taxes"), and will promptly furnish
the Administrative Agent with evidence of such payment; however, Borrower's
compliance with Section 3.4 of this Agreement relating to impounds for taxes and
assessments shall, with respect to payment of such taxes and assessments, be
deemed compliance with this Section 8.2. Borrower shall not suffer or permit the
joint assessment of the Project with any other real property constituting a
separate tax lot or with any other real or personal property. Borrower shall pay
when due all claims and demands of mechanics, materialmen, laborers and others
which, if unpaid, might result in a Lien on the Project; however, Borrower may
contest the validity of such claims and demands or taxes so long as (1) Borrower
notifies the Administrative Agent that it intends to contest such claim or
demand, (2) Borrower provides the Administrative Agent with an indemnity, bond
or other security satisfactory to the Administrative Agent (including an
endorsement to the Administrative Agent's title insurance policy insuring
against such claim or demand) assuring the discharge of Borrower's obligations
for such claims and demands, including interest and penalties, and (3) Borrower
is diligently contesting the same by
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appropriate legal proceedings in good faith and at its own expense and concludes
such contest prior to the tenth (10th) day preceding the earlier to occur of the
Maturity Date or the date on which the Project is scheduled to be sold for
non-payment.
(2) Upon demand by the Administrative Agent, Borrower shall pay all
mortgage, mortgage recording, stamp, intangible or other similar taxes required
at any time to be paid by any Person under any applicable legal requirements or
governmental interpretation thereof in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of any of the Loan
Documents, including, without limitation, the Mortgage, so that each Loan
Document, including, without limitation, the Mortgage, is at all times
enforceable in accordance with its terms by the Administrative Agent or any
subsequent holder thereof (on behalf of the Lenders), subject to applicable
bankruptcy, insolvency, or similar laws generally affecting the enforcement of
creditors' rights.
Section 8.3. Control; Management. There shall be no change in the
day-to-day control and management of Borrower or any Borrower Party without the
prior written consent of the Administrative Agent. Borrower shall not terminate,
replace or appoint any property manager or terminate or amend the Management
Agreement for the Project (other than minor modifications which do not increase
the fees payable under the Management Agreement, decrease the term of the
Management Agreement or otherwise adversely affect the rights and obligations of
the Borrower thereunder) or permit the REIT to terminate, replace or appoint any
asset manager or terminate or amend the Asset Management Agreement for the
Project, in either case without the Administrative Agent's prior written
approval, which approval shall not be unreasonably withheld in the case of any
replacement of the Manager with a prominent and experienced real property
management company which, at the time of its engagement by Borrower, has under
management at least ten (10) first class office buildings in the City of New
York comprising not less than five (5) million square feet of net rentable area
in the aggregate (in each case exclusive of the Project). Any change in
ownership or control of the Manager or the Asset Manager shall be cause for the
Administrative Agent to re-approve such Manager and Management Agreement or
Asset Manager and Asset Management Agreement, as the case may be. If at any time
the Administrative Agent consents to the appointment of a new manager or asset
manager, such new manager or asset manager and Borrower shall, as a condition of
the Administrative Agent's consent, execute a Manager's Consent and
Subordination of Management Agreement or an Asset Manager Comfort Letter, as
applicable, in form and substance reasonably satisfactory to the Administrative
Agent. Each manager and asset manager shall hold and maintain all necessary
licenses, certifications and permits required by law. Borrower shall fully
perform all of its covenants, agreements and obligations under the Management
Agreement and shall cause the REIT to perform all of its covenants, agreements
and obligations under the Asset Management Agreement.
Section 8.4. Operation; Maintenance; Inspection. Borrower shall
observe and comply with all legal requirements applicable to the ownership, use
and operation of the Project. Borrower shall maintain the Project in good
condition and promptly repair any damage or casualty. Borrower shall permit the
Administrative Agent and the Lenders and their agents, representatives and
employees, upon reasonable prior notice to Borrower and subject to the rights of
tenants at the Project, to inspect the Project and conduct such environmental
and
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engineering studies as the Administrative Agent may require, provided such
inspections and studies do not materially interfere with the use and operation
of the Project.
Section 8.5. Taxes on Security. Borrower shall pay all taxes, charges,
filing, registration and recording fees, excises and levies payable with respect
to the Notes or the Liens created or secured by the Loan Documents, other than
income, franchise and doing business taxes imposed on the Administrative Agent
or any Lender. If there shall be enacted any law (1) deducting the Loans from
the value of the Project for the purpose of taxation, (2) affecting any Lien on
the Project, or (3) changing existing laws of taxation of mortgages, deeds of
trust, security deeds, or debts secured by real property, or changing the manner
of collecting any such taxes, Borrower shall promptly pay to the Administrative
Agent, on demand, all taxes, costs and charges for which the Administrative
Agent or any Lender is or may be liable as a result thereof.
Section 8.6. Legal Existence; Name, Etc. Each of Borrower and the
general partner in Borrower shall preserve and keep in full force and effect its
existence as a Single Purpose Entity, entity status, franchises, rights and
privileges under the laws of the state of its formation, and all qualifications,
licenses and permits applicable to the ownership, use and operation of the
Project. Neither Borrower nor any general partner of Borrower shall wind up,
liquidate, dissolve, reorganize, merge, or consolidate with or into, or convey,
sell, assign, transfer, lease, or otherwise dispose of all or substantially all
of its assets, or acquire all or substantially all of the assets of the business
of any Person. Borrower and each general partner in Borrower shall conduct
business only in its own name and shall not change its name, identity, or
organizational structure, or the location of its chief executive office or
principal place of business unless Borrower (a) shall have obtained the prior
written consent of the Administrative Agent to such change, and (b) shall have
taken all actions necessary or requested by the Administrative Agent to file or
amend any financing statement or continuation statement to assure perfection and
continuation of perfection of security interests under the Loan Documents.
Borrower (and each general partner in Borrower), if any, shall maintain its
separateness as an entity, including maintaining separate books, records, and
accounts and observing corporate and partnership formalities independent of any
other entity, shall pay its obligations with its own funds and shall not
commingle funds or assets with those of any other entity.
Section 8.7. Affiliate Transactions. Without the prior written consent
of the Administrative Agent, Borrower shall not engage in any transaction
affecting the Project with an Affiliate of Borrower. Borrower hereby represents
that it and/or the REIT have entered into arrangements with certain Affiliates
for the provision by such Affiliates of certain cleaning, asset management,
property management and tax consulting services as more particularly described
in the agreements referenced in Schedule 8.7 hereto, true, correct and complete
copies of which have been delivered to the Administrative Agent, and each of
which is hereby approved by the Administrative Agent.
Section 8.8. Limitation on Other Debt. Except as expressly provided in
Section 8.1, Borrower (and each general partner in Borrower, if any) shall not,
without the prior written consent of the Administrative Agent and the Majority
Lenders, incur any Debt other than the Loans, the Interest Rate Protection
Agreement and trade and operational debt described in subsection (o) of the
definition of Single Purpose Entity.
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Section 8.9. Further Assurances. Borrower shall promptly (1) cure any
defects in the execution and delivery of the Loan Documents, and (2) execute and
deliver, or cause to be executed and delivered, all such other documents,
agreements and instruments as the Administrative Agent may reasonably request to
further evidence and more fully describe the collateral for the Loans, to
correct any ministerial or scriveners omissions in the Loan Documents, to
perfect, protect or preserve any liens created under any of the Loan Documents,
or to make any recordings, file any notices, or obtain any consents, as may be
necessary or appropriate in connection therewith.
Section 8.10. Estoppel Certificates. Borrower, within ten (10) days
after request, shall furnish to the Administrative Agent a written statement,
duly acknowledged, setting forth the amount due on the Loans, the terms of
payment of the Loans, the date to which interest has been paid, whether any
offsets or defenses exist against the Loans and, if any are alleged to exist,
the nature thereof in detail, and such other matters as the Administrative Agent
reasonably may request; provided, however, that any out-of-pocket costs and
expenses reasonably incurred by Borrower in complying with any such requests
made by the Administrative Agent more than two (2) times during any twelve (12)
month period shall be payable by the Lenders.
Section 8.11. Notice of Certain Events. Borrower shall promptly notify
the Administrative Agent of (1) any Potential Default or Event of Default,
together with a detailed statement of the steps being taken to cure such
Potential Default or Event of Default; (2) any notice of default received by
Borrower or any Borrower Party under other obligations relating to the Project
or otherwise material to Borrower's business; and (3) any threatened (in
writing) or pending legal, judicial or regulatory proceedings, including any
dispute between Borrower and any governmental authority, affecting Borrower or
the Project.
Section 8.12. Indemnification. Borrower shall indemnify, defend and
hold the Administrative Agent and each Lender harmless from and against any and
all losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements of any kind or nature
whatsoever, including the reasonable fees and actual expenses of their counsel,
which may be imposed upon, asserted against or incurred by any of them relating
to or arising out of (1) the Project or (2) any of the Loan Documents or the
transactions contemplated thereby, including, without limitation, (a) any
accident, injury to or death of persons or loss of or damage to property
occurring in, on or about any of the Project or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways, (b) any inspection, review or testing of or with respect to the
Project, (c) any investigative, administrative, mediation, arbitration, or
judicial proceeding, whether or not the Administrative Agent or any Lender is
designated a party thereto, commenced or threatened at any time (including after
the repayment of the Loans) in any way related to the execution, delivery or
performance of any Loan Document or to the Project, (d) any proceeding
instituted by any Person claiming a Lien, and (e) any brokerage commissions or
finder's fees claimed by any broker or other party in connection with the Loans,
the Project, or any of the transactions contemplated in the Loan Documents,
except to the extent any of the foregoing (x) is caused by the Administrative
Agent's or any Lender's gross negligence or willful misconduct, in which case
the party to whom the gross negligence or willful misconduct is attributable
(but not any other party) shall not be entitled to the indemnification provided
for hereunder to the extent of such gross negligence or willful misconduct, or
(y) arises from a
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dispute among the Lenders or between the Lenders and the Administrative Agent
with respect to their respective rights and obligations under the Loan
Documents.
Section 8.13. Payment For Labor and Materials. Borrower will promptly
pay when due all bills and costs for labor, materials, and specifically
fabricated materials incurred in connection with the Project, except to the
extent the same are being diligently contested by Borrower in good faith and by
proper legal proceedings, where appropriate, and never permit to exist beyond
the due date thereof in respect of the Project or any part thereof any lien or
security interest, even though inferior to the liens and the security interest
hereof, and in any event never permit to be created or exist in respect of the
Project or any part thereof any other or additional lien or security interest
other than the liens or security interests hereof, except for the Permitted
Encumbrances.
Section 8.14. Alterations. Borrower shall obtain the Administrative
Agent's prior written consent, which consent shall not be unreasonably withheld
or delayed, to any alterations to any improvements that may have a material
adverse effect on Borrower's financial condition, the use, operation or value of
the Project or the Actual Net Operating Income with respect to the Project,
other than (a) tenant improvement work performed pursuant to the terms of any
lease executed on or before the date hereof, (b) tenant improvement work
performed pursuant to the terms and provisions of a lease and not adversely
affecting any structural component of any improvements, any utility or HVAC
system contained in any improvements or the exterior of any building
constituting a part of any improvements at the Project, or (c) alterations
performed in connection with the restoration of the Project after the occurrence
of a casualty in accordance with the terms and provisions of this Agreement.
Section 8.15. Handicapped Access.
(1) Borrower (a) agrees that it shall use commercially reasonable
efforts to ensure that the Project shall at all times comply with the
requirements of the Americans with Disabilities Act of 1990, the Fair Housing
Amendments Act of 1988, all state and local laws and ordinances related to
handicapped access and all rules, regulations, and orders issued pursuant
thereto including, without limitation, the Americans with Disabilities Act
Accessibility Guidelines for Buildings and Facilities (collectively, "Access
Laws") and (b) has no actual knowledge as to the Project's non-compliance with
any Access Laws where the failure to so comply could have a material adverse
effect on the Project or on the Borrower's ability to repay the Loans in
accordance with the terms hereof.
(2) Notwithstanding any provisions set forth herein or in any other
document regarding the Administrative Agent's approval of alterations of the
Project, Borrower shall not alter the Project in any manner which would
materially increase any Borrower's responsibilities for compliance with the
applicable Access Laws without the prior written approval of the Administrative
Agent. The foregoing shall apply to tenant improvements constructed by Borrower
or by any of its tenants. The Administrative Agent may condition any such
approval upon receipt of a certificate of Access Law compliance from an
architect, engineer, or other person reasonably acceptable to the Administrative
Agent.
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(3) Borrower agrees to give prompt notice to the Administrative Agent
of the receipt by Borrower of any written complaints related to violation of any
Access Laws with respect to the Project and of the commencement of any
proceedings or investigations which relate to compliance with applicable Access
Laws.
Section 8.16. Interest Rate Protection Agreement.
(1) Borrower shall maintain in full force and effect the Interest Rate
Protection Agreement during the entire term of the Loans (including during any
extension period if Borrower duly exercises the Extension Option) with a
counterparty and on terms and conditions which are satisfactory to
Administrative Agent in its reasonable discretion. In the event that (1) the
Interest Rate Protection Agreement is terminated for any reason or is otherwise
unenforceable by the Borrower or (2) the Counterparty to the Interest Rate
Protection Agreement fails to maintain a credit rating satisfactory to
Administrative Agent, Borrower shall immediately obtain from a financial
institution satisfactory to Administrative Agent a replacement interest rate
protection agreement in form and substance similar to the Interest Rate
Protection Agreement and deliver to Administrative Agent a favorable legal
opinion with respect to the enforceability of such replacement interest rate
protection agreement against the counterparty thereunder. Borrower shall not
provide the Project as security for any Interest Rate Protection Agreement.
Borrower shall pledge to the Administrative Agent (on behalf of the Lenders) all
right, title and interest of Borrower in and to all payments owing to or
received by Borrower under the Interest Rate Protection Agreement (and any
replacement interest rate protection agreement) as additional collateral for the
Loans.
(2) Borrower hereby represents and warrants to Administrative Agent
and the Lenders that, in connection with the Borrower's entering into the
Interest Rate Protection Agreement, each of The Chase Manhattan Bank and 237
Park Partners, L.L.C. (the successor by conversion to 237 Park Partners, L.P.)
have released the Borrower from any and all liability under or in connection
with a certain ISDA Master Agreement, dated October 10, 1996 (together with all
supplements thereto and trade confirmations thereunder and all amendments,
supplements or modifications to any of the foregoing, the "Existing Rate Swap
Agreement"), among such parties. To the extent not available and delivered to
the Administrative Agent on the date hereof, Borrower shall deliver to the
Administrative Agent, within fifteen (15) days after the date hereof, (i) an
assignment, assumption and consent agreement among Borrower, The Chase Manhattan
Bank and the Counterparty providing for an assignment of the Borrower's rights
under the Existing Rate Swap Agreement to the Counterparty, an assumption of the
Borrower's obligations under the Existing Rate Swap Agreement by the
Counterparty and a consent to such assignment and assumption by The Chase
Manhattan Bank, (ii) a release of Borrower by each of The Chase Manhattan Bank
and 237 Park Partners, L.L.C. and (iii) a favorable legal opinion with respect
to the enforceability of the Interest Rate Protection Agreement against the
Counterparty, all in form and substance satisfactory to the Administrative
Agent.
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ARTICLE 9
EVENTS OF DEFAULT
-----------------
Each of the following shall constitute an Event of Default under the
Loans:
Section 9.1. Payments. Borrower's failure to pay any regularly
scheduled installment of principal, interest, the Agency Fee, or other amount
due under the Loan Documents (including, without limitation, the Swap
Reimbursement Obligations, the Swap Guaranty Fee and breakage costs and deposits
required to be made into the Accounts) within five (5) days of (and including)
the date when due, or Borrower's failure to pay the Loans at the Maturity Date,
whether by acceleration or otherwise.
Section 9.2. Insurance. Borrower's failure to maintain insurance as
required under Section 3.1 of this Agreement.
Section 9.3. Single Purpose Entity. If Borrower breaches its covenant
under Section 6.13.
Section 9.4. Taxes. If any of the Taxes are not paid when the same are
due and payable.
Section 9.5. Sale, Encumbrance, Etc. The sale, transfer, conveyance,
pledge, mortgage or assignment of any part or all of the Project, or any
interest therein, or of any interest in Borrower, in violation of Section 8.1 of
this Agreement.
Section 9.6. Representations and Warranties. Any representation or
warranty made in any Loan Document proves to be untrue in any material respect
when made or deemed made.
Section 9.7. Other Encumbrances. Any default beyond any applicable
notice and/or cure periods under any document or instrument, other than the Loan
Documents, evidencing or creating a Lien on the Project or any part thereof.
Section 9.8. Involuntary Bankruptcy or Other Proceeding. Commencement
of an involuntary case or other proceeding against Borrower or any Borrower
Party (each, a "Bankruptcy Party") which seeks liquidation, reorganization or
other relief with respect to it or its debts or other liabilities under any
bankruptcy, insolvency or other similar law now or hereafter in effect or seeks
the appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any of its property, and such involuntary case or other
proceeding shall remain undismissed or unstayed for a period of 60 days; or an
order for relief against a Bankruptcy Party shall be entered in any such case
under the Federal Bankruptcy Code.
Section 9.9. Voluntary Petitions, Etc. Commencement by a Bankruptcy
Party of a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its Debts or other
liabilities under any bankruptcy, insolvency or other similar law or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official for it or any of its property, or consent by a Bankruptcy Party to any
such relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or the making
by a Bankruptcy Party of a general assignment for the
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benefit of creditors, or the failure by a Bankruptcy Party, or the admission by
a Bankruptcy Party in writing of its inability, to pay its debts generally as
they become due, or any action by a Bankruptcy Party to authorize or effect any
of the foregoing.
Section 9.10. Covenants. Borrower's failure to perform or observe any
of the agreements and covenants contained in this Agreement or in any of the
other Loan Documents and not specified above, and the continuance of such
failure for twenty (20) days after notice by the Administrative Agent to
Borrower; however, subject to any shorter period for curing any failure by
Borrower as specified in any of the other Loan Documents, Borrower shall have an
additional period of time (not to exceed (120) days) as may reasonably be
necessary in the Administrative Agent's judgment to cure such failure if (1)
such failure does not involve the failure to make payments on a monetary
obligation; (2) such failure cannot reasonably be cured within twenty (20) days;
(3) Borrower is diligently undertaking to cure such default; and (4) Borrower
has provided the Administrative Agent with security reasonably satisfactory to
the Administrative Agent against any interruption of payment or impairment of
collateral as a result of such continuing failure.
ARTICLE 10
REMEDIES
--------
Section 10.1. Remedies - Insolvency Events. Upon the occurrence of any
Event of Default described in Section 9.8 or 9.9, the obligations of the Lenders
to advance amounts hereunder shall immediately terminate, and all amounts due
under the Loan Documents immediately shall become due and payable, all without
written notice and without presentment, demand, protest, notice of protest or
dishonor, notice of intent to accelerate the maturity thereof, notice of
acceleration of the maturity thereof, or any other notice of default of any
kind, all of which are hereby expressly waived by Borrower; however, if the
Bankruptcy Party under Section 9.8 or 9.9 is other than Borrower, then all
amounts due under the Loan Documents shall become immediately due and payable at
the Administrative Agent's election, in the Administrative Agent's sole
discretion.
Section 10.2. Remedies - Other Events. Except as set forth in Section
10.1 above, while any Event of Default exists, the Administrative Agent may (1)
by written notice to Borrower, declare the entire amount of the Loans to be
immediately due and payable without presentment, demand, protest, notice of
protest or dishonor, notice of intent to accelerate the maturity thereof, notice
of acceleration of the maturity thereof, or other notice of default of any kind,
all of which are hereby expressly waived by Borrower, (2) terminate the
obligation, if any, of the Lenders to advance amounts hereunder, and (3)
exercise all rights and remedies therefor under the Loan Documents and at law or
in equity.
Section 10.3. Lender's Right to Perform the Obligations. If Borrower
shall fail, refuse or neglect to make any payment or perform any act required by
the Loan Documents, then while any Event of Default exists, and without notice
to or demand upon Borrower and without waiving or releasing any other right,
remedy or recourse the Administrative Agent or any Lender may have because of
such Event of Default, the Administrative Agent may (but shall not be
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obligated to) make such payment or perform such act for the account of and at
the expense of Borrower (including, without limitation, Administrative Agent's
reimbursements to GECC and/or Lenders of any sums paid by reason of a default by
Borrower under the Interest Rate Protection Agreement, including, without
limitation, any such reimbursement for Swap Reimbursement Obligations and Swap
Guaranty Fees), and shall have the right to enter upon the Project for such
purpose and to take all such action thereon and with respect to the Project as
it may deem necessary or appropriate. If the Administrative Agent shall elect to
pay any sum due with reference to the Project, the Administrative Agent may do
so in reliance on any bill, statement or assessment procured from the
appropriate governmental authority or other issuer thereof without inquiring
into the accuracy or validity thereof. Similarly, in making any payments to
protect the security intended to be created by the Loan Documents, the
Administrative Agent shall not be bound to inquire into the validity of any
apparent or threatened adverse title, lien, encumbrance, claim or charge before
making an advance for the purpose of preventing or removing the same.
Additionally, if any Hazardous Materials affect or threaten to affect the
Project, the Administrative Agent may (but shall not be obligated to) give such
notices and take such actions as it deems necessary or advisable in order to
abate the discharge of any Hazardous Materials or remove the Hazardous
Materials. Borrower shall indemnify, defend and hold the Administrative Agent
and the Lenders harmless from and against any and all losses, liabilities,
claims, damages, expenses, obligations, penalties, actions, judgments, suits,
costs or disbursements of any kind or nature whatsoever, including reasonable
attorneys' fees and disbursements, incurred or accruing by reason of any acts
performed by the Administrative Agent or any Lender pursuant to the provisions
of this Section 10.3, including those arising from the joint, concurrent, or
comparative negligence of the Administrative Agent and any Lender, except as a
result and to the extent of the Administrative Agent's or any Lender's gross
negligence or willful misconduct. All sums paid by the Administrative Agent
pursuant to this Section 10.3, and all other sums expended by the Administrative
Agent or any Lender to which it shall be entitled to be indemnified, together
with interest thereon at the Default Rate from the date of such payment or
expenditure until paid, shall constitute additions to the Loans, shall be
secured by the Loan Documents and shall be paid by Borrower to the
Administrative Agent upon demand.
ARTICLE 11
MISCELLANEOUS
-------------
Section 11.1. Notices. Any notice required or permitted to be given
under this Agreement shall be in writing and either shall be mailed by certified
mail, postage prepaid, return receipt requested, or sent by overnight air
courier service, or personally delivered to a representative of the receiving
party, or sent by telecopy (provided an identical notice is also sent
simultaneously by mail, overnight courier, or personal delivery as otherwise
provided in this Section 11.1) to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof. Any
communication so addressed and mailed shall be deemed to be given on the
earliest of (1) when actually delivered, (2) on the first Business Day after
deposit with an overnight air courier service, or (3) on the third Business Day
after deposit in the United States mail, postage prepaid, in each case to the
address of the intended addressee, and any communication so delivered in person
shall be deemed to be given when receipted for by, or
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actually received by the Administrative Agent, a Lender or Borrower, as the case
may be. If given by telecopy, a notice shall be deemed given and received when
the telecopy is transmitted to the party's telecopy number specified above, and
confirmation of complete receipt is received by the transmitting party during
normal business hours or on the next Business Day if not confirmed during normal
business hours, and an identical notice is also sent simultaneously by mail,
overnight courier, or personal delivery as otherwise provided in this Section
11.1. Any party may designate a change of address by written notice to each
other party by giving at least ten (10) days prior written notice of such change
of address.
Section 11.2. Amendments, Waivers, Etc.
(1) Subject to any consents required pursuant to this Section 11.2 and
any other provisions of this Agreement and any other Loan Document which
expressly require the consent, approval or authorization of the Majority
Lenders, this Agreement and any other Loan Document may be modified or
supplemented only by an instrument in writing signed by the Borrower and the
Administrative Agent; provided that, the Administrative Agent may (without any
Lender's consent) give or withhold its agreement to any amendments of the Loan
Documents or any waivers or consents in respect thereof or exercise or refrain
from exercising any other rights or remedies which the Administrative Agent may
have under the Loan Documents or otherwise provided that such actions do not, in
the Administrative Agent's judgment reasonably exercised, materially adversely
affect the value of any collateral, taken as a whole, or represent a departure
from Administrative Agent's standard of care described in Section 13.5 (and the
assignment or granting of a participation by GECC of any interest in the Loans
it may have shall not limit or otherwise affect its discretion in respect of any
of the foregoing), except that the Administrative Agent will not, without the
consent of all of the Lenders, agree to the following (provided that no Lender's
consent shall be required for any of the following which are otherwise required
under the Loan Documents): (a) reduce the principal amount of the Loans or
reduce the interest rate thereon; (b) extend any stated payment date for
principal of or interest on the Loans payable to such Lender; (c) release the
Borrower or any other party from liability under the Loan Documents; (d) release
or subordinate in whole or in part any material portion of the collateral given
as security for the Loans; (e) modify any of the provisions of this Section, the
definition of "Majority Lenders" or any other provision in the Loan Documents
specifying the number or percentage of Lenders required to waive, amend or
modify any rights thereunder or make any determination or grant any consent
thereunder; (f) modify the terms of any Event of Default; or (g) consent to (i)
the sale, transfer or encumbrance of any portion of the Project (or any interest
therein) or any direct or indirect ownership interest therein and (ii) the
incurrence by Borrower of any additional indebtedness secured by the Project, in
each case to the extent (and subject to any standard of reasonability) such
consent is required under the Loan Documents.
(2) Notwithstanding anything to contrary contained in this Agreement,
any modification or supplement of Article 13, or of any of the rights or duties
of the Administrative Agent hereunder, shall require the consent of the
Administrative Agent.
Section 11.3. Limitation on Interest. It is the intention of the
parties hereto to conform strictly to applicable usury laws. Accordingly, all
agreements between Borrower, the Administrative Agent and the Lenders with
respect to the Loans are hereby expressly limited so that in no event, whether
by reason of acceleration of maturity or otherwise, shall the amount
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paid or agreed to be paid to the Administrative Agent or any Lender or charged
by any Lender for the use, forbearance or detention of the money to be lent
hereunder or otherwise, exceed the maximum amount allowed by law. If the Loans
would be usurious under applicable law (including the laws of the State and the
laws of the United States of America), then, notwithstanding anything to the
contrary in the Loan Documents: (1) the aggregate of all consideration which
constitutes interest under applicable law that is contracted for, taken,
reserved, charged or received under the Loan Documents shall under no
circumstances exceed the maximum amount of interest allowed by applicable law,
and any excess shall be credited on the Notes by the holders thereof (or, if the
Notes have been paid in full, refunded to Borrower); and (2) if maturity is
accelerated by reason of an election by the Administrative Agent in accordance
with the terms hereof, or in the event of any prepayment, then any consideration
which constitutes interest may never include more than the maximum amount
allowed by applicable law. In such case, excess interest, if any, provided for
in the Loan Documents or otherwise, to the extent permitted by applicable law,
shall be amortized, prorated, allocated and spread from the date of advance
until payment in full so that the actual rate of interest is uniform through the
term hereof. If such amortization, proration, allocation and spreading is not
permitted under applicable law, then such excess interest shall be cancelled
automatically as of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited on the Notes (or, if the Notes have been
paid in full, refunded to Borrower). The terms and provisions of this Section
11.3 shall control and supersede every other provision of the Loan Documents.
The Loan Documents are contracts made under and shall be construed in accordance
with and governed by the laws of the State, except that if at any time the laws
of the United States of America permit the Lenders to contract for, take,
reserve, charge or receive a higher rate of interest than is allowed by the laws
of the State (whether such federal laws directly so provide or refer to the law
of any state), then such federal laws shall to such extent govern as to the rate
of interest which the Lenders may contract for, take, reserve, charge or receive
under the Loan Documents.
Section 11.4. Invalid Provisions. If any provision of any Loan
Document is held to be illegal, invalid or unenforceable, such provision shall
be fully severable; the Loan Documents shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
thereof; the remaining provisions thereof shall remain in full effect and shall
not be affected by the illegal, invalid, or unenforceable provision or by its
severance therefrom; and in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as a part of such Loan Document a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible to be legal, valid and enforceable.
Section 11.5. Reimbursement of Expenses. Borrower shall pay to or
reimburse the Administrative Agent and/or the Lenders on demand of the
applicable party for: (1) all expenses incurred by the Administrative Agent in
connection with the Loans, including fees and expenses of the Administrative
Agent's attorneys, environmental, engineering and other consultants, and fees,
charges or taxes for the negotiation, recording or filing of Loan Documents, (2)
all expenses of the Administrative Agent in connection with the administration
of the Loans, including audit costs, inspection fees, settlement of condemnation
and casualty awards, and premiums for title insurance and endorsements thereto,
(3) all of the Administrative Agents and/or the initial Lenders' reasonable
costs and expenses (including reasonable fees and disbursements of the
Administrative Agent's and/or the initial Lenders' external counsel) incurred in
connection with
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the syndication of the Loans to the Lenders, and (4) for all amounts expended,
advanced or incurred by the Administrative Agent and the Lenders to collect the
Notes, or to enforce the rights of the Administrative Agent and the Lenders
under this Agreement or any other Loan Document, or to defend or assert the
rights and claims of the Administrative Agent and the Lenders under the Loan
Documents or with respect to the Project (by litigation or other proceedings,
and except to the extent of any enforcement actions by Administrative Agent
against a Lender, by a Lender against Administrative Agent and by a Lender
against another Lender), which amounts will include all court costs, attorneys'
fees and expenses, fees of auditors and accountants, and investigation expenses
as may be incurred by the Administrative Agent and the Lenders in connection
with any such matters (whether or not litigation is instituted), together with
interest at the Default Rate on each such amount from the date of disbursement
until the date of reimbursement to the Administrative Agent and the Lenders, all
of which shall constitute part of the Loans and shall be secured by the Loan
Documents.
Section 11.6. Approvals; Third Parties; Conditions. All approval
rights retained or exercised by the Administrative Agent and the Lenders with
respect to leases, contracts, plans, studies and other matters are solely to
facilitate the Lenders' credit underwriting, and shall not be deemed or
construed as a determination that the Lenders have passed on the adequacy
thereof for any other purpose and may not be relied upon by Borrower or any
other Person. This Agreement is for the sole and exclusive use of the
Administrative Agent, the Lenders and Borrower and may not be enforced, nor
relied upon, by any Person other than the Administrative Agent, the Lenders and
Borrower. All conditions of the obligations of the Administrative Agent and the
Lenders hereunder, including the obligation to make advances, are imposed solely
and exclusively for the benefit of the Administrative Agent and the Lenders,
their successors and assigns, and no other Person shall have standing to require
satisfaction of such conditions or be entitled to assume that the Lenders will
refuse to make advances in the absence of strict compliance with any or all of
such conditions, and no other Person shall, under any circumstances, be deemed
to be a beneficiary of such conditions, any and all of which may be freely
waived in whole or in part by the Administrative Agent and the Lenders at any
time in their sole discretion.
Section 11.7. Lenders and Administrative Agent Not in Control; No
Partnership. None of the covenants or other provisions contained in this
Agreement shall, or shall be deemed to, give the Administrative Agent or any
Lender the right or power to exercise control over the affairs or management of
Borrower, the power of the Administrative Agent and the Lenders being limited to
the rights to exercise the remedies referred to in the Loan Documents. The
relationship between Borrower and the Lenders is, and at all times shall remain,
solely that of debtor and creditor. No covenant or provision of the Loan
Documents is intended, nor shall it be deemed or construed, to create a
partnership, joint venture, agency or common interest in profits or income
between the Administrative Agent, the Lenders and Borrower or to create an
equity in the Project in the Administrative Agent or any Lender. The
Administrative Agent and the Lenders neither undertake nor assume any
responsibility or duty to Borrower or to any other person with respect to the
Project or the Loans, except as expressly provided in the Loan Documents; and
notwithstanding any other provision of the Loan Documents: (1) neither the
Administrative Agent nor any Lender is, nor shall be construed as, a partner,
joint venturer, alter ego, manager, controlling person or other business
associate or participant of any kind of Borrower or its stockholders, members,
or partners and neither the Administrative Agent nor any Lender intends to ever
assume such status; (2) no Lender or the Administrative Agent shall in any
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event be liable for any Debts, expenses or losses incurred or sustained by
Borrower; and (3) no Lender or the Administrative Agent shall be deemed
responsible for or a participant in any acts, omissions or decisions of Borrower
or its stockholders, members, or partners. The Administrative Agent, the Lenders
and Borrower disclaim any intention to create any partnership, joint venture,
agency or common interest in profits or income between the Administrative Agent,
the Lenders and Borrower, or to create an equity in the Project in the
Administrative Agent or any Lender, or any sharing of liabilities, losses, costs
or expenses.
Section 11.8. Brokers. Borrower hereby represents to the
Administrative Agent and each Lender that Borrower has not dealt with any
broker, underwriters, placement agent, or finder in connection with the
transactions contemplated by this Agreement and the other Loan Documents, other
than Victor Capital Group, L.P. (the "Broker"). Borrower hereby agrees to pay
all fees and commissions due and payable to Broker and to indemnify and hold the
Administrative Agent and each Lender harmless from and against any and all
claims, liabilities, costs and expenses of any kind in any way relating to or
arising from a claim by any Person (including Broker) that such Person acted on
behalf of Borrower in connection with the transactions contemplated herein.
Section 11.9. Time of the Essence. Time is of the essence with respect
to this Agreement.
Section 11.10. Successors and Assigns; Secondary Market Transactions.
(1) This Agreement shall be binding upon and inure to the benefit of
the Administrative Agent, the Lenders and Borrower and the respective successors
and permitted assigns, provided that neither Borrower nor any other Borrower
Party shall, without the prior written consent of the Administrative Agent and
all of the Lenders, assign any rights, duties or obligations hereunder, except
as may otherwise be expressly provided in the Loan Documents.
(2) Borrower acknowledges that Administrative Agent and each Lender
and its respective successors and assigns may without notice to or consent from
Borrower (a) sell this Agreement, the Mortgage, the Notes, the other Loan
Documents, and any and all servicing rights thereto, or any portions thereof, to
one or more investors, (b) participate and/or syndicate the Loans to one or more
investors, (c) deposit this Agreement, the Notes and the other Loan Documents,
or any portions thereof, with a trust, which trust may sell certificates to
investors evidencing an ownership interest in the trust assets, or (d) otherwise
sell, transfer or assign the Loans or interests therein in one or more
transactions to investors (the transactions referred to in clauses (a) through
(d) are hereinafter each referred to as a "Secondary Market Transaction").
Borrower shall reasonably cooperate with the Administrative Agent and each
Lender in effecting any such Secondary Market Transaction and shall reasonably
cooperate and use all reasonable efforts to satisfy the market standards to
which the Administrative Agent and each Lender customarily adheres or which may
be reasonably required by any participant, investor, purchaser or any rating
agency involved in any Secondary Market Transaction (including, without
limitation, delivery of opinions of counsel in form and substance similar to the
opinions of counsel delivered to the Administrative Agent on the date hereof).
Borrower shall provide such information and documents relating to the Borrower
and the Project as the Administrative Agent and each Lender may reasonably
request in connection with such Secondary Market Transaction.
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In addition, Borrower shall make available to the Administrative Agent and the
Lenders all information concerning the Project, its business and operations that
the Administrative Agent and the Lenders may reasonably request. The
Administrative Agent and the Lenders shall be permitted to share all information
with the participants, investors, purchasers, investment banking firms, rating
agencies, accounting firms, law firms and third-party advisory firms involved
with the Loans and Loan Documents or the applicable Secondary Market
Transaction. The Administrative Agent and the Lenders and all of the aforesaid
participants, investors, purchasers, advisors, rating agencies and professional
firms shall be entitled to rely on the information supplied by or on behalf of
Borrower. Borrower also agrees to execute any amendment of or supplement to this
Agreement and the other Loan Documents as the Administrative Agent and the
Lenders may reasonably request in connection with any Secondary Market
Transaction, provided that such amendment or supplement does not change the
economic terms of the Loan or materially increase Borrower's duties,
responsibilities or liabilities under the Loan Documents.
(3) The Notes may hereafter be split, severed and subdivided, by
exchange of the Notes for promissory notes of lesser denominations or otherwise,
and, in such event, Borrower shall promptly execute additional or replacement
Notes. At no time shall the aggregate original principal amount of such
replacement promissory notes exceed the outstanding principal amount of the
Loans as of the date of execution of such replacement promissory notes, nor
shall such replacement promissory notes be (in the aggregate) on terms and
conditions materially different from those set forth in the Notes proposed to be
replaced.
Section 11.11. Renewal, Extension or Rearrangement. All provisions of
the Loan Documents shall apply with equal effect to each and all promissory
notes and amendments thereof hereinafter executed which in whole or in part
represent a renewal, extension, increase or rearrangement of the Loans. For
portfolio management purposes, the Lenders may elect to divide the Loans into
two or more separate loans evidenced by separate promissory notes so long as the
payment and other obligations of Borrower are not effectively increased or
otherwise modified. Borrower agrees to cooperate with the Administrative Agent
and the Lenders and to execute such documents as the Administrative Agent
reasonably may request to effect such division of the Loans.
Section 11.12. Waivers. No course of dealing on the part of the
Administrative Agent or any Lender, their officers, employees, consultants or
agents, nor any failure or delay by the Administrative Agent or any Lender with
respect to exercising any right, power or privilege of the Administrative Agent
or any Lender under any of the Loan Documents, shall operate as a waiver
thereof.
Section 11.13. Cumulative Rights. Rights and remedies of the
Administrative Agent and the Lenders under the Loan Documents shall be
cumulative, and the exercise or partial exercise of any such right or remedy
shall not preclude the exercise of any other right or remedy.
Section 11.14. Singular and Plural. Words used in this Agreement and
the other Loan Documents in the singular, where the context so permits, shall be
deemed to include the plural and vice versa. The definitions of words in the
singular in this Agreement and the other Loan
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Documents shall apply to such words when used in the plural where the context so
permits and vice versa.
Section 11.15. Phrases. When used in this Agreement and the other Loan
Documents, the phrase "including" shall mean "including, but not limited to,"
the phrases "satisfactory to any Lender" or "satisfactory to the Administrative
Agent" shall mean in form and substance satisfactory to such Lender or the
Administrative Agent, as the case may be, in all respects, the phrases "with
Lender's consent", "with Lender's approval", "with the Administrative Agent's
consent" or "with the Administrative Agent's approval" shall mean such consent
or approval at Lender's or the Administrative Agent's, as the case may be,
discretion, and the phrases "acceptable to Lender" or "acceptable to the
Administrative Agent" shall mean acceptable to Lender or the Administrative
Agent, as the case may be, at such party's sole discretion."
Section 11.16. Exhibits and Schedules. The exhibits and schedules
attached to this Agreement are incorporated herein and shall be considered a
part of this Agreement for the purposes stated herein.
Section 11.17. Titles of Articles, Sections and Subsections. All
titles or headings to articles, sections, subsections or other divisions of this
Agreement and the other Loan Documents or the exhibits hereto and thereto are
only for the convenience of the parties and shall not be construed to have any
effect or meaning with respect to the other content of such articles, sections,
subsections or other divisions, such other content being controlling as to the
agreement between the parties hereto.
Section 11.18. Promotional Material. Borrower authorizes the
Administrative Agent and each Lender to issue press releases, advertisements and
other promotional materials in connection with the Administrative Agent's or
such Lender's own promotional and marketing activities, and describing the Loans
in general terms or in detail and the Administrative Agent's or such Lender's
participation in the Loans. All references to the Administrative Agent or any
Lender contained in any press release, advertisement or promotional material
issued by Borrower shall be approved in writing by the Administrative Agent and
such Lender in advance of issuance.
Section 11.19. Survival. All of the reimbursement and indemnification
obligations of Borrower hereunder (including those relating to environmental
matters under Article 4, subject to the terms of Article 4, and the obligations
under Sections 2.7(1), 2.7(5) and 2.7(6)), and under the reimbursmement and
indemnification provisions of the other Loan Documents shall survive (a) the
repayment in full of the Loans and the release of the Liens evidencing or
securing the Loans, (b) the transfer (by sale, foreclosure, conveyance in lieu
of foreclosure or otherwise) of any or all right, title and interest in and to
the Project to any party, whether or not an Affiliate of Borrower and (c) in the
case of any Lender that may assign any interest in its Commitment or Loans
hereunder in accordance with the terms of this Agreement, the making of such
assignment, notwithstanding that such assigning Lender may cease to be a
"Lender" hereunder.
Section 11.20. WAIVER OF JURY TRIAL. BORROWER, THE ADMINISTRATIVE
AGENT AND EACH LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
RIGHT TO A TRIAL BY JURY IN
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RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF EITHER PARTY OR
ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THE LOAN DOCUMENTS OR
IN ANY WAY RELATING TO THE LOANS OR THE PROJECT (INCLUDING, WITHOUT LIMITATION,
ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT, AND ANY CLAIM OR DEFENSE
ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR
VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND
EACH LENDER TO ENTER THIS AGREEMENT.
Section 11.21. Waiver of Punitive or Consequential Damages. None of
the Administrative Agent, the Lenders or Borrower shall be responsible or liable
to the other or to any other Person for any punitive, exemplary or consequential
damages which may be alleged as a result of the Loans or the transaction
contemplated hereby, including any breach or other default by any party hereto.
Section 11.22. Governing Law
(1) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE
BY THE ADMINISTRATIVE AGENT AND LENDERS AND ACCEPTED BY BORROWER IN THE STATE OF
NEW YORK, AND THE PROCEEDS OF THE NOTES DELIVERED PURSUANT HERETO WERE DISBURSED
FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY,
AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND
THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION,
AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND
PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROJECT IS LOCATED, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE
LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER, THE
ADMINISTRATIVE AGENT AND LENDERS HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES
ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT AND THE NOTES, AND THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
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(2) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST THE ADMINISTRATIVE
AGENT, ANY LENDER OR BORROWER ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS
MAY AT THE ADMINISTRATIVE AGENT'S OPTION (WHICH DECISION SHALL BE MADE BY THE
MAJORITY LENDERS) BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW
YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER
HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND
APPOINT BATTLE FOWLER LLP, 75 EAST 55TH STREET, NEW YORK, NEW YORK 10022-3205,
ATTENTION: ROBERT J. WERTHEIMER, ESQ. AS ITS AUTHORIZED AGENT TO ACCEPT AND
ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN
ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK,
NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND
WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER
PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK.
BORROWER (A) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS
AUTHORIZED AGENT HEREUNDER, (B) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE
A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR
SERVICE OF PROCESS), AND (C) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS
AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED
WITHOUT LEAVING A SUCCESSOR.
Section 11.23. Entire Agreement. This Agreement and the other Loan
Documents embody the entire agreement and understanding between the
Administrative Agent, the Lenders and Borrower and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof. Accordingly, the Loan Documents may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties.
Section 11.24. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall constitute an original, but all of
which shall constitute one document.
Section 11.25. Assignments and Participations.
(1) Assignments by Borrower. Except as may otherwise be expressly
provided in the Loan Documents, Borrower may not assign any of its rights or
obligations hereunder or under the Notes without the prior consent of all of the
Lenders and the Administrative Agent.
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(2) Assignments by the Lenders. Each Lender may assign all or any
portion of its interest in its Loans, its Note and its Commitment (but only with
the consent of the Administrative Agent); provided that:
(a) no such consent by the Administrative Agent shall be required in
the case of any assignment (i) by any Lender to another Lender or an affiliate
of such Lender or such other Lender or (ii) by CMF Capital Company, LLC to GECC
or an affiliate of GECC;
(b) except to the extent the Administrative Agent shall otherwise
consent, any partial assignment (other than to another Lender or an affiliate of
a Lender) shall be in an amount at least equal to $10,000,000;
(c) each such assignment (including an assignment to another Lender or
an affiliate of a Lender) by a Lender of its Loans or Commitment shall be made
in such manner so that the same portion of its Loans and Commitment is assigned
to the respective assignee;
(d) subject to the applicable Lender's compliance with the provisions
of clauses (b) and (c) above, the Administrative Agent's consent to an
assignment shall not be unreasonably withheld, delayed or conditioned if (i) in
the reasonable judgment of the Administrative Agent, such assignment is made to
a reputable institutional investor with substantial experience in real estate
lending and originating mortgage loans similar to the Loans, and a financial net
worth of at least $100,000,000, (ii) such assignment is first offered to the
Administrative Agent in accordance with the terms and conditions of a separate
agency agreement among the Administrative Agent and the Lenders, and (iii) the
provisions of clause (e) have been satisfied; and
(e) upon execution and delivery by the assignee (even if already a
Lender) to Borrower and the Administrative Agent of an Assignment and Acceptance
pursuant to which such assignee agrees to become a "Lender" hereunder in respect
of the interest to be so assigned, and upon consent thereto by the
Administrative Agent to the extent required above, the assignee shall have, to
the extent of such assignment (unless otherwise consented to by the
Administrative Agent), the obligations, rights and benefits of a Lender
hereunder holding the Commitment and Loans (or portions thereof) assigned to it
(in addition to the Commitment and Loans, if any, theretofore held by such
assignee) and the assigning Lender shall, to the extent of such assignment, be
released from the Commitment (or portion thereof) so assigned. Upon each such
assignment, the assigning Lender (and not the Borrower) shall pay the
Administrative Agent a processing and recording fee of $3,500 and the reasonable
fees and disbursements of the Administrative Agent's counsel incurred in
connection therewith.
(3) Participations. A Lender may sell or agree to sell to one or more
other Persons (each a "Participant") a participation in all or any part of any
Loans held by it, or in its Commitment, provided that such Participant shall not
have any rights or obligations under this Agreement or any Note or any other
Loan Document (the Participant's rights against such Lender in respect of such
participation to be those set forth in the agreements executed by such Lender
and the applicable Participant). All amounts payable by Borrower to any Lender
under Section 2.7 in respect of Loans held by it and its Commitment shall be
determined as if such Lender had not sold or agreed to sell any participations
in such Loans and Commitment, and as if
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such Lender were funding each of such Loans and Commitment in the same way that
it is funding the portion of such Loans and Commitment in which no
participations have been sold. In no event shall a Lender that sells a
participation agree with the Participant to take or refrain from taking any
action hereunder or under any other Loan Document except that such Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (i) increase or extend the term of such Lender's
Commitment, (ii) extend the date fixed for the payment of principal of or
interest on the related Loan or Loans or any portion of any fee hereunder
payable to the Participant, (iii) reduce the amount of any such payment of
principal, (iv) reduce the rate at which interest is payable thereon, or any fee
hereunder payable to the Participant, to a level below the rate at which the
Participant is entitled to receive such interest or fee or (v) consent to any
modification, supplement or waiver hereof or of any of the other Loan Documents
to the extent that the same, under Section 11.2, requires the consent of each
Lender.
(4) Certain Pledges. In addition to the assignments and participations
permitted under the foregoing provisions of this Section 11.25 (but without
being subject thereto), any Lender may (without notice to Borrower, the
Administrative Agent or any other Lender and without payment of any fee) assign
and pledge all or any portion of its Loans and its Note to any Federal Reserve
Bank as collateral security pursuant to Regulation A and any operating circular
issued by such Federal Reserve Bank, and such Loans and Note shall be fully
transferable as provided therein. No such assignment shall release the assigning
Lender from its obligations hereunder.
(5) Provision of Information to Assignees and Participants. A Lender
may furnish any information concerning Borrower or any of its Affiliates in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants).
(6) No Assignments to Borrower or Affiliates. Anything in this Section
11.25 to the contrary notwithstanding, no Lender may assign or participate any
interest in any Loan held by it hereunder to Borrower or any of Borrower's
Affiliates without the prior consent of all Lenders.
ARTICLE 12
LIMITATIONS ON LIABILITY
------------------------
Section 12.1. Limitation on Liability. Notwithstanding anything to the
contrary contained in this Agreement or in any of the Loan Documents, except as
provided below, neither Borrower nor any Borrower Party shall be personally
liable for amounts due under the Loan Documents. Borrower shall be personally
liable to the Administrative Agent and the Lenders for any deficiency, loss or
damage suffered by the Administrative Agent or any Lender because of: (1)
Borrower's commission of a criminal act; (2) the failure to comply with
provisions of the Loan Documents prohibiting the sale, transfer or encumbrance
of the Project, any other collateral, or any direct or indirect ownership
interest in Borrower; (3) the misapplication by Borrower or any Borrower Party
of any funds derived from the Project, including security deposits, insurance
proceeds and condemnation awards; (4) the fraud or misrepresentation by
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Borrower or any Borrower Party made in or in connection with the Loan Documents
or the Loan; (5) Borrower's collection of rents more than one month in advance
or entering into or modifying leases, or receipt of monies by Borrower or any
Borrower Party in connection with the modification of any leases, in violation
of this Agreement or any of the other Loan Documents; (6) Borrower's application
of the rents, security deposits or any other payments in respect of the leases
and other income of the Project or any other collateral in contravention of the
Loan Documents; (7) Borrower's interference with the Administrative Agent's
exercise of rights under the Assignment of Rents and Leases; (8) Borrower's
failure to maintain insurance as required by this Agreement or to pay any taxes
or assessments affecting the Project or any mortgage recording or similar taxes
required to be paid by any Person in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of any of the Loan
Documents; (9) damage or destruction to the Project caused by the acts or
omissions of Borrower, its agents, employees, or contractors; (10) Borrower's
obligations with respect to environmental matters under Article 4; (11)
Borrower's failure to pay for any loss, liability or expense (including
attorneys' fees) incurred by the Administrative Agent or any Lender arising out
of any claim or allegation made by Borrower, its successors or assigns, or any
creditor of Borrower, that this Agreement establishes a joint venture,
partnership or similar arrangement between Borrower, the Administrative Agent
and any Lender; (12) any brokerage commission or finder's fees claimed in
connection with the transactions contemplated by the Loan Documents establish a
joint venture, partnership or other similar arrangement between Borrower, the
Administrative Agent and any Lender; or (13) the Swap Reimbursement Obligations.
Notwithstanding anything to the contrary contained in this Agreement or the
other Loan Documents, (A) neither the Administrative Agent nor the Lenders shall
be deemed to have waived any right which the Administrative Agent or any Lender
may have under Sections 506(a), 506(b), 1111(b) or any other provision of the
United States Bankruptcy Code, as such sections may be amended, to file a claim
for the full amount due to the Administrative Agent or such Lender under the
Loan Documents or to require that all collateral shall continue to secure the
amounts due under the Loan Documents, and (B) the Indebtedness shall be fully
recourse to Borrower in the event that: (I) there is a default under Section 9.9
hereof; (II) Borrower fails to obtain the Administrative Agent's prior written
consent to any subordinate financing or other voluntary lien encumbering the
Project; or (III) Borrower fails to obtain the Administrative Agent's prior
written consent to any assignment, transfer, or conveyance of the Project or any
interest therein as required by the Loan Documents.
Section 12.2. Limitation on Liability of the Administrative Agent's
and the Lenders' Officers, Employees, etc. Any obligation or liability
whatsoever of the Administrative Agent or any Lender which may arise at any time
under this Agreement or any other Loan Document shall be satisfied, if at all,
out of the Administrative Agent's or such Lender's respective assets only. No
such obligation or liability shall be personally binding upon, nor shall resort
for the enforcement thereof be had to, the property of any of the Administrative
Agent's or any Lender's shareholders, directors, officers, employees or agents,
regardless of whether such obligation or liability is in the nature of contract,
tort or otherwise.
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ARTICLE 13
THE ADMINISTRATIVE AGENT
------------------------
Section 13.1. Appointment, Powers and Immunities. Each Lender hereby
appoints and authorizes the Administrative Agent to act as its agent hereunder
and under the other Loan Documents with such powers as are specifically
delegated to the Administrative Agent by the terms of this Agreement and of the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent (which term as used in this
sentence and in Section 13.5 and the first sentence of Section 13.6 shall
include reference to its affiliates and its own and its affiliates' officers,
directors, employees and agents):
(a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and in the other Loan Documents,
and shall not by reason of this Agreement or any other Loan Document
be a trustee for any Lender;
(b) shall not be responsible to the Lenders for any
recitals, statements, representations or warranties contained in this
Agreement or in any other Loan Document, or in any certificate or
other document referred to or provided for in, or received by any of
them under, this Agreement or any other Loan Document, or for the
value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement, any Note or any other Loan Document or
any other document referred to or provided for herein or therein or
for any failure by Borrower or any other Person to perform any of its
obligations hereunder or thereunder; and
(c) shall not be responsible for any action taken or omitted
to be taken by it hereunder or under any other Loan Document or under
any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, except to the extent
any such action taken or omitted violates the Administrative Agent's
standard of care set forth in the first sentence of Section 13.5.
The Administrative Agent may employ agents and attorneys-in-fact, and
may delegate all or any part of its obligations hereunder, to third parties and
shall not be responsible for the negligence or misconduct of any such agents,
attorneys-in-fact or third parties selected by it in good faith. The
Administrative Agent may deem and treat the payee of a Note as the holder
thereof for all purposes hereof unless and until a notice of the assignment or
transfer thereof shall have been filed with the Administrative Agent.
Section 13.2. Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including, without limitation, any thereof by telephone,
telecopy, telegram or cable) reasonably believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Administrative Agent. As to any matters not
expressly provided for by this Agreement or any other Loan Document, the
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or thereunder in accordance with instructions
given by the Majority Lenders, and such instructions of the Majority Lenders and
any action taken or failure to act pursuant thereto shall be binding on all of
the Lenders.
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Section 13.3. Defaults. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of a Potential Default or Event of
Default unless the Administrative Agent has received notice from a Lender or
Borrower specifying such Potential Default or Event of Default and stating that
such notice is a "Notice of Default". In the event that the Administrative Agent
receives such a notice of the occurrence of a Potential Default or Event of
Default, the Administrative Agent shall give prompt notice thereof to the
Lenders, with the Administrative Agent hereby agreeing to endeavor to give such
notice to the Lenders within two (2) Business Days after Administrative Agent
receives a notice of such occurrence. The Administrative Agent shall (subject to
Section 13.7) take such action with respect to such Potential Default or Event
of Default and other matters relating to the Loans as shall be directed by the
Lenders in accordance with a separate agreement entered into by the
Administrative Agent and the Lenders.
Section 13.4. Rights as a Lender. If a Lender is also acting as
Administrative Agent, then, with respect to the Commitment and the Loans made by
such Lender, such Lender (and any successor acting as a Lender and as
Administrative Agent) in its capacity as a Lender hereunder shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not acting as the Administrative Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the
Administrative Agent in its individual capacity. Such Lender (and any successor
acting as a Lender and as Administrative Agent) and its affiliates may (without
having to account therefor to any Lender) lend money to, make investments in and
generally engage in any kind of lending, trust or other business with Borrower
(and any of its Affiliates) as if it were not acting as the Administrative
Agent, and such Lender and its affiliates may accept fees and other
consideration from Borrower for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.
Section 13.5. Standard of Care; Indemnification. In performing its
duties under the Loan Documents, the Administrative Agent will exercise the same
degree of care as GECC normally exercises in connection with real estate loans
in which no syndication or participations are involved, but the Administrative
Agent shall have no further responsibility to any Lender except as expressly
provided herein and except for its own gross negligence or willful misconduct
which resulted in actual loss to such Lender, and, except to such extent, the
Administrative Agent shall have no responsibility to any Lender for the failure
by the Administrative Agent to comply with any of the Administrative Agent's
obligations to Borrower under the Loan Documents or otherwise. The Lenders agree
to indemnify the Administrative Agent (to the extent not reimbursed under
Section 11.5, but without limiting the obligations of Borrower under Section
11.5) ratably in accordance with the aggregate principal amount of the Loans
held by the Lenders (or, if no Loans are at the time outstanding, ratably in
accordance with their respective Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against the Administrative Agent (including by any
Lender) arising out of or by reason of any investigation in or in any way
relating to or arising out of this Agreement or any other Loan Document or any
other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including, without limitation, the
costs and expenses that Borrower is obligated to pay under Section 11.5, but
excluding, unless a Event of Default has occurred and is continuing,
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normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the Administrative
Agent's breach of its standard of care set forth in the first sentence of this
Section.
Section 13.6. Non-Reliance on Administrative Agent and Other Lenders.
Each Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of
Borrower and its Affiliates and decision to enter into this Agreement and that
it will, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or under any other Loan
Document. Subject to the provisions of the first sentence of Section 13.5, the
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by Borrower of this Agreement or any of the other Loan
Documents or any other document referred to or provided for herein or therein or
to inspect the Project or the books of Borrower or any of its Affiliates. Except
for notices, reports and other documents and information expressly required to
be furnished to the Lenders by the Administrative Agent hereunder or as
otherwise agreed by the Administrative Agent and the Lenders, the Administrative
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or
business of Borrower or any of its Affiliates that may come into the possession
of the Administrative Agent or any of its affiliates.
Section 13.7. Failure to Act. Except for action expressly required of
the Administrative Agent hereunder or under any other Loan Document, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 13.5 against any and all liability and expense that
may be incurred by it by reason of taking or continuing to take any such action.
Section 13.8. Resignation of Administrative Agent. The Administrative
Agent may resign at any time by giving notice thereof to the Lenders and
Borrower. Upon any such resignation, the Majority Lenders shall have the right
to appoint a successor Administrative Agent which shall be a financial
institution that has (a) an office in New York, New York with a combined capital
and surplus of at least $500,000,000 and (b) knowledge and experience comparable
to the resigning Administrative Agent's knowledge and experience in the
servicing of loans similar to the Loans hereunder. In the event of any such
resignation, the Borrower, the Lenders, the resigning Administrative Agent and
the successor Administrative Agent shall cooperate with one another and take
such steps as may reasonably be required in order to ensure that the Swap
Reimbursement Obligations and Swap Guaranty Fee continue to be secured by the
Lien of the Mortgage. If no successor Administrative Agent shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent's giving of notice of
resignation of the retiring Administrative Agent, then the retiring
Administrative Agent's resignation shall nonetheless become effective and (i)
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and
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(ii) the Majority Lenders shall perform the duties of the Administrative Agent
(and all payments and communications provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender directly) until
such time as the Majority Lenders appoint a successor agent as provided for
above in this Section 13.8. In addition, the Administrative Agent may be removed
for cause at any time by the Majority Lenders if the Administrative Agent
performs its functions hereunder in a grossly negligent manner or commits
willful misconduct, provided that, prior to such removal, GECC (if it is acting
as Administrative Agent) is released from any and all obligations under the
Interest Rate Guaranty. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring (or retired)
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder (if not already discharged therefrom
as provided above in this Section 13.8). The fees payable by Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between Borrower and such successor. After
any retiring Administrative Agent's resignation hereunder as Administrative
Agent, the provisions of this Article 13 and Section 11.5 shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Administrative Agent.
[Signature Pages Follow]
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<PAGE>
EXECUTED as of the date first written above.
LENDER: GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
By: /s/ Douglas A. Ewing
-----------------------------
Name: Douglas A. Ewing
Title: Authorized Signatory
Address for Notices:
General Electric Capital Corporation
125 Park Avenue
New York, New York 10017
Attention: Mr. Rick Aurilio
Telecopier No.: (212) 573-9733
Lending Office for Eurodollar and
Alternate Base Rate Loans:
General Electric Capital Corporation
125 Park Avenue
New York, New York 10017
Attention: Mr. Rick Aurilio
Telecopier No.: (212) 573-9733
<PAGE>
BORROWER: 1290 PARTNERS, L.P., a Delaware limited partnership
By: 1290 GP Corp., a Delaware corporation, its general partner
By: /s/ Andrew S. Cohen
--------------------------------
Name: Andrew S. Cohen
Title: Vice President
Address for Notices:
1290 Partners, L.P.
c/o Victor Capital Group, L.P.
605 Third Avenue
New York, NY 10158
Attention: Ms. Jeremy FitzGerald
Telecopier No.: (212) 655-0044
<PAGE>
ADMINISTRATIVE AGENT: GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent
By /s/ Douglas A. Ewing
------------------------------------
Name: Douglas A. Ewing
Title: Authorized Signatory
Address for Notices to the
Administrative Agent:
General Electric Capital Corporation
125 Park Avenue
New York, New York 10017
Attention: Rick Aurilio
Telecopier No.: (212) 573-9733
AMENDED, RESTATED AND CONSOLIDATED PROMISSORY NOTE
$425,000,000 December 13, 1999
New York, New York
This Amended, Restated and Consolidated Promissory Note, dated as of
December 13, 1999, by 1290 PARTNERS, L.P., a Delaware limited partnership (the
"Borrower"), to GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
(the "Lender").
W I T N E S S E T H :
- - - - - - - - - --
A. Lender is the present owner and holder of those certain bonds and
promissory notes described on Exhibit A attached hereto and made a part hereof
(collectively, the "Existing Notes"), which Existing Notes evidence an
indebtedness of Borrower to Lender in the outstanding principal amount of
$425,000,000.
B. Borrower and Lender have agreed in the manner hereinafter set forth
to (i) combine and consolidate the Existing Notes and the respective
indebtednesses evidenced thereby and (ii) amend, modify and restate in their
entirety the terms and provisions of the Existing Notes, as so combined and
consolidated, on the terms and conditions hereinafter set forth.
C. Borrower intends these Recitals to be a material part of this Note.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
I. The Existing Notes and the respective indebtednesses evidenced
thereby are each hereby combined and consolidated so that together they shall
constitute in law but one indebtedness in the principal sum of $425,000,000,
together with interest thereon as hereinafter provided, and the terms,
covenants, conditions and provisions of the Existing Notes, as so combined and
consolidated, are hereby modified, amended and restated in their entirety so
that henceforth the terms, covenants, conditions and provisions of the Existing
Notes shall read and be as set forth in this Note and Borrower agrees to comply
with and be subject to all of the terms, covenants and conditions of this Note.
II. The parties hereto certify that this Note evidences the same
indebtedness evidenced by the Existing Notes and evidences no further or other
indebtedness or obligation. Neither this Note nor anything contained herein
shall be construed as a novation of Borrower's indebtedness to Lender or of the
Existing Notes, which shall remain in full force and effect as hereby
consolidated, confirmed, modified, restated and superseded.
1
<PAGE>
III. This Note is an extension and continuation of the existing
indebtedness evidenced by the Existing Notes and is issued in replacement of and
substitution for the Existing Notes.
IV. The Existing Notes, as consolidated, modified and restated in their
entirety pursuant to this Note, and the obligations of Borrower thereunder, are
hereby ratified and confirmed, and shall remain in full force and effect until
the full performance and satisfaction of all obligations of Borrower hereunder.
NOW, THEREFORE, Borrower and Lender agree as follows:
Borrower hereby promises to pay to the Lender, for the account of its
respective Applicable Lending Offices provided for by the Agreement referred to
below, at the principal office of General Electric Capital Corporation, 125 Park
Avenue, New York, New York 10017, the principal sum of Four Hundred Twenty-Five
Million Dollars ($425,000,000) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loans made by the Lender to the
Borrower under the Agreement), in lawful money of the United States of America
and in immediately available funds, on the dates and in the principal amounts
provided in the Agreement, and to pay interest on the unpaid principal amount of
each such Loan, at such office, in like money and funds, for the period
commencing on the date of such Loan until such Loan shall be paid in full, at
the rates per annum and on the dates provided in the Agreement.
The date, amount, Type, interest rate and duration of Interest Period
(if applicable) of each Loan made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of this Note, endorsed by the
Lender on the schedule attached hereto or any continuation thereof, provided
that the failure of the Lender to make any such recordation or endorsement shall
not affect the obligations of the Borrower to make a payment when due of any
amount owing under the Agreement or hereunder in respect of the Loans made by
the Lender.
This Note is one of the Notes referred to in the Loan Agreement dated
as of December 13, 1999 (as modified and supplemented and in effect from time to
time, the "Agreement") between the Borrower, the lenders party thereto
(including the Lender) and General Electric Capital Corporation, as
Administrative Agent, and evidences Loans made by the Lender thereunder. Terms
used but not defined in this Note have the respective meanings assigned to them
in the Agreement.
The Agreement provides for the acceleration of the maturity of this
Note upon the occurrence of certain events and for prepayments of Loans upon the
terms and conditions specified therein.
Except as permitted by Sections 11.9 and 11.24 of the Agreement, this
Note may not be assigned by the Lender to any other Person.
2
<PAGE>
Notwithstanding anything to the contrary in this Note, Borrower's
liability under this Note is subject to the limitations on liability provisions
of Article 12 of the Loan Agreement, the terms and provisions of which are
incorporated herein by reference.
3
<PAGE>
This Note shall be governed by, and construed in accordance with, the
law of the State of New York.
BORROWER: 1290 PARTNERS, L.P., a Delaware limited partnership
By: 1290 GP Corp., a Delaware corporation, its
general partner
By:/s/ Andrew S. Cohen
------------------------------------------
Name: Andrew S. Cohen
Title: Vice President
4
AMENDED, RESTATED AND CONSOLIDATED
MORTGAGE AND SECURITY AGREEMENT
dated as of December 13, 1999
from
1290 PARTNERS, L.P., a Delaware limited partnership
having an address at
c/o Victor Capital Group, L.P.
605 Third Avenue
New York, New York 10158
Attention: Ms. Jeremy FitzGerald
to
GENERAL ELECTRIC CAPITAL CORPORATION, as Administrative Agent for the Lenders
having an address at
125 Park Avenue
New York, New York 10017
Attention: Mr. Rick Aurilio
-----------------------------------------------------------------------
<PAGE>
Premises: 1290 Avenue of the Americas
New York County, New York
Section 5, Block 1267, Lot 1
-----------------------------------------------------------------------
Prepared and drafted by and after recording return to:
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104-0050
Attention: Mark S. Edelstein, Esq.
AMENDED, RESTATED AND CONSOLIDATED
MORTGAGE AND SECURITY AGREEMENT
-------------------------------
This Amended, Restated and Consolidated Mortgage and Security Agreement
(this "Mortgage") is executed as of December 13, 1999, by 1290 PARTNERS, L.P., a
Delaware limited partnership ("Mortgagor"), whose address for notice hereunder
is c/o Victor Capital Group, L.P., 605 Third Avenue, New York, New York 10158,
Attention: Ms. Jeremy FitzGerald, for the benefit of GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation, as Administrative Agent for the Lenders (as
hereinafter defined; and in such capacity, together with its successors and
assigns in such capacity, "Mortgagee"), whose address for notice is 125 Park
Avenue, New York, New York 10017, Attention: Mr. Rick Aurilio.
RECITALS
WHEREAS, Mortgagor is the owner of the fee estate in the real property
described in Exhibit A attached hereto (the "Land");
WHEREAS, Mortgagee is the present owner and holder of the notes, bonds
and/or other evidences of indebtedness described in Schedule 1 attached hereto
and made a part hereof (collectively, the "Existing Notes"), which Existing
Notes evidence an indebtedness of Mortgagor to the Lenders in the aggregate
outstanding principal amount of $425,000,000;
<PAGE>
WHEREAS, the Existing Notes are secured by the mortgages described in
Schedule 2 attached hereto (collectively, the "Existing Mortgage"), which
Existing Mortgages constitute first and second priority liens on the Mortgaged
Property (as hereinafter defined) securing the aggregate outstanding principal
amount of $425,000,000;
WHEREAS, pursuant to an Amended, Restated and Consolidated Promissory
Note, dated as of the date hereof (together with all promissory notes delivered
in substitution or exchange therefor, in each case as the same may be
consolidated, severed, split, modified, amended or extended from time to time,
the "Notes"), the terms and conditions of the Existing Notes are being combined,
consolidated, modified, amended and restated in their entirety so as to
constitute a single indebtedness in the outstanding principal amount of
$425,000,000 payable in accordance with the terms of such Notes;
WHEREAS, Mortgagor and Mortgage have agreed in the manner hereinafter
set forth to (i) combine and consolidate the Existing Mortgages and the
respective liens thereof and (ii) amend, modify and restate in their entirety
the terms and provisions of the Existing Mortgages on the terms and conditions
hereinafter set forth; and
WHEREAS, Mortgagor and Mortgagee intend these Recitals to be a material
part of this Mortgage.
NOW, THEREFOR, in consideration of the premises and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
2
<PAGE>
A. The Existing Mortgages and the respective liens thereof are each
hereby combined and consolidated so that together they shall constitute in law
but one (1) mortgage, a single first priority lien, covering the Mortgaged
Property and securing the principal sum of $425,000,000, together with interest
and additional interest thereon as provided in the Note and the other Loan
Documents (as hereinafter defined), and the terms, covenants, conditions and
provisions of the Existing Mortgages, as so combined and consolidated, are
hereby amended, modified and restated in their entirety so that henceforth the
terms, covenants, conditions and provisions of the Existing Mortgages shall read
and be as set forth in this Mortgage and Mortgagor agrees to comply with and be
subject to all the terms, covenants, conditions and provisions of this Mortgage.
B. Mortgagor hereby certifies that this Mortgage secures the same
indebtedness evidenced by the Existing Notes and secured by the Existing
Mortgages, respectively, and secures no further or other or indebtedness or
obligation. Neither this Mortgage nor anything contained herein shall be
construed as a novation of Mortgagor's indebtedness to the Lenders or of the
Existing Notes, which shall remain in full force and effect as hereby confirmed,
combined, consolidated, modified, restated and superseded.
C. This Mortgage is an extension and continuation of the existing
indebtedness evidenced and secured by the Existing Notes and the Existing
Mortgages.
D. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE
MAXIMUM AMOUNT OF PRINCIPAL INDEBTEDNESS SECURED BY THIS MORTGAGE AT THE TIME OF
EXECUTION OR WHICH UNDER ANY CONTINGENCY MAY HEREAFTER BECOME SECURED BY THIS
MORTGAGE AT
3
<PAGE>
ANY TIME IS FOUR HUNDRED TWENTY FIVE MILLION DOLLARS ($425,000,000); TOGETHER
WITH (A) INTEREST, INCLUDING, WITHOUT LIMITATION, ADDITIONAL INTEREST, ON THE
AFORESAID PRINCIPAL INDEBTEDNESS AT THE RATES SET FORTH IN THE NOTES AND (B)
AMOUNTS EXPENDED BY MORTGAGEE AFTER DEFAULT OF SUMS ADVANCED OR PAID FOR
HEREUNDER TO MAINTAIN THE LIEN OF THIS MORTGAGE OR TO PROTECT THE PREMISES
SECURED BY THIS MORTGAGE, INCLUDING, WITHOUT LIMITATION, AMOUNTS IN RESPECT OF
INSURANCE PREMIUMS, IMPOSITIONS (OR PAYMENTS IN LIEU OF IMPOSITIONS), LITIGATION
EXPENSES TO PROSECUTE OR DEFEND THE RIGHTS, REMEDIES AND LIEN OF THIS MORTGAGE
OR TITLE TO THE PREMISES SECURED HEREBY, AND ANY COSTS, CHARGES OR AMOUNTS TO
WHICH MORTGAGEE OR THE LENDERS BECOME SUBROGATED UPON PAYMENT, WHETHER UNDER
RECOGNIZED PRINCIPLES OF LAW OR EQUITY OR UNDER EXPRESS STATUTORY AUTHORITY.
E. The Existing Mortgages, as combined, consolidated, modified and
restated pursuant to this Mortgage, and obligations of Mortgagor hereunder, are
hereby ratified and confirmed and shall remain in full force and effect until
the full payment, performance and satisfaction of the obligations of Mortgagor
hereunder.
4
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used herein, the following terms shall
have the following meanings:
(a) "Indebtedness": The sum of all (1) principal, interest,
additional interest and other amounts due under or secured by the Loan
Documents, (2) principal, interest and other amounts which may hereafter be
loaned by the Lenders, their successors or assigns, to or for the benefit of the
owner of the Mortgaged Property, when evidenced by promissory notes or other
instruments which, by their terms, are secured hereby, and (3) all other
indebtedness, obligations and liabilities now or hereafter existing of any kind
of Mortgagor to Mortgagee or the Lenders under documents which recite that they
are intended to be secured by this Mortgage; provided that the maximum principal
amount of indebtedness which is or under any contingency may be secured by this
Mortgage at the date of execution hereof or at any time thereafter is
$425,000,000.
(b) "Lenders": The syndicate of Lenders party to the Loan Agreement.
(c) "Loan Documents": The (1) Loan Agreement of even date between
Mortgagor, Mortgagee and the Lenders (the "Loan Agreement"), (2) the Notes, (3)
this Mortgage, (4) all other documents now or hereafter executed by Mortgagor,
or any other person or entity to evidence or secure the payment of the
Indebtedness or the performance of the Obligations and (5) all modifications,
restatements, extensions, renewals and replacements of the foregoing.
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(d) "Mortgaged Property": (1) the Land, (2) all buildings,
structures and other improvements, now or at any time situated, placed or
constructed upon the Land (the "Improvements"), (3) all materials, supplies,
equipment, apparatus and other items of personal property now owned or hereafter
acquired by Mortgagor and now or hereafter attached to, installed in or used in
connection with any of the Improvements or the Land, and water, gas, electrical,
storm and sanitary sewer facilities and all other utilities whether or not
situated in easements (the "Fixtures"), (4) all right, title and interest of
Mortgagor in and to all goods, accounts, general intangibles, instruments,
documents, chattel paper and all other personal property of any kind or
character, including such items of personal property as defined in the UCC, now
owned or hereafter acquired by Mortgagor and now or hereafter affixed to, placed
upon, used in connection with, arising from or otherwise related to the Land and
Improvements or which may be used in or relating to the planning, development,
financing or operation of the Mortgaged Property, including, without limitation,
furniture, furnishings, equipment, machinery, money, insurance proceeds,
accounts, contract rights, trademarks, goodwill, chattel paper, documents, trade
names, licenses and/or franchise agreements, rights of Mortgagor under leases of
Fixtures or other personal property or equipment, inventory, all refundable,
returnable or reimbursable fees, deposits or other funds or evidences of credit
or indebtedness deposited by or on behalf of Mortgagor with any governmental
authorities, boards, corporations, providers of utility services, public or
private, including specifically, but without limitation, all refundable,
returnable or reimbursable tap fees, utility deposits, commitment fees and
development costs (the "Personalty"), (5) all reserves, escrows or impounds
required under the Loan Agreement and all deposit accounts maintained by
Mortgagor with respect to the Mortgaged Property, (6) all plans, specifications,
shop drawings and other technical descriptions prepared for construction, repair
or alteration of the Improvements, and all amendments and modifications thereof
(the "Plans"), (7) all leases, subleases, licenses, concessions, occupancy
agreements or other agreements
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(written or oral, now or at any time in effect) which grant a possessory
interest in, or the right to use, all or any part of the Mortgaged Property,
together with all related security and other deposits (the "Leases"), (8) all of
the rents, revenues, income, proceeds, profits, security and other types of
deposits, and other benefits paid or payable by parties to the Leases other than
Mortgagor for using, leasing, licensing, possessing, operating from, residing
in, selling or otherwise enjoying the Mortgaged Property (the "Rents"), (9) all
other agreements, such as construction contracts, architects' agreements,
engineers' contracts, utility contracts, maintenance agreements, management
agreements, service contracts, permits, licenses, certificates and entitlements
in any way relating to the development, construction, use, occupancy, operation,
maintenance, enjoyment, acquisition or ownership of the Mortgaged Property (the
"Property Agreements"), (10) all rights, privileges, tenements, hereditaments,
rights-of-way, easements, appendages and appurtenances appertaining to the
foregoing, and all right, title and interest, if any, of Mortgagor in and to any
streets, ways, alleys, strips or gores of land adjoining the Land or any part
thereof, (11) all accessions, replacements and substitutions for any of the
foregoing and all proceeds thereof, (12) all insurance policies, unearned
premiums therefor and proceeds from such policies covering any of the above
property now or hereafter acquired by Mortgagor, (13) all mineral, water, oil
and gas rights now or hereafter acquired and relating to all or any part of the
Mortgaged Property, and (14) all of Mortgagor's right, title and interest in and
to any awards, remunerations, reimbursements, settlements or compensation
heretofore made or hereafter to be made by any governmental authority pertaining
to the Land, Improvements, Fixtures or Personalty. As used in this Mortgage, the
term "Mortgaged Property" shall mean all or, where the context permits or
requires, any portion of the above or any interest therein.
(e) "Obligations": All of the agreements, covenants, conditions,
warranties, representations and other obligations (other than to repay the
Indebtedness) made or undertaken
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by Mortgagor or any other person or entity to Mortgagee, the Lenders or others
as set forth in the Loan Documents.
(f) "Permitted Encumbrances": The outstanding liens, easements,
restrictions, security interests and other exceptions to title set forth in the
policy of title insurance insuring the lien of this Mortgage, and such other
similar matters as may be agreed to and/or accepted by Mortgagee from time to
time in writing in its sole discretion, together with the liens and security
interests in favor of Mortgagee created by the Loan Documents, none of which,
individually or in the aggregate, materially interferes with the benefits
intended to be provided by this Mortgage, materially and adversely affects the
value of the Mortgaged Property, impairs the use or operations of the Mortgaged
Property, or impairs Mortgagor's ability to pay its obligations in a timely
manner.
(g) "UCC": The Uniform Commercial Code of New York.
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ARTICLE II
GRANT
-----
Section 2.1 Grant. To secure the full and timely payment of the
Indebtedness and the full and timely performance of the Obligations, Mortgagor
MORTGAGES, GRANTS, BARGAINS, SELLS and CONVEYS, to Mortgagee (on behalf of the
Lenders) the Mortgaged Property, subject, however, to the Permitted
Encumbrances, TO HAVE AND TO HOLD the Mortgaged Property to Mortgagee and
Mortgagor does hereby bind itself, its successors and assigns to WARRANT AND
FOREVER DEFEND the title to the Mortgaged Property unto Mortgagee.
ARTICLE III
WARRANTIES, REPRESENTATIONS AND COVENANTS
-----------------------------------------
Mortgagor warrants, represents and covenants to Mortgagee and the
Lenders as follows:
Section 3.1 Title to Mortgaged Property and Lien of this Instrument.
Mortgagor owns the Mortgaged Property free and clear of any liens, claims or
interests, except the Permitted Encumbrances. This Mortgage creates valid,
enforceable first priority liens and security interests against the Mortgaged
Property.
Section 3.2 First Lien Status. Mortgagor shall preserve and protect the
first lien and security interest status of this Mortgage and the other Loan
Documents. If any lien or security interest other than the Permitted
Encumbrances is asserted against the Mortgaged Property, Mortgagor shall
promptly, and at its expense, (a) give Mortgagee a detailed written notice of
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such lien or security interest (including origin, amount and other terms), and
(b) pay the underlying claim in full or take such other action so as to cause it
to be released or contest the same in compliance with the requirements of the
Loan Agreement (including the requirement of providing a bond or other security
satisfactory to Mortgagee).
Section 3.3 Payment and Performance. Mortgagor shall pay the
Indebtedness when due under the Loan Documents and shall perform the Obligations
in full when they are required to be performed.
Section 3.4 Replacement of Fixtures and Personalty. Mortgagor shall
not, without the prior written consent of Mortgagee, permit any of the Fixtures
or Personalty to be removed at any time from the Land or Improvements, unless
the removed item is removed temporarily for maintenance and repair or, if
removed permanently, is replaced by an article of equal or better suitability
and value, owned by Mortgagor subject to the liens and security interests of
this Mortgage and the other Loan Documents, and free and clear of any other lien
or security interest except such as may be first approved in writing by
Mortgagee.
Section 3.5 Maintenance of Rights of Way, Easements and Licenses.
Mortgagor shall maintain all rights of way, easements, grants, privileges,
licenses, certificates, permits, entitlements and franchises necessary for the
use of the Mortgaged Property and will not, without the prior consent of
Mortgagee, consent to any public restriction (including any zoning ordinance) or
private restriction as to the use of the Mortgaged Property. Mortgagor shall
comply with all restrictive covenants affecting the Mortgaged Property, and all
zoning ordinances and other public or private restrictions as to the use of the
Mortgaged Property.
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Section 3.6 Inspection. Subject to the applicable provisions of the
Loan Agreement, Mortgagor shall permit Mortgagee, each Lender and Mortgagee's
and the Lenders' agents, representatives and employees, upon reasonable prior
notice to Mortgagor, to inspect the Mortgaged Property and conduct such
environmental and engineering studies as Mortgagee may require, provided that
such inspections and studies shall not materially interfere with the use and
operation of the Mortgaged Property.
Section 3.7 Other Covenants. All of the covenants in the Loan Agreement
are incorporated herein by reference and, together with covenants in this
Article 3, shall be covenants running with the land. The covenants set forth in
the Loan Agreement include, among other provisions: (a) the prohibition against
the further sale, transfer or encumbering of any of the Mortgaged Property,
except as expressly permitted thereby, (b) the obligation to pay when due (or
contest in accordance with the Loan Agreement) all taxes on the Mortgaged
Property or assessed against Mortgagee with respect to the Loan, (c) the
obligation to keep the Mortgaged Property insured as Mortgagee may require, (d)
the obligation to comply with (or contest in accordance with the Loan Agreement)
all legal requirements (including environmental laws), maintain the Mortgaged
Property in good condition, and promptly repair any damage or casualty, and (e)
except as otherwise permitted under the Loan Agreement, the obligation of
Mortgagor to obtain Mortgagee's consent prior to entering into, modifying or
taking other actions with respect to Leases.
Section 3.8 Condemnation Awards and Insurance Proceeds.
(a) Condemnation Awards. Mortgagor assigns all awards and
compensation for any condemnation or other taking, or any purchase in lieu
thereof, to Mortgagee (on behalf of the
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Lenders) and authorizes Mortgagee to collect and receive such awards and
compensation and to give proper receipts and acquittances therefor, subject to
the terms of the Loan Agreement.
(b) Insurance Proceeds. Mortgagor assigns to Mortgagee (on behalf of
the Lenders) all proceeds of any insurance policies insuring against loss or
damage to the Mortgaged Property. Mortgagor authorizes Mortgagee to collect and
receive such proceeds and authorizes and directs the issuer of each of such
insurance policies to make payment for all such losses directly to Mortgagee,
instead of to Mortgagor and Mortgagee jointly, subject to the terms of the Loan
Agreement.
ARTICLE IV
DEFAULT AND FORECLOSURE
-----------------------
Section 4.1 Remedies. If an Event of Default (as defined in the Loan
Agreement) exists, Mortgagee may, at Mortgagee's election, exercise any or all
of the following rights, remedies and recourses:
(a) Acceleration. Declare the Indebtedness to be immediately due and
payable, without further notice, presentment, protest, notice of intent to
accelerate, notice of acceleration, demand or action of any nature whatsoever
(each of which hereby is expressly waived by Mortgagor), whereupon the same
shall become immediately due and payable.
(b) Entry on Mortgaged Property. Enter the Mortgaged Property and
take exclusive possession thereof and of all books, records and accounts
relating thereto. If Mortgagor remains in possession of the Mortgaged Property
after an Event of Default and
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without Mortgagee's prior written consent, Mortgagee may invoke any legal
remedies to dispossess Mortgagor.
(c) Operation of Mortgaged Property. Hold, lease, develop, manage,
operate or otherwise use the Mortgaged Property upon such terms and conditions
as Mortgagee may deem reasonable under the circumstances (making such repairs,
alterations, additions and improvements and taking other actions, from time to
time, as Mortgagee deems necessary or desirable), and apply all Rents and other
amounts collected by Mortgagee in connection therewith in accordance with the
provisions of Section 4.7.
(d) Foreclosure and Sale. Institute proceedings for the complete
foreclosure of this Mortgage, in which case the Mortgaged Property may be sold
for cash or credit in one or more parcels. With respect to any notices required
or permitted under the UCC, Mortgagor agrees that five (5) days' prior written
notice shall be deemed commercially reasonable. At any such sale by virtue of
any judicial proceedings or any other legal right, remedy or recourse, the title
to and right of possession of any such property shall pass to the purchaser
thereof, and to the fullest extent permitted by law, Mortgagor shall be
completely and irrevocably divested of all of its right, title, interest, claim
and demand whatsoever, either at law or in equity, in and to the property sold
and such sale shall be a perpetual bar both at law and in equity against
Mortgagor, and against all other persons claiming or to claim the property sold
or any part thereof, by, through or under Mortgagor. Mortgagee, the Lenders or
their nominee may be a purchaser at such sale and if Mortgagee, the Lenders or
such nominee is the highest bidder, may credit the portion of the purchase price
that would be distributed to Mortgagee (on behalf of the Lenders) against the
Indebtedness in lieu of paying cash.
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(e) Receiver. Make application to a court of competent jurisdiction
for, and obtain from such court as a matter of strict right and without notice
to Mortgagor or regard to the adequacy of the Mortgaged Property for the
repayment of the Indebtedness, the appointment of a receiver of the Mortgaged
Property, and Mortgagor irrevocably consents to such appointment. Any such
receiver shall have all the usual powers and duties of receivers in similar
cases, including the full power to rent, maintain and otherwise operate the
Mortgaged Property upon such terms as may be approved by the court, and shall
apply such Rents in accordance with the provisions of Section 4.7.
(f) Other. Exercise all other rights, remedies and recourses granted
under the Loan Documents or otherwise available at law or in equity (including
an action for specific performance of any covenant contained in the Loan
Documents, or a judgment on the Note either before, during or after any
proceeding to enforce this Mortgage).
Section 4.2 Separate Sales. The Mortgaged Property may be sold in one
or more parcels and in such manner and order as Mortgagee in its sole
discretion, may elect; the right of sale arising out of any Event of Default
shall not be exhausted by any one or more sales.
Section 4.3 Remedies Cumulative, Concurrent and Nonexclusive. Mortgagee
shall have all rights, remedies and recourses granted in the Loan Documents and
available at law or equity (including the UCC), which rights (a) shall be
cumulative and concurrent, (b) may be pursued separately, successively or
concurrently against Mortgagor or others obligated under the Note and the other
Loan Documents, or against the Mortgaged Property, or against any one or more of
them, at the sole discretion of Mortgagee, (c) may be exercised as often as
occasion therefor shall arise, and the exercise or failure to exercise any of
them shall not be construed as a
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waiver or release thereof or of any other right, remedy or recourse, and (d) are
intended to be, and shall be, nonexclusive. No action by Mortgagee or any Lender
in the enforcement of any rights, remedies or recourses under the Loan Documents
or otherwise at law or equity shall be deemed to cure any Event of Default.
Section 4.4 Release of and Resort to Collateral. Mortgagee may release,
regardless of consideration and without the necessity for any notice to a
consent by the holder of any subordinate lien on the Mortgaged Property, any
part of the Mortgaged Property without, as to the remainder, in any way
impairing, affecting, subordinating or releasing the lien or security interests
created in or evidenced by the Loan Documents or their stature as a first and
prior lien and security interest in and to the Mortgaged Property. For payment
of the Indebtedness, Mortgagee and the Lenders may resort to any other security
in such order and manner as Mortgagee and the Lenders may elect.
Section 4.5 Waiver of Redemption, Notice and Marshalling of Assets. To
the fullest extent permitted by law, Mortgagor hereby irrevocably and
unconditionally waives and releases (a) all benefit that might accrue to
Mortgagor by virtue of any present or future statute of limitations or law or
judicial decision exempting the Mortgaged Property from attachment, levy or sale
on execution or providing for any appraisement, valuation, stay of execution,
exemption from civil process, redemption or extension of time for payment, (b)
all notices of any Event of Default, except as expressly required by the Loan
Agreement, or of Mortgagee's and the Lenders' election to exercise or their
actual exercise of any right, remedy or recourse provided for under the Loan
Documents, and (c) any right to a marshalling of assets or a sale in inverse
order of alienation.
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Section 4.6 Discontinuance of Proceedings. If Mortgagee and/or the
Lenders shall have proceeded to invoke any right, remedy or recourse permitted
under the Loan Documents and shall thereafter elect to discontinue or abandon it
for any reason, Mortgagee and the Lenders shall have the unqualified right to do
so and, in such an event, Mortgagor, Mortgagee and the Lenders shall be restored
to their former positions with respect to the Indebtedness, the Obligations, the
Loan Documents, the Mortgaged Property and otherwise, and the rights, remedies,
recourses and powers of Mortgagee and the Lenders shall continue as if the
right, remedy or recourse had never been invoked, but no such discontinuance or
abandonment shall waive any Event of Default which may then exist or the right
of Mortgagee or the Lenders thereafter to exercise any right, remedy or recourse
under the Loan Documents for such Event of Default.
Section 4.7 Application of Proceeds. The proceeds of any sale of, and
the Rents and other amounts generated by the holding, leasing, management,
operation or other use of the Mortgaged Property, shall be applied by Mortgagee
(or the receiver, if one is appointed) in the following order unless otherwise
required by applicable law:
(a) to the payment of the costs and expenses of taking possession of
the Mortgaged Property and of holding, using, leasing, repairing, improving and
selling the same, including, without limitation (1) receiver's fees and
expenses, (2) court costs, (3) attorneys' and accountants' fees and expenses,
(4) costs of advertisement, and (5) the payment of all ground rent, real estate
taxes and assessments, except any taxes, assessments or other charges subject to
which the Mortgaged Property shall have been sold;
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(b) to the payment of all amounts (including interest), other than
the unpaid principal balance of the Notes and accrued but unpaid interest, which
may be due to Mortgagee and/or the Lenders under the Loan Documents;
(c) to the payment of the Indebtedness and performance of the
Obligations in such manner and order of preference as Mortgagee in its sole
discretion may determine; and
(d) the balance, if any, to the payment of the persons legally
entitled thereto.
Section 4.8 Occupancy After Foreclosure. The purchaser at any
foreclosure sale pursuant to Section 4.1(d) shall become the legal owner of the
Mortgaged Property. All occupants of the Mortgaged Property shall, at the option
of such purchaser, become tenants of the purchaser at the foreclosure sale and
shall deliver possession thereof immediately to the purchaser upon demand,
subject to the terms of any subordination, non-disturbance and attornment
agreements binding upon such purchaser and such occupants. It shall not be
necessary for the purchaser at said sale to bring any action for possession of
the Mortgaged Property other than the statutory action of forcible detainer in
any justice court having jurisdiction over the Mortgaged Property.
Section 4.9 Additional Advances and Disbursements; Costs of
Enforcement.
(a) If any Event of Default exists, Mortgagee and the Lenders shall
have the right, but not the obligation, to cure such Event of Default in the
name and on behalf of Mortgagor. All sums advanced and expenses incurred at any
time by Mortgagee or the Lenders under this Section 4.9, or otherwise under this
Mortgage or any of the other Loan Documents or applicable law, shall bear
interest from the date that such sum is advanced or expense incurred, to and
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including the date of reimbursement, computed at the Default Rate (as defined in
the Loan Agreement), and all such sums, together with interest thereon, shall be
secured by this Mortgage.
(b) Mortgagor shall pay all expenses (including reasonable
attorneys' fees and expenses) of or incidental to the perfection and enforcement
of this Mortgage and the other Loan Documents, or the enforcement, compromise or
settlement of the Indebtedness or any claim under this Mortgage and the other
Loan Documents, and for the curing thereof, or for defending or asserting the
rights and claims of Mortgagee and the Lenders in respect thereof, by litigation
or otherwise.
Section 4.10 No Mortgagee in Possession. Neither the enforcement of any
of the remedies under this Article 4, the assignment of the Rents and Leases
under Article 5, the security interests under Article 6, nor any other remedies
afforded to Mortgagee and/or the Lenders under the Loan Documents, at law or in
equity shall cause Mortgagee or any Lender to be deemed or construed to be a
mortgagee in possession of the Mortgaged Property, to obligate Mortgagee or any
Lender to lease the Mortgaged Property or attempt to do so, or to take any
action, incur any expense, or perform or discharge any obligation, duty or
liability whatsoever under any of the Leases or otherwise.
ARTICLE V
ASSIGNMENT OF RENTS AND LEASES
------------------------------
Section 5.1 Assignment. Mortgagor acknowledges and confirms that it has
executed and delivered to Mortgagee (on behalf of the Lenders) an Assignment of
Rents and Leases of even date (the "Assignment of Rents and Leases"), intending
that such instrument create a
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present, absolute assignment to Mortgagee of the Leases and Rents. Without
limiting the intended benefits or the remedies provided under the Assignment of
Rents and Leases, Mortgagor hereby assigns to Mortgagee (on behalf of the
Lenders), as further security for the Indebtedness and the Obligations, the
Leases and Rents. While any Event of Default exists, Mortgagee shall be entitled
to exercise any or all of the remedies provided in the Assignment of Rents and
Leases and in Article 4 hereof, including the right to have a receiver
appointed. If any conflict or inconsistency exists between the assignment of the
Rents and the Leases in this Mortgage and the absolute assignment of the Rents
and the Leases in the Assignment of Rents and Leases, the terms of the
Assignment of Rents and Leases shall control.
Section 5.2 No Merger of Estates. So long as any part of the
Indebtedness and the Obligations secured hereby remain unpaid and undischarged,
the fee and leasehold estates to the Mortgaged Property shall not merge, but
shall remain separate and distinct, notwithstanding the union of such estates
either in Mortgagor, Mortgagee, any lessee or any third party by purchase or
otherwise.
ARTICLE VI
SECURITY AGREEMENT
------------------
Section 6.1 Security Interest. This Mortgage constitutes a "Security
Agreement" on personal property within the meaning of the UCC and other
applicable law and with respect to the Personalty, Fixtures, Plans, Leases,
Rents and Property Agreements. To this end, Mortgagor grants to Mortgagee (on
behalf of the Lenders), a first and prior security interest in the Personalty,
Fixtures, Plans, Leases, Rents and Property Agreements and all other Mortgaged
Property which is personal property to secure the payment of the Indebtedness
and performance
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of the Obligations, and agrees that Mortgagee shall have all the rights and
remedies of a secured party under the UCC with respect to such property. Any
notice of sale, disposition or other intended action by Mortgagee with respect
to the Personalty, Fixtures, Plans, Leases, Rents and Property Agreements sent
to Mortgagor at least five (5) days prior to any action under the UCC shall
constitute reasonable notice to Mortgagor.
Section 6.2 Financing Statements. Mortgagor shall execute and deliver
to Mortgagee, in form and substance satisfactory to Mortgagee, such financing
statements and such further assurances as Mortgagee may, from time to time,
reasonably consider necessary to create, perfect and preserve Mortgagee's
security interest hereunder and Mortgagee may cause such statements and
assurances to be recorded and filed, at such times and places as may be required
or permitted by law to so create, perfect and preserve such security interest.
Mortgagor's chief executive office is in the State of New York at the address
set forth in the first paragraph of this Mortgage.
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Section 6.3 Fixture Filing. This Mortgage shall also constitute a
"fixture filing" for the purposes of the UCC against all of the Mortgaged
Property which is or is to become fixtures. Information concerning the security
interest herein granted may be obtained at the addresses of Debtor (Mortgagor)
and Secured Party (Mortgagee) as set forth in the first paragraph of this
Mortgage.
ARTICLE VII
NEW YORK PROVISIONS
-------------------
Section 7.1 Maximum Principal Sum. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED HEREIN, THE MAXIMUM AMOUNT OF PRINCIPAL INDEBTEDNESS SECURED
BY THIS MORTGAGE AT THE TIME OF EXECUTION OR WHICH UNDER ANY CONTINGENCY MAY
HEREAFTER BECOME SECURED BY THIS MORTGAGE AT ANY TIME IS FOUR HUNDRED TWENTY
FIVE MILLION DOLLARS ($425,000,000); TOGETHER WITH (A) INTEREST, INCLUDING,
WITHOUT LIMITATION, ADDITIONAL INTEREST, ON THE AFORESAID PRINCIPAL INDEBTEDNESS
AT THE RATES SET FORTH IN THE NOTES AND (B) AMOUNTS EXPENDED BY MORTGAGEE AFTER
DEFAULT OF SUMS ADVANCED OR PAID FOR HEREUNDER TO MAINTAIN THE LIEN OF THIS
MORTGAGE OR TO PROTECT THE PREMISES SECURED BY THIS MORTGAGE, INCLUDING, WITHOUT
LIMITATION, AMOUNTS IN RESPECT OF INSURANCE PREMIUMS, IMPOSITIONS (OR PAYMENTS
IN LIEU OF IMPOSITIONS), LITIGATION EXPENSES TO PROSECUTE OR DEFEND THE RIGHTS,
REMEDIES AND LIEN OF THIS MORTGAGE OR TITLE TO THE PREMISES SECURED HEREBY, AND
ANY COSTS, CHARGES OR AMOUNTS TO WHICH MORTGAGEE OR THE LENDERS BECOME
SUBROGATED UPON PAYMENT,
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WHETHER UNDER RECOGNIZED PRINCIPLES OF LAW OR EQUITY OR UNDER EXPRESS STATUTORY
AUTHORITY.
Section 7.2 Trust Fund for Advances. In compliance with Section 13 of
the Lien Law of the State of New York, Mortgagor will receive the advances
secured by this Mortgage and will hold the right to receive such advances as a
trust fund to be applied first for the purpose of paying the cost of the
building(s) and other improvements located on the Mortgaged Property before
using any part of the total of the same for any other purpose. Mortgagor will
indemnify and hold Mortgagee harmless against any loss, liability, cost or
expense, including any judgments, attorneys' fees, cost of appeal bonds or
printing costs, arising out of or relating to any proceedings instituted by any
claimant alleging a violation by the Mortgagor or Article 3-A of the New York
Lien Law.
Section 7.3 New York Real Property Law Article 4-A. If this Mortgage
shall be deemed to constitute a "mortgage investment" as defined by New York
Real Property Law ss.125, then this Mortgage shall and hereby does (i) confer
upon the Mortgagee the powers and (ii) impose upon the Mortgagee the duties of
trustees set forth in New York Real Property Law ss.126.
Section 7.4 Statement in Accordance with Section 253.1a(a) of the New
York Tax Law. This Mortgage does not cover real property principally improved or
to be improved by one or more structures containing in the aggregate not more
than six (6) residential dwelling units, each having separate cooking
facilities.
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Section 7.5 Statement in Accordance with Section 274-a of the New York
Real Property Law. The Mortgagee shall, within fifteen (15) days after written
request, provide the Mortgagor with the statement required by Section 274-a of
the New York Real Property Law.
Section 7.6 Section 291-f of New York Real Property Law. Mortgagee
shall have all of the rights set forth in Section 291-f of the Real Property Law
of New York. For purposes of Section 291-f of the New York Real Property Law,
all existing tenants and every tenant or subtenant who after the recording of
this Mortgage, enters into a lease for any of the Mortgaged Property or who
acquires by instrument of assignment or by operation of law a leasehold estate
upon the Mortgaged Property is hereby notified that Mortgagor shall not, without
obtaining Mortgagee's prior consent in each instance, cancel, abridge or
otherwise modify any lease or accept prepayments for more than thirty (30) days
of installment of rent to become due with respect to any lease thereof having an
unexpired term on the date of this Mortgage of five (5) years or more, except as
expressly permitted under this Mortgage or the Loan Agreement, and that any such
cancellation, abridgement, modification or prepayment made by any such tenant or
subtenant without either being expressly permitted under this Mortgage or the
Loan Agreement or receiving Mortgagee's prior consent shall be voidable by
Mortgagee at its option.
Section 7.7 Sections 254, 271, 272 and 291-f of New York Real Property
Law. All covenants of the Mortgagor herein contained shall be construed as
affording to Mortgagee rights additional to and not exclusive of the rights
conferred under the provisions of Section 254, 271, 272 and 291-f of the Real
Property Law of New York.
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Section 7.8 Real Property Law. Sections 3.7 and 3.8 hereof shall be
construed according to subdivision 4 of Section 254 of the New York Real
Property Law as amended by Chapter 886 of the Laws of 1945 but not as amended by
Chapter 830 of the Laws of 1965 or as otherwise thereafter amended.
Section 7.9 RPAPL. If an Event of Default shall occur and be
continuing, Mortgagee may elect to sell (and, in the case of any default of any
purchaser, resell) the Mortgaged Property or any part thereof by exercise of the
power of foreclosure or of sale granted to Mortgagee by Article 13 or 14 of the
New York Real Property Actions and Proceedings Law (the "RPAPL"). In such case,
Mortgagee may commence a civil action to foreclosure this Mortgage pursuant to
Article 13 of the RPAPL, or it may proceed and sell the Property pursuant to
Article 14 of the RPAPL to satisfy the Note and all other amounts secured
hereby.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices. Any notice required or permitted to be given under
this Mortgage shall be in writing and either shall be mailed by certified mail,
postage prepaid, return receipt requested, or sent by overnight air courier
service, or personally delivered to a representative of the receiving party, or
sent by telecopy (provided an identical notice is also sent simultaneously by
mail, overnight courier, personal delivery or otherwise as provided in this
Section 8.1). All such communications shall be mailed, sent or delivered,
addressed to the party for whom it is intended at its address set forth on the
first page of this Mortgage. Any
24
<PAGE>
communication so addressed and mailed shall be deemed to be given on the
earliest of (a) when actually delivered, (b) on the first Business Day (as
defined in the Loan Agreement) after deposit with an overnight air courier
service, or (c) on the third Business Day after deposit in the United States
mail, postage prepaid, in each case to the address of the intended addressee,
and any communication so delivered in person shall be deemed to be given when
receipted for by, or actually received by, Mortgagee or Mortgagor, as the case
may be. If given by telecopy, a notice shall be deemed given and received when
the telecopy is transmitted to the party's telecopy number specified in the Loan
Agreement and confirmation of complete receipt is received by the transmitting
party during normal business hours or on the next Business Day if not confirmed
during normal business hours, and an identical notice is also sent
simultaneously by mail, overnight courier, or personal delivery as otherwise
provided in this Section 8.1. Any party may designate a change of address by
written notice to the other by giving at least ten (10) days prior written
notice of such change of address.
Section 8.2 Covenants Running with the Land. All Obligations contained
in this Mortgage are intended by Mortgagor and Mortgagee to be, and shall be
construed as, covenants running with the Mortgaged Property. As used herein,
"Mortgagor" shall refer to the party named in the first paragraph of this
Mortgage and to any subsequent owner of all or any portion of the Mortgaged
Property (without in any way implying that Mortgagee has or will consent to any
such conveyance or transfer of the Mortgaged Property). All persons or entities
who may have or acquire an interest in the Mortgaged Property shall be deemed to
have notice of, and be bound by, the terms of the Loan Agreement and the other
Loan Documents; however, no such party other than Mortgagor shall be entitled to
any rights thereunder without the prior written consent of Mortgagee.
25
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Section 8.3 Attorney-in-Fact. Mortgagor hereby irrevocably appoints
Mortgagee (on behalf of the Lenders) and its successors and assigns, as its
attorney-in-fact, which agency is coupled with an interest, (a) to execute
and/or record any notices of completion, cessation of labor or any other notices
that Mortgagee reasonably deems appropriate to protect Mortgagee's interest, if
Mortgagor shall fail to do so within ten (10) days after written request by
Mortgagee, (b) upon the issuance of a deed pursuant to the foreclosure of this
Mortgage or the delivery of a deed in lieu of foreclosure, to execute all
instruments of assignment, conveyance or further assurance with respect to the
Leases, Rents, Personalty, Fixtures, Plans and Property Agreements in favor of
the grantee of any such deed and as may be necessary or desirable for such
purpose, (c) to prepare, execute and file or record financing statements,
continuation statements, applications for registration and like papers necessary
to create, perfect or preserve Mortgagee's security interests and rights in or
to any of the collateral, and (d) while any Event of Default exists, to perform
any obligation of Mortgagor hereunder; however: (1) Mortgagee shall not under
any circumstances be obligated to perform any obligation of Mortgagor; (2) any
sums advanced by Mortgagee in such performance shall be added to and included in
the Indebtedness and shall bear interest at the Default Rate; (3) Mortgagee as
such attorney-in-fact shall only be accountable for such funds as are actually
received by Mortgagee; and (4) neither Mortgagee nor any Lender shall be liable
to Mortgagor or any other person or entity for any failure to take any action
which it is empowered to take under this Section.
Section 8.4 Successors and Assigns. This Mortgage shall be binding upon
and inure to the benefit of Mortgagee and Mortgagor and their respective
successors and assigns. Mortgagor shall not, without the prior written consent
of Mortgagee, assign any rights, duties or obligations hereunder.
26
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Section 8.5 No Waiver. Any failure by Mortgagee to insist upon strict
performance of any of the terms, provisions or conditions of the Loan Documents
shall not be deemed to be a waiver of same, and Mortgagee shall have the right
at any time to insist upon strict performance of all of such terms, provisions
and conditions.
Section 8.6 Subrogation. To the extent proceeds of the Notes have been
used to extinguish, extend or renew any indebtedness against the Mortgaged
Property, then Mortgagee (on behalf of the Lenders) shall be subrogated to all
of the rights, liens and interests existing against the Mortgaged Property and
held by the holder of such indebtedness and such former rights, liens and
interests, if any, are not waived, but are continued in full force and effect in
favor of Mortgagee (on behalf of the Lenders) as modified by the Loan Documents.
Section 8.7 Loan Agreement. If any conflict or inconsistency exists
between this Mortgage and the Loan Agreement, the Loan Agreement shall govern.
Section 8.8 Release. Upon payment in full of the Indebtedness and
performance in full of the Obligations, Mortgagee, at Mortgagor's expense, shall
release or, upon request, assign (at Mortgagor's sole cost and expense and
without any representation, warranty and/or recourse, express or implied, and
subject to applicable law) the liens and security interests created by this
Mortgage.
Section 8.9 Waiver of Stay, Moratorium and Similar Rights. Mortgagor
agrees, to the full extent that it may lawfully do so, that it will not at any
time insist upon or plead or in any way take advantage of any appraisement,
valuation, stay, marshalling of assets, extension, redemption or moratorium law
now or hereafter in force and effect so as to prevent or hinder the
27
<PAGE>
enforcement of the provisions of this Mortgage or the indebtedness secured
hereby, or any agreement between Mortgagor and Mortgagee and/or the Lenders or
any rights or remedies of Mortgagee and/or the Lenders.
Section 8.10 Limitation on Liability. Notwithstanding anything to the
contrary contained in this Mortgage, Mortgagor's liability under this Mortgage
is subject to the limitation on liability provisions of Article 12 of the Loan
Agreement.
Section 8.11 Obligations of Mortgagor, Joint and Several. If more than
one person or entity has executed this Mortgage as "Mortgagor," the obligations
of all such persons or entities hereunder shall be joint and several.
Section 8.12 Governing Law. This Mortgage shall be governed by the laws
of the State of New York.
Section 8.13 Headings. The Article, Section and Subsection titles
hereof are inserted for convenience of reference only and shall in no way alter,
modify or define, or be used in construing, the text of such Articles, Sections
or Subsections.
Section 8.14 Entire Agreement. This Mortgage and the other Loan
Documents embody the entire agreement and understanding between Mortgagee, the
Lenders and Mortgagor and supersede all prior agreements and understandings
between such parties relating to the subject matter hereof and thereof.
Accordingly, the Loan Documents may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
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Executed as of the date first written above.
1290 PARTNERS, L.P.
By: 1290 GP CORP., its general partner
By: /s/ Andrew S. Cohen
------------------------------------
Name: Andrew S. Cohen
Title: Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation, as
Administrative Agent
By: ______________________________________
Name: Douglas A. Ewing
Title: Authorized Signatory
29
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On the 13th day of December in the year 1999 before me, the undersigned,
personally appeared Andrew Cohen, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
- -----------------------------
Signature and Office of Individual
taking acknowledgement
30
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On the 13th day of December in the year 1999 before me, the undersigned,
personally appeared Douglas A. Ewing, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual(s) whose name(s) is
(are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the instrument.
- -----------------------------
Signature and Office of Individual
taking acknowledgement
31
INDEMNIFICATION AND PLEDGE AGREEMENT
New York, New York
December 13, 1999
Reference is made to the Loan Agreement, dated as of the date hereof (the
"Credit Agreement"), between 1290 Partners, L.P. (the "Partnership") and General
Electric Capital Corporation, relating to certain premises located in New York,
New York and more commonly known as 1290 Avenue of the Americas (the "1290
Property").
Apollo Real Estate Investment Fund, L.P. ("Apollo") is the holder of
4,936,060 shares of the Common Stock, par value $10.00 per share ("Common
Stock"), of Metropolis Realty Trust, Inc. ("Metropolis"), representing
approximately 38% of the outstanding shares of Common Stock. Metropolis is the
owner of a 94.05% interest, as a limited partner, of the Partnership.
Pursuant to Section 8.1(1)(d) of the Credit Agreement, the Partnership
agreed not to permit any transfers of the Common Stock which would cause Apollo
to own less than 30% of the outstanding shares of Common Stock (the "Shares").
Apollo will derive a substantial benefit from the closing of the
transaction contemplated by the Credit Agreement.
1. Indemnity. In consideration of the agreement of the Partnership to the
provisions of Section 8.1(1)(d) of the Credit Agreement (the "Transfer
Restriction") Apollo hereby agrees to defend, indemnify, and hold harmless the
Partnership and its partners (and their respective stockholders and partners, as
the case may be) and successors and assigns (collectively, the "Indemnitees"),
from and against any and all claims, demands, penalties, causes of action,
fines, liabilities, settlements, damages (but excluding consequential and
punitive damages), costs or expenses arising out of, or in any way related to
the transfer by Apollo of any of the Shares in contravention of the Transfer
Restrictions (a "Default"). The indemnity obligations of Apollo pursuant to this
Section 1 are hereinafter referred to as the "Indemnity Obligations".
2. Pledge. As security for the payment and performance in full of the
Indemnity Obligations, Apollo hereby transfers, grants, bargains, sells,
conveys, hypothecates, pledges, sets over, endorses over, and delivers unto the
Partnership, for its own benefit and for the benefit of the other Indemnitees, a
security interest in, (a) 4,000,000 shares of Common Stock (the "Pledged
Stock"), (b) subject to Section 6 below, all proceeds of the Pledged Stock,
including, without limitation, all cash, securities or other property at any
time and from time to time receivable or otherwise distributed in respect of or
in exchange for any of or all such Pledged Stock (the items referred to in
clauses (a) and (b) being collectively called the "Collateral"). Upon delivery
to the Partnership, any securities now or hereafter included in the Collateral
including, without limitation, the Pledged Stock (the "Pledged Securities")
shall
<PAGE>
be accompanied by undated stock powers duly executed in blank or other
instruments of transfer satisfactory to the Partnership and by such other
instruments and documents as the Partnership may reasonably request. Each
delivery of Pledged Securities shall be accompanied by a schedule showing a
description of the securities theretofore and then being pledged hereunder,
which schedule shall be attached hereto as Schedule I and made a part hereof.
Each schedule so delivered shall supersede any prior schedules so delivered.
3. Delivery of Collateral. Apollo agrees to deliver promptly or cause to
be delivered to the Partnership any and all Pledged Securities, and any and all
certificates or other instruments or documents representing any of the
Collateral (together with any necessary endorsement).
4. Representations, Warranties and Covenants. Apollo hereby represents,
warrants and covenants to and with the Partnership:
(a) except for the security interest granted to the Partnership, Apollo
(i) is and, subject to the provisions of the Credit Agreement, will at all times
continue to be the direct owner, beneficially and of record, of the Pledged
Securities that it is pledging hereunder, (ii) holds the Collateral that it is
pledging hereunder free and clear of all liens, charges, encumbrances and
security interests of every kind and nature, and the Pledged Stock is subject to
no options to purchase or any similar or other rights of any person, (iii) will
make no assignment, pledge, hypothecation or, subject to the provisions of the
Credit Agreement, transfer of, or create any security interest in, the
Collateral that it is pledging hereunder including, without limitation, by
virtue of becoming bound by any agreement which restricts in any manner the
rights of any present or future holder of any Pledged Stock with respect
thereto, and (iv) subject to Section 6 below, will cause any and all Collateral,
whether for value paid by Apollo or otherwise, to be forthwith deposited with
the Partnership and pledged or assigned hereunder;
(b) Apollo (i) has good right and legal authority to pledge the
Collateral it is pledging hereunder in the manner hereby done or contemplated,
(ii) will not amend, modify or supplement any Pledged Security without the prior
written consent of the Partnership, nor forgive any indebtedness evidenced by
any Pledged Security, and (iii) will defend its title or interest thereto or
therein against any and all attachments, liens, claims, encumbrances, security
interests or other impediments of any nature, however arising, of all persons
whomsoever;
(c) no consent or approval of any governmental body or regulatory
authority or any securities exchange was or is necessary to the validity of the
pledge effected hereby;
(d) by virtue of the execution and delivery by Apollo of this Agreement,
when the certificates, instruments or other documents representing or evidencing
the Collateral are delivered to the Partnership in accordance with this
Agreement, the Partnership will obtain a valid and perfected first lien upon and
security interest in such Collateral as security for the performance of the
Indemnity Obligations, prior to all other liens and encumbrances thereon and
security interests therein;
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<PAGE>
(e) the pledge effected hereby is effective to vest in the Partnership
the rights of the Partnership in the Collateral as set forth herein; and
(f) all of the Pledged Stock has been duly authorized and validly issued
and as of the date hereof, the Pledged Stock constitutes approximately 30% of
the issued and outstanding shares of Common Stock.
All representations, warranties and covenants of Apollo contained in this
Agreement shall survive the execution, delivery and performance of this
Agreement until the termination of this Agreement pursuant to Section 14 hereof.
5. Registration in Nominee Name; Denominations. Upon the occurrence and
during the continuance of a Default, the Partnership shall have the right (in
its sole and absolute discretion with subsequent notice to Apollo) to transfer
to or to register the Pledged Securities in its own name or the name of its
nominee. In addition, the Partnership shall at all times have the right to
exchange the certificates representing Pledged Securities for certificates of
smaller or larger denominations for any purpose consistent with this Agreement.
6. Voting Rights; Dividends; etc. (a) Unless and until a Default
hereunder shall have occurred and be continuing:
(i) Apollo shall be entitled to exercise any and all voting and/or
consensual rights and powers accruing to an owner of Pledged Securities or any
part thereof for any purpose not inconsistent with the terms of this Agreement
and the Credit Agreement; provided that such action would not adversely affect
the rights inuring to the Partnership or the other Indemnitees under this
Agreement or the Credit Agreement or adversely affect the rights and remedies of
the Partnership or the other Indemnitees under this Agreement or the Credit
Agreement or the ability of the Partnership or the other Indemnitees to exercise
the same.
(ii) The Partnership shall execute and deliver to Apollo, or cause to
be executed and delivered to Apollo, all such proxies, powers of attorney, and
other instruments as Apollo may reasonably request for the purpose of enabling
Apollo to exercise the voting and/or consensual rights and powers which they are
entitled to exercise pursuant to subparagraph (i) above.
(iii) Apollo shall be entitled to receive and retain any and all cash
dividends paid on the Pledged Securities only to the extent that such cash
dividends are permitted by, and otherwise paid in accordance with the terms and
conditions of, the Credit Agreement and applicable laws. Any and all
a. noncash dividends,
b. stock or dividends paid or payable in cash or otherwise in
connection with a partial or total liquidation or dissolution, and
c. instruments, securities, other distributions in property,
return of capital, capital surplus or paid-in surplus or other distributions
made on or in respect of Pledged Securities (other than dividends
3
<PAGE>
permitted by this Section 6(a)(iii)), whether paid or payable in cash or
otherwise, whether resulting from a subdivision, combination or reclassification
of the outstanding capital stock of the issuer of any Pledged Securities or
received in exchange for Pledged Securities or any part thereof, or in
redemption thereof, as a result of any merger, consolidation, acquisition or
other exchange of assets to which such issuer may be a party or otherwise, shall
be and become part of the Collateral, and, if received by Apollo, shall not be
commingled by Apollo with any of its other funds or property but shall be held
separate and apart therefrom, shall be held in trust for the benefit of the
Partnership and the other Indemnitees and shall be forthwith delivered to the
Partnership in the same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of a Default, all
rights of Apollo to receive any dividends which Apollo is authorized to receive
pursuant to paragraph (a)(iii) of this Section 6 shall cease, and all such
rights shall thereupon become vested in the Partnership, which shall have the
sole and exclusive right and authority to receive and retain such dividends. All
dividends which are received by Apollo contrary to the provisions of this
Section 6(b) shall be received in trust for the benefit of the Partnership,
shall be segregated from other property or funds of Apollo and shall be
forthwith delivered to the Partnership as Collateral in the same form as so
received (with any necessary endorsement). Any and all money and other property
paid over to or received by the Partnership pursuant to the provisions of this
Section 6 shall be retained by the Partnership in an account to be established
by the Partnership upon receipt of such money or other property and shall be
applied in accordance with the provisions of Section 9 hereof.
(c) Upon the occurrence and during the continuance of a Default, all
rights of Apollo to exercise the voting and consensual rights and powers which
it is entitled to exercise pursuant to Section 6(a)(i) shall cease, and all such
rights shall thereupon become vested in the Partnership, which shall have the
sole and exclusive right and authority to exercise such voting and consensual
rights and powers.
(d) As long as the Credit Agreement remains in effect and until all of
the Indemnity Obligations have been paid fully and indefeasibly, any payments
made in respect of the Pledged Securities shall be and become part of the
Collateral, and, if received by Apollo, shall not be commingled by Apollo with
any of its other funds or property but shall be held separate and apart
therefrom, shall be held in trust for the benefit of the Partnership and the
other Indemnitees and shall be forthwith delivered to the Partnership in the
same form as so received.
7. Supplemental Documentation. In connection with the execution and
delivery of this Agreement, Apollo shall furnish or cause to be furnished to the
Partnership on or prior to the Closing Date a certificate signed by a
responsible officer of Apollo dated the Closing Date, certifying that, as of the
date of such certificate, all representations and warranties of Apollo in
Section 4 hereof are true and correct and that Apollo is in compliance with all
conditions, agreements and covenants to be observed or performed hereunder.
4
<PAGE>
8. Remedies upon Default. If a Default shall have occurred and be
continuing, the Partnership may sell or otherwise dispose of all or any part of
the Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Partnership shall deem appropriate. Each such purchaser at any such sale shall
hold the property sold absolutely, free from any claim or right on the part of
Apollo, and Apollo hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal which Apollo now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
The Partnership shall give Apollo 10 days' written notice (which Apollo
agrees is reasonable notice within the meaning of Section 9-504(3) of the
Uniform Commercial Code as in effect in New York) of the Partnership's intention
to make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Partnership may fix and state in the notice (if any) of
such sale. At any such sale, the Collateral, or portion thereof, to be sold may
be sold in one lot as an entirety or in separate parcels, as the Partnership may
(in its sole and absolute discretion) determine. The Partnership shall not be
obligated to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Partnership may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further
notice, be made at the time and place to which the same was so adjourned. In
case any sale of all or any part of the Collateral is made on credit or for
future delivery, the Collateral so sold may be retained by the Partnership until
the sale price is paid by the purchaser or purchasers thereof, but the
Partnership shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice. At any
public sale made pursuant to this Section 8, any Indemnitee may bid for or
purchase, free (to the extent permitted by law) from any right of redemption,
stay or appraisal on the part of Apollo (all said rights being also hereby
waived and released to the extent permitted by law), with respect to the
Collateral or any part thereof offered for sale and any such Indemnitee may make
payment on account thereof by using any claim then due and payable to such
Indemnitee from Apollo as a credit against the purchase price, and such
Indemnitee may, upon compliance with the terms of sale, hold, retain and dispose
of such property without further accountability to Apollo therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Partnership shall be free to carry out
such sale and purchase pursuant to such agreement, and Apollo shall not be
entitled to the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Partnership shall have entered into such
an agreement all Defaults shall have been remedied and the Indemnity Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Partnership may proceed by a suit or suits at law or in equity to
foreclose this
5
<PAGE>
Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.
9. Application of Proceeds of Sale. The proceeds of any sale of
Collateral, as well as any Collateral consisting of cash, shall be applied by
the Partnership as follows:
First, to the payment of all Damages incurred by the Partnership in
connection with such Default or otherwise in connection with this Agreement or
any of the Indemnity Obligations, including, but not limited to, all court costs
and the reasonable fees and expenses of such Indemnitees' agents and legal
counsel, and any other reasonable costs or expenses incurred in connection with
the exercise of any right or remedy hereunder; and
Second, pro rata to the payment in full of principal and interest in
respect of any loans outstanding under the Credit Agreement.
If the Partnership exercises its right to sell, assign, transfer or
otherwise dispose of the Collateral pursuant to Section 8 of this Agreement, the
Partnership shall cause to be returned to Apollo any proceeds received by the
Indemnitees in excess of the amount needed to satisfy the Indemnity Obligations.
10. Partnership Appointed Attorney-in-Fact. Apollo hereby appoints the
Partnership its attorney-in-fact for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instrument which the
Partnership may deem necessary or advisable to accomplish the purposes hereof,
which appointment is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, the Partnership shall have the right, upon the
occurrence and during the continuance of a Default, with full power of
substitution either in the Partnership's name or in the name of Apollo, to ask
for, demand, sue for, collect, receive receipt and give acquittance for any and
all moneys due or to become due and under and by virtue of any Collateral, to
endorse checks, drafts, orders and other instruments for the payment of money
payable to Apollo representing any interest or dividend, or other distribution
payable in respect of the Collateral or any part thereof or on account thereof
and to give full discharge for the same, to settle, compromise, prosecute or
defend any action, claim or proceeding with respect thereto, and to sell,
assign, endorse, pledge, transfer and make any agreement respecting, or
otherwise deal with, the same; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Partnership, or the other
Indemnitees to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Partnership, or the other
Indemnitees, or to present or file any claim or notice, or to take any action
with respect to the Collateral or any part thereof or the moneys due or to
become due in respect thereof or any property covered thereby, and no action
taken by the Partnership, or the other Indemnitees or omitted to be taken with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of Apollo or to any claim or action against the
Partnership or the other Indemnitees in the absence of the gross negligence or
wilful misconduct of the Partnership or the other Indemnitees.
6
<PAGE>
11. No Waiver. No failure on the part of the Partnership to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Partnership preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law. The Partnership and the other Indemnitees shall not be deemed to have
waived any rights hereunder or under any other agreement or instrument unless
such waiver shall be in writing and signed by such parties.
12. Security Interest Absolute. All rights of the Partnership hereunder,
the grant of a security interest in the Collateral and all obligations of Apollo
hereunder, shall be absolute and unconditional irrespective of (i) any lack of
validity or enforceability of the Credit Agreement, any agreement with respect
to any of the Indemnity Obligations or any other agreement or instrument
relating to any of the foregoing, (ii) any change in time, manner or place of
payment of, or in any other term of, all or any of the Indemnity Obligations, or
any other amendment or waiver of or any consent to any departure from the Credit
Agreement or any other agreement or instrument, (iii) any exchange, release or
nonperfection of any other collateral, or any release or amendment or waiver of
or consent to or departure from any guarantee, for all or any of the Indemnity
Obligations or (iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Apollo in respect of the Indemnity
Obligations or in respect of this Agreement.
13. Partnership's Fees and Expenses. Apollo shall be obligated to, upon
demand, pay to the Partnership the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts or
Partnerships which the Partnership may incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Partnership
hereunder or (iv) the failure by Apollo to perform or observe any of the
provisions hereof.
14. Termination. This Agreement shall terminate when (a) all the
Indemnity Obligations have been fully and indefeasibly paid in cash and (b) all
obligations under the Credit Agreement shall have been paid and discharged in
full at which time the Partnership shall reassign and deliver to Apollo, or to
such person or persons as Apollo shall designate, against receipt, such of the
Collateral (if any) as shall not have been sold or otherwise still be held by it
hereunder, together with appropriate instruments of reassignment and release.
15. Notices. 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
Partnership shall be addressed to:
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1290 Partners, L.P.
c/o Victor Capital Group
605 Third Avenue
New York, NY 10016
Attention: John R. Klopp
Telecopy Number: (212) 655-0044
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 Partnership may designate by written notice to Apollo and
Metropolis. Notices to Apollo shall be addressed to:
Apollo Real Estate Investment Fund, L.P.
2 Manhattanville Road
Purchase, New York 10599
Attention: Lee Neibart
Telecopy Number: (914) 694-4929
or at such other address and to the attention of such other
person as the Buyer may designate by written notice to Partnership and
Metropolis. Notices to the Partnership 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
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 Metropolis may designate by written notice to Apollo and the
Partnership.
16. Further Assurances. Apollo agrees to do such further acts
and things, and to execute and deliver such additional conveyances, assignments,
agreements and instruments, as the Partnership may at any time reasonably
request in connection with the administration and enforcement of this Agreement
or with respect to the Collateral or any part thereof or in order better to
assure and confirm unto the Partnership its rights and remedies hereunder.
8
<PAGE>
17. Binding Agreement; Assignments. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
Apollo shall not be permitted to assign this Agreement or any interest herein or
in the Collateral, or any part thereof, or otherwise pledge, encumber or grant
any option with respect to the Collateral, or any part thereof, or any cash or
property held by the Partnership as Collateral under this Agreement.
18. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF), EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
APOLLO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND THE INDEMNITEES
BY THEIR ACCEPTANCE OF THIS INDEMNIFICATION AGREEMENT IRREVOCABLY AND
UNCONDITIONALLY WAIVE, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, CASE,
PROCEEDING, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE
RELATING TO THIS INDEMNIFICATION AGREEMENT.
Apollo agrees that, with or without notice or demand, Apollo will
reimburse the Indemnitees for all costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred by the Indemnitees in
connection with any action, case or proceeding brought by any of the Indemnitees
to enforce the obligations of Apollo under this Indemnification Agreement.
19. Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective upon the date first set forth above.
21. Section Headings. Section headings used herein are for convenience
only and are not to affect the construction of, or be taken into consideration
in interpreting, this Agreement.
22. Amendments. This Agreement may only be modified, amended, changed or
terminated by an agreement in writing signed by Apollo and the other
Indemnitees.
Apollo agrees to submit to personal jurisdiction in the State of New York
in any action, case or proceeding arising out of this Agreement and, in
furtherance of such agreement, Apollo hereby agrees and consents that without
limiting other methods of obtaining jurisdiction, personal jurisdiction over
Apollo in any such action, case or proceeding may be obtained within or without
the jurisdiction of any court located in New York and that any process or notice
9
<PAGE>
of motion or other application to any such court in connection with any such
action, case or proceeding may be served upon Apollo by registered or certified
mail to or by personal service at the last known address of Apollo, whether such
address be within or without the jurisdiction of any such court.
Apollo represents and warrants to and for the benefit of each
Indemnitee that it has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, that the
execution and delivery by it of this Agreement and the performance by it of its
obligations hereunder have been duly authorized by all necessary action by and
on its behalf, that this Agreement has been duly executed and delivered by a
duly authorized officer and that this Agreement constitutes a valid and legally
binding obligation enforceable against it in accordance with the terms set forth
herein.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
the day and year first above set forth.
APOLLO REAL ESTATE INVESTMENT FUND, L.P.
By: Apollo Real Estate Advisors, L.P.
By: Apollo Real Estate Management
By: /s/ Andrew S. Cohen
--------------------------------
Name: Andrew S. Cohen
Title: Vice President
1290 PARTNERS, L.P.
By: 1290 GP Corp., its general partner
By: /s/ Andrew S. Cohen
-----------------------------------
Name: Andrew S. Cohen
Title: Vice President
ACKNOWLEDGED AND AGREED:
METROPOLIS REALTY TRUST, INC.
By:/s/ Lee S. Neibert
---------------------------
Name: Lee S. Neibert
Title: President
11
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<NAME> Louis Vitali
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<CURRENCY> U.S. D0LLARS
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> DEC-31-1999
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0
0
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